Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
All major US and European equity indices closed higher on the
week, while APAC was mixed. US and benchmark European government
bonds closed sharply lower week-over-week. CDX-NA and European
iTraxx closed tighter across IG and high yield on the week. The US
dollar closed lower on week, while oil, natural gas, gold, silver,
and copper closed higher week-over-week.
Americas
All major US equity markets closed higher on the week; Nasdaq
+3.2%, Russell 2000 +3.1%, S&P 500 +2.3%, and DJIA +1.7%
week-over-week.
10yr US govt bonds closed 1.50% yield and 30yr bonds 1.91%
yield, which is -9bps week-over-week for both tenors.
DXY US dollar index closed 96.02 (-0.6% WoW).
Gold closed $1,812 per troy oz (+0.4% WoW), silver closed $22.94
per troy oz (+1.8% WoW), and copper closed $4.39 per pound (+2.3%
WoW).
Crude Oil closed $73.79 per barrel (+4.3% WoW) and natural gas
closed $3.73 per mmbtu (+1.1% WoW).
CDX-NAIG closed 50bps and CDX-NAHY 292bps, which is -3bps and
-16bps week-over-week, respectively.
EMEA
All major European equity indices closed higher; Spain +3.0%,
France +2.6%, Italy +1.5%, Germany +1.4%, and UK +1.4%
week-over-week.
10yr European government bonds closed lower on the week; Germany
closed +13bps, France +15bps, UK +17bps, Spain +17bps, and Italy
+19bps week-over-week.
Brent Crude closed $76.64 per barrel (+4.2% WoW).
iTraxx-Europe closed 48bps and iTraxx-Xover 244bps, which is
-2bps and -10bps week-over-week, respectively.
APAC
Major APAC equity indices closed mixed; Australia +1.7%, Japan
+0.9%, India +0.5%, Hong Kong +0.1%, Mainland China -0.1%, and
South Korea -0.2% week-over-week.
IHS Markit forecasts global light-vehicle sales to increase
3.7% and production to increase 9.0% in 2022. Next year, global
light-vehicle sales and production volumes are forecast to still be
below the levels of 2019, as the recovery cycle from the COVID-19
pandemic has been held back by supply constraints and new virus
variants. Auto demand levels are expected to remain depressed on
the microchip shortage, as well as the race between vaccination
programs and new COVID-19 variants. Although the supply situation
is expected to improve through 2022, the ability to replenish
inventories may not come before 2024. IHS Markit expects the
semiconductor shortages and wider supply chain disruptions to
continue until 2023. IHS Markit projects light-vehicle sales
globally of nearly 79.4 million units in 2021. We forecast new
light-vehicle sales of nearly 82.4 million units globally in 2022
and auto industry demand to continue to be constrained next year as
the challenges in the semiconductor supply chain remain. Global
light-vehicle production is expected to be 75.5 million units in
2021, a paltry 1.2% improvement over levels in 2020. However, in
2022, IHS Markit forecasts a rebound in global light-vehicle
production of 9.0% to 82.3 million units. (IHS Markit
AutoIntelligence's Stephanie
Brinley)
The Indian union cabinet has approved a production-linked
incentive scheme (PLI) worth over INR760 billion (USD9.9 billion)
for production of semiconductors over the next six years, reports
The Economic Times. Under the new scheme, called Programme for
Development of Semiconductors and Display Manufacturing Ecosystem,
over 20 semiconductor design, components manufacturing, and display
fabrication units will be set up including one to two fabrication
units for displays and 10 units each for designing and
manufacturing components. The government will offer incentives to
companies involved in the manufacturing of silicon semiconductor
fabs, display fabs, compound semiconductors, silicon photonics,
sensors fabs, semiconductor packaging, and semiconductor design.
