The pace at which carbon dioxide accumulates in the Earth's air continues to rise. Through September 2024, that pace is nearing the record for the modern era recorded in January 2017.

That increase has taken place as China, the world's largest source of CO₂ emissions, has seen its factory output slow as the nation's industrial output has weakened. Even so, China's carbon dioxide emissions more than double those of the United States, which means a sluggish Chinese economy still cranks out more CO₂ than any other nation by a very wide margin.

The following NASA animation illustrates that output, showing how emissions originating from various locations around the world diffuse through the Earth's atmosphere. Check out the CO₂ 'smoke cloud' erupting from eastern China....

With Chinese factories slowing, the continued increase in the accumulation rate of CO₂ during the last few months may be a consequence of the strong El Niño event, which ran from May 2023 through April 2024. While not as strong as the 2015-16 El Niño event that was accompanied by extensive wildfires in Indonesia, it appears to be having a similar lingering impact, as seen in the following chart tracking the rate at which the trailing year average of the year-over-year change in the concentration of carbon dioxide in the Earth's atmosphere is changing.

New published research by Leipzig University researchers points to the role of strong El Niño events behind that observation. Here's a summary of their findings from the university's press office:

A recent study challenges previous assumptions about the connection between CO₂ in the atmosphere and temperatures in the tropics. Between 1959 and 2011, the CO₂ content in the atmosphere responded twice as strongly to temperatures in the tropics than before. This has often been attributed to increasing droughts in the tropics and to changes in carbon cycle responses caused by climate change. However, the current study conducted by researchers from the Max Planck Institute for Biogeochemistry and Leipzig University suggests that a small number of particularly strong El Niño events could be responsible for this.

Both tropical and non-tropical ecosystems absorb large amounts of carbon that were previously released into the atmosphere through human CO₂ emissions. Globally, land surface ecosystems act as a carbon sink and absorb on average around a third of human CO₂ emissions. These ecosystems are therefore a natural buffer for climate change. In the 1980s and 1990s, however, researchers observed an increased fluctuation in global carbon storage on land, and it appeared that the CO₂ growth rate was particularly sensitive to temperatures in the tropics. In a recent study, researchers from Jena and Leipzig found that this “doubling” of sensitivity was caused by the increased occurrence of El Niño events in the 1980s and 1990s compared to 1960–1979. This also includes the extreme El Niño events of 1982/83 and 1997/98. El Niño events cause severe droughts and heat waves in the tropics, which affect plant growth and thus reduce carbon uptake. In times of El Niño, vegetation even releases large amounts of carbon that would otherwise be sequestered in the soil or forests. This causes the CO₂ content in the atmosphere to increase.

The authors of the study emphasise that this CO₂ increase is due to internal climate variability rather than a systematic change in the carbon cycle caused by climate change. “Our results show that this doubling of sensitivity is not necessarily a sign of a fundamental change in the response of the carbon cycle to climate change,” says Na Li from the Max Planck Institute for Biogeochemistry, first author of the study. Instead, it is caused by the combination of extreme El Niño events and their global impact.

Tropical droughts associated with strong El Niño events contribute to a faster pace of CO₂ accumulation in the atmosphere by reducing its absorption by plant life until the affected regions have had sufficient time to recover, which can be aggravated by related wildfire events. Our chart showing the strong El Niño events of 2015-16 and 2023-24 suggests that effect continues for many months after the El Niño events themselves have ended. Through this point of 2024, that effect would seem to be more than offseting the slowing output from China's economy.

The big question for the months ahead is whether the Chinese government's new efforts to stimulute China's economy will offset the natural recovery from the 2023-24 El Niño event and cause the rate of CO₂ accumulation to continue increasing rather than diminishing.

References

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Online Data]. Updated 5 October 2024. Accessed 11 October 2024.

After July 2024's tariff-clock beating surge, the total value of trade recorded between the U.S. and China coasted slightly higher in August 2024, even as its momentum reversed.

