WSJ: Xi Thinks He Has Trump’s Number
Inflation cools in September | U.S. border closures over screwworm are a modern exception, not a historical norm | Senate Judiciary to probe seed and fertilizer competition | Lula prepares to meet Trump | Trump cuts off trade talks with Canada over ad featuring voice of former President Ronald Reagan re: tariffs
Link: Mexico Seeks Deal to Reopen U.S. Border for Cattle Amid Screwworm Crisis
Link: Tariffs, Trade Remedies, & Fertilizer:
How U.S. Policy Is Reshaping Farm Input Costs
Link: Trump, Xi, and the Next China Showdown
Link: Video: Wiesemeyer’s Perspectives, Oct. 17, updated this afternoon
Link: Audio: Wiesemeyer’s Perspectives, Oct. 17, updated this afternoon
Note: A file server issue caused a delay in sending Updates out the traditional way, so this is why a pdf version was sent out. The server is now back online, so this is the same report the traditional way.
Today’s Updates:
INTERNATIONAL
— Mexico seeks border deal to resume cattle trade amid screwworm crisis
— U.S. border closures over screwworm are a modern exception, not a historical norm
— Trump and Xi set to speak next Thursday
— U.S. to launch probe into China’s compliance with 2020 trade deal
— China adopts hardball playbook for Trump’s second term
— Lula seeks Trump meeting in Asia, open to talks on Venezuela
— Trump ends trade talks with Canada over Ontario’s Reagan ad
— Pakistan seeks China’s backing to join BRICS Development Bank
U.S. POLICY & POLITICS
— White House gets more negative reaction on cattle plan
— Virginia Democrats plan to redraw House maps in redistricting push
— Flight delays soar as shutdown drags into fourth week
— Federal layoff orders halted after court blocks administration’s RIF plans
— Estate tax breaks set to rise in 2026 under OBBB deal
FED & MACRO
— Stocks poised for a sizeable move amid “volatility crush,” Sevens Report says
— Kevin Warsh calls for a “sea change” at the Fed amid Trump’s economic boom
— Fed poised for another rate cut as job market concerns deepen
— U.S. inflation edges up to 3% in September, driven by energy costs
AG POLICY & MARKETS
— Senate Judiciary to probe seed and fertilizer competition
— Va. Cattlemen’s Assn. urges USDA on labeling, transparency, risk management
— Tariffs have unsettled Colorado’s ag industry; new move adds to uncertainty
— Agriculture markets yesterday (corn, soy, wheat, cattle, hogs)
ENERGY & INDUSTRY
— Oil prices jumped 5% Thursday as U.S. sanctions hit Russian oil giants
— Oil steady today after surge; traders assess sanctions impact
— Indian and Chinese refineries scale back Russian oil purchases amid sanctions
— Refiners take the lead as oil producers struggle
— Tokyo Gas becomes second Japanese firm to explore Alaska LNG purchase
ASIA ENERGY & BIOFUELS
— Indonesia plans 10% bioethanol mandate by 2027
FOOD & NUTRITION PROGRAMS
— SNAP funding crisis deepens as shutdown nears one month
— Hawley bill would keep SNAP payments flowing amid shutdown stalemate
TRANSPORTATION & LOGISTICS
— Union Pacific’s strong quarter overshadowed by merger uncertainty
— Senate Commerce Committee sets hearing on reviving U.S. shipbuilding
WEATHER
— NWS outlook: Heavy rain and severe storms from southern Plains to
Lower Mississippi; Pacific Northwest mountain snow ahead
Updates: Policy/News/Markets, Oct. 24, 2025
—Mexico seeks border deal to resume cattle trade amid screwworm crisisAg Minister Julio Berdegue to meet U.S. counterpart Brooke Rollins as outbreak strains livestock trade Mexico’s incoming agriculture minister, Julio Berdegue, will travel to Washington next week seeking to reopen the U.S. border to Mexican cattle, Reuters reported. The border has been shut since May due to a screwworm outbreak spreading north from Central America. President Claudia Sheinbaum said Berdegue aims to “return with an agreement” after talks with USDA Secretary Brooke Rollins, who has criticized Mexico’s response. The outbreak, now reaching Nuevo León near the U.S. border, coincides with the Trump administration’s push to expand the U.S. cattle herd and a new move to quadruple low-tariff Argentine beef imports — a decision drawing anger from American ranchers.—U.S. border closures over screwworm are a modern exception, not a historical normUnlike today’s suspension of cattle imports, past outbreaks in Mexico led to heightened inspections — not full trade shutdowns When USDA Secretary Brooke Rollins announced in May 2025 that live cattle, bison, and horse imports from Mexico would be suspended because of the spread of New World screwworm (NWS), it marked an unusually sweeping step in the history of cross-border livestock trade. USDA officials said the move was necessary after new cases appeared roughly 370 miles south of the Texas border. But records show that such blanket closures have not been the historical norm. Before the current outbreaks, the U.S. rarely halted Mexican cattle trade outright because of screwworm risk. Instead, it relied on decades-old inspection and treatment protocols designed to manage disease risk while keeping commerce flowing. Historical policy: Inspection, not prohibition. Since the late 20th century, the Animal and Plant Health Inspection Service (APHIS) has governed imports through a detailed framework — codified in 9 CFR Part 93 — requiring veterinary inspection and treatment for livestock originating from screwworm-affected regions. These rules, last updated in 2000 and 2002, mandated pre-export inspections, quarantine procedures, and insecticide treatments, but stopped short of outright bans. Even when Mexico still battled NWS in the 1980s, the U.S. border stayed open to feeder cattle under these safeguards. Data from USDA’s Economic Research Service show that Mexico exported well over one million head of cattle annually to the United States in several years before the pest was officially eradicated in Mexico in 1991. The U.S. declared itself screwworm-free in 1966, yet bilateral trade continued under strict veterinary controls. What changed in 2024–2025. That long-standing equilibrium shifted when screwworm re-emerged in southern Mexico late in 2024. The USDA temporarily suspended all live-animal entries through southern ports in May 2025, later tightening restrictions again in July after new detections. Officials framed the closures as emergency containment measures, not permanent policy changes. The decision highlights how the current outbreak differs from past episodes: a more aggressive and fast-spreading infestation, heightened biosecurity concerns, and the political sensitivity of any pest crossing into Texas ranching territory. Of note: One industry contact emailed: “We live in the age of social media where any attempt to open the border is met with a barrage of protectionism. It shifts the political dynamic. Note the Feb 2025 MOU that mandated TREATMENT on both sides of the border. Plus, the last time USDA was poised to re-open ports (June/July) it was only in the Western MX states via the Arizona ports, with treatment on both sides of the border. Just going back to the decades-long normal trade pattern will stabilize beef prices and we can move on from this chaos. And I’d rather feed and process Mexican cattle in the U.S. than continue this talk of importing more foreign beef. But I also understand if Secretary Rollins prefers to have domestic production of sterile flies a little further down the road before she resumes imports of live cattle from Mexico.” Bottom Line: Historically, the United States has managed New World Screwworm risk at the border rather than closing it. The recent suspensions mark a sharp departure from decades of policy emphasizing vigilance and inspection over prohibition — underscoring both the seriousness of the new outbreak and the extraordinary caution shaping Washington’s response. —Senate Judiciary to probe seed and fertilizer competitionGrassley-led panel to focus on rising farm input costs amid weak commodity prices The Senate Judiciary Committee will hold a hearing Tuesday titled “Pressure Cooker: Competition Issues in the Seed & Fertilizer Industries,” as lawmakers intensify scrutiny of consolidation and pricing power among agricultural input suppliers. Committee Chair Sen. Chuck Grassley (R-Iowa), a longtime advocate for stronger antitrust enforcement in agriculture, has raised concerns that rising seed and fertilizer costs are squeezing farmers’ margins just as corn, soybean, and wheat prices have fallen sharply in recent months. The hearing aims to explore how limited competition and global market concentration—particularly among multinational seed and chemical companies—may be affecting price transparency and farmer choice. While the witness list has not yet been released, Grassley said earlier this month that he wants to “get to