Kitco daily macro-economic/business digest - May 17
EPA Forwards RFS Volume Requirements to OMB
AI leader: Regulate us | Black Sea grain pact | Debt-limit talks | Worker requirements
In Today's Digital Newspaper
House Speaker Kevin McCarthy (R-Calif.) said a debt-limit deal could be possible by the end of this week, despite saying the two sides remain far apart. The idea that a default wasn't an option was voiced on both sides, another promising development. President Biden cutting short his trip to Japan could be seen both positively and negatively. It highlights the importance of getting a deal done but also underlines that there's no time to lose.
McCarthy told CNBC in an interview he does not think the U.S. will default on its debt as tense negotiations over the debt ceiling continue. "I think at the end of the day we do not have a debt default," McCarthy told CNBC's "Squawk Box" Wednesday morning.
Senators hammered former executives of recently collapsed Silicon Valley Bank and Signature Bank on Tuesday over their paychecks, sales of stock and bonus payouts as the financial institutions struggled to stay afloat. Much of the focus centered around CEO compensation. Securities and Exchange Commission filings show that SVB's former chief executive Greg Becker sold more than $2 million in SVB stock in late February and $1.1 million in stock in January, ahead of the bank's failure. Joseph DePaolo, the former CEO of Signature Bank, received about $8.6 million. "You were paying out bonuses until literally hours before regulators seized your assets," Sen. Sherrod Brown (D-Ohio), chairman of the Senate Banking Committee, told Becker at Tuesday's hearing. "Workers face consequences, executives ride off into the sunset. Only in corporate boardrooms can you run your business into the ground, take the whole economy along with you and come out ahead. We can't let that happen again," Brown said. Becker said his cash and stock bonuses were "predetermined" and that he wasn't aware of when they would be paid out. Both the Federal Deposit Insurance Corporation and Federal Reserve have the authority to claw some of that pay back and further penalize bank executives. Brown said he is working on a bill to make it easier for them to do so.
Reuters quoted the RIA news service from Russia as saying that Black Sea Grain pact talks were continuing and that a decision today on the grain deal cannot be ruled out. But Bloomberg says a deal will be announced today, citing Turkish sources. Ukraine has said Moscow is purposefully slowing the pace of exports, while vessel inspections have been repeatedly disrupted. The number of ships that cleared inspection fell to a record low of 2.9 a day on average in early May. Delays pile on costs for each cargo. The corridor is currently almost empty after traders and shipowners waited to see whether Moscow would stay in the agreement. More in Russia/Ukraine section.
California green diesel fuel program is proving too popular for its own good. The state's efforts have helped create a boom in the production of green trucking fuel, with biofuels now making up nearly 50% of the diesel used in California and overall greenhouse-gas emissions down about 13% since the program began in 2011. The Wall Street Journal reports that has created a twist that few in the industry anticipated by tanking the market for California's low-carbon fuel credits, which are now trading for about $84 per metric ton, down from over $200 at the beginning of 2021. More in Energy & Climate Change section.
The chief executive of ChatGPT creator OpenAI called on Congress to create licensing and safety standards for advanced AI systems. "If this technology goes wrong, it can go quite wrong," Sam Altman testified to a Senate Judiciary subcommittee. The hearing also touched on concerns about the many ways AI could impact our lives: elections, intellectual-property theft, news coverage, military operations and diversity and inclusion initiatives. Meanwhile, corporate venture-capital investors are cutting bigger checks for AI startups.
Securities and Exchange Commission Chair Gary Gensler said financial firms' use of artificial intelligence poses a "systemic risk" that could lead to a financial crisis, and the use of such systems should be closely monitored.
President Joe Biden vetoed a congressional resolution to overturn a two-year tariff pause on solar panel imports from Southeast Asia following a bipartisan push from lawmakers that are concerned about unfair competition from China. The pause is set to continue until at least June 2024, after which Biden said he intends to allow the tariffs to take effect.
Equities today: Asian and European stock markets were mixed overnight. U.S. Dow opened up around 140 points. In Asia, Japan +0.8%. Hong Kong -2.1%. China -0.2%. India -0.6%. In Europe, at midday, London flat. Paris -0.2%. Frankfurt +0.3%.