Additionally, the cabinet also approved a plan for the
modernization and commercialization of the Semi-conductor
Laboratory (SCL). The launch of the scheme comes at a time when
automakers are struggling with the semiconductor shortage globally
and have been forced to adjust production levels since several
months ago. By localizing development and production, the Indian
government aims to reduce dependence for such chips on other
countries. (IHS Markit AutoIntelligence's Isha Sharma)
US corn growers, furious about skyrocketing costs for phosphate
fertilizers, have accused leading domestic producer Mosaic with a
plot to derail foreign competitors with punishing trade
tariffs—a move they say handed the world's second largest
phosphate fertilizer producer undue influence over US fertilizer
supply and thus pricing. (IHS Markit Food and Agricultural Policy's
William Schulz)
In a December 17 open letter to Mosaic executives, leaders of
the National Corn Growers Association (NCGA) say Mosaic's petition
to the US International Trade Commission (ITC) for countervailing
duties (CVD) against fertilizer producers in Russia and Morocco was
nothing more than a feigned act of corporate social
responsibility.
"Mosaic has almost single-handedly erected an insurmountable
tariff barrier to keep its top competitors in Morocco and Russia
out of the US phosphate market," reads the NCGA letter. "Thanks to
Mosaic's petition, only 15 percent of phosphorous imports now come
into the US without tariffs. And experts say that using [the
Department of Commerce] and ITC to manipulate the supply curve does
indeed dictate price to farmers."
The NCGA is not alone in its price-gouging accusations. "The
economic conditions of the fertilizer sector suggest market abuses
are likely, and farmers are experiencing a price squeeze that is
highly suspicious in its timing," the Family Farm Action Alliance
said in a December 8 letter to the Department of Justice's
Antitrust Division.
But ITC investigated Mosaic's charge that foreign producers
were competing unfairly by dumping low-cost phosphate fertilizer
product on the US market and artificially lowering prices. In June,
the agency issued a CVD on Moroccan and Russian phosphate
fertilizer imports due to unfair foreign subsidies.
"Based on the available pricing data obtained by the Commission
… cumulated subject imports undersold the domestic like product in
16 of 52 quarterly comparisons with margins of underselling ranging
from 0.1 percent to 13.0 percent and an average underselling margin
of 2.8 percent," an ITC's report says. "Subject imports oversold
the domestic like product in the remaining 36 instances with
margins of overselling ranging from 0.1 and 11.2 percent and an
average overselling margin of 4.0 percent."
Supermarkets across Europe have pledged to remove beef products
that are linked to deforestation in Brazil from their stores. On 15
December, US activist group Mighty Earth announced that six
European supermarket chains will stop selling Brazilian beef
products after an investigation found that these products
contribute to the destruction of the Amazon rainforest. The most
far-going pledge came from Lidl Netherlands, which said it would
stop sales of all beef originating from South America in January
2022. Albert Heijn, the largest supermarket chain in the
Netherlands, said it will stop sourcing beef from Brazil entirely.
(IHS Markit Food and Agricultural Policy's Pieter Devuyst)
Other supermarket chains made less dramatic moves and decided
to focus on specific beef products. Sainsbury's UK said will stop
sourcing its store brand corned beef from Brazil and highlighted
that 90% of its beef is already sourced from the UK and Ireland.
Auchan France will remove beef jerky products linked to Brazilian
meat processor JBS from its shelves, while Carrefour Belgium and
Delhaize will stop selling Jack Link's brand beef jerky.
The withdrawals came after an investigation by Mighty Earth and
Reporter Brasil, a Brazilian NGO, found that JBS indirectly sourced
cows from illegally deforested areas, in a scheme known as "cattle
laundering". In such schemes, cows are raised on illegally
deforested land and then sold on to a legitimate farm before being
sent to the slaughterhouse, to obscure the true origin of the
cattle.
In reaction, JBS said it has zero tolerance for illegal
deforestation and has blocked more than 14,000 suppliers for
failing to comply with its policies. The company said monitoring
indirect suppliers - the ones before the final seller to the
slaughterhouse - is a challenge for the entire sector, but it
promised to set up a system capable of doing so by 2025.
Baker Hughes has been awarded a contract by Santos to supply
turbomachinery equipment for the Moomba carbon capture and storage
(CCS) project (Moomba CCS), including gas turbine, compressors, and
heat recovery steam generator (HRSG). The project will serve a gas
processing plant and permanently store 1.7 million tons of carbon
dioxide (CO2) annually in depleted natural gas reservoirs in the
onshore Cooper Basin in South Australia. (IHS Markit Upstream Costs
and Technology's Kamila
Langklep)
Specifically, Baker Hughes will provide PGT25+G4 aeroderivative
gas turbine (nameplate power capacity of 34 MW), MCL compressor and
BCL compressor, which will enable Santos to compress CO2 captured
at Moomba CCS for transportation and subsequent injection for
storage.