the bottom of why farmers are paying more for less competition in the marketplace.” The session follows recent calls from farm-state senators for the Department of Justice and Federal Trade Commission to investigate potential anti-competitive practices in input markets. Link to our special report on the fertilizer industry. —Trump and Xi are set to speak next Thursday First face-to-face meeting since Trump’s return to power lifts markets amid signs of easing tensions President Donald Trump and Chinese President Xi Jinping will meet next Thursday on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit. White House Press Secretary Karoline Leavitt announced the timing of the meeting during a press briefing Thursday. “I think we’re going to come out very well and everyone’s going to be very happy,” Trump said later Thursday regarding his sit-down with Xi. It will mark the first in-person meeting between the two leaders since Trump’s return to office in January. The announcement, seen as a sign of cooling trade tensions, sent stocks and soybean prices higher. The news follows China’s unveiling of a plan to boost self-sufficiency and expand domestic markets amid growing foreign pressures. The two have spoken at least three times this year — most recently in September. Trump and Xi last met in person in 2019, during Trump’s first White House term. Trump will not attend the full APEC summit in South Korea beyond his meeting with Chinese President Xi Jinping, the White House said Thursday. Leavitt said the president is scheduled to depart Washington late this evening and is expected to arrive in Malaysia — his first stop on the trip — early Sunday morning, local time, for the Association of Southeast Asian Nations summit. Trump is slated to hold a bilateral meeting with Malaysian Prime Minister Anwar Ibrahim and attend an ASEAN leaders dinner on Sunday evening, she said. The president will depart on Monday for Tokyo, ahead of a Tuesday meeting with new Japanese Prime Minister Sanae Takaichi. Trump is scheduled to fly to South Korea on Wednesday, where he will meet with South Korean President Lee Jae Myung, deliver a keynote address at the APEC CEO luncheon and participate in a working dinner with other leaders attending the summit. — U.S. to launch probe into China’s compliance with 2020 trade dealInvestigation could escalate tariff tensions ahead of Trump/Xi meeting The Trump admin. is preparing to launch a formal investigation into China’s compliance with the 2020 “Phase One” trade agreement, a move that could heighten tensions ahead of next week’s meeting between President Donald Trump and Chinese President Xi Jinping, the New York Times reported. The investigation — expected to be announced as soon as today — will be filed by the U.S. Trade Representative under Section 301 of the Trade Act of 1974. The provision allows the administration to investigate foreign trade practices deemed unfair to U.S. interests. A USTR spokeswoman declined to comment, but the Times noted that such probes often serve as the foundation for additional tariffs. “The inquiry could pave the way for more tariffs on Chinese imports,” the report said, “although no such decision has been made.” The move comes as U.S./China relations remain strained. Since returning to office, President Trump has imposed a 55% tariff on Chinese imports, with some categories facing even higher rates. Beijing has retaliated with tariffs on U.S. goods, including soybeans—deepening losses for American farmers. The planned investigation follows China’s recent restrictions on rare earth mineral exports, which prompted Trump to threaten an additional 100% tariff on Chinese products starting Nov. 1, alongside potential curbs on U.S. software exports. Trump and Xi are expected to meet in South Korea on Oct. 30. The Times reported that the 2020 trade pact — signed during Trump’s first term — was meant to ease the tariff war and boost U.S. exports. China had pledged to purchase $200 billion in additional American goods and services and improve market access and intellectual property protections. However, those targets were never met. “China was never on pace to meet its purchase commitments,” said Chad Bown, a senior fellow at the Peterson Institute for International Economics and former Biden administration official. The institute calculated that China ultimately bought only about 58% of the promised American exports, falling short even of pre–trade war import levels. Analysts cited by the Times said many of the deal’s targets were unrealistic, especially after the pandemic disrupted global trade. Nonetheless, administration officials have accused previous leadership of failing to enforce compliance. The upcoming Section 301 investigation marks another escalation in Washington’s efforts to pressure Beijing — and could set the stage for yet another round of tariffs amid already tense trade relations. —China adopts hardball playbook for Trump’s second termXi’s new strategy mixes toughness on rare earths with tactical concessions like TikTok, signaling Beijing’s intent to “hit back harder” while appealing to Trump’s dealmaking instincts Sourcing the Wall Street Journal, Beijing has overhauled its approach to dealing with President Donald Trump, crafting what Chinese officials describe as a “Trump-specific playbook” that blends confrontation with selective compromise. According to the Journal’s Lingling Wei, Chinese President Xi Jinping now aims to “gain leverage while projecting strength and unpredictability,” a combination that he believes Trump both respects and responds to. During Trump’s first term, Xi was often thrown off balance by the U.S. president’s mix of tariffs and charm offensives. This time, said Kurt Campbell, chairman of the Asia Group and former deputy secretary of state, “Xi wanted to be prepared. He knows Trump wants a good relationship with him and respects strength, not concessions.” The pivot was starkly demonstrated earlier this month when China announced sweeping export controls on rare earths — materials essential to high-tech manufacturing — just ahead of the planned Trump/Xi summit in South Korea. The move, which shocked markets and disrupted supply chains, was widely seen as a power play meant to remind Washington that “China holds an undisputed trump card,” said UC San Diego’s Jimmy Goodrich. Xi’s rare-earth gambit was both retaliation for U.S. tech restrictions and a bid to force concessions before the summit, the Journal reported. China produces roughly 90% of the world’s refined rare earths, giving it enormous leverage over industries from EVs to defense. Still, the blowback was intense. The White House threatened 100% tariffs on Chinese goods, prompting Beijing to soften its tone within days. “The episode underscored that while Xi sees economic coercion as leverage, Washington still holds powerful cards — particularly access to U.S. technology,” the Journal wrote. Xi’s broader approach borrows from Trump’s own “maximum pressure” tactics. Beijing’s retaliation for April’s “Liberation Day” tariffs — which included cutting off rare-earth magnets to U.S. automakers — caused a brief market panic but convinced Xi that the U.S. lacked the will for prolonged economic pain. Since then, China’s strategy has paired high-stakes pressure with symbolic appeasements, such as offering up TikTok as a bargaining chip. According to the report, Xi privately dismissed TikTok as “spiritual opium” and viewed its forced sale as a “low-cost concession” to keep dialogue with Trump alive. That calculation appears to have worked: summits are now planned in Seoul and potentially Beijing and Washington next year. Beijing’s internal logic, the Journal said, is grounded in the belief that Trump is “transactional, not ideological.” By catering to his desire for deals while counterpunching hard, Xi hopes to marginalize the “China hawks” in Trump’s circle — such as trade adviser Peter Navarro — whose influence has reportedly waned. But the strategy risks overreach. Trump recently reconsidered shelving sanctions on China for buying Russian oil — a move he initially avoided to prevent further escalation. As former U.S. official Kurt Campbell put it, “Trump’s focus is short-term and political, while Xi is focused on sustaining long-term competition with the U.S.” The next test will come at the South Korea summit, where Xi is expected to raise Taiwan and offer token agricultural purchases —possibly U.S. soybeans — to sweeten the optics. Yet the rare-earth episode, the Wall Street Journal concludes, “has already turned Beijing’s playbook into a high-stakes gamble — one that could just as easily provoke Washington’s hard-liners as outmaneuver them.” —Lula seeks Trump meeting in Asia, open to talks on VenezuelaBrazilian leader