Daily Briefing – 399

Post: Oct. 27, 2021

Striketober: Kellogg Negotiates, Deere Litigates, and Amazon Faces New Organizing Push

A dominant feature of the American economy over the past few decades has been sluggish wage growth, albeit with decent gains just before the pandemic. The question now is whether Striketober signals a clearer turning-point, a shift in the balance of power towards labor. Workers have reason for guarded optimism.

As worker strikes at two different manufacturers stretch on for weeks, their employers’ tactics are changing. Kellogg Co., now facing a fourth consecutive week of striking, now says its willing to reopen negotiations. Deere & Co., approaching a second week without union-represented workers, has hit picket lines with a series of legal actions. And elsewhere, the second-largest private employer in the United States, Amazon Co., is facing its second major push by activists to unionize.

CEOs are Embracing Sustainability

With the U.N. Climate Change Conference—a.k.a. COP26—opening in Glasgow on Sunday, business leaders are lining up to encourage political leaders to act. Business, once the resisters in the climate policy debate—has moved to the vanguard and is calling for action. A survey of more than 1,000 CEOs conducted by the U.N. Global Compact and Accenture found that 79% said the pandemic has highlighted the need to transition to more sustainable business models.

Why has business interest in climate action accelerated? Extreme weather events are one reason, according to the report, making climate a current business risk, not a hypothetical future one. Pressure from employees is another, as Fortune’s recent survey with Deloitte demonstrated. Pressure from investors is also starting to motivate companies as well.

A Guide to the Five Proposals on the New York State Ballot

Voters across New York will be asked to decide the fate of five ballot measures this year, including two that are meant to make it easier for people to vote in future elections.

There are no state or federal races on the ballot this year, but all New York voters will be given five opportunities to change the state constitution. In order to change the constitution, back-to-back, separately elected sessions of the Legislature have to approve the proposal first. Then it goes to the voters, who have final say on where the proposal should be approved.

Billionaires Tax Faces Constitutional, Political Hurdles

A proposal released Wednesday morning would tax the paper investment gains of the ultra-wealthy. The idea is to capture revenue from billionaires whose “tradable” assets — like stocks — appreciate in value each year without being taxed. Under current law, those gains aren’t “realized” and taxed until the underlying assets are sold. Tax law experts disagree about whether such a provision would be consistent with the Constitution, but Daniel Hemel, a University of Chicago Law School professor, said Democrats would be taking their chances with a conservative Supreme Court.

The tax would also apply to the tradable assets of people who earn $100 million or more in three consecutive years, but it would not apply to property such as real estate.

U.S. COVID Update – Boosters

As of last week all 3 of the vaccines approved or authorized in the US are available for additional for booster doses among certain populations. This includes individuals aged 65 or older and those aged 18 or older who live in long-term care settings, have underlying medical conditions, or work or live in high-risk settings.

For those who received primary shots with either the Pfizer-BioNTech or Moderna vaccines, booster doses are available 6 months after the initial series.
Anyone who received the J&J-Janssen vaccine is eligible to receive a booster dose 2 months following their initial shot.
The Moderna booster is half of the initial shots (50 μg versus 100 μg), while the Pfizer-BioNTech booster is the same dosage.
Additionally, the CDC’s recommendations allow for people to choose which of the 3 available vaccines they get for a booster, a strategy known as “mix & match” or heterologous dosing. Notably, health experts emphasized that anyone who received 2 mRNA vaccine doses or a single J&J-Janssen dose are—for now—considered fully vaccinated.

NYS Vaccine and COVID Update

Vaccine Stats as of Wednesday October 27th:

One Vaccine Dose

73.7 of all New Yorkers – 14,260,894 (plus 19,179 from a day earlier)
In the Hudson Valley 1,492,706 (plus 2,010)

Fully Vaccinated

66.3% of all New Yorkers – 12,887,733 (plus 19,346).
In the Hudson Valley – 1,330,3473 (plus 1,434).

The Governor updated COVID data through Tuesday October 26th. There were 35 COVID related deaths for a total of 57,845.

Hospitalizations:

Patients Currently in Hospital statewide: 1,996.

Seven Day Average Positivity Rate:

Statewide 2.11%
Mid-Hudson: 1.85%

Useful Websites:

Delta Plus – AY.4.2 Variant Under Investigation

The UK Health Security Agency last week designated the Delta sublineage AY.4.2—commonly known as “Delta Plus”—as a Variant Under Investigation (VUI) and officially named the variant VUI-21OCT-01. The agency made the designation because the sublineage has become increasingly common in the UK in recent months, accounting for approximately 6% of all sequenced Delta cases. Currently, there is no evidence AY.4.2 causes more severe disease, although 2 mutations on the spike protein—A222V and Y145H—could be contributing to an increased growth rate, but more evidence is needed.

COVID-19 cases caused by the Delta sublineage have been detected in at least 118 countries, including the US, India, Israel, and Russia. At a briefing last week, US CDC Director Dr. Rochelle Walensky said health officials are keeping an eye on the sublineage but that so far there is no evidence it impacts the effectiveness of vaccines or available treatments.

Merck Allows Wider Generic Production of COVID-19 Pill

Merck & Co has signed a licensing agreement with the United Nations-backed Medicines Patent Pool (MPP) that will allow more companies to manufacture generic versions of its experimental oral antiviral COVID-19 treatment, the U.S. drugmaker and the organization announced on Wednesday. The U.S. Food and Drug Administration is considering emergency use authorization of the medicine, which was shown in a clinical trial to halve the risk of serious disease and death when given early for COVID-19.

