Trump lashes out at China | PTC and railroads | Cold weather sets records | Election Watch, 2018
— The “Transformation of the American Farm, in 18 Charts” is the title of a Wall Street Journal item. It says, “The shift to specialization, fed by technology and competition, has boosted profits. It has also left farmers more vulnerable to price busts like the one currently sweeping the Farm Belt.” Link to the charts.
— Senate Democrats urge railroad accountability for PTC. A group of 15 U.S. senators sent a letter to U.S. Department of Transportation leadership asking the agency to hold the nation’s railroads accountable for expeditiously implementing the proper levels of operations safety on their tracks. The senators want a status report of railroads’ implementation of positive train control (PTC) technology across their networks. Congress mandated the implementation of PTC for the nation’s railroads by the end of 2018, just one year away. Congress mandated implementation of PTC in 2008 for all U.S. railroads by Dec. 31, 2015, but later extended the deadline to the end of 2018. Supporters claim it will drastically improve railroad safety, but the railroads have complained that PTC, which relies on GPS, wireless radio and computers, is complicated and expensive to install.
— The Trump administration today will officially repeal the Obama administration’s 2015 fracking rule regulating oil and natural gas drilling on federal lands. “We believe it imposes administrative burdens and compliance costs that are not justified,” the Interior Department’s Bureau of Land Management write in a notice that rescinds the rule, published in today’s Federal Register. Link. The rule affects oil wells on public lands that are found mainly in the West. Environmental groups are expected to sue the agency.
— Sen. Flake still waits on USTR response to his NAFTA 2.0 question as his hold on USTR nominee continues. Sen. Jeff Flake (R-Ariz.) has a hold on Gregg Doud's nomination to be the chief agricultural negotiator at the U.S. Trade Representative's (USTR) office. The topic in question is a proposal the U.S. has advanced in the NAFTA 2.0 talks that would change U.S. trade remedy law to favor seasonal produce growers. Link to a Congressional Research Service backgrounder on the topic.
— Other items of note:
- The turnover rate among senior White House officials reached 34% this year, a level unprecedented in the modern era, and twice that of Reagan’s 17% in 1981 — the next-highest in the past 40 years. Details.
- President Donald Trump lashed out at China on Thursday following reports that Chinese ships transferred oil to North Korean vessels at sea in violation of U.N. sanctions over the North’s nuclear weapons program. Trump said on Twitter that China had been “Caught RED HANDED,” adding he was “very disappointed that China is allowing oil to go into North Korea.” On Tuesday, the South Korean newspaper Chosun Ilbo cited unidentified South Korean government officials as saying U.S. reconnaissance satellites have spotted Chinese ships transferring oil to North Korean vessels some 30 times since October in seas off China. That report was picked up by some U.S. media outlets. Meanwhile, South Korea seized a Hong-Kong flagged ship for selling oil to North Korea. Authorities said the ship, supposed to be heading to Taiwan, had broken international sanctions in October by secretly transferring oil to North Korean vessels in international waters. China hit back at similar accusations, with Chinese Foreign Ministry spokeswoman Hua Chunying telling reporters, "The Chinese side has conducted immediate investigation. In reality, the ship in question has, since August, not docked at a Chinese port and there is no record of it entering or leaving a Chinese port." Chinese trade data released this week indicated the country exported no oil to North Korea. Link to article.
- Trump: Russia inquiry makes U.S. ‘look very bad’. The president said in an interview on Thursday that the special counsel will treat him fairly, contradicting a campaign by some Republicans to discredit the investigation. Link to New York Times article.
- New York Governor Andrew Cuomo is considering a legal challenge to the Republican tax law, becoming the latest blue-state leader to discuss pushing back against the massive overhaul. "There are serious legal questions," he told CNBC. Cuomo is targeting the planned limits on state and local tax deductions, which primarily benefit the residents of states like New York, New Jersey and California.
- For fast-food franchisees, price cuts hard to digest. A price war in the fast-food industry has caused a major tiff among industry stakeholders. Link to Washington Post article.
- Cotton AWP climbs over 70 cents per pound. The Adjusted World Price (AWP) for cotton rose to 70.44 cents per pound, effective today, the first time it has been at 70 cents or more since the price effective for the week of May 19, when it was 72.44 cents per pound. Before that, the AWP was last above 70 cents per pound for the AWP effective the week of June 20, when it was 70.38 cents per pound.
- No purchases of sugar under the Feedstock Flexibility Program (FFP) are expected for fiscal 2018, according to the USDA Commodity Credit Corporation (CCC), based on current crop and consumption forecasts. CCC is required to make the determination each quarter. FFP is aimed at avoiding forfeitures of sugar placed under loan and USDA's current forecasts are that ending stocks are unlikely to lead to any forfeitures. The next quarterly estimate on FFP will occur on or before April 1, 2018.