aims to ease U.S. tariffs and sanctions, open to “no-veto” discussion on contentious issues Brazilian President Luiz Inácio Lula da Silva said he expects to meet with President Donald Trump in Malaysia this weekend, where he plans to discuss any topic — including Washington’s military strikes on alleged drug shipments from Venezuela. Lula told reporters in Indonesia on Friday that he is “fully prepared to defend Brazil’s interests and to show that the tariffs imposed on Brazil were a mistake.” The meeting is being arranged on the sidelines of the Association of Southeast Asian Nations (ASEAN) summit, Bloomberg reported. Lula hopes to persuade Trump to roll back tariffs on Brazilian products (including beef) and lift sanctions targeting Brazilian Supreme Court justices, government officials, and their families. The Brazilian leader criticized Trump’s anti-drug campaign in Venezuela, which has included recent U.S. strikes and, as Lula noted, remarks by Trump that “the land is going to be next.” “You don’t say you’re going to kill people,” Lula said. “You have to arrest people, put them on trial … that’s the least that’s expected from a head of state.” If the meeting takes place, Lula said there will be “no vetoes” and both sides will be free to “say whatever they want” — while also listening to “what they don’t want.” Other potential discussion topics include U.S. interests in critical minerals, online sports betting regulations, and global flashpoints in Gaza, Ukraine, and Venezuela. —White House gets more negative reaction on cattle plan Senators warn beef import plan risks undercutting recovering ranchers The Trump administration on Wednesday announced new measures regarding the U.S. cattle industry, including opening more federally owned land for grazing, boosting insurance subsidies, and cutting costs for small meat processors. But ranchers and lawmakers say the best way to lower beef prices is to let domestic production continue to rebound. “The answer is let the markets continue to recover,” said Sen. Steve Daines (R-Mont.), noting that ranchers are “finally getting to the point where they’re making money again and they’re very concerned about these actions.” Several Republican senators said they’ve raised concerns with USDA Secretary Brooke Rollins, Treasury Secretary Scott Bessent, and U.S. Trade Representative Jamieson Greer, but have received no signal that the White House will reconsider its plan to expand beef imports. On Oct. 21, a group of House GOP lawmakers from rural states like North Dakota and Montana sent a letter to the president and Agriculture Secretary Brooke Rollins to express their concerns. Sen. Mike Rounds (R-S.D.) said he met with the president and his Cabinet member at the White House to talk about it. Rollins responds. “I suggested that energy prices across the country are down not because we imported additional energy from other countries, but because we started producing more energy right here in the United States,” Rounds said in a statement. “The same rule should apply for American beef.”A contrary voice is Sen. Roger Marshall (R-Kan.) who said that Americans wouldn’t feel it even if the U.S. increased its beef imports from Argentina by 10 times what they are now. —Virginia Cattlemen’s Association urges USDA to support labeling, transparency, and risk managementLetter to Secretary Rollins cites market losses, warns Argentine beef imports could hit U.S. producers hard The Virginia Cattlemen’s Association (VCA) sent a letter (link) Thursday to USDA Secretary Brooke Rollins outlining its top federal policy priorities and thanking the administration for its recently released Beef Industry Plan. The letter emphasizes three pillars to “promote and protect the cattle industry”: truth in labeling, industry transparency and resiliency, and improved risk management tools. VCA President Mike Carpenter praised USDA’s focus but warned of the fallout from recent trade discussions. “When you account for inflation, the increases seen in beef prices are very comparable to other goods — and in many cases less,” Carpenter wrote. “Retailers are going to charge as much as they think they can get for beef. Any additional imports are likely not going to lessen the price of beef enough to move the needle. But they do stand to hurt cattle prices, the brunt of which will be felt by cow/calf producers.” According to VCA, feeder cattle futures have dropped between $20 and $25 per hundredweight since speculation began last week about possible Argentine beef imports, translating to roughly $200 per head in lost value for an 8-cwt steer — about $12,000 per truckload. Meanwhile, the beef cutout price has risen this week, underscoring what VCA called a widening gap between producer prices and retail values. The Association also noted that Livestock Risk Protection (LRP) coverage is unavailable to producers on limit-down trading days, limiting their ability to hedge losses. VCA said it will continue working with Congress and USDA “on policies that will help advance the cause of the Virginia cattle producer” as market volatility and trade uncertainty persist. —Trump ends trade talks with Canada over Ontario’s Reagan adPresident calls Ontario’s anti-tariff campaign “egregious behavior” aimed at influencing U.S. courts President Donald Trump said Thursday he is ending trade negotiations with Canada after Ontario launched a television ad that uses the late President Ronald Reagan’s voice to criticize tariffs — a move Trump denounced as “egregious behavior.” In a late-night Truth Social post, Trump claimed the ad, which repurposes parts of Reagan’s 1987 radio address on trade, was “fake” and accused Ontario of trying to sway U.S. legal decisions. “Based on their egregious behavior, all trade negotiations with Canada are hereby terminated,” Trump wrote, defending tariffs as “very important to the national security, and economy, of the USA.” The Ronald Reagan Presidential Foundation said the ad used “selective audio and video” and that Ontario “did not seek nor receive permission” to edit Reagan’s remarks. The Foundation said it is reviewing legal options. Ontario’s $75-million campaign, promoted by Premier Doug Ford, features Reagan’s voice warning that “high tariffs inevitably lead to retaliation” and “fierce trade wars.” Ford said the province would air the ad “in every Republican district,” arguing it was “very factual” and “just Ronald Reagan’s message.” Prime Minister Mark Carney and Ford appeared together earlier Thursday, presenting a united front despite differing tactics. Carney said Canada remains in “constructive” sector-by-sector talks on steel, aluminum, and energy, but added that “if we ultimately don’t make progress … we’re going to do what’s necessary to protect our workers.” Reagan’s original 1987 address, which the ad drew from, also justified duties on Japan to counter “unfair practices,” a nuance largely omitted from Ontario’s version. The controversy now risks straining already tense cross-border trade relations just months before the scheduled 2026 review of the United States-Mexico-Canada Agreement. —Flight delays soar as shutdown drags into fourth weekTransportation Secretary Duffy warns of worsening air travel disruptions as unpaid FAA and TSA workers stay on the job Transportation Secretary Sean Duffy warned Thursday that travelers should brace for continued and potentially worsening flight delays across the U.S. as the government shutdown enters its fourth week. “I can’t guarantee you that your flight’s going to be on time. I can’t guarantee you that your flight’s not going to be canceled,” Duffy told reporters, noting that more than 13,000 air traffic controllers and 50,000 TSA agents are working without pay. The share of delays caused by staffing shortages has jumped from roughly 5% before the shutdown to more than 50%, with disruptions reported at major hubs in Dallas, Chicago, Nashville, and the Washington, D.C. area. Duffy said controllers will miss their first full paycheck on Tuesday, and warned that some trainees at the FAA academy in Oklahoma City are considering quitting. “They’re thinking about leaving the academy — smart young men and women — because they don’t want to work for a system that won’t pay them,” he said. House Speaker Mike Johnson (R-La.) said the administration hasn’t identified funds to cover air traffic controller pay, unlike the workaround used to pay active-duty military on Oct. 15. |
| FINANCIAL MARKETS |
—Equities today: Global stock markets were mixed overnight. Dow futures jumped 200 points as a light inflation report (see item below) paves the way for a Fed rate cut. In Asia, Japan +1.4%. Hong Kong +0.7%. China +0.7%. India -0.4%. In Europe, at midday, London -0.1%. Paris -0.5%. Frankfurt -0.1%.