Target results came in a little better than expected Wednesday morning, even as shoppers pare back their spending on discretionary items and buy more essentials like groceries. "The consistent inflation, the running out of savings as well as just economic uncertainty in general is having an impact on their choices and they're making tradeoffs," said the company's chief growth officer, Christina Hennington. Digital sales fell as foot traffic at stores increased slightly. Cornell also said the retail giant is on track to lose $500 million this year from theft and overall "shrink," compared with last year.
U.S. equities yesterday: The Dow ended down 336.46 points, 1.01%, at 33,012.14. The Nasdaq declined 22.16 points, 0.18%, at 12,343.06. The S&P 500 fell 26.38 points, 0.64%, at 4,109.90.
Market quotes of note:
- JPMorgan says the market is right to be pricing in rate cuts by the Federal Reserve, seeing a U.S. recession as a virtual certainty. Seamus Mac Gorain, head of global rates in London, says recent banking woes have heightened the risk of a recession, and that the Fed may lower its key rate as soon as the third quarter. But the Fed has repeatedly pushed back against bets that a policy pivot could come as soon as September to counter slowing growth.
- Once the debt ceiling is lifted, the resulting surge in issuance will at last put a bite into quantitative tightening, TS Lombard's Steven Blitz says in a note. He expects real GDP to drop about 1% in 2Q vs 1Q, with unemployment rising to 5.5%. "The worse outcome is no recession at all — it will rhyme with the 1966-67 credit crunch that skirted recession but, in doing so, skewed monetary policy and the 15-year 'Great Inflation' was the result," he says. Blitz advises caution regarding Fedspeak, as "their plans are beholden to incoming data, and they have no better idea of what's coming next than anyone else."
- China's economic woes are having an impact. Goldman Sachs and Morgan Stanley are among banks scaling back expansion plans and profit goals in China, as relations with the U.S. sour further and President Xi Jinping's willingness to sacrifice economic priorities for security concerns rocks the private sector. Drastic jobs cuts are being eyed at the biggest U.S. banks with presence in China, Bloomberg reports. "Global banks are vulnerable to political actions that could inflict material financial harm," said finance professor Mark Williams at Boston University.
- Next financial crisis could come from AI, SEC chair says. The next financial crisis could emerge from firms' use of artificial intelligence, Securities and Exchange Commission (SEC) Chair Gary Gensler said, warning of the potential "systemic risk" posed by the technology's proliferation. Concerns grow over AI's impact: Data aggregators and AI platforms could be major components of future financial system "fragility," Gensler said Tuesday at a conference in Washington hosted by the Financial Industry Regulatory Authority, Wall Street's self-regulatory body.
On tap today:
• U.S. housing starts are expected to fall to an annual pace of 1.4 million in April from 1.42 million one month earlier. (8:30 a.m. ET) UPDATE: Housing starts in the U.S. unexpectedly increased 2.2% to an annualized rate of 1.401 million in April, compared to forecasts of 1.4 million. Data for March was revised sharply lower to 1.37 million from 1.42 million. Meanwhile, building permits fell 1.5% to 1.416 million, a second consecutive month of decline and short of market expectations of 1.437 million.
Japan Q1 GDP growth beats forecasts. The Japanese economy grew by 0.4% quarter-over-quarter in Q1of 2023 after showing no growth in Q4, topping market estimates of a 0.1% rise, flash data showed. This was the fastest expansion since Q2 of 2022, with private consumption rising the most in three quarters after tough border controls were fully lifted while capital expenditure unexpectedly rebounded. On an annualized basis, the economy expanded 1.6%, outpacing 1.1% growth for the same quarter in the U.S.
Japan has just begun to benefit from postpandemic pent-up demand of the kind the U.S. experienced more than a year ago. Tokyo waited until last October to remove border controls for overseas tourists and lifted restrictions on big events earlier this year.