With the Biden-Harris administration's new and expanded set of tariffs taking effect during the month, the negative change in momentum was expected. Importers of goods from China had rushed to pull as many deliveries of goods subject to the new tariffs ahead as possible, which by itself will diminish the level of trade in the months ahead. Although these imports typically peak in October each year, the actions to avoid the Biden-Harris administration's tariffs likely moved 2024's peak to July. U.S. imports of goods from China fell in August.

The total value of trade was up in August 2024 however because U.S. exports of agricultural goods like soybeans to China rose. U.S. exports of these goods to China are typically elevated during the last quarter of the year, but were elevated year-over-year.

The following chart shows how the August 2024 surge impacted the total value of goods traded between the U.S. and China.

This chart shows the nominal level of the total value of goods exchanged between the U.S. and China over the period from January 2017 through August 2024. Unfortunately, it doesn't fully convey the effects of the tariffs and other events on the level of U.S. and China trade.

For that, we need to take the effects of inflation into account. In the next chart, we've done that for the combined value of goods imported and exported between the U.S. and China, which are expressed in terms of constant 2017 U.S. dollars.

The level of trade between the U.S. and China peaked at $54.2 billion in 2017 USD in September 2018, when the Trump administration initiated a tariff war with China (Event A). The level of trade dropped 18.4% to $44.8 billion in 2017 USD, which would have marked a bottom given December 2017 Phase 1 trade deal between the U.S. and China, but didn't because of the onset of the coronavirus pandemic (Event B). The pandemic took the inflation-adjusted bottom of trade between the U.S. and China down to its Trump-era low of $42.8 billion in April 2020, some 21.1% below its September 2018 peak (Event C).

After April 2020, the level of trade grew rapidly, until the Biden-Harris administration initiated a period of high inflation for the U.S. economy with the passage of the American Rescue Plan Act of 2021 in March 2021 (Event D). The high inflation unleased in this period stalled the recovery in trade between the two nations, which ranged between $50 and $51 billion through September 2022.

That coincides with the peak in trade ahead of the Biden-Harris administration's announcement of its own tariffs and export restrictions on U.S. semiconductor technologies, which crashed the amount of trade between the U.S. and China. The level of trade plunged $9.8 from $50.9 billion in September 2022 to bottom at $41.1 billion in May 2024.

At this point, the Biden-Harris administration's trade sanctions against China have been more damaging in inflation-adjusted terms than the Trump administration's non-pandemic affected sanctions. However, in May 2024, the Biden-Harris administration announced new and expanded tariffs and other trade sanctions in May 2024 (Event E), which started taking effect in August 2024 and is already negatively affecting the trade data. That impact will continue in the months ahead.

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 12 October 2024.

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with World, Seasonally Adjusted, Nominal Figures, Total Census Basis. [Excel spreadsheet]. Accessed 12 October 2024.

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). Real U.S. Trade in Goods with World, Seasonally Adjusted, Chained 2017 U.S. Dollars, Total Census Basis. [Excel spreadsheet]. Accessed 12 October 2024.

Image Credit: A large cargo ship docked in a harbor photo by Matt Benson on Unsplash.

The price of an iconic can of Campbell's Condensed Tomato Soup remained largely stable during the past three months. The trailing twelve month average unit price for the 10.75 fluid ounce can held steady at $1.28. That's the same average price per can as we recorded in July 2024.

Unfortunately, outside of a brief example at Meijer's in September 2024 when the price was marked down to a dollar per can, we're finding few notable sales of Campbell's tomato soup as soup season in the United States gets under way. Prices are substantially higher than they were four years earlier and are nearly double what they were in 2010.

For this edition of our ongoing series on Campbell's Tomato Soup prices, we find that Meijer's sale has ended with the price returning to its regular $1.35 per can level. Here's the rundown of prices and how they've changed since July 2024 from our survey of ten major grocery-selling retailers across the U.S.

