In February, Rivian announced it would be cutting 10% of its workforce, prompting Tesla CEO, Elon Musk, to opine over X that the company would go bankrupt in roughly 6 quarters at the current trajectory. Musk then added, for good measure, “They need to cut costs massively, and the exec teams need to live in the factory or they will die.” Although Tesla aims to begin producing a more affordable model, Musk also warned his investors that 2024 Tesla EV sales are likely to be “notably lower.” Tesla reported quarterly revenue of $25.17 billion, falling short of analyst estimates of $25.64 billion.

A 2021 Congressional Research Service report found that steel plays a vital role in critical infrastructure projects, missile systems, and overall defense. Politically, practically no issues achieve bipartisan support in 2024, yet protecting the steel industry is one. Key swing states such as Ohio, Pennsylvania, and Minnesota employ tens of thousands of steelworkers, and both candidates are vying for their support.

President Biden has been trying to have it both ways with energy policy. While simultaneously approving controversial drilling ventures, the President is now flirting with an LNG (liquified natural gas) export ban. In an attempt to appease the environmentalist flank of the party, the administration is taking a “second look” at the criteria employed to approve new LNG export projects. The US began shipping LNG exports in 2016 and now exports more than any other country. The President is in a thorny position as renewables are far from a viable replacement for oil and gas, something a portion of his base remains in wild disagreement with.

In the aftermath of the 2008-2009 recession, interest rates were held down by increased savings from an aging population. Coupled with overall uncertainty, people were reticent to spend. This also resulted in less investment which ultimately ushered in a period of secular stagnation. The term “secular stagnation” initially appeared in the 1930s during the Great Recession. But it was Summers who revived it following the 2008 financial crisis.

One of the biggest wins for many CEOs post-Covid was their ability to clear inventory. This was welcome news to shareholders as companies were grasping for reliable demand models during the roller-coaster pandemic years. The inventory-to-sales ratio has remained steady at 1.30 since May 2023 and firms welcomed an additional win with a 3.1% holiday sales bump compared to 2022. All this suggests that the “just-in-case” hoarding strategy of the pandemic years is over and retailers are easing back into a “just-in-time” strategy.

Approximately 205 million square feet of warehouse space was leased by logistics operators in the second quarter of 2023. This was less than the same period in 2022 (235 million) but eclipsed the second quarter of 2019 – 135 million square feet. Firms are still seeking to expand but 2021 and 2022 are clouding expectations. The sector will not return to the pandemic heights, but companies are actively seeking to offset the supply-chain disruptions that were common during the pandemic by moving inventory closer to their customers.

Congress is enacting a multiyear farm bill, the 20th of its kind since 1933. Farm bills are normally passed every five years and shape not only what kind of food domestic farmers grow, but also how they raise said food and how it ultimately arrives on the consumer’s plate. Farm bills 50 years ago were focused narrowly on farmers and ancillary suppliers/providers. The farm bill that will likely be enacted come 2025 is expected to cover a dizzying array of interest groups that range from helping towns purchase police cars to broadband access. Conservation and environmental groups are omnipresent, keeping a close eye on sustainable farming practices and land use, while rural counties especially have their own integrated market of providers (bankers, insurance agencies, hunters and anglers, and local governmental agencies).

According to a Wall Street Journal analysis, despite some troubling macroeconomic indicators, compensation for the median worker over nearly 300 companies in the S&P 500 index was greater in 2022 (compared to the previous year). The leading company in the analysis was a real estate investment trust that managed casinos and hotels. Vici Properties saw the salary of their median worker rise by 1,373%. Granted, the firm did not include the tens of thousands of workers that are technically employed by casinos working at their properties, but the jump was certainly notable.

The Agriculture Foreign Investment Disclosure Act (AFIDA) was passed in 1978. The act states that all foreign persons (and entities) who acquire, hold, or transfer agricultural land interests must report those holdings and/or transactions to the Secretary of Agriculture (part of the US Department of Agriculture). Those who fail to do so are subject to penalties from the USDA’s Farm Service Agency, the entity tasked with the public inspection. As of December 31, 2020, the Farm Service Agency reported that foreign-held acres numbered 37.6 million. While that might sound like a considerable amount, those who track foreign investments posit this number is severely under-counted. A bipartisan act introduced by Jon Tester, a Democrat from Montana, and Mike Braun, a Republican from Indiana, aims to strengthen AFIDA.