Baker Hughes' broader carbon capture, utilization, and storage
(CCUS) portfolio features advanced turbomachinery, solvent-based
capture processes, well construction and management for CO2
storage, and advanced digital monitoring and industrial asset
management solutions.
The contract for Baker Hughes' technology lays a foundation for
Santos' future objectives of decarbonizing natural gas, lowering
emissions and ultimately producing hydrogen fuel using stored CO2.
A final investment decision on the Moomba CCS project was reached
in November 2021.
During the third quarter of 2021, Argentina's seasonally
adjusted GDP increased by 4.1% q/q after decreasing by 0.9% q/q in
the previous quarter, according to the revised figures. On an
annual basis, GDP grew by 11.9% year on year in July-September on
the back of a low comparison base in the third quarter of 2020 when
GDP shrunk by 10.2% y/y because of COVID-19-related response
measures and extreme lockdown. (IHS Markit Economist Claudia
Wehbe)
The estimate for the GDP deflator shows a rise of 54.1% y/y,
while the private-sector consumption deflator increased at a slower
rate of 50.1% y/y during the same period.
By sector, the primary sector showed the only annual decline in
the third quarter. All other sectors posted annual growth in the
double digits, except for utilities, whose cost increases are
controlled by the government, education, financial intermediation,
and real estate and business services.
Sectors with a severely depressed comparison base posted an
annual growth rate over 25% y/y, such as construction, hospitality
and restaurants, and non-profit and social services. Activity in
the hospitality and restaurant sector was nearly half the size
compared with the first half of 2018. Meanwhile, manufacturing
gained 12.7% y/y.
IHS Markit's forecast for 2021 has been adjusted upwards to
7.5%, expecting the sudden increase in public-sector spending to
gain the population's trust before the November 2021 mid-term
election to have a marginal bump in GDP in the last quarter of the
year, paired with strong external demand for manufactured goods of
agriculture origin. The economy is not projected to return to
pre-pandemic levels until the second half of 2023.
Report was not published on Tuesday, December 21, 2021
Turkey's Ministry of Treasury and Finance has deployed a new
program to shield depositors from lira volatility and discourage
further dollarization. President Recep Tayyip Erdoğan first
announced the new Foreign Currency-protected Turkish Lira Deposit
Account programme following a cabinet meeting on 20 December.
Households and banks holding time deposits ranging in maturity from
three to 12 months will be eligible to participate in the program.
The scheme will see the finance ministry remunerate depositors for
any amount that the lira depreciates above the prevailing central
bank policy rate at maturity. Depositors will not pay withholding
tax on the difference paid. Turkish broadcaster Habertürk reported
that Alpaslan Çakar, the head of the Banks Association of Turkey,
estimated that USD1-billion worth of foreign-currency deposits had
been converted into lira following Erdogan's announcement. (IHS
Markit Banking Risk's Alyssa
Grzelak)
The introduction of quasi foreign-currency-indexed accounts
backstopped by the Treasury will shift exchange rate risk from
banks and households to the government, but many details of the
program have yet to be worked out.
For instance, it was not immediately clear if the difference
between the exchange rate and the interest rate would be calculated
based on the average prevailing policy rate and exchange rates or
the end of period rates. The announcement also suggested that the
ministry was 'working' to include Islamic banks in the scheme,
suggesting that depositors at Islamic banks are not eligible at
present.
As of 9 December, Turkey's Banking Regulation and Supervision
Agency (Bankacılık Düzenleme ve Denetleme Kurumu: BDDK) has
reported that of the TRY5,435 billion (USD415.8 billion) of
deposits in the banking sector, TRY3,489.7 billion were denominated
in foreign currency. The cost of the program to the Treasury could
therefore be substantial.
Using the vague outline of the scheme provided so far, IHS
Markit estimates that based on the current policy rate of 14% and
the 55% depreciation of the lira since the start of the year (as of
20 December), the new program would have cost the Treasury up to
USD86 billion had it been in place.
