US ECONOMY & POLITICS

Fed’s Barkin Says Labor Market Hasn’t Healed Enough to Taper Bond Buying – Wall Street Journal, 7/12/2021

• Federal Reserve Bank of Richmond President Thomas Barkin isn’t ready to call for an end to the U.S. central bank’s $120 billion a month in bond-buying stimulus given where the labor market stands today.
• The policy maker said the employment-to-population ratio is important to him in determining when the central bank can dial back on the stimulus it is providing the economy.
• This ratio stood at 61.1% in February 2020, before the coronavirus pandemic took hold in the U.S. and economic activity cratered.
• It bottomed out in April of that year at 51.3% and has risen since, hitting 58% this June. Mr. Barkin said he would like to see something just north of 59% before he believes it would be time to start reducing bond buying.

Lawmakers to Determine Fate of Infrastructure, Antipoverty Plans – Wall Street Journal, 7/12/2021

• Democrats are racing to finalize a bipartisan infrastructure deal and set the contours of a broad child-care and education plan, aiming to maintain a delicate agreement with Republicans while simultaneously plowing forward with their own priorities.
• After a two-week recess, senators return to Washington this week to determine the fate of much of President Biden’s roughly $4 trillion agenda.
• Senate Majority Leader Chuck Schumer (D., N.Y.) told Senate Democrats in a letter on Friday that he expects that the chamber will take up both a roughly $1 trillion infrastructure agreement and a resolution setting the parameters of a bill encompassing other Democratic priorities in the coming weeks.
• While staff have been filling in details of the infrastructure agreement, Democrats remain divided over the size and scope of the other, broader bill.
• Liberals such as Sen. Bernie Sanders (I., Vt.) have called for as much as $6 trillion in spending in the package, while moderates have favored a smaller number.
• Adding to the sensitivity of the negotiations, many lawmakers have linked the fate of the two efforts.
• Some Democrats, including House Speaker Nancy Pelosi (D., Calif.) have said they won’t support the infrastructure agreement unless the other legislation moves forward, while some Republicans have said advancing other Democratic priorities could cause them to oppose the infrastructure deal.

Global Tax Deal Heads Down Perilous Path in Congress – Wall Street Journal, 7/12/2021

• A complex international corporate tax deal that took years to hammer out soon faces one of its toughest tests: the U.S. Congress.
• The Group of 20 major economies backed the plan this weekend in Venice, Italy, following the earlier endorsement from a broader 130-country group.
• The plan, aimed at limiting corporate tax avoidance, would revamp longstanding international rules and is crucial to President Biden’s plans to raise corporate taxes.
• International negotiators split their work into two separate ideas, known as pillars.
• Pillar One, pushed by European countries including the U.K., would assign more taxing power to countries with large consumer markets and pull power away from low-tax jurisdictions such as Ireland.
• Pillar Two, driven by the U.S., would impose at least a 15% tax on companies’ world-wide earnings.
• Setting that floor makes it easier for the Biden administration to try raising taxes on U.S. companies by up to $2 trillion over a decade, because U.S. rates could rise higher without creating significant opportunities for companies to dodge taxes by shifting profits and addresses.

EU to Put on Hold Digital Levy Following G-20 Minimum Tax Plans – Wall Street Journal, 7/12/2021

• The European Union is putting on hold a proposed digital levy, an EU spokesman said Monday, after finance chiefs from the Group of 20 leading economies endorsed an overhaul of the rules for taxing international companies.
• The EU has faced intense U.S. pressure to postpone any announcement until a deal among the G-20 can advance. The EU’s executive arm, the European Commission, has “decided to put on hold our work on a proposal for a digital levy” until October, said the spokesman. A proposal was expected later this month.
• European officials had already indicated they would aim to ensure the EU’s digital levy wouldn’t undermine work on the global corporate minimum tax, indicating they would propose a low tax rate and structure it in a way to avoid discriminating against U.S. companies.

EUROPE & WORLD

ECB’s Lagarde Foresees July Policy Shift, 2022 ‘Transition’ – Bloomberg, 7/12/2021

• European Central Bank President Christine Lagarde told investors to prepare for new guidance on monetary stimulus in 10 days, and signaled that fresh measures might be brought in next year to support the euro-area economy after the current emergency bond program ends.
• Speaking to Bloomberg Television days after the ECB raised its inflation goal to 2% and acknowledged it may overshoot the target, Lagarde said the July 22 Governing Council session — previously expected to be relatively uneventful — will now have “some interesting variations and changes.”
• Lagarde said she expects the ECB’s current 1.85 trillion-euro ($2.2 trillion) bond-buying plan to run “at least” until March 2022.
• That could then be followed by a “transition into a new format,” she said, without elaborating.

Beijing Blocks Merger, Tightens Data Rules as Post-Didi Crackdown Speeds Up – Wall Street Journal, 7/12/2021

• China’s internet regulator moved Saturday toward requiring data-rich tech companies to undergo cybersecurity reviews ahead of any foreign listings, making explicit for the first time a data-security requirement that marred last week’s U.S. initial public offering by Didi Global.
• Separately, China’s main antitrust regulator on Saturday blocked Tencent’s bid to combine the country’s two biggest game-streaming platforms, its first public intervention to halt a merger in China’s technology sector.
• The security review revision, released Saturday by the Cyberspace Administration of China for public comment, said companies holding personal data on at least one million users must apply for a cybersecurity review.
• Previously, companies seeking overseas stock listings weren’t explicitly obligated to conduct such reviews, though they would typically do so if asked by officials.

China to order Tencent Music to give up music label exclusivity -sources – Reuters, 7