Oct 7, 2021

Axios Closer

Hello! Hope King here — we are almost there. How are you?

Today's newsletter is 702 words, a 2½ minute read.

🔔 The dashboard: The S&P 500 closed up 0.8%.

  • Biggest gainer? Freeport-McMoRan (+8.2%), as copper prices gained.
  • Biggest decliner? Pinnacle West (-8.1%) following a double downgrade from Guggenheim.
1 big thing: Port pileup... no relief in sight
Data: Digital Intelligence Strategy;  Chart: Axios Visuals

Supply chain constraints have gotten so bad that even throwing more people at the problems wouldn’t make them go away immediately. A new snapshot of port activity in California is the latest indication.

  • The number of workers in the ports of Los Angeles and Long Beach is down roughly 30% from pre-COVID levels, according to RBC Capital Markets data shared with Axios. RBC approximates foot traffic based on anonymized cellphone location data from geospatial intelligence company Orbital Insight.
  • “That’s your labor shortage quantified,” says Michael Tran, managing director of digital intelligence strategy at RBC Capital Markets

Why it matters: Companies are eager to find signs of relief in the supply chain in order to adjust inventory and prices effectively. The data shows how far activity has dropped from pre-pandemic levels and how hard it's been to stabilize this year.

State of play: Among the 22 biggest ports in the world, LA and Long Beach this year have experienced the longest turnaround times (how long it takes a ship to move through port), according to RBC's data.

  • The gap between the most efficient port, Port Klang in Malaysia, and LA and Long Beach, is 4.8 days.
  • Across all global ports, the current turnaround time is almost an entire day (+350%) longer than normal levels in 2019.

The big picture: The economy cannot add jobs fast enough to counterbalance the current record demand for goods.

  • The backlog is so immense that even with more workers added, you would need everyone to work harder and longer to get through that backlog first, says Tran.

What to watch: There are currently 60 ships at anchor between both ports, according to Phillip Sanfield of the Port of LA, or about two weeks of work waiting to come in.

2. Charted: High demand even at higher prices
Data: FactSet; Chart: Axios Visuals

Levi Strauss uses 2 pounds of cotton in every pair of pants, CFO Harmit Singh said on Wednesday’s earnings call.

  • To help cover its skyrocketing costs for the material, the company has raised its average selling prices by more than 10% over 2019 levels.

The big picture: Despite higher costs, lean inventories and shoppers’ willingness to pay up are helping big companies continue to grow.

3. What's happening

🏛️ Senate Democrats and Republicans reached an agreement to raise the debt ceiling limit by $480 billion until Dec. 3. (Axios)

✈️ United Airlines is planning to schedule 3,500 domestic flights a day in December, its highest level since the start of the pandemic. (CNBC)

💉 Pfizer asked the FDA to approve its coronavirus vaccine for kids ages 5–11. (Axios)

🍃 Google and YouTube issue new policy to prohibit climate deniers from being able to monetize their content. (Axios)

4. A crack in misinformation crackdown

Illustration: Brendan Lynch/Axios

YouTube is reviewing a high-profile and dangerous vaccine misinformation channel following an inquiry from Axios' Felix Salmon and Margaret Harding McGill.

Catch up quick: YouTube last month banned "harmful vaccine content" from the site, but left up Corona Ausschuss (The Corona Committee).

  • It's not only the foremost anti-vaxx YouTube channel in Germany, it's also the public face of Die Basis, an entire political party, nearly all of whose donations come from viewers of the YouTube channel,

Why it matters: When tech giants announce major policy changes, there's always a suspicion they're doing so for their domestic audience, and specifically for U.S. journalists and policymakers.

Read Felix and Margaret's full story

5. Happy Meal's Hispanic heritage

Illustration: Shoshana Gordon/Axios

The origins of the McDonald's Happy Meal began as a marketing idea in Guatemala, Axios' Oriana Gonzalez writes.

  • One of the co-founders of the first McDonald's in Guatemala, Yolanda Fernández de Cofiño, noticed that kids couldn't finish their meals and came up with the idea of smaller portions and a toy.
  • Fernández de Cofiño introduced her children's menu with smaller burgers, fries and a sundae at the 1977 World Franchisee Convention and McDonald's adopted the idea worldwide in 1979 as the Happy Meal.
  • She passed away in September at the age of 87.

Read Oriana's full story

6. What they're saying
"The worst part is that we don’t know where the bottom is."
— Manhattan Chamber of Commerce's Jessica Walker on the record office space vacancies in the New York City's midtown area — which has been brutal for surrounding businesses that rely on worker foot traffic — in an interview with CNBC.

What are your plans this weekend? Have a good one and take care of yourself.