• Walmart: $1.26/each, unchanged
• Amazon: $1.99/each, increase of $0.70 (+54.3%)
• Kroger: $1.39/each, unchanged
• Walgreens: $1.99/each, unchanged
• Target: $1.39/each, unchanged
• CVS: $2.49/each, unchanged
• Albertsons: $1.49/each, decrease of $0.20 (-11.8%)
• Food Lion: $1.25/each, unchanged
• H-E-B: $1.31/each, unchanged
• Meijer: $1.35/each, unchanged

The following chart shows how the price of a can of Campbell's Tomato Soup has evolved during the 2000s:

Perhaps the biggest news from the Campbell Soup Company (NYSE: CPB) since our last update is the revelation of its plan to remove "Soup" from the company's name! Here's the story from 11 September 2024:

Campbell Soup Co. announced its intention to change its name at an annual meeting of investors on Tuesday. The 155-year-old food seller, which is most famous for its namesake canned soups, says it would now like to be known as Campbell’s Co.

CEO Mark Clouse said in a statement that this “subtle yet important change” will retain the company’s iconic name “while better reflecting the full breadth” of its portfolio today.

Campbell hasn’t been exclusive to the soup business for some time. The company also owns brands like Prego sauce and Goldfish crackers — and completed a $2.7 billion acquisition of Sovos Brands, the maker of Rao’s pasta sauces, just earlier this year.

Campbell’s roots date back to 1869, as a modest operation out of New Jersey that later grew. The current Campbell Soup name was adopted in 1922, according to the company’s website.

Since the news article omits it, here's the link to the company's website, which identifies the name "Campbell Soup Company" being used in November 1922. Here's a public domain image of 1920's era advertising for Campbell's Tomato Soup that shows it being used on the can:

That's quite different from the company name that appeared on the label applied to the first cans of Campbell's Condensed Tomato Soup when it was introduced in 1897. We should also note the label on the Joseph Campbell Preserve Co.'s cans of soup was itself very different, featuring colors more at home with the arrival of soup season than the much more familiar red and white design the company rolled out in 1898.

Image credits: A can of tomato soup on a yellow background photo by Anastasiya Badun on Unsplash. The public domain image of the vintage 1920's era advertisement for Campbell's Tomato Soup was posted online by Halloween HJB on Flickr. The original 1897 label for Campbell's original condensed tomato soup cans is likewise in the public domain and was featured at Modern Farmer in an article about the company's role in developing its own unique tomatoes.

The S&P 500 (Index: SPX) reached a new height to mark the end of the second week of October 2024. The index closed at a new all time record high of 5,815.03 on Friday, 11 October 2024, a 1.1% increase over where it closed in the previous week.

Most of that week-over-week gain came on Friday as both JP Morgan Chase (NYSE: JPM) and Bank of New York (NYSE: BNY), as both banks beat profit estimates, which was unexpected news.

Aside from that surprise, the rest of the week was characterized by a lot of chatter by Federal Reserve officials, who aimed to set expectations for smaller rate cuts in the remaining months of 2024.

How the rest of earnings season plays out remains to be seen, but this week, it's good earnings news that has Wall Street bulls considering the prospect of higher highs in the quarter ahead. Which coincidentally, is what the latest update of the alternative futures chart projects lies ahead during this quarter.

For now, the trajectory of the S&P 500 lies within the redzone forecast range we added several weeks ago, which we expect to continue until it runs out in three weeks.

There was more information for investors to absorb during the week that was, here's our summary of its market moving headlines.

Monday, 7 October 2024

• Signs and portents for the U.S. economy:
• Oil pares gains after strongest weekly rise in over a year
• Fed minions say more rate cuts ahead are "appropriate":
• Fed's Williams says appropriate again to cut rates 'over time', FT reports
• Fed's Musalem argues for more rate cuts, says data to drive easings
• Bigger stimulus getting some traction in China:
• China home sales rise after stimulus measures, state media says
• BOK minions gearing up for a rate cut:
• Bank of Korea to kick off easing cycle with 25 bps cut on October 11: Reuters poll
• BOJ minions rate hikes expected to cause little damage Japanese economy:
• Fall in Japan's real wages, spending likely just minor bump for further BOJ hikes
• ECB minions getting excited to cut Eurozone interest rates again:
• ECB will probably cut rates in Oct on risk of too low inflation: Villeroy
• Bundesbank's Nagel says he is open to another ECB rate cut
• Nasdaq, S&P, and Dow concluded lower as geopolitical tensions rise and CPI data lurks
• Wall Street indexes slip with interest rates, Middle East in focus
• How a rates rethink after strong US jobs data could shake up markets