The US Conference Board Consumer Confidence Index rose 3.9
points to 115.8 (1985=100) in December. November's reading was
revised up from 109.5 to 111.9. (IHS Markit Economists Akshat Goel
and William Magee)
The index of views on the present situation edged down only 0.3
point to 144.1 in December, despite headwinds from continued price
increases and the emergence of the Omicron variant.
The labor index (the percentage of respondents viewing jobs as
currently plentiful minus the percentage viewing jobs as hard to
get) retreated from a multidecade high of 44.7 to 42.6.
The expectations index rose 6.7 points to 96.9 with a higher
proportion of consumers planning to buy homes, automobiles, major
appliances, and vacations over the next six months.
The expectations index was driven higher by optimism about
business conditions and job prospects in the short term, with 26.7%
of consumers expecting business conditions to improve, up from
25.6%. A smaller percentage (17.9%) expects business conditions to
worsen, down from 19.6%.
Consumers were also buoyant about their job prospects: 25.1% of
consumers expect more jobs to be available in the coming months, up
from 22.8%; 14.8% anticipate fewer jobs, down from 19.0%.
Bottom line: Consumers are looking past the sudden spike in
COVID-19 cases and higher prices, but a continued upward trend on
both fronts could shatter confidence.
The German Federal Statistical Office (FSO) has reported that
real monthly earnings in the whole economy (including employees in
the public sector, including bonus payments, and assuming for
analytical purposes that the employment structure of the previous
year has remained constant) declined to 0.0% year on year (y/y) in
the third quarter, down from 3.0% y/y in the second quarter but
still up from an interim low of -2.0% y/y in the first quarter.
These annual rates compare with an all-time low of -4.7% in the
second quarter of 2020, a series peak of 6.0% in the third quarter
of 1992, and a long-term (1992-2020) average of 0.4%. (IHS Markit
Economist Timo
Klein)
Nominal wage growth softened much less in the third quarter,
declining from the previous quarter's 5.5% y/y to 3.9% y/y. This
owes to another sharp rise of consumer price inflation from 2.4% to
3.9%. Nominal wage growth of 3.9% remains well above its long-term
average of 2.1%.
The number of hours worked continued to have an important
influence on monthly earnings. The number of people on short-time
work schedules has been declining since March and hours worked thus
increased by 1.7% y/y. Although this is down from the second
quarter's 4.0% y/y, related to base effects, it remains a
supportive factor for wages earned per month compared with the
year-ago period. Note that government subsidies for short-time work
are not classified as earnings as reported in these statistics
(employees who are furloughed, i.e., effectively put on 0%
short-time, are ignored altogether).
The third-quarter breakdown for different types of employment
shows that nominal wage growth (total: 3.9% y/y) was highest among
full-time employees (4.1% y/y), followed by part-time workers
(3.2%) and finally the holders of so-called mini jobs (1.5%).
Denmark's The Lego Group plans to build its first carbon
neutral factory in Vietnam, the company announced this month. The
company intends to invest $1 billion in the factory, which will be
its 6th LEGO factory in the world and 2nd in Asia. Construction is
set to begin H2 2022 with a target startup in 2024, according to
the company. (IHS Markit Chemical Market Advisory Service's Chuan
Ong)
The LEGO Group has signed a memorandum of understanding (MoU)
with Vietnam Singapore Industrial Park (VSIP) to build this factory
on a 44-hectare site in Vietnam's Binh Duong Province.
This carbon neutral factory will include solar roof panels,
while a nearby solar energy project investment will be built by
VSIP on behalf of The Lego Group. These together are expected to
produce enough renewable energy to match 100% of the factory's
annual energy requirements, said the Group.
The factory will aim to meet a minimum of LEED (Leadership in
Energy and Environmental Design) Gold, which it said covers all
areas of sustainability including energy, water, and waste. The
factory will be designed to accommodate electric vehicles and be
outfitted with energy-efficient production equipment, the company
said.
Together with VSIP, The Lego Group intends to plant 50,000
trees in Vietnam to compensate for vegetation removed during
construction.