Eurozone inflation ticks up in April but core prices ease. Eurozone consumer inflation increased 7.0% from year-ago during April, up from 6.9% the previous month. Excluding volatile food and fuel prices, core inflation slowed to 7.3% from 7.5%, while an even narrower measure, which excludes alcohol and tobacco, slowed to 5.6% from 5.7% in its first decline since last June.
The rate remained significantly above the European Central Bank's target of 2.0%, indicating that policymakers will likely continue their efforts to curb inflationary pressures.
India's trade deficit narrowed to the smallest in almost two years as softening domestic demand and easing commodity prices led to a lower import bill, signaling an uneven pace of growth in Asia's third-largest economy.
Federal Reserve Vice Chair for Supervision Michael Barr said during a House Financial Services Committee hearing that the central bank plans to release stronger capital and liquidity rules for large regional U.S. banks this summer. Federal Deposit Insurance Corp. Chairman Martin Gruenberg spoke to recent banking failures in the hearing, saying that bank examiners failed to force institutions to comply with rules when problems were discovered, and Barr additionally noted that the Fed is investigating what he called "outrageous" executive bonuses that were paid out at Silicon Valley Bank hours before it was taken over by regulators.
IRS will offer free online tax prep for some taxpayers in 2024. The Internal Revenue Service (IRS) will begin a pilot program next year to help some taxpayers fill out and file their income tax returns for free online, taking the first step toward building a government-run competitor to TurboTax and H&R Block. Private tax-preparation companies are fighting a change that could shrink their revenue.
The IRS also released a cost and feasibility study, required by the Inflation Reduction Act, about creating a direct filing system. It found that most U.S. taxpayers would want to use a free government-provided tool to digitally prepare and file taxes.
Tesla CEO Elon Musk hinted at two new models but also warned shareholders gathered at its annual meeting in Texas on Tuesday that there are challenges ahead as higher interest rates weigh on potential buyers. He said the company isn't immune to the global economic environment. Tesla previously outlined plans to make a vehicle that would cost half the price to produce than the Model 3. Musk said there are a few new products he is excited about. The humanoid Optimus was one he highlighted, showing off new videos of the robot moving around. Musk added he believes the majority of Tesla's value in the future would be derived from the robot. The next model that Tesla will ship will be the Cybertruck, which is due to be delivered later this year. The company expects to complete the design of its new Roadster this year, aiming for the possibility of production in 2024.
Ohio sampling of soil around rail crash site show no plant contamination. Ohio officials said that plant tissue samples collected from agricultural sites near the site of the East Palestine, Ohio, train derailment did not detect any hazardous chemicals. The tests centered on winter wheat, pasture grasses, malting barley, and forage covers within a five-mile radius of the train derailment site. According to the Ohio governor's office, "Analysis of scientific data by OSU [Ohio State University] shows plant materials from agricultural sites in the East Palestine area are not contaminated with semi-volatile organic compounds (SVOCs) associated with the train derailment."
• Outside markets: The U.S. dollar index was firmer, with the euro and British pound both weaker against the dollar. The yield on the 10-year U.S. Treasury note was weaker, trading around 3.52%, with a mostly weaker tone in global government bond yields. Crude oil futures firmed, with U.S. crude around $71.05 per barrel and Brent around $75.10 per barrel ahead of US government inventory data due later this morning. Gold and silver futures were weaker, with gold around $1,991 per troy ounce and silver around $23.86 per troy ounce.
• The average price of diesel fuel across the U.S. has fallen by nearly 22 cents a gallon in the past month to the lowest level since January 2022. Meanwhile, average diesel prices in the U.K. reached their lowest level since February last year.
• Sales of bunker fuel in Panama sank to their lowest level since last September on waning container line demand.
• India's liquefied natural gas buyers are seeking decades-long supply deals to protect them from price surges, a move that will support the government's plan to boost the fuel's use. Bloomberg.
• EU member states approve the world's most expansive crypto regulations to date. The rules will require ????companies involved in issuing, trading or managing crypto assets in the 27-nation bloc to obtain a license as early as 2024. From 2026, the names of senders and beneficiaries must be disclosed in crypto transactions. The move may put pressure on other countries, including the United States, to adopt similar rules to regulate the industry. Reuters.