Train derailments, like accidents in any industrial environment, can cripple rail providers. Norfolk Southern understands this better than most. The Atlanta-based railway was riddled with accidents in December 2021, and when their derailment in East Palestine, Ohio occurred in early February 2023, releasing toxic chemicals and bringing forth a series of lawsuits, Norfolk Southern found themselves under the regulatory microscope of the National Transportation Safety Board (NTSB). The entity initiated a special probe into Norfolk Southern’s safety culture, something quite rare for the NTSB. The Federal Railroad Administration (FRA) followed with a separate probe and at the center of Norfolk Southern’s practices (as well as many other large railroad operators) is something called precision-scheduled railroading (PSR).

While the causes of inflation can be nuanced, the effects are clear. In the face of rising costs, most consumers either purchase less of something or seek cheaper alternatives. There are some examples of inelastic goods that remain in demand in the face of price hikes – prescription drugs, utilities, or tobacco products to name a few. But most products can either be swapped out or not consumed at all. Whole Foods Market is one of the more expensive supermarket options. The Amazon-owned grocer caters to a segment that is accustomed to higher prices than one would find in more conventional markets. Yet, in the face of ever-rising prices, Whole Foods is making a push with their suppliers to bring down prices as lower-cost competitors such as Aldi Inc. and Trader Joe’s are beginning to gain market share.

It’s no secret that semiconductors and manufacturing plants (colloquially known as “fabs”) are critical to nearly every economy on the planet. The steel industry is a $900 billion behemoth, and semiconductors have now passed $650 billion and gaining ground fast. Thanks to Covid we all became much more aware of the importance of semiconductor supply chains. The bottlenecks affected everything from car manufacturers to consumer electronics.

When the yen depreciates, the value of the forwards increases. Disbursed over a 2-year period (24 months), once existing contracts expire, they immediately open new ones. Moreover, there are also forward contracts flowing in the opposite direction - converting dollars into yen at present rates. Yet, the cost of this hedge (dollar to yen) has gone up principally due to interest rate differences in Japan and the US.

Consensus is never easy. Folks are unique, and while countries try their hardest to engender shared values, norms, and policies, getting multiple countries to agree on a single issue or theme is rare. As a global community, we’ve done it, but it’s often exhausting along the way. Last year roughly 140 nations agreed to overhaul the rules governing the taxation of profits by companies doing business in more than one country. In today’s globalized world, there are a lot of these. The group’s stated objective was to tax those businesses that are digital in nature and profit off consumers everywhere from Sidney to Taipei, Cape Town, and even Montevideo. The first part of the proposal is known as Pillar One.

CEOs in the retail sector are turning over once again. The pandemic served as a pause button for many Boards that had CEO succession plans already defined. Yet, the pandemic also revealed some new tools that retail CEOs will need moving forward – mainly the understanding of data and technology related to online shopping. Traditionally retail CEOs arrived at their positions either because they understood (and could predict) styles and trends, and/or were very good at managing the systems necessary to keep stores running efficiently. CEO turnover in S&P 500 companies fell in 2020 and 2021. The pandemic was unnerving and most companies did not wish to add another level of uncertainty with CEO vacancies.

After the 2008 financial crisis, the US pushed hard to devalue the dollar. The Federal Reserve played a principal role, and it is inserting itself once again. In terms of the US’s major trading partners – Japan and the EU – the dollar is the strongest against the yen since 1998 and at near parity with the euro for the first time since 2002. The increasing price of natural gas is the main driver behind the dollar’s leap. Russia’s incursion into Ukraine didn’t help, and pundits predict investment to be routed away from Europe and certain parts of Asia and over to the US.

Tariffs have a long history in diplomatic and labor relations. On the local side, their application protects homegrown industries and is a form of a tax. The most common type of tariff is what is known as “ad valorem” – a fixed percentage of the total value of an import. There are then specific tariffs that either rise or fall depending on the volume of goods. The US currently has several tariffs in place with China. Everything from school supplies to clothing is levied, but President Biden is exploring options to roll some of these back. On July 5th the Office of the US Trade Representative concluded its mandatory four-year review of the previous president’s (former President Trump) tariffs.

Company financing needs are receiving greater scrutiny. As interest rates continue to rise, many firms have pulled forward new debt sales or even retired debt via the use of excess cash on balance sheets. Carnival Corp., the cruise-ship operator, sold $1 billion in unsecured notes in late May that was set to mature in 2030. They’ll pay investors 10.5% in annual interest and use the proceeds to pay down ancillary debt. Meanwhile, HP recently put together a bond deal to raise $2 billion and devote a large chuck for their pending $1.7 billion acquisition of another tech company, Poly.