Tuesday, 8 October 2024

• Signs and portents for the U.S. economy:
• Crude prices slide over 4% on possible Hezbollah-Israel ceasefire
• EIA slashes US, global oil demand forecasts for 2025
• US bank profits to shrink on interest income, focus shifts to Fed cuts
• US candy companies favor gummies, licorice over pricey Halloween chocolates
• Fed minions see cooling U.S. job market, more rate cuts ahead:
• US jobs market cooling but still resilient, Fed's Kugler says
• Fed's Kugler makes case for more rate cuts if inflation keeps easing
• Fed's Collins expects more rate cuts amid confidence inflation is easing
• Fed's Bostic says labor market slowing but not slow, jobs gains 'robust'
• Bigger trouble developing in China after expected stimulus isn't delivered:
• China's stocks rally fizzles as stimulus offer disappoints
• Hong Kong Crashes As China's Stimulus Frenzy Ends With A Bang
• ECB minions expected to deliver two Eurozone rate cuts in remainder of 2024:
• ECB to cut rates by 25bps in both Oct and Dec as euro zone economy wobbles: Reuters poll
• S&P, Nasdaq end up 1%, Dow up as oil slides on China stimulus letdown, Middle East unease
• US-listed shares of Chinese firms slide as stimulus optimism ebbs

Wednesday, 9 October 2024

• Signs and portents for the U.S. economy:
• Oil slips as strong supply counters Middle East and hurricane risk
• US 30-year mortgage rate jumps to 6.36%, biggest weekly gain in 15 months
• Fed minions say their rate cuts are about propping up job market, expect to need to deliver more:
• A 'substantial majority' of Fed favored large cut in Sept, minutes show
• FOMC Minutes Show Fed Considerably More Divided Over Size Of Rate Cut
• Fed Vice Chair Jefferson: rate cut aimed at keeping US job market strong
• Fed Vice Chair Jefferson: Sept rate cut was 'timely'
• Fed's Collins expects more rate cuts amid confidence inflation is easing
• Fed's Daly sees one or two more interest rate cuts this year
• Fed's Logan calls for 'gradual' rate cuts, says 'should not rush'
• Fed's Collins expects more rate cuts amid confidence inflation is easing
• Not big enough stimulus developing in China:
• China's runaway rally stutters; commodities and global shares subdued
• China September bank lending set to rise on policy support
• ECB minions getting excited to Eurozone interest rates again, get data to contradict their desire:
• ECB policymakers press case for October rate cut
• German exports rise in August, defying expectations of decline
• S&P ends at record high, Dow up 1% after Fed minutes show majority backed 50bp rate cut
• Wider US deficits, inflationary trade policies threaten bond outlook, says PIMCO

Thursday, 10 October 2024

• Signs and portents for the U.S. economy:
• September CPI rises more than expected, indicating inflation risks remain
• 2 Warm Sept CPI inflation chills outlook for dovish Fed
• Core Producer Price Inflation Hotter Than Expected; Food Costs Surge
• Oil prices jump 4% on US storm and Israel-Iran fears
• Domino's Pizza posts smaller-than-expected rise in comparable sales as demand stutters
• US weekly jobless claims surge amid Hurricane Helene distortions
• Fed minions say never mind inflation running hot, they're on course for more rate cuts:
• Fed on track for gradual rate cuts ahead, officials signal
• Fed's Williams reckons more rate cuts lie ahead, amid solid economy
• Fed's Goolsbee sees gradual policy rate cuts over next 12-18 months
• Bigger trouble developing in China:
• China's exports likely slowed further in September as global demand cools
• BOJ minions claim they'll hike rates when and if they become more confident:
• BOJ may not be as dovish as Ueda's cautious rhetoric suggests
• BOJ will hike rates if it has more confidence in forecasts, says deputy governor Himino
• BOK kicks off series of anticipated rate cuts:
• South Korea's central bank makes first rate cut, flags room for more
• S&P, Dow, Nasdaq fluctuate as CPI warms, jobless claims come in hotter than expected