• Key states are nearing a deal to protect the Colorado River. California, Arizona and Nevada would voluntarily conserve a major portion of their river water in exchange for over $1 billion in federal funds. To keep the crucial river from drying up. It supplies water and hydropower for tens of millions of people, but there's not enough to go around after decades of drought. Washington Post.
• How El Niño could scramble commodity markets. The hard-to-predict climate pattern, when powerful, can usher in intense drought or rainfall, upend output from the world's breadbasket regions, and whipsaw the prices of commodities. The Wall Street Journal takes an extended look at the topic in search for answers.
— The ship DSM Capella left the Ukrainian port of Chomomorsk today (May 17) carrying 30,000 metric tons of corn and was believed to be en route to Turkey, with U.N. data indicating this is the final ship to move under the Black Sea Grain Initiative that is set to expire May 18.
Kremlin spokesman Dmitry Peskov was quoted by Russian media Tuesday as saying there were "still a lot of open questions" on the deal relative to portions for helping Russia export fertilizer and agricultural products. Russia has complained Western sanctions have hampered its ability to export those products.
Many expect the U.N., Turkey, Russia and Ukraine will continue trying to reach some kind of agreement to keep the plan going, with an optimistic report coming from Bloomberg (see next item).
— Turkish official: Black Sea grain deal set to be extended. The Black Sea grain deal is set to be extended, with Russia agreeing to stay in the pact for now, Turkish officials told Bloomberg. An announcement will reportedly be made today. The length of any extension is unknown.
Moscow was under pressure to renew the deal so as not to damage relationships with some of the buyers of Ukrainian grain, said Evghenia Sleptsova, a senior economist at Oxford Economics. "If the goal is to put pressure on Ukraine and starve it of foreign currency revenues, they are doing that already by reducing the inspection rates," she said.
Market impact: Wheat futures in the fell to the $6.40 per bushel mark, heading toward the two-year low of $6 touched on May 2 amid renewed expectations of abundant supply among the world's top producers. The developments will preserve Ukraine's access to key foreign markets and increase price competition with other major producers.
— Spy campaign working. The Central Intelligence Agency's semipublic campaign to convince Russians disaffected by the Ukraine war to spy for Washington has borne fruit, CIA officials said this week.
— Russia's prime minister will lead a government delegation to China next week to attend a business forum along with sanctioned tycoons as Moscow leans on Beijing to help it withstand economic pressure over the Kremlin's war in Ukraine.
— The "yes but" behind Russian oil exports. The International Energy Agency reported Tuesday that Russia's oil exports hit a post-invasion high in April of 8.3 million barrels per day. That's up from the monthly average of 7.7 million in 2022. Says GZERO Daily: "Those with the bad habit of reading only the headlines might think this is good news for Vladimir Putin and his war on Ukraine. Not quite."
It adds: "Buried among the details and data points in many press reports is the reality that despite the export record, Russia's monthly oil revenues were down 27% from last year, according to the IEA. And the Russian government's tax receipts from the oil and gas sector have fallen 64% over the past year. Why is that? In response to Russia's invasion of Ukraine, Europe has stopped buying Russian oil exports, some 80% of which now go to China and India. But the Asian giants can buy Russian oil at steeply discounted prices. That's good news for all the world's oil consumers because the complete elimination of Russian oil from global markets would send prices everywhere soaring. Instead, oil buyers avoid a price shock, China and India get cheap crude, Europe gets independence from Russian energy, and the Kremlin gets less revenue. You won't get that from headlines about export records."
— Latest on debt-limit talks:
- President Biden will cut short a planned overseas trip to focus on striking a deal to raise the debt ceiling to avoid the country's first-ever default, as party leaders remained at odds following a meeting Tuesday at the White House over potential spending cuts.
- Biden on Tuesday appointed two senior aides to hold discussions with Republican lawmakers. Steve Ricchetti, counselor to the president, and Office of Management and Budget Director Shalanda Young will now represent the White House in talks with House Speaker Kevin McCarthy's (R-Calif.) team and one of the California Republican's top allies, Rep. Garret Graves (R-La.).