—Equities yesterday:
| Equity Index | Closing Price Oct. 23 | Point Difference from Oct. 22 | % Difference from Oct. 22 |
| Dow | 46,734.61 | +144.20 | +0.31% |
| Nasdaq | 22,941.80 | +201.40 | +0.89% |
| S&P 500 | 6,738.44 | +39.04 | +0.58% |
All three major indexes approached their highest closing levels on record during the day, but pared back some of those gains in the last hour of trading. Still, the S&P was only 0.2% off from the record high reached on Oct. 8.
—Stocks poised for a sizeable move amid “volatility crush,” Sevens Report says
Analysts see bearish technical bias but potential for a sharp breakout either way
According to the Sevens Report, U.S. equities are “positioned for a sizeable move” following months of quiet upward drift fueled by what analysts called a “volatility crush” in the derivatives market. The report noted that after the April rebound, “the market has been churning steadily higher amid a ‘vol crush,’” describing the pattern as one where implied volatility premiums collapse after a panic-driven surge in hedging demand.
The Sevens Report explained that “a ‘vol crush’ occurs after a bout of sudden and rapidly rising implied volatility,” adding that as the cost of hedging skyrockets, investors often abandon puts, triggering “volatility exhaustion” and a flip to “decidedly bullish, risk-on” sentiment. But this dynamic now appears to be fading. “The recent price consolidation in both the S&P 500 and VIX suggests the technical scales are tipped in favor of the equity market bears and volatility bulls right now,” the report cautioned.
Analysts pointed to weakening momentum: “The hourly RSI on the S&P 500 shows a clear set of lower lows and lower highs, revealing weakening price action,” while a “bullish divergence” in the VIX hinted at brewing volatility pressure. The firm added that bears appear to be “defending the all-time highs amid a coincident sense of hesitation among the bulls chasing the rally with bids fueled by FOMO.”
The Sevens Report projected that a technical breakout could send the S&P 500 to 6,970 — about a 3.5% rally from current levels — while a downside break could drop the index to 6,340, roughly a 6% decline. “It’s impossible to tell with any significant degree of certainty,” the report said, “but the setup suggests the next decisive move in equities could be large.”
—Kevin Warsh calls for a “sea change” at the Fed amid Trump’s economic boom
Former Federal Reserve Governor tells Fox News’ Larry Kudlow that monetary policy is working at cross purposes with the President’s agenda
In an appearance on Fox News’Kudlow, former Federal Reserve Governor Kevin Warsh praised the strength of the U.S. economy under President Donald Trump’s policies, while sharply criticizing the Federal Reserve for operating at “cross purposes” with the administration. Warsh urged a fundamental overhaul at the central bank, including changes in leadership, models, and priorities.
“The U.S. economy is booming,” Warsh said. “The global economy is not booming. The U.S. is taking huge market share, huge economic growth from the rest of the world because the President’s policies are hitting our economy first.”
Warsh said that while the President’s policies were driving growth and lowering prices, the Fed’s past decisions had “led to something like stagflation.” He argued that monetary policy must align more closely with Main Street, not Wall Street. “What worries me, and I suspect what worries the President, is the Fed’s going to make its sixth or seventh big mistake in the last six or seven years,” Warsh said in the context of warning that the Federal Reserve risks repeating past policy errors by tightening prematurely during a period of strong productivity growth and technological investment.
“The Fed’s policies have done a lot of harm, and the President has to dig out from those,” he told host Larry Kudlow. “Their policies are quite good for Wall Street. They need to take their balance sheet down and redeploy that money to Main Street.”
Kudlow, echoing Warsh’s comments, asked whether reducing the Fed’s target rate could spur housing and investment growth. “Why couldn’t we take the target rate from four to two so we can lower interest rates a lot, and in so doing, get 30-year fixed rate mortgages so they’re affordable?” Kudlow asked.
Warsh agreed that the balance sheet could be refocused, suggesting that the money “should go to Main Street” to support investment and housing affordability. “Wall Street right now is booming. They don’t need any extra help,” he said. “That excess money can go to Main Street, and that will give us room for lower interest rates.”
Warsh emphasized that the current economic expansion is driven by supply-side factors — including low taxes, deregulation, and energy dominance — rather than excessive demand. He cautioned that the Fed risks undermining this productivity-driven boom by reacting too defensively. “They’ve got to allow that productivity and that technology to continue to lower prices,” Warsh said. “Instead of saying, ‘Oh my gosh, the economy is too strong, we better stop this,’ they should let it run.”
The former Fed official also praised Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer, saying their messages at recent IMF meetings projected confidence and growth, while the Fed’s stance projected “malaise.”
“There’s been a sea change in the White House, a sea change at the Treasury,” Warsh concluded. “We need the same kind of sea change at the Federal Reserve.”
Kudlow closed the segment calling Warsh “a man who knows whereof he speaks,” highlighting the former governor’s alignment with the administration’s economic philosophy.
Bottom Line: Warsh’s comments underline a widening divide between the Trump administration’s fiscal and trade-driven economic agenda and the Fed’s cautious monetary approach — an institutional tension that could shape policy debates heading into 2026.
—Fed poised for another rate cut as job market concerns deepen
Powell signals caution on rising unemployment risks ahead of next week’s FOMC decision
The Federal Reserve appears ready to lower interest rates again at next week’s policy meeting, with officials balancing their reluctance to reignite inflation against growing concern over a cooling labor market. “You’re at a place where further declines in job openings might very well show up in unemployment,” Fed Chair Jerome Powell said at an economics conference last week, underscoring the central bank’s shifting focus toward employment stability.
A key variable for policymakers will be the September inflation data, delayed by the ongoing government shutdown and released today (see next item). The Federal Open Market Committee meets Tuesday and Wednesday, with Powell scheduled to hold a press conference following the rate decision — where markets will look for clues on how aggressively the Fed plans to continue cutting rates.
Note: The US government will probably be unable to release inflation data for October, the White House said Friday, citing the ongoing government shutdown
—U.S. inflation edges up to 3% in September, driven by energy costs
Core inflation eases slightly as gasoline prices lead monthly gains
The annual U.S. inflation rate rose to 3% in September 2025, the highest since January, up from 2.9% in August but slightly below market expectations of 3.1%. Energy prices climbed 2.8%, while food prices advanced 3.1%.
Core inflation, which excludes food and energy, eased to 3% from 3.1%, marking a modest cooling in underlying price pressures. On a monthly basis, the Consumer Price Index (CPI) increased 0.3%, less than both August’s 0.4% rise and forecasts of 0.4%.
The 4.1% jump in gasoline prices was the largest single contributor to the monthly increase, offsetting milder gains in other categories. The data reinforce expectations that the Federal Reserve remains cautious on further rate cuts, balancing slowing core inflation with renewed energy-driven pressures.
The report was originally scheduled to be released on Oct. 15 but was delayed by the ongoing federal government shutdown, which is now the second longest shutdown in history. Today’s CPI reading is the last major economic release expected before the Fed gathers for its policy meeting next week.