Before this project was announced, The Lego Group had in
September 2020 committed to investing $400 million over three years
to sustainability. In line with this, it debuted in June this year
a prototype LEGO brick made using recycled plastic, specifically
polyethylene terephthalate (PET) from discarded bottles. These are
not expected to be near readiness for commercial production.
As the state of California adds growing levels of energy
storage, GEM A-CAES LLC applied on December 1 with the California
Energy Commission for approval to construct, own and operate the
500-MW Gem Energy Storage Center, an Advanced Compressed Air Energy
Storage (A-CAES) facility in Kern County, California. (IHS Markit
PointLogic's Barry Cassell)
The Gem Energy Storage Center will deploy proprietary Hydrostor
technology consisting of five 100-MW all-electric air compressor
and associated power turbine trains, underground compressed air
storage cavern, aboveground support facilities and a 10.9-mile
interconnection to Southern California Edison's (SCE) Whirlwind
Substation.
"Gem's primary goal is to be a state-of-the-art energy storage
and reliability resource," the application noted. "Gem has been
designed to deliver up energy and reliability services with no
fossil fuel combustion or related air quality impacts. The project
will be one of the first commercial applications of Hydrostor's
A-CAES technology at this scale. Gem will combine dispatchable,
operationally flexible, and efficient energy generation with
state-of-the-art A-CAES technology to facilitate the integration of
variable renewable energy on the grid and to meet California and
regional needs for reliability services."
The Gem project will be located on an approximately 71-acre
project site in unincorporated Kern County, approximately one mile
northeast of the community of Willow Springs and seven miles west
of Rosamond.
The main project elements include: five all-electric 100-MW air
compressor and power generation turbine trains housed inside a
turbine hall and compressor building; underground (approximately
2,000 feet deep) purpose-built compressed air storage cavern;
approximately 31-acre by 50 feet deep (average) hydrostatic
compensation surface reservoir with approximately 6 to 40-foot-high
earthen berms and approximately 565 acre-feet capacity and floating
cover to reduce evaporative loss; air conduit (sealed) to
facilitate cyclic injection/storage of compressed air and release
of compressed air for power generation; water conduit (sealed) to
facilitate inflow/outflow of hydrostatic compensation water to/from
the surface reservoir and underground storage cavern; aboveground
heat exchangers and thermal storage equipment; and control house,
electrical gallery and maintenance building connected to the
turbine hall.
"The Gem project will be designed to operate 24 hours per day,
7 days per week with an annual capacity factor of up to 85
percent," the application said. "The facility will typically cycle
between Charging Mode (compression/energy storage) lasting
approximately 14 hours and Discharging Mode (decompression/power
production) lasting 8 hours at nameplate capacity."
IHS Markit reports on new models expected to go on sale in the
United States in 2022, looking at selected automakers and segments.
In 2021, the introduction of new EVs and announcements by
automakers of increased investments to accelerate the move to EVs
have positioned the vehicle market's future as an electric one. In
2022, the availability of EV products is to continues to grow.
Trends that will continue in 2022 include the preponderance of
new-vehicle launches being in the utility vehicle categories, while
few sports cars will be on the list. The EVs expected to be
introduced in 2022 will be significant statements for most of the
brands launching them, representing early manifestations of
evolving EV strategies. In 2022, IHS Markit estimates about 60
models will be new generations or new introductions in the market.
By comparison, about 50 such models went on sale in 2021. In 2023,
the number of new EV programs arriving will spike again and we
expect about 75 new or redesigned models to go on sale in the US.