- McCarthy cautioned that negotiators are still "far apart" but added that the new lane of communication "gives us a structure to be more productive but a short time frame to get it done,"
- Negotiators are seeking a framework agreement to review upon President Biden's shortened trip overseas. The president said he'd be calling to check in on the status of talks during his time abroad.
- White House staff and congressional aides will keep meeting daily.
- Negotiators struck a cautiously optimistic tone on Tuesday during a meeting, after which Biden said "there was an overwhelming consensus…that defaulting on the debt is simply not an option."
- Democratic leaders said both sides agreed the House and Senate must pass a "bipartisan bill" with backing from both parties to raise the debt ceiling.
- It's unclear when President Biden and congressional leaders will meet next to continue talks.
- Major policy differences remain. Republicans still want big spending cuts and work requirements for federal aid programs, while Democrats don't want to roll back Inflation Reduction Act measures. The two sides could agree on reclaiming unspent Covid-19 relief and on energy permitting reforms. GOP wants spending caps over 10 while the Democrats prefer two years.
- Republicans insist worker requirements for some unspecified programs be included while key Democrats are resisting any such development (see related item).
- House Republicans say any deal would include changes to the National Environmental Policy Act (NEPA) to speed up the buildout of fossil fuel and clean energy projects but would leave Democratic priorities like granting the federal government a bigger role in interstate power transmission line approvals up for discussion at a later date, Politico reported, citing a GOP House leadership aide familiar with the negotiations.
- Another issue: How long will the debt-limit hike last?
- One of several options: Officials might agree on a short-term measure to lift the debt limit until the fall, when Congress must pass its new fiscal budget. But others say that is simply kicking the can down the road and would not be favored by many House Republicans.
- House Democrats today will begin collecting the 218 signatures needed for a discharge petition, a long-shot parliamentary procedure that would allow lawmakers to sidestep Republican leadership and force a vote on raising the borrowing limit. That means at least five GOP representatives would be needed, and while Democrats intend to raise the ceiling cleanly, with no conditions, Republicans are pushing to pair the raising with spending cuts.
Worker requirements for some welfare programs is a sensitive issue in the ongoing debt-limit/budget cut talks at the White House. It's a "redline" issue for both parties, with Democrats insisting they not be included, with House Republicans insisting they should be. "If we can deal with work requirements as a part of the debt ceiling. I think that is excellent news for the farm bill," said Rep. Dusty Johnson (R-S.D.).
— The EU deforestation regulation (EUDR) has been formally adopted by the Council of the European Union representing the bloc's 27 member states. The new law aims to prevent products and commodities linked to deforestation and forest degradation from being placed onto the EU market, marking a significant milestone in global efforts to protect forests. Once the law enters into force, large and medium-sized companies will have 18 months to implement the new rules. It will be mandatory for companies to conduct due diligence on commodities covered by the legislation: cattle, cocoa, coffee, palm oil, soya, timber and rubber as well as derived products such as beef, furniture or chocolate.
— Firms cut China's economic growth forecasts. Nomura cut its forecast for China's 2023 gross domestic product (GDP) growth to 5.5% from 5.9% previously, after disappointing April data showed the post-Covid recovery was losing steam. Barclays lowered its forecast for China's 2023 GDP growth to 5.3% from 5.6% previously.
- A former Apple engineer has been charged with trying to steal the company's self-driving-car technology, U.S. authorities said Tuesday. The action is one of a series aimed at dismantling what U.S. authorities say are illicit networks providing Russia and China with access to trade secrets and restricted items such as aircraft parts and battlefield equipment. The charges: Weibao Wang, 35 years old, a software engineer at Apple from 2016 to 2018, was charged with six counts of theft or attempted theft of the company's "entire autonomy source code," tracking systems, architecture designs and descriptions of hardware behind the technology, the Justice Department said in an indictment.
— President Biden vetoed legislation that would have reinstated tariffs on solar panels from Chinese companies in Southeast Asia that had been imported into the United States in violation of trade rules.