Bottom Line: The data came in softer than expected across most categories but continues to show that inflation remains elevated while the labor market is losing momentum. Overall, the report reinforces expectations that the Federal Reserve will cut the federal funds rate target by 25 basis points at the conclusion of its Oct. 29 meeting. Markets reacted positively, with stock index futures extending their gains ahead of the opening bell.
| Food The index for food rose 0.2%V in September, after rising 0.5% in August. The food at home index increased 0.3% over the month. Four of the six major grocery store food group indexes increased in September. The index for other food at home rose 0.5% over the month after rising 0.1% in August. The cereals and bakery products index and the nonalcoholic beverages index both increased 0.7% in September. The index for meats, poultry, fish, and eggs rose 0.3% over the month following a 1.0% increase in August. The dairy and related products index declined 0.5% in September as the cheese and related products index decreased 0.7%. The index for fruits and vegetables was unchanged over the month. The food away from home index rose 0.1% in September. The index for limited service meals rose 0.2% over the month while the index for full service meals was unchanged. The index for food at home rose 2.7% over the 12 months ending in September, as it did over the 12 months ending in August. The meats, poultry, fish, and eggs index rose 5.2% over the last 12 months. The index for nonalcoholic beverages increased 5.3% over the same period and the index for other food at home rose 1.9%. The cereals and bakery products index increased 1.6% over the 12 months ending in September. The index for fruits and vegetables rose 1.3% and the index for dairy and related products increased 0.7% over the same period. The food away from home index rose 3.7% over the last year. The index for full service meals rose 4.2% and the index for limited service meals rose 3.2% percent over the same period. |
—Pakistan seeks China’s backing to join BRICS Development Bank
Beijing expected to support Islamabad’s bid despite India’s likely opposition and Belt and Road frustrations
Pakistan has asked China to support its application to join the BRICS-backed New Development Bank (NDB) as it looks to diversify its credit options beyond the IMF and World Bank. The request was made by Finance Minister Muhammad Aurangzeb during a meeting with China’s Deputy Finance Minister Liao Min on the sidelines of the IMF/World Bank meetings in Washington, according to Pakistan’s Ministry of Finance.
The NDB — founded in 2015 by Brazil, Russia, India, China, and South Africa — has expanded to include Egypt, Bangladesh, Algeria, and the UAE. Each founding member holds an 18.76% stake, while new members have smaller shares. Pakistan’s bid faces an uphill battle since membership requires approval from at least four of the five founding members, and India is expected to block Islamabad’s entry due to tense relations.
Analysts told Nikkei Asia that Beijing is likely to advocate for Pakistan’s inclusion despite frustrations over stalled Belt and Road projects and security concerns following the deaths of 21 Chinese nationals in Pakistan since 2021. “Given that Pakistan is one of China’s closest allies, Beijing may want Islamabad to jump on the NDB bandwagon,” said Bradley Parks of William & Mary’s AidData.
Legal expert Ikram ul Haq said Beijing’s disappointment over project delays “is not going to stop the Chinese from helping Pakistan to avail the benefits of the NDB.” Experts added that access to NDB funds would offer Islamabad faster, less politically constrained financing for infrastructure development.
Still, skepticism remains over whether China will push hard for Pakistan’s membership. Jeremy Garlick of the Prague University of Economics and Business said Beijing “is unlikely to push very hard for Pakistan’s inclusion because of Pakistan’s poor track record with handling its own finances.” Even so, observers expect China to lobby Russia, Brazil, and South Africa to back Islamabad’s bid.
| AG MARKETS |
—Indonesia plans 10% bioethanol mandate by 2027
Jakarta targets self-sufficiency with palm oil and sugarcane-based fuel expansion
Indonesia plans to require a 10% bioethanol content in gasoline starting in 2027, Energy Minister Bahlil Lahadalia announced, as part of efforts to cut reliance on imported fuel. The mandate — dubbed E10 — would demand about 1.4 million kiloliters of bioethanol annually. “We plan to source all the ethanol from domestic markets,” Lahadalia said, adding that palm oil, sugarcane, and potentially other crops could be used as feedstocks.
Industry data show Indonesia’s bioethanol production capacity stood at 303,325 kiloliters in 2024, though actual output was just 160,945 kiloliters, supplemented by 11,829 kiloliters of imports. Domestic demand was estimated at 125,937 kiloliters, suggesting substantial scaling will be needed to meet the 2027 target.
The plan aligns with Indonesia’s broader push to expand biofuels — notably its B35 biodiesel program — to reduce import dependence and support local agriculture and renewable energy goals.
—Tariffs have unsettled Colorado’s ag industry; a Trump move adds to uncertainty
Ranchers fear Argentine imports could undercut long-awaited gains as tariffs, costs, and drought already strain the sector
Colorado’s agricultural producers are facing mounting pressure from tariffs, rising costs, and the Trump administration’s decision to import more beef from Argentina — a move many fear could jeopardize long-overdue gains for U.S. ranchers. A state report cited by the Denver Post estimated that tariffs have already caused a $39 million drop in beef revenue in the first half of 2025 compared to 2024, with 265 jobs lost and a total economic impact decline of $80 million statewide. The administration, under fire over its trade policies, announced this week it would reopen 2,100 USDA offices despite the government shutdown to help farmers access $3 billion in existing support funds.
President Donald Trump, defending his push to expand Argentine beef imports, said, “U.S. ranchers are doing well because I have put tariffs on beef imports.” But Colorado ranchers and agricultural leaders disagree. “It’s not good for American beef producers,” said Chad Franke, president of the Rocky Mountain Farmers Union. “For the last five years at least, American beef producers have made little to no money.”
Franke noted that domestic ranchers have only recently begun to see “fair returns” as drought and smaller herds tightened supply. Imported Argentine beef, which is typically leaner and frozen, would likely be mixed with U.S. ground beef, he added — doing little to lower grocery prices but potentially eroding rancher profits.
Economic ripples across the state. Beef remains Colorado’s top agricultural export, comprising the majority of the state’s $2.7 billion in agricultural exports last year. Agriculture overall contributes about $47 billion annually to Colorado’s economy.
Sowing chaos? Two state legislators — Sen. Dylan Roberts (D-Frisco) and Rep. Karen McCormick (D-Longmont) — warned that the administration’s proposal would sow “chaos and confusion” in domestic markets and “undercut cattle producers.” The Colorado Cattlemen’s Association urged Washington not to intervene, emphasizing that “consumer demand for U.S. beef remains strong” thanks to producers’ efforts to maintain “safe, high-quality products.”
Concerns over safety, supply, and tariffs. Colorado State University economist Amanda Countryman told the paper that concerns go beyond economics: “There are also real concerns about food safety, quality and animal health. The health and safety standards are different in Argentina than they are in the U.S.” Countryman added that Argentina has a history of foot-and-mouth disease among cattle, and lowering U.S. beef prices would ultimately require a domestic supply increase, not expanded imports.
Colorado’s cattle herd — 2.5 million head as of January 2025, one of the smallest in 50 years — reflects years of drought and high feed costs. Fertilizer prices are up 15% from 2024, and the cost of tractor tires has soared from $1,500 to as much as $5,000 each, according to Franke. “It’s been all over the board,” Franke said. “We don’t not support tariffs, but they need to be done in a thoughtful and methodical way.”
“Restore stability” to trade policy. Colorado State Treasurer Dave Young echoed those concerns, noting that farmers’ higher costs and market uncertainty ripple across rural economies: “It’s time to restore stability to our trade relationships and ensure that policies support, not punish, the hard-working families who feed our nation.”
With federal funds only now resuming after months of delays, cash flow remains a critical concern for small producers. As Franke put it: “If you don’t have cash on hand when you need it, it doesn’t matter if you’re profitable or not. If you can’t pay your bills, you’re not going to continue.”
