Daily News Briefing: Friday, July 20, 2012

Published by: Clark Barrow

Clark Barrow

DAILY BRIEFING - SUMMARY

  • CANADA - For the first time in recent history, the average Canadian is richer than the average American, according to a report from Environics Analytics WealthScapes, a Canadian financial database website.
  • FOOD PRICES - Corn prices are nearing the record highs of last summer as the U.S. Midwest suffers its worst drought since 1956. Shoppers should expect higher grocery bills, because corn is used in three-quarters of supermarket products.
  • FOOD STAMPS - The Mexican government has been working with the United States Department of Agriculture to increase participation in the Supplemental Nutrition Assistance Program (SNAP), or food stamps.
  • CONGRESS - The U.S. House Wednesday joined the U.S. Senate in approving legislation that asks the Obama administration for details on how it would implement the planned $1.2 trillion in automatic spending cuts.
  • PENTAGON - The U.S. Department of Defense announced new steps it’s taking to crack down on leaks, including tapping its chief spokesman to monitor the national media for classified information that’s disclosed.
  • SYRIA - Russia and China again vetoed a Western-backed U.N. resolution Thursday aimed at pressuring President Bashar Assad’s government to end the escalating 16-month conflict in Syria.
  • IRAN - U.S. government officials, citing new intelligence, said Iran has developed plans to disrupt international oil trade, including through attacks on oil platforms and tankers.

WHAT WE KNOW

ECONOMIC NEWS

  • HOUSING MARKET - Americans bought fewer homes in June than May, indicating the weak economy could make a modest housing recovery choppy.
    • The National Association of Realtors said Thursday that sales of previously occupied homes fell 5.4 percent in June to a seasonally adjusted annual rate of 4.37 million homes. That's the fewest since October.
    • Sales are up 4.5 percent from a year ago, evidence that the market is still recovering. But the annual sales pace is below the 6 million that economists consider healthy.
    • Meanwhile, more than 1.5 million older Americans already have lost their homes, with millions more at risk as the national housing crisis takes its toll on those who are among the worst positioned to weather the storm, a new AARP report says. Older African-Americans and Hispanics are the hardest hit.
  • CANADA - For the first time in recent history, the average Canadian is richer than the average American, according to a report from Environics Analytics WealthScapes, a Canadian financial database website.
    • Currently, the average Canadian household is more than $40,000 richer than the average American household. The net worth of the average Canadian household in 2011 was $363,202, compared to around $320,000 for Americans.
    • This difference is not because of a Canadian exchange rates advantage. The Canadian dollar has actually caught up to the U.S. dollar in recent years.
    • Besides a strengthening currency and a better labor market, experts credit the particularly savage fallout from the financial crisis on the U.S. economy and housing market, which torpedoed home values and gutted household wealth. According to the report, real estate held by Canadians is worth more than $140,000 more on average and they have almost four times as much equity in their real estate investments.
  • FOOD PRICES - Corn prices are nearing the record highs of last summer as the U.S. Midwest suffers its worst drought since 1956. Shoppers should expect higher grocery bills, because corn is used in three-quarters of supermarket products.
    • Corn’s price has jumped 45% this summer. The U.S. Department of Agriculture says a 50 percent increase in the price of corn tends to raise total shopping bills by about 1 percent.
    • The National Oceanic and Atmospheric Administration (NOAA) said in a report on Monday that, based on the Palmer Drought Index, 55 percent of the contiguous United States was under moderate to extreme drought in June. That is the largest land area in the United States to be affected by a drought since December 1956.
  • The Dow Jones Industrial Average rose 34.66 points, or 0.3%, to 12,943.66.
  • The S&P 500 gained 3.73 points, or 0.3%, to 1,376.51.The Nasdaq Composite rose 23.30 points, or 0.8%, to 2,965.90.

COMMODITIES

  • The U.S. national average for a gallon of regular gasoline is $3.44.
    • When President Obama was inaugurated, in January 2009, the U.S. national average for a gallon of regular gasoline was $1.85. Average gasoline prices are currently 86 percent higher than they were when Mr. Obama became president.
  • Oil for August delivery rose $2.79, or 3.1%, to end at $92.66 a barrel on the New York Mercantile Exchange.
  • Gold for August delivery added $9.60, or 0.6%, to settle at $1,580.40 an ounce on the Comex division of the New York Mercantile Exchange.