- A food-swamp study suggests counties could introduce zoning restrictions that would reduce the number of fast-food joints while simultaneously increasing the number of grocery stores. Link to article on the topic from The Atlantic.
- Facing lawsuits and consumer outrage over its iPhone slowdown, Apple has issued an apology to customers over its handling of the issue. To "regain the trust of anyone who may have doubted Apple's intentions," the tech giant is slashing prices for battery replacements to $29 (from $79) and will change its software to show users whether their phone battery is good.
- Alabama certified Democrat Jones the winner of a special Senate election, after a failed legal challenge by Republican Moore. He will be the first Democratic senator to represent Alabama in 25 years. Jones is expected to be sworn in on Jan. 3, narrowing the GOP’s advantage in the U.S. Senate to 51-49.
- Election Watch, 2018. Roll Call has a handy interactive piece that will help monitor elections in 2018. Link.
- President Trump will undergo a physical in January, his first known medical exam by a government doctor since taking office. Trump will be examined on Jan. 12 by Rear Admiral Ronny Jackson, the physician to the president, at Walter Reed National Military Medical Center in Bethesda, Maryland, White House press secretary Sarah Huckabee Sanders said. Jackson will issue a public statement on the president’s health after the exam, Sanders said.
- Cold weather records were set Thursday from Arkansas to Maine, and the meteorologists expect the cold air will linger through the weekend and into next week, reaching as far south as Texas and the Florida Panhandle. Forecasters say the nation’s average low will be 10 degrees when 2018 begins Monday, with a third of the country seeing averages below zero. Meanwhile, President Trump, vacationing in Palm Beach, Fla., where temperatures are in the 70s, took to Twitter to mention the chill — and take a shot at climate change. “In the East, it could be the COLDEST New Year’s Eve on record,” he wrote. “Perhaps we could use a little bit of that good old Global Warming.”
- U.S. Census Bureau projects the U.S. population will be 326,971,407 on Jan. 1, 2018. This represents an increase of 2,314,238, or 0.71%, from New Year’s Day 2017. Since Census Day (April 1) 2010, the population has grown by 18,225,587, or 5.90%. In January 2018, the United States is expected to experience one birth every 8 seconds and one death every 10 seconds. Meanwhile, net international migration is expected to add one person to the U.S. population every 29 seconds. The combination of births, deaths and net international migration will increase the U.S. population by one person every 18 seconds. The projected world population on Jan. 1, 2018, is 7,444,443,881, an increase of 78,521,283, or 1.07%, from New Year’s Day 2017. During January 2018, 4.3 births and 1.8 deaths are expected worldwide every second.
— Markets. The Dow was up 63.21 points, 0.26%, at 24,837.51. The Nasdaq rose 10.82%, 0.16%, at 6,950.16. The S&P 500 added 4.92 points, 0.18%, at 2,687.54. International equities are on track to narrowly outpace the U.S. for the first time since 2012.
Mostly normal market hours today. Most markets observe normal trading hours ahead of the New Year holiday on Monday, Jan. 1, though the bond market will close at 1 p.m. CT Friday. There will also be no overnight session the evening of Jan. 1.
U.S. oil prices have rallied 27% since the start of September, driven by tightening supply and expectations that resurgent economic growth in the U.S. and abroad will drive demand higher.
The euro is on pace for its biggest yearly gain against the dollar since 2003 with a rise of 13.6%.
The dollar fell to its lowest level in three months Thursday. The U.S. dollar index, which tracks the greenback against as basket of 16 others, is off around 7.3%, set for its worst year since 2007, as traders seem to be focusing on monetary policy tightening in the eurozone next year. As for 2018, potential topics that could lead to a higher dollar include interest-rate moves by the Federal Reserve, higher than expected inflation and the U.S. tax overhaul. In 2005, the year after a foreign tax repatriation holiday, the ICE dollar index rose 13%. As for the Fed, “Once past the third move in a tightening or easing phase, a central bank loses its ability to shock the market or even influence it in a major way.” analysts at BMO Capital Markets said in a note to clients. “That is where the Fed is at now, so we don’t think whether the Fed hikes two, three or four times will matter much” for the dollar.
Copper prices climbed to the highest level in four years, with the metal set to end the year up 39%, boosted by robust demand in China.
U.S. merchandise trade gap widens to largest since 2015. The U.S. merchandise trade deficit reached a more than two-year high in November, while inventories at wholesalers and retailers increased, according to preliminary figures released Dec. 28 by the Commerce Department.