— USTR issues notice on extension of Covid exclusions on Section 301 tariffs on medical-care products from China. The Office of the US Trade Representative (USTR) published a notice in the Federal Register which will temporarily extend certain exclusions from Section 301 tariffs on some medical-care products from China. "The current Covid exclusions — covering 81 medical-care products — are scheduled to expire on May 15, 2023," USTR said. The agency will provide a 16-day transition period for all Covid exclusions, extending them through May 31, 2023, and to extend 77 of the Covid exclusions through Sept. 30, 2023.
ENERGY & CLIMATE CHANGE
— California's green-fuel program struggles with overwhelming popularity. A boom in renewable diesel production has led to a drastic decrease in California's low-carbon fuel credit prices, affecting the economic viability of other renewable-energy projects and illustrating how unanticipated market dynamics can compromise government objectives, the Wall Street Journal reports (link). Renewable diesel, which now accounts for nearly 50% of the diesel used in California, has helped the state reduce greenhouse-gas emissions by about 13% since the Low Carbon Fuel Standard program was implemented in 2011. However, the unexpected credit-price drop has caused the economics of some projects to become marginal, leading to delays or cancellations, and the California Air Resources Board is now considering increasing its 2030 carbon-reduction goal to boost credit prices.
— Final EPA RFS levels now at OMB for review. EPA sent its final levels for volume standards under the Renewable Fuel Standard for 2023 and beyond to the Office of Management and Budget (OMB) for review. Under a consent decree agreement reached with Growth Energy in July 2022, EPA committed to finalizing the levels for 2023 no later than June 14. The agency had also committed to setting the proposed levels by Nov. 16, but the two sides later committed to Nov. 29 as the deadline.
EPA announced the proposed marks Dec. 1, saying that EPA Administrator Michael Regan had signed off on the plan on Nov. 29.
OMB can take up to 90 days to review the EPA plan which given the court agreement, it is doubtful they will use that full 90 days.
Many are watching whether EPA has adjusted upward the levels for biodiesel and renewable diesel compared with their final marks.
Reports signal EPA may separate their plan on Renewable Identification Numbers for fuel used for power generation for electric vehicles (e-RINS) from the RFS levels for 2023-2025 as Reuters reported that the administration expects legal challenges and do not want to delay the 2023-2025 levels.
— Reuters: BP considering buying stakes in biofuel producers, investing in farming ventures. BP is considering buying stakes in biofuel feedstock producers and making direct investments into farming ventures to secure biofuel supplies as global demand for the low-carbon fuel increases, BP head of biofuels Nigel Dunn told Reuters in an interview.
BP has set a target of increasing its biofuel output to 100,000 barrels per day (bpd) by 2030. Dunn said part of the plan centers on construction of five biofuel plans to process waste feedstocks known as hydroprocessed esters and fatty acids (HEFA). "They make perfect feedstocks for HEFA. The problem is there's only so much of them in the world. And the more HEFA plants that get built, the more challenging the dash for those feedstocks is going to get." Dunn said that this will mean BP needs to "almost certainly" seek stakes in feedstock manufacturers. "We are going to be in as an integrated chain," he noted. "That's our business today in fossil (fuel) and I think that's going to be the winning way."
He also said that he views cover crops and novel feedstocks as being key.
Dunn stated that BP will decide yet this year on whether to construct a HEFA plant in Australia with an intention to start production in 2026.
— The aviation sector's emissions are poised to rise over the next few years as the technology and economics of planemaking make decarbonization hard, the Economist writes.
— The Energy Department today will announce $251 million to back projects in multiple states for developing or expanding large-scale carbon storage and transport, Axios reports. Details:
— It's the first wave of funding from a pair of programs in the 2021 bipartisan infrastructure law.
— The bulk, $242 million, is from the $2.25 billion Carbon Storage Validation and Testing program.
— The balance goes to engineering studies for large-scale CO2 pipeline networks under the Carbon Capture and Technology program.
"DOE is building out the infrastructure needed to slash harmful carbon pollution from industry and the power sector," U.S. Secretary of Energy Jennifer Granholm said.
— USDA's Forest Service issued a permit that would allow the $6.6 billion Mountain Valley natural gas pipeline to run through the Jefferson National Forest between Virginia and West Virginia, as Equitrans Midstream Corp. anticipates federal agencies to issue more required authorizations in the coming months. The project is still undergoing review and permitting by West Virginia and the Interior Department.