Based on IHS Markit's US regional segmentation, about 30 new CUVs
will go on sale in the US market in 2022, encompassing all sizes
and price classes. The forecast sees about 12 new cars arriving and
four SUVs. Sales launches of sports cars are expected to reach nine
in 2022, including exotic, low-volume vehicles such as the Maserati
MC20, Lamborghini Huracan, and Ferrari 296 GTB. (IHS Markit
AutoIntelligence's Stephanie
Brinley)
Storage battery manufacturer Exide Industries announced
yesterday (21 December) in filing to the Bombay Stock Exchange
(BSE) that it will set up a greenfield multi-gigawatt lithium-ion
cell manufacturing facility in India. The company's board of
directors also approved to participate in the production-linked
incentive scheme for national program on 'Advanced Chemistry Cell
(ACC)' battery storage, issued by the Ministry of Heavy Industries
in August 2021. The total outlay of the scheme is INR181 billion
(USD2.4 billion) for five years. The latest move is in line with
the Indian government's goal to support electric vehicle (EV)
manufacturing as it seeks to increase the share of such vehicles in
the country. The government has been working to put in place a
supportive framework and is offering incentives to the
manufacturers in this space. Exide Industries also seeks to benefit
from the subsidy under the PLI scheme. (IHS Markit
AutoIntelligence's Isha Sharma)
Nigerian mobility tech startup Metro Africa Xpress (MAX) has
raised USD31 million in a Series B funding round, reports
TechCrunch. The latest funding round was co-led by Lightrock and
Global Ventures with participation of existing investors Novastar
Ventures and Proparco. The company plans to use the infused capital
to enter more markets across Africa and extend vehicle financing
credit to over 100,000 drivers in the next two years. It plans to
launch operations in Ghana and Egypt by the end of the first
quarter of 2022, and other additional markets in Francophone and
East and Southern Africa by the end of the same year. MAX started
its operations in 2015 as a delivery startup using motorcycles
before venturing into ride hailing, and later into vehicle
subscription and financing services. In 2019, the company started
its electric mobility journey and currently provides two-, three-,
and four-wheeler electric vehicles (EVs) to drivers through various
leasing and financing options. MAX has installed charging stations
in the cities of Lagos, Ibadan, and Akure, all in the south of
Nigeria. (IHS Markit Automotive Mobility's Surabhi Rajpal)
US personal income increased 0.4% in November while real
disposable personal income (DPI) decreased 0.2% amid higher
consumer prices. Underlying the increase in personal income, wage
and salary income increased 0.5% in November. Wage and salary
income has essentially recovered to its pre-pandemic trend, up
12.5% over the last two years. (IHS Markit Economists Kathleen
Navin and Gordon Greer III)
Ongoing advance payments of the Child Tax Credit authorized
under the American Rescue Plan raised personal income by $223
billion (annual rate), roughly the same amount as in the previous
four months. Fewer unemployment insurance payments under
pandemic-era programs—which expired in early
September—continued to act as a drag on income.
Real personal consumption expenditures (PCE) were flat in
November, as real PCE for goods declined 0.8% and real PCE for
services increased 0.5%. The decline in real PCE for goods was
close to our estimate, while the increase in real PCE for services
was softer than we anticipated.
Virus-sensitive categories, such as food services and
accommodations, posted increases in November, suggesting concerns
arising from news of the Omicron variant of COVID-19 were not yet a
major factor in the November report.
The PCE price index increased 0.6% in November, and its
12-month change was 5.7%. Excluding food and energy, for which
prices rose strongly, the core PCE price index rose 0.5% in
November and 4.7% over 12 months.
The pandemic and elevated inflation remain headwinds for
household spending, but personal income growth, rooted in strongly
rising wages, is expected to support faster expansion in PCE in
coming months.
The US University of Michigan Consumer Sentiment Index rose 3.2
points from its November level to 70.6 in the final December
reading—recovering from the decade low it dropped to in
December. (IHS Markit Economists Akshat Goel and William Magee)
The present situation index rose 0.6 point to 74.2 and the
expectations index jumped 4.8 points to 68.3.
The increase in consumer sentiment in December was driven by
significant gains among households with incomes in the bottom half
of the distribution. While the index of sentiment for households
earning over $100,000 per year declined 2.1 points, that for
households earning below $100,000 per year jumped 7.5 points.
According to the report, the uptick in sentiment among the bottom
half was the result of an expectation of a substantial increase in
income in the year ahead.
Elevated inflation remains the foremost drag on sentiment. At
6.8%, the 12-month increase in the consumer price index (CPI) in
November was the fastest since 1982, with energy prices up a
stunning 33.3%. The median expected one-year inflation rate in the
University of Michigan survey edged down from 4.9%—its highest
level since 2008—to 4.8%.
The indexes of buying conditions for large household durable
goods, automobiles, and homes improved in December but continue to
be held back by high prices and limited inventories.