—Agriculture markets yesterday:
| Commodity | Contract Month | Closing Price Oct. 23 | Change from Oct. 22 |
| Corn | December | $4.28 | +5¢ |
| Soybeans | January | $10.62 | +12¢ |
| Soybean Meal | December | $292.30 | +$2.30 |
| Soybean Oil | December | 50.87¢ | +80 pts |
| SRW Wheat | December | $5.13 | +9¼¢ |
| HRW Wheat | December | $5.00 | +11½¢ |
| Spring Wheat | December | $5.58 | +10¼¢ |
| Cotton | December | 64.07¢ | +33 pts |
| Live Cattle | December | $241.175 | +$1.35 |
| Feeder Cattle | January | $357.425 | –$3.60 |
| Lean Hogs | December | $81.775 | –62½¢ |
| ENERGY MARKETS & POLICY |
—Oil prices were little changed, stabilizing after yesterday’s surge and remaining on track for a weekly gain as fresh U.S. sanctions on Russia’s two biggest oil companies over the war in Ukraine fueled supply concerns. Brent crude futures were down 0.06% at $65.95. West Texas Intermediate (WTI) crude futures slipped 0.05% to $61.75. Traders are waiting for signs of how big the impact is of the new sanctions on Russia. The market is in a wait-and-see mode to see what happens to the flows. Similar sanctions in the past have caused just temporary disruption.
Of note: The Trump administration is readying a proposal to open almost all US coastal waters to new offshore oil drilling, Jennifer A. Dlouhy reports. The plans are being made despite opposition from state governors and the president’s previous efforts to close off some of the territory.
—Oil prices jumped 5% Thursday as U.S. sanctions hit Russian oil giants
Sanctions on Rosneft and Lukoil send Brent and WTI to two-week highs, fueling fears of a global supply deficit
Oil prices surged about 5% Thursday to their highest levels in two weeks after the United States imposed sweeping sanctions on Russian producers Rosneft and Lukoil, escalating pressure on the world’s second-largest oil exporter and triggering concerns about tighter global supplies.
Brent crude rose $3.40, 5.4%, to $65.99 a barrel, while U.S. West Texas Intermediate (WTI) climbed $3.29, or 5.6%, to $61.79 — their biggest one-day gains since mid-June and strongest closes since Oct. 8.
U.S. diesel futures jumped nearly 7%, pushing refining margins to their highest since February. The sanctions have already disrupted trade flows: Chinese state refiners suspended seaborne purchases, while India’s Reliance Industries and other refiners are preparing sharp import cuts to avoid sanctions exposure.
Kuwait’s oil minister said OPEC stands ready to adjust production to offset any shortfall, but analysts cautioned that replacing Russian barrels would take time.
Britain and the European Union also broadened sanctions to include restrictions on two Chinese refiners and PetroChina-linked trading arms. Analysts now expect the combination of sanctions, disrupted Russian output, and lower Indian imports to push the oil market from surplus to deficit in early 2026, lending support to prices in the weeks ahead.
—Indian and Chinese refineries scale back Russian oil purchases amid U.S. sanctions
Trump’s sanctions on Rosneft and Lukoil trigger a major shift in global crude flows
According to the Financial Times, major refineries in India and China have paused most purchases of Russian crude oil following the Trump administration’s latest round of sanctions targeting Russia’s largest energy producers, Rosneft and Lukoil. The move marks one of the most significant disruptions yet to Moscow’s oil export network since the Ukraine war began.
A coordinated pullback. India’s Reliance Industries and other major refiners have sharply reduced imports of Russian crude after Washington warned of secondary sanctions on financial institutions involved in such transactions. “We are recalibrating our sourcing in line with government guidance,” a Reliance official told the FT, underscoring fears of losing access to the U.S. financial system.
In China, state-backed refiners have similarly scaled back purchases, while smaller independent “teapot” refiners in Shandong province may continue limited buying. The FT noted that the decisions by India and China — who together account for roughly 80% of Russia’s seaborne crude exports — represent a “potentially severe blow” to the Kremlin’s revenue streams.
Secondary sanctions bite. The sanctions unveiled by President Trump’s administration last week go beyond direct prohibitions, extending penalties to banks and insurers facilitating Russian oil transactions. This effectively discourages third-party payments and shipping insurance, making it harder for Moscow to reroute its exports through alternative channels.
“The U.S. is now applying maximum pressure to choke off Putin’s oil lifeline,” one U.S. official told the Financial Times, describing the measures as part of a strategy to force Moscow to negotiate over Ukraine.
Market impact. Oil prices surged on the news, with Brent crude rising more than 5% to above $65 per barrel. Analysts said traders were bracing for potential supply disruptions, though skepticism remains about the long-term effectiveness of sanctions. “So far, most of the sanctions over the past three and a half years have failed to significantly dent Russia’s output,” FT cited Rystad Energy analyst Claudio Galimberti as saying. “But this round could be different if Asian buyers truly retreat.”
A global reordering of oil trade. While the pause is not an outright embargo, analysts say it underscores a growing fragmentation of global oil markets. India and China had become Moscow’s most reliable customers after European buyers exited the market in 2022. Their retreat — even temporarily — could force Russia to offer deeper discounts or seek new buyers in Africa and Latin America.
The FT concluded that the current disruption “signals a major recalibration of global energy flows,” potentially reshaping trade patterns and prices well into 2026.
—Refiners take the lead as oil producers struggle
Valero’s blockbuster earnings underscore a year of refining dominance amid falling crude prices and tight fuel supply.
Refining companies are emerging as the clear winners of 2025’s volatile energy markets, with Valero Energy leading the pack. According to Barron’s, Valero shares surged 7% on Thursday after reporting stronger-than-expected profits — tripling from a year earlier — and are now up 41% for the year. The company’s performance has helped propel the VanEck Oil Refiners ETF nearly 40% higher in 2025, far outpacing the broader energy sector’s modest 3.2% gain.
“Refiners have been stars in a messy year for energy stocks,” Barron’s wrote, noting that the refining sector’s success stems from a unique imbalance in global energy markets: crude oil is oversupplied, but refined fuels like gasoline and diesel remain in tight supply. U.S. oil prices are down 14% this year, yet wholesale diesel prices have risen 4%, creating wide profit margins for refiners such as Valero.
Valero’s third-quarter revenue held steady while its costs fell sharply, aided by cheaper crude and lower input prices. Its ethanol business also gained from a record U.S. corn crop and robust demand.
Looking ahead, the company said global refining capacity is expected to grow only slowly in 2026, suggesting that fuel production may again struggle to keep up with consumption. “We expect things to be tighter next year as well,” Valero executives said on the company’s earnings call — a signal that refiners could continue to outperform even if oil producers face another challenging year.
—Tokyo Gas becomes second Japanese firm to explore Alaska LNG purchase
Move follows JERA’s letter of intent ahead of President Trump’s visit to Japan next week
Japan’s Tokyo Gas has signed a letter of intent with U.S. developer Glenfarne Group to explore purchasing liquefied natural gas from the $44 billion Alaska LNG project, a centerpiece of President Donald Trump’s energy agenda. The agreement, coming just days before Trump’s visit to Tokyo for talks with Prime Minister Sanae Takaichi, marks Tokyo Gas as the second Japanese firm — after JERA — to show interest in the project.
The nonbinding deal will allow Tokyo Gas to assess the project’s economics and potential LNG procurement. It follows Washington’s mounting pressure on Japan to curb imports of Russian gas and instead back U.S. energy ventures.
The Alaska LNG project aims to transport feed gas from northern Alaska through a 1,300-kilometer pipeline to a coastal liquefaction facility near Anchorage, giving it a geographical advantage over Gulf Coast projects by bypassing the congested Panama Canal.
Glenfarne said Tokyo Gas’ commitment “adds commercial momentum” to a venture expected to produce 20 million metric tons of LNG annually. The developer has already signed preliminary offtake agreements for 11 million tons per year with buyers across Japan, South Korea, Taiwan, and Thailand, including JERA, POSCO, CPC, and PTT.