NEWS TO WATCH

  • PROTESTORS – The Occupy Wall Street protests continue around the world, now in their 303rd day.
  • FOOD STAMPS - The Mexican government has been working with the United States Department of Agriculture to increase participation in the Supplemental Nutrition Assistance Program (SNAP), or food stamps.
    • USDA has an agreement with Mexico to promote American food assistance programs, including food stamps, among Mexican Americans, Mexican nationals and migrant communities in America.
    • The goal, for USDA, is to get rid of what they see as enrollment obstacles and increase access among potentially eligible populations by working with arms of the Mexican government in America. Benefits are not guaranteed or provided under the program — the purpose is outreach and education.
    • It is up to the individual states to determine if applicants or households are qualified, legal aliens. In some circumstances, SNAP benefits can be conferred upon people who merely state, upon penalty of perjury, that they are in the country legally.
  • CONGRESS - The U.S. House late Thursday approved a massive, $606 billion bill funding the Defense Department and war activities in Afghanistan and Iraq in 2013.
    • Members approved the bill in an 326-90 vote, after two days of debate on several amendments from Democrats that sought to limit spending in Afghanistan, as well as some attempts by Republicans to cut spending to reduce the federal budget deficit.
    • U.S. House passage sends the bill to a Senate that appears unlikely to consider it anytime soon. The bill is the seventh spending bill for 2013 that the House has passed, while the Senate has so far passed none.
    • The U.S. Senate has generally balked at the House-passed bills because they break the spending deal reached last year. President Obama has also threatened to veto the Defense appropriations bill because it's $3 billion higher than the Pentagon's budget request and $8 billion above the spending caps in last year's Budget Control Act.
    • Meanwhile, U.S. House on Wednesday joined the U.S. Senate in approving legislation that asks the Obama administration for details on how it would implement the planned $1.2 trillion in automatic spending cuts. Those votes also seem aimed at deflecting blame for the sequester from Congress to the administration.
  • CONGRESS - The U.S. House approved language on Thursday that would prevent the Obama administration from sharing classified information about U.S. missile defense technology with Russia.
    • The language was proposed by Rep. Mo Brooks (R-Ala.) as an amendment to the 2013 Department of Defense spending bill and quickly approved by voice vote. Brooks said he proposed it as a reaction to the hot-mic conversation between President Obama and then-Russian President Dmitry Medvedev, in which he said he would have more flexibility on the issue of U.S. involvement in European missile defense after the November election.
    • Republicans have said they fear Obama's remarks indicate he is working on some secret arrangement with the Russians, and Brooks said his amendment is meant to prevent any sharing of missile defense technology with Russia.
  • CONGRESS - The movement to step up the collection of online sales tax is gaining momentum from traditional retail stores that want to level the playing field and, more recently, state governments that are desperate for money.
    • In the U.S. Senate, the Marketplace Fairness Act would allow states to require online retailers to collect sales tax. In the U.S. House, the Marketplace Equity Act, which has a hearing next week, would essentially do the same thing. Both have growing bipartisan support.
    • Even before Congress decides whether to give states this power, a growing number of governors are striking deals with online retailers to collect sales tax.
  • WHITE HOUSE - The free-trade consensus of the previous two decades has frayed under President Obama, and while he has pushed through some low-level agreements, he has fallen far short of his predecessors on this key driver of the nation’s economy, and analysts say the U.S. is lagging behind many of its chief competitors.
    • Last fall, Mr. Obama pushed through Congress and signed trade deals with Colombia, Panama and South Korea, but the agreements were negotiated primarily under President George W. Bush, and scholars give Mr. Bush credit for them.
    • Former President George W. Bush signed free-trade agreements with more than a dozen countries, including Australia, Peru, Singapore and Bahrain. President Clinton’s first term included the signing of the North American Free Trade Agreement with Canada and Mexico, the establishment of permanent normal trade relations with China and the birth of the World Trade Organization.
    • While the Obama administration has failed to achieve any new deals, he says, the rest of the world is moving full steam ahead. Since 2007, the European Union has finalized or negotiated more than 20 deals. China has signed or negotiated nearly 20.