Despite an improvement in sentiment this month, consumer
sentiment remains low and underscores the downside risks related to
a prolonged period of above-trend inflation. The emergence of the
Omicron variant is another downside risk; according to the report,
there were not enough data to capture the impact of the rapid
spread of the Omicron variant. Uncontrolled spread of the Omicron
variant and a continued increase in prices could sour consumer
sentiment and depress spending.
In the third quarter of 2021, total state personal income
increased in 43 states, after historic losses during the previous
quarter. This resulted from sharp declines in transfer receipts
following an end to direct economic payments and reductions in
federally enhanced unemployment insurance payments. While transfer
payments continued to fall during the third quarter as states wound
down their enhanced UI programs the drop was much less severe, down
15.7% versus the 72.6% fall in the second quarter. Meanwhile, there
were notable expansions in net earnings and modest contributions
from dividends, interest, and rental income across the country as
state economic recoveries continued. On a state level, total
personal income growth was strongest in Kentucky, which added 6.7%
(annualized) thanks to a rise in earnings from the
healthcare/social assistance and transportation/warehousing
sectors. Close behind were Colorado (5.9%) and Utah (5.7%), with
gains driven by earnings in professional services and construction,
respectively. Among the eight states where personal income
contracted, the largest decline was in North Dakota, where personal
income fell by 4.3% (annualized), after experiencing the largest
drop in net earnings of any state due to a sharp contraction in
farm income. New Hampshire down -3.5%) and Vermont (down 1.9%) saw
the second and third worst income contractions during the third
quarter. New Hampshire saw the largest contraction in net earnings
during the quarter after a rapid contraction in the earnings for
the management of companies and enterprises. Vermont had the second
largest decline in transfer receipts, partly driven by the rapid
decline in unemployment insurance claims during the third quarter.
(IHS Markit Economist Alexander Minelli)
Mainland China's provincial government of northeastern rust
belt province Heilongjiang held a meeting on 20 December that
called for "all-out" support to restore the province's real estate
industry, according to a report by Caixin, citing an announcement
previously published on the government website. Measures mentioned
included carrying out online sales campaigns for developers and
providing subsidies to home purchasers. However, the announcement
was reportedly removed from the website the day after it was
published. (IHS Markit Economist Yating
Xu)
The local government of another northeastern province, Jilin,
listed further stabilizing the real estate market as one of its
main tasks for the first quarter of 2022 and vowed to encourage
lower-level governments to subsidize property purchases and provide
support to help rural residents buy homes in urban areas. Also, the
local governments of Wuhu of Jiangsu Province and Guilin of Guangxi
Province have rolled out polices encouraging residents to buy
property.
The recent moves to issue regional-level stimulus to boost
housing purchases, provide financing support for mergers and
acquisitions of developers, and ease mortgage policies, are aligned
with the vow taken by top Chinese leaders at the Central Economic
Work Conference in early December to promote the healthy
development of the real estate sector.
General Motors (GM) has announced plans to supply
electrification components for electric vehicle (EV) conversion
projects, commercial equipment, and marine applications. Some of
the elements of the announcement have been announced previously.
The aim of the plans is to generate revenue beyond new vehicle
sales, as well as to create new business models. In a company
statement, GM's vice-president of EV growth operations said, "GM
has an established strategy, network of integrators and
co-development agreements to apply an extensive array of components
and solutions to a broad range of customers and use cases. As
companies across many industries look to reduce their environmental
impact, GM is uniquely positioned to serve as a leader not only
through exciting new EVs across our brands, but through additional
technology applications, and we look forward to bringing customers
- existing and new - along with us on our zero-emissions journey."