“This agreement validates the strength of Alaska LNG’s commercial offering and its importance as a strategically positioned supplier for U.S. Pacific allies,” said Glenfarne CEO Brendan Duval, noting that Tokyo Gas first purchased LNG from Alaska 55 years ago.
| CHINA |
—China’s leverage playbook: Rare earths, crackdowns, and coercion ahead of U.S. talks
House China Committee chair warns Beijing is “firing a loaded gun” on U.S. economy as Trump-Xi meeting nears
China is employing “every means—including coercion—to gain bargaining leverage” ahead of upcoming trade talks with the United States, House China Committee Chair Rep. John Moolenaar (R-Mich.) told The Epoch Times in an interview on EpochTV’s American Thought Leaders. “They are putting every bit of leverage on the table so that in a negotiation, they can, in some way, relent in a small way and still keep their negotiated gains,” Moolenaar said.
He pointed to Beijing’s Oct. 9 rare earth export controls as a prime example. China mines two-thirds of global rare earths and controls over 90% of processing capacity — materials critical to electronics, defense systems, and clean-energy technologies. “China is basically firing a loaded gun, if you will, on our economy,” Moolenaar warned, calling the move “a very aggressive threatening action.”
Beijing’s bargaining chips. President Donald Trump is expected to meet Xi Jinping next Thursday on the sidelines of the Asia-Pacific Economic Cooperation summit in South Korea, with top U.S. officials including USTR Jamieson Greer and Treasury Secretary Scott Bessent already in Asia for preparatory talks. The rare earth restrictions — so severe that Trump initially suggested calling off the summit — are not Beijing’s only leverage, Moolenaar said. He cited crackdowns on Christian pastors, including the detention of more than 30 leaders from Beijing’s Zion Church, and a state probe targeting Nvidia under China’s anti-monopoly law. “In the middle of a negotiation, these measures are all strategic,” he said. “They’re setting up this negotiation line.”
‘Win-lose’ strategy and global ambition. Despite Beijing’s rhetoric of “win-win” cooperation, Moolenaar said China’s actions reveal a “win-lose” worldview driven by its long-term quest for global dominance. “Ultimately they are looking at a much longer time frame … they’re willing to wait 50 years, 100 years,” he said. He compared Beijing’s tactics — such as the Belt and Road Initiative and state-backed industrial targeting — to a systematic campaign to “extract every bit of learning” from foreign companies, then undercut or drive them out of business.
Tariffs and the economic stakes. The U.S. trade deficit with China neared $300 billion in 2024, underscoring deep interdependence. Moolenaar backed Trump’s threat to impose a 100% tariff on Chinese goods in November unless Beijing lifts its rare earth curbs. “I tend to be a free trader, but you want to have free trade with free nations,” he said. Tariffs, he added, both “penalize China for this aggressive, outrageous action” and encourage allies to secure their own supply chains.
A clash of values. Beyond trade, Moolenaar urged the administration to confront China’s human rights abuses, from forced organ harvesting of prisoners of conscience — including Falun Gong practitioners — to the repression of Christians and Uyghurs. “It really shines a spotlight on the problems with the Chinese Communist Party,” he said, describing the regime’s persecution of faith as an attempt to replace religion with party loyalty. “Rather than allowing a faith in God, they’re saying you have to have faith in the Party, and the Party is the God.”
Calling the standoff a “competition of values,” Moolenaar concluded: “There is a competition going on, and it’s really important the United States win this competition for the freedoms that we enjoy here.”
| FEDERAL LAYOFFS |
—Federal layoff orders halted after court blocks Trump administration’s RIF plans
Government Executive reports agencies had begun mass cuts before judge intervened
The Government Executive reported that although the Supreme Court earlier this year allowed President Donald Trump’s administration to resume mass reductions in force (RIFs), a federal judge in California has now temporarily blocked large portions of those layoffs. The order halts dismissals across wide areas of the federal government that had already begun during the ongoing government shutdown.
In the past 10 months, multiple agencies issued RIF notices, launching a new wave of layoffs as the shutdown unfolded. These cuts are separate from the earlier firings of probationary employees, which removed at least 25,000 federal workers. In February, an executive order and subsequent guidance from the Office of Management and Budget (OMB) and the Office of Personnel Management (OPM) directed the “maximum elimination” of agency functions not mandated by law—targeting workers whose roles were not legally required and who typically face furloughs during shutdowns.
OMB and OPM estimated that roughly one-third of the federal workforce, or 700,000 employees, could be subject to these reviews. Several departments have already eliminated entire offices and regional branches, leading to about 4,000 layoffs across seven agencies on Oct. 10 — part of what Trump and OMB Director Russ Vought described as efforts to “inflict pain” on the bureaucracy amid the shutdown.
Court order freezes reductions. Those RIFs, along with further cuts promised by Trump and Vought, are now largely paused under the temporary restraining order. The judge’s ruling applies to agencies employing members of major federal unions, including the American Federation of Government Employees, the National Treasury Employees Union, and the Service Employees International Union, among others.
The following is an update on USDA and EPA as reported by Government Executive:
•USDA: Reorganization and relocations. At USDA, officials plan to significantly shrink the headquarters workforce by relocating staff into new regional hubs and offering reassignments or separation packages. USDA is also consolidating its physical footprint — reducing leases, closing one of its two Washington headquarters buildings, and merging dozens of smaller sites nationwide. Altogether, 2,600 Washington-based employees are slated for relocation, and the department has already shed 15,000 workers through voluntary separation incentives.
• EPA: Offices shuttered, RIFs in motion. The Environmental Protection Agency began implementing RIFs this spring after Administrator Lee Zeldin announced the elimination of the Office of Environmental Justice and External Civil Rights, its regional divisions, and the Office of Inclusive Excellence. Around 170 staff members were placed on administrative leave before the closures took effect.
By July, the EPA said it would also dissolve its Office of Research and Development, potentially cutting hundreds more employees. The agency’s total workforce has fallen from 16,155 when Trump took office to 12,448. Another 30 layoffs announced in October are now paused due to the restraining order.
Government Executive confirmed that both USDA and EPA have active or pending RIFs that remain in flux, subject to future court rulings.
| TAX POLICY |
—Estate tax breaks set to rise in 2026 under OBBB deal
Inflation adjustments and GOP compromise lift lifetime exemption to $15 million
Estate tax relief is on the way next year, thanks to the Omnibus Budget and Business Bill (OBBB) and inflation indexing. The lifetime estate and gift tax exemption for 2026 deaths will increase to $15 million, up from $13.99 million in 2025. For married couples, the combined exemption effectively doubles to $30 million, assuming both spouses elect “portability” — a provision allowing the unused portion of one spouse’s exemption to be transferred to the surviving spouse. While many Republican lawmakers had pushed to repeal the estate tax entirely, the final OBBB compromise instead made the higher exemption permanent, with annual inflation adjustments continuing.
The law also enhances the special estate tax valuation for farms and family businesses. Beginning in 2026, estates can apply a discount valuation of up to $1.46 million for qualifying real property, allowing valuation at current use rather than fair market value. To qualify, at least half the estate must consist of real estate, and 25% or more must be actively farmed or used in a business by the decedent or family for at least five of the eight years preceding death.
Meanwhile, the annual gift tax exclusion will remain unchanged at $19,000 per recipient. This allows individuals to give up to $19,000 each year to as many recipients as they wish without affecting their lifetime exemption, incurring gift tax, or filing a return. Gifts exceeding that amount must be reported, though no gift tax applies until cumulative lifetime gifts exceed the $15 million threshold.