PRESIDENT’S SCHEDULE

  • In the morning, President Obama will depart West Palm Beach, Florida and travel to Fort Myers, Florida.
  • Later in the morning, the president will deliver remarks at a campaign event at the Harborside Event Center in Fort Myers, Florida.
  • In the afternoon, the president will depart Fort Myers, Florida and travel to Orlando, Florida.
  • Later in the afternoon, the president will deliver remarks at a campaign event at Rollins College in Winter Park, Florida.
  • In the evening, the president will depart Orlando, Florida and travel to Washington, D.C.

HAPPENING IN THE U.S. CONGRESS

U.S. SENATE

  • The U.S. Senate is not in session today. 

U.S. HOUSE OF REPRESENTATIVES

  • The U.S. House is not in session today.

TOPICS OF INTEREST

NATIONAL SECURITY

  • PENTAGON - The U.S. Department of Defense announced new steps it’s taking to crack down on leaks, including tapping its chief spokesman to monitor the national media for classified information that’s disclosed.
    • U.S. Defense Secretary Panetta on Thursday instructed the Undersecretary of Defense for Intelligence and the Assistant Secretary for Public Affairs to join together to “monitor all major, national level media reporting for unauthorized disclosures of Defense Department classified information,” Pentagon spokesman George Little said in a statement Thursday evening.
    • The new emphasis on leaks in Washington is coming after a series of stories involving classified information, including reports on a U.S. cyberattack on Iran and a double agent in Yemen who infiltrated al Qaeda. Attorney General Eric Holder has appointed two U.S. attorneys to investigate the leaks.

FOREIGN POLICY

MIDDLE EAST

  • ISRAEL - American officials on Thursday identified the suicide bomber responsible for a deadly attack on Israeli vacationers here as a member of a Hezbollah cell that was operating in Bulgaria and looking for such targets, corroborating Israel’s assertions and making the bombing a new source of tension with Iran.
    • One senior American official said the current American intelligence assessment was that the bomber, who struck Wednesday, killing five Israelis, had been “acting under broad guidance” to hit Israeli targets when opportunities presented themselves, and that the guidance had been given to Hezbollah, a Lebanese militant group, by Iran, its primary sponsor. Two other American officials confirmed that Hezbollah was behind the bombing, but declined to provide additional details.
    • Bulgarian media sources had falsely reported that the suicide bomber was Mehdi Ghezali, a Swedish citizen who spent two years in the U.S. prison at Guantanamo Bay. U.S. and Swedish intelligence official have denied that Ghezali was the bomber.
  • SYRIA - Russia and China again vetoed a Western-backed U.N. resolution Thursday aimed at pressuring President Bashar Assad’s government to end the escalating 16-month conflict in Syria.
    • The 11-2 vote, with two abstentions from South Africa and Pakistan, was the third double veto of a resolution addressing the Syria crisis by Damascus’ most important allies.
    • The defeat leaves in limbo the future of the 300-strong U.N. observer mission in Syria, which was forced to suspend operations because of the intensified fighting. Its mandate, to monitor a cease-fire and implementation of special envoy Kofi Annan’s peace plan, expires Friday.
  • IRAN - U.S. government officials, citing new intelligence, said Iran has developed plans to disrupt international oil trade, including through attacks on oil platforms and tankers.
    • Officials said the information suggests that Iran could take action against facilities both inside and outside the Persian Gulf, even absent an overt military conflict.
    • The findings come as American officials closely watch Iran for its reaction to punishing international sanctions and to a drumbeat of Israeli threats to bomb Tehran's nuclear sites, while talks aimed at preventing Iran from developing nuclear weapons have slowed.
    • Analysts say Iran, which denies it is developing nuclear weapons, may be looking for options to push back as it comes under growing pressure and finds its most critical ally, the Syrian regime, focused internally on its own struggle for survival.