Merck said the royalty-free license would apply to 105 low- and middle-income countries. It allows manufacturers selected by MPP to make generic versions of molnupiravir, the antiviral pill Merck has developed with Ridgeback Biotherapeutics.

Why Vaccine Passports are Causing Chaos

The trouble is that these passes are not interoperable. Most look the same: a QR code on a smartphone or piece of paper. Yet even scanning the codes can be a problem: different verifier apps read different passes. Once scanned, the codes serve up widely varying information, depending on the national or local health systems or attitudes about privacy. Some vaccine passports, like the CommonPass used in parts of America, share raw data on vaccination status. Others, like the one issued by the NHS, yield only a symbol, a tick or a cross. And the rules of the game are not fixed. During a surge of infections this month, Israel retracted its “green pass” from 2m people who had not yet received booster jabs.

The administrative, commercial and even psychological burdens are obvious at airports. Traveller numbers have dropped between 85% and 90%, yet reaching the gate has become a more demanding obstacle course than ever. Queues lengthen as anxious travelers fumble for slips of paper and QR codes. Officials struggle to keep track of which vaccines state regulators have approved and how long which test results are valid for which destinations. As Corneel Koster, chief customer and operating officer at Virgin Atlantic, an airline, puts it: “It’s kind of a jungle out there.”

U.S. Consumer Confidence Rose as Delta Covid-19 Wave Eased

The consumer confidence index increased to 113.8 in October from a revised 109.8 in September, according to data from the Conference Board released Tuesday. The rise in confidence can be attributed to Americans’ easing concerns over Covid-19, said Lynn Franco, senior director of economic indicators at the Conference Board.

Short-term inflation concerns rose to a 13-year high, but consumers indicated they planned to spend on big-ticket items in the final quarter of this year, Ms. Franco added. “The proportion of consumers planning to purchase homes, automobiles, and major appliances all increased in October—a sign that consumer spending will continue to support economic growth,” she said. Almost half of the respondents also said they planned to take a vacation in the next six months, the highest level since the pandemic hit in March of 2020.

Supply Chain Snarls ‘Akin to Playing Whac-a-Mole,’ Says GE CEO

The CEO of General Electric on Oct. 26 said he wouldn’t go on the record, as a few other leaders have said of late, as saying that the kinks in the global supply chain peaked in August or September. Asked about his view of the market on the heels of GE’s third-quarter earnings report, Culp said dealing with today’s challenges “really is akin to playing Whac-A-Mole.”

The issue, Culp added, isn’t that certain specific elements of the supply chain are particularly hung up. It’s more that new headaches and question marks surface as others recede, making the current environment the most challenging he has seen in his career.

Orders for Big-Ticket Products Fell in September Amid Supply Constraints

U.S. durable-goods orders fell 0.4% in September, after a 1.3% rise in the prior month, the Commerce Department said Wednesday. Economists surveyed by the Wall Street Journal were expecting a 1% decline. This was the first decline after four straight gains.

Orders for “core” durable goods – nondefense capital goods orders excluding aircraft – were up 0.8% in September after a 0.5% gain in the prior month. Shipments of core goods rose 1.4%. Much of the weakness was in autos and aircraft. Excluding transportation, durable-goods orders were up 0.4% after an 0.3% gain in August. Orders for defense goods rose sharply in September. Excluding defense, durable goods orders were down 2%.

Tech Company Earnings Solid

Both Alphabet, parent company to Google and YouTube, and Microsoft reported better-than-expected third-quarter results. A boom in digital advertising helped increase revenues at Alphabet by 41% year-over-year, to $65bn. Meanwhile the shift to remote work boosted Microsoft, whose revenues rose by 22% over the same period, to $45bn.

Revenues at Twitter also leapt, by 37% to $1.3bn. Nonetheless it booked a $537m net loss for the quarter, after settling a long-running shareholder lawsuit. Meanwhile Facebook investors shrugged off the massive ongoing document dump on Monday and instead focused on the company’s third-quarter earnings, which topped analysts’ estimates. The company said it’s adding $50 billion to its stock buyback program, helping lift the shares about 2% in extended trading and reported earnings of $3.22 vs. $3.19 per share expected by analysts.

New Home Sales, Average Price Rise

Single-family home sales increased from 702,000 units at the annual rate in August to 800,000 in September, the best pace since March according to the U.S. Census Bureau. Sales rose in every region of the U.S. except the Midwest. The data have nonetheless trended lower since the January peak of 993,000 units. This is due largely to soaring prices, supply-chain bottlenecks and labor shortages. Year over-year, the sale of new single-family homes dipped 17.6%, from 971,000 units in September 2020.

In September, the median sales price for new homes was $408,800, which is a new record and an 18.7% increase from $344,400 a year ago.

NYS DEC Denies Permit for Danskammer Power Plant

The New York State Department of Environmental Conservation (DEC) denied an air permit for Danskammer Energy Center near the Town of Newburgh in Orange County on Wednesday. The proposed expansion was the first large scale gas-fired power plant to be considered by state authorities since the 2019 passage of CLCPA, which calls for sharp reductions in the use of fossil fuels.

Danskammer was seeking authorization to construct and operate a new natural gas-fired combined-cycle power generation facility that could provide up to 600 megawatts of power, compared to the existing plant with its four smaller-capacity turbines. The existing facility currently works as a “peaker” plant, meaning it runs only periodically when additional power is needed for the statewide grid. The Company has the right to request an administrative adjudicatory hearing regarding the denial of its application. The request must be made within 30 days.

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