— North Carolina's Republican-controlled legislature successfully overrode the governor's recent veto of legislation banning most abortions after 12 weeks, further restricting abortion care in the state. Democratic Gov. Roy Cooper, an abortion-rights supporter, vetoed the measure over the weekend and has spent the last week traveling around the state to convince Republicans to uphold his veto.
Meanwhile, likely GOP presidential candidate Ron DeSantis (R-Fla.) knocked GOP frontrunner candidate Donald Trump for refusing to say if he backs a six-week abortion ban. "He won't answer," DeSantis said.
— Munjal Shah and his Hippocratic AI cofounders are ready to solve the looming healthcare staffing shortage. The Palo Alto-based has raised a $50 million seed round to develop a large language model that will power healthcare bots to provide guidance on nutrition, genetics counseling, insurance billing and more — with one major caveat: they won't diagnose medical conditions — yet.
POLITICS & ELECTIONS
— Is sometimes centrist Sen. Joe Manchin (D-W.Va.) signaling a run at the presidency? "People are upset with both President Biden for not bringing the country together...and also with Donald Trump for being a tremendous divider," Manchin said. "When you look at that, people are just naturally saying, is there something else? Is there something better?" While Manchin did not explicitly state that he was the "something better," he did suggest that the idea had "a lot of options." He further pitched his vision for the U.S. as wanting to unite the parties along everyday matters and attempting to stem polarization. "I'm more concerned about my country than I've ever been and our standing in the world," Manchin said. "I'm concerned about the things I know we can fix. We can get our financial house in order. It doesn't seem my Democrat colleagues are as concerned about that as I am. On the other hand, I've seen Republicans really have the chance to make changes, and they haven't either." Manchin's potential presidential bid would likely face significant challenges, including a tough Senate race in 2024 against Republican challenger Gov. Jim Justice (R-W.Va). Manchin has not yet announced whether he intends to run for re-election.
— Biden leads Trump by 6 in latest Reuters/Ipsos poll. The poll shows President Biden leading former President Trump 44%-38% in a hypothetical 2024 matchup, little changed from a five-point Biden lead in a similar poll in March. In the GOP primary, Trump leads with 49%, followed by Florida Gov. Ron DeSantis with 21%, and the remainder of the field in single digits. Link for details.
— Daniel Cameron wins GOP nomination for Kentucky Governor. Says the Cook Political Report with Amy Walter: "His win is also a win for Trump, who endorsed Cameron. Our rating of the race remains Lean Democrat, with incumbent Gov. Andy Beshear holding the early edge." With nearly all votes counted, Cameron took 48% of the vote in the low-turnout primary, followed by Quarles at 22% and Craft at 17%.
— OpenAI chief concerned about AI being used to compromise elections. Sam Altman, the CEO of OpenAI, the startup behind ChatGPT, told a Senate panel the use of artificial intelligence to interfere with election integrity is a "significant area of concern," adding that it needs regulation. Speaking before Congress for the first time, Altman suggested that, in general, the U.S. should consider licensing and testing requirements for development of AI models. Altman, asked to comment on which AI should be subject to licensing, said a model that can persuade or manipulate a person's beliefs would be an example of a "great threshold." He also said companies should have the right to say they do not want their data used for AI training, which is one idea being discussed on Capitol Hill. Altman said, however, that material on the public web would be fair game.
CONGRESS— Senate Democrats and Republicans pressed former Silicon Valley Bank Chief Executive Greg Becker and two ex-executives from Signature Bank Tuesday, blaming both banks' management for the way they handled rapid growth and rising interest rates before collapsing in March. "When you put other people's money, and our broader economy, at risk, there must be accountability for that level of mismanagement. Running a bank, as you know or should know, is unlike running any other company." — Sen. Sherrod Brown (D-Ohio), speaking at a Senate Banking Committee hearing Tuesday, at which former executives from Silicon Valley Bank and Signature Bank were pressed over their management of the banks before they collapsed.