Friday, 11 October 2024

• Signs and portents for the U.S. economy:
• Oil settles down on Florida fuel demand worries, Mideast risk drives weekly gains
• Fed minions expected to deliver two quarter point rate cuts in months ahead:
• Traders keep bets on 25 basis point Fed rate cuts in November, December
• S&P, Dow close at record highs as market enters year two of bull run; Nasdaq rises
• S&P 500, Dow hit records, boosted by bank earnings surprise
• JPMorgan profit beats estimates on investment-banking strength, shares jump
• BNY beats Q3 profit estimates as assets under custody and administration top $50 trillion

The CME Group's FedWatch Tool continues to project a quarter-point rate cut at the Fed's upcoming 7 November 2024 meeting. Afterward, the FedWatch tool anticipates that the Fed will continue a series of quarter point rate cuts at six-to-twelve-week intervals well into 2025.

The Atlanta Fed's GDPNow tool's projection of the real GDP growth rate for the current quarter of 2024-Q3 increased to +3.3% from the previous week's forecast of +2.5% growth.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bull standing on a small peak looking out at an even higher peak in the distance"

Through August 2024, the cost of eating out at establishments that provide full service meals and snacks has risen 23% since January 2021.

In fact, when you go out to a restaurant today, it's not uncommon to see things like $16 dollar BLT sandwiches on the menu. How is it possible that two slices of toasted bread, a couple strips of bacon, several leaves of lettuce, and one or two tomato slices and some mayonnaise possibly cost so much?

The short answer is because of the inflation unleashed in early 2021. That inflation has driven up the costs of everything it takes to provide you as a customer with a BLT sandwich, including rents, utilities, and labor - it's not just the cost of food itself that has gone up.

Brian Will is a restaurant owner in the north Atlanta metropolitan area. In the following TikTok video, he lays out the percentages and costs of doing business that dictate why he has to charge for a BLT sandwich:

@dropoutmm Restaurant food is expensive #restaurantlife #foodcost #restaurantindustry #restaurant #businessowner #businesscoach ♬ original sound - The Dropout Multimillionaire

We thought the numbers he provided, including the average number of BLT sandwiches that his restaurant must sell per day just to break even, made for some interesting math. We've built the following tool to convert the numbers he throws out into the math behind them, but you're more than welcome to change the numbers to consider a multitude of other scenarios. If you're accessing this article on a site that republishes our RSS news feed, you may need to click through to our site to access a working version.

The default values are mostly those given by Will for his restaurant, which almost certainly involve some rounding. We tweaked the value of the unit cost of the food to roughly match what it would take for the restaurant to break even, assuming an average of 257 BLT sandwiches at $16 each per day. Of course, the restaurant's net income represents the income that Will and his partners earn through their ownership and management of the business. If they're just breaking even, with a net income of $0, they can't afford to be in business and the restaurant will shut down.

If they do have a positive net income, say from selling an average of 300 BLT sandwiches per day instead of just 257 to break even, they're going to have to pay income taxes on it, which is why we added that additional element to the tool.

There's one other aspect to consider as well. Today's inflated prices for BLT sandwiches and every other menu item on American restaurant menus are changing the way people eat, with fewer people willing to eat out because of the higher prices they would have to pay. The effect of inflation on supply and demand has a negative effect on the restaurant industry. If they could count on selling more sandwiches every day, they could sell them for a lower price, but the higher costs for everything that goes into making a sandwich to be served at a restaurant have made that marketing strategy much more risky.

If the risk of making the wrong decision in this real world scenario means going out of business, especially if you expect inflation to continue making everything more costly, could you as a business owner even afford to try?

Image credit: Photo by David Trinks on Unsplash.