Recipients of gifts continue to owe no federal tax on what they receive. However, the tax basis rules differ for gifts and inheritances: recipients of gifted property generally assume the donor’s tax basis, while inherited assets receive a step-up in basis to fair market value at the time of death.
| POLITICS & ELECTIONS |
—Virginia Democrats plan to redraw House maps in redistricting push
Move could add up to three seats and reshape November elections
Virginia Democrats are preparing to launch a surprise redistricting effort that could yield two or three additional U.S. House seats for their party — a development poised to shake up the state’s political landscape just 12 days before the Nov. 4 election.
Senate Majority Leader Scott Surovell confirmed Thursday that Democrats will advance a constitutional amendment to allow mid-decade redrawing of the state’s congressional maps, following Republican-led redistricting drives in Texas, Missouri, and North Carolina at President Trump’s urging. If successful, the move would make Virginia only the second Democratic-controlled state, after California, to attempt such a midterm redistricting.
Democrats currently hold six of Virginia’s 11 House seats. The new initiative, which could require back-to-back legislative approvals and a statewide referendum, may reshape key competitive districts now held by Republicans Rob Wittman and Jen Kiggans. “This is about addressing actions by the Trump administration,” Surovell said. Republican leaders swiftly denounced the plan, with GOP strategist Adam Kincaid calling it “a desperate move” ahead of the election.
The debate comes as Democrats, led by gubernatorial nominee Abigail Spanberger, hold narrow legislative majorities and outspend Republicans six to one on late-campaign TV ads. A redistricting session could begin as soon as Monday, reopening a special legislative session left active since 2024.
Democrats frame the effort as a counterweight to Republican gerrymanders nationwide, while critics argue it undermines the independent redistricting system voters approved in 2020.
| FOOD & FOOD INDUSTRY |
—SNAP funding crisis deepens as shutdown nears one month
USDA warns food aid for 42 million Americans could halt in November; states declare emergencies to keep benefits flowing
The battle over food assistance erupted into a full-blown political crisis Thursday, as lawmakers and governors clashed over the looming expiration of funds for the Supplemental Nutrition Assistance Program (SNAP). With the government shutdown now in its 23rd day, USDA has warned states that SNAP funding will run out if the stalemate continues into November — jeopardizing aid for roughly 42 million Americans.
In Virginia, Republican Governor Glenn Youngkin declared a state of emergency to free up state resources for food benefits, accusing Democrats of using hungry residents as “leverage.” “I refuse to let hungry Virginians be used as ‘leverage’ by Congressional Democrats,” Youngkin said, noting that over 850,000 state residents rely on SNAP. The move comes just weeks before Virginia’s gubernatorial election on Nov. 4.
Senate Democrats pressed USDA Secretary Brooke Rollins to find ways to sustain SNAP payments. “USDA should explore all legal means to augment funds to pay the full amount of SNAP benefits in November,” they wrote in a Wednesday letter signed by nearly every Democratic senator except Pennsylvania’s John Fetterman, who instead urged reopening the government.
USDA estimates that its contingency fund — now about $6 billion — falls short of the roughly $8 billion needed for next month’s payments. The agency has already tapped tariff revenues to prop up the Women, Infants and Children (WIC) program and plans to continue doing so. “Democrats can continue to hold out for health care for illegals or reopen the government so mothers, babies, and the most vulnerable among us can receive timely WIC and SNAP allotments,” USDA said in a statement.
The impact could soon ripple through the retail economy. Oklahoma’s Human Services agency warned Dollar General Corp. that the loss of about $128 million in monthly SNAP spending will hit both low-income families and local retailers. “This disruption will be felt by both SNAP customers and stores, markets and suppliers who service them,” the agency wrote.
Retailers such as Walmart and Dollar General, which depend heavily on lower-income shoppers, are expected to face growing uncertainty as they release quarterly earnings in the coming weeks.
—Hawley bill would keep SNAP payments flowing amid shutdown stalemate
White House signals support as Murkowski and Grassley weigh prospects for bipartisan backing
Lawmakers are weighing a proposal from Sen. Josh Hawley (R-Mo.) that would ensure Supplemental Nutrition Assistance Program (SNAP) benefits continue during the ongoing government shutdown, Politico reported. Sen. Lisa Murkowski (R-Alaska) said she’s exploring the measure, noting that Alaskan food banks are already feeling strain. “We have been in contact with our food banks, not only the food bank in Alaska but other local food banks,” she said Thursday. “I know Sen. Hawley has a bill that would make sure that SNAP benefits get paid. It’s something that we’re looking at, whether it’s his bill or somebody else’s.”
But Sen. Chuck Grassley (R-Iowa) expressed skepticism that Democrats would support emergency funding for SNAP while broader spending bills remain blocked. “We can’t even get Democrat votes for funding [the military and FSA],” Grassley said. “So how would we get Democrat votes to fund food stamps? You got to open up government.”
White House press secretary Karoline Leavitt said Thursday that President Trump supports Hawley’s proposal. “We hope it will come over the finish line,” she said, while emphasizing that Congress must ultimately pass a continuing resolution to end the shutdown.
Of note: Senate Appropriations Chair Susan Collins (R-Maine) told reporters she’s been in conversations with the administration to potentially release contingency funds so the hungriest Americans can use their SNAP cards to buy food.
| TRANSPORTATION/LOGISTICS |
—Union Pacific’s strong quarter overshadowed by merger uncertainty
Solid profits fail to lift shares as investors focus on Norfolk Southern deal and regulatory risks
Union Pacific delivered a better-than-expected third quarter, reporting adjusted earnings per share of $3.08 on $6.2 billion in revenue — above Wall Street estimates of $2.99. Operating profit margins rose more than two percentage points year over year to about 42%, signaling strong cost control and efficiency gains despite sluggish freight volumes.
Yet shares fell 2.3% to $220.04 on Thursday as investors looked past the solid results and fixated on the railroad’s proposed merger with Norfolk Southern, which faces steep regulatory hurdles. “Our third quarter results serve as a proof point that we are successfully executing on our strategy,” said CEO Jim Vena. “We have a historic opportunity with the Norfolk Southern to create America’s first transcontinental railroad.”
The Surface Transportation Board is expected to subject the merger to intense scrutiny given decades of consolidation across the industry. Since merger talks surfaced in July, Norfolk Southern shares have jumped 11%, while Union Pacific, Canadian National, and Canadian Pacific Kansas City have slipped about 5% as investors weigh which railroads might be next in line for deals — or regulatory pushback.
Freight volumes in the quarter were slightly lower than a year ago, with gains in bulk and industrial shipments offset by weaker consumer and auto traffic. Management said fourth-quarter trends look similar, underscoring that while operations remain strong, investors’ attention is firmly on Washington, not Omaha.
—Senate Commerce Committee sets hearing on reviving U.S. shipbuilding
Lawmakers to examine modernization, workforce, and industrial base challenges facing maritime sector
The Senate Commerce Committee announced it will hold a hearing on Tuesday, Oct. 28, to “examine how to modernize and accelerate U.S. commercial shipbuilding while strengthening America’s broader maritime industrial base.” The session is titled “Sea Change: Reviving Commercial Shipbuilding.” Lawmakers are expected to focus on revitalizing domestic shipyards, bolstering the U.S. merchant fleet, and addressing supply chain and workforce constraints that have left the nation dependent on foreign-built vessels.
Witnesses have not yet been announced, but the committee is expected to call shipyard executives, labor representatives, and Defense Department officials involved in the maritime industrial base review. The hearing is part of a broader effort to rebuild America’s maritime capacity amid rising competition from China and other global shipbuilding powers.
| WEATHER |
— NWS outlook: Widespread showers and thunderstorms to bring a flash flood and severe weather threat from the southern Plains to the Lower Mississippi Valley… …A Pacific system accompanied by an influx of moisture/atmospheric river will bring lower elevation heavy rain and mountain snow to the Pacific Northwest heading into the weekend.