In the statement, GM provided a series of examples of its expected
efforts, rather than a definitive list of products. Among these are
Electronic Connect and Cruise eCrate packages, the aim of which is
to enable customers to work with qualified installers to replace a
vehicle's ICE with a fully electric propulsion system. The
installers will work through GM's electric specialty vehicle
modifier (eSVM) program. GM has been exploring this idea with
previous proof-of-concepts including a Chevrolet S-10 pick-up
conversion called E-10 Pickup, the K-5 Blazer-E, the eCOPO Camaro,
and Project X. The most recent project is conversion of a 1972 El
Camino SS, on which GM worked with Lingenfelter Performance
Engineering. GM says the El Camino SS project is the first
independent installation of the eCrate package, due to be launched
in 2022. GM says that the new EV components business segment could
create a total addressable market of USD20 billion by 2030, and the
company looks to be part of that market. GM's plans are aggressive
and could have a substantial impact on its revenue, as well as
possibly help provide scale for some components and engineering
developments. In addition to creating the revenue stream, these
projects create opportunities for GM's engineering teams, including
in integration, battery development, control units, and other
areas, to expand their expertise and knowledge base. (IHS Markit
AutoIntelligence's Stephanie
Brinley)
Commercial vehicle (CV) registrations in the European Union
(EU) have declined again during November, as the semiconductor
shortage continues to drag on vehicle supply. According to data
published by the European Automobile Manufacturers' Association
(ACEA), sales of light commercial vehicles (LCVs) under 3.5 tons,
medium and heavy commercial vehicles (MHCVs), and medium and heavy
buses and coaches over 3.5 tons contracted by 14.7% year on year
(y/y) to 142,480 units. Nevertheless, because of the low base
during the first half of 2020 caused by coronavirus disease 2019
(COVID-19) virus lockdown measures, volumes remain up 11.5% y/y
during the first 11 months of 2021. Volumes for this period now
stand at 1,723,817 units. It has been another difficult month for
the CV market in the EU. While growth in the first half of the year
was underpinned by the low base of comparison due to lockdown
measures to prevent the spread of COVID-19 virus the year before,
there was a shift towards decline at this year's halfway point. The
biggest drag has come from LCVs - like the passenger car category,
stoppages have hit production at the manufacturing facilities of
various OEMs throughout the year so far because of the
semiconductor shortage. The rate of decline for LCVs has not been
as great as for passenger cars, as automakers have diverted
available components to some of their most profitable and high
demand vehicles, which have included LCVs. Nevertheless, Ford,
Stellantis and Renault Group are still among those that have had to
manage their output during the past 12 months. IHS Markit currently
anticipates that despite the disruptions to component supply and
vehicle production, EU registration volumes of LCVs with a GVW of
over 6 tons will grow by 8.8% y/y to under 1.51 million units,
although this will still be down by around 9.5% compared to the
performance recorded during 2019. While we anticipate 2022 will be
flatter, gains will return in the coming years, with 2019 volumes
being surpassed in 2024. (IHS Markit AutoIntelligence's Ian
Fletcher)
Indian Oil Corporation (IndianOil) has announced it will spend
INR9,2080 crore (USD1.2 billion) on a new crude oil pipeline system
of 17.5 million metric tons per year to connect Mundra, Gurjarat to
Panipat, Haryana in the north of India. As part of the project,
IndianOil will also build nine crude oil tanks of 370,000 barrels
each at Mundra. The project is expected to be completed in
synchronization with the commissioning of its Panipat refinery
expansion which is scheduled for completion in the second half of
2024. (IHS Markit Upstream Costs and Technology's Chris
Alexander)
Siemens Gamesa along with Dominion Energy, has signed an
agreement for the delivery of offshore 176 SG 14-222DD wind
turbines and ten years of service for the 2.6GW Coastal Virginia
Offshore Wind (CVOW) commercial project. The agreement is still
subject to customary conditions including required governmental
permitting, which is expected to be successfully closed by the
first quarter 2023. This agreement has followed Siemens Gamesa was
named to be the preferred turbine supplier for the CVOW commercial
project in January 2020 and the conditional deal from May, when
Dominion Energy signed up for the company's SG 14-222 DD after
confirming the exact quantity of turbines to be deployed which was
subject to site conditions. Installation of the wind farm is
expected to begin off the coast of the Commonwealth of Virginia in
2024. The project is scheduled to be completed by 2026. (IHS Markit
Upstream Costs and Technology's Monish Thakkar)
Report was not published on Friday, December 24, 2021 in
observance of the Christmas holiday
Posted 27 December 2021 by Chris Fenske, Head of Fixed Income Research, Americas
IHS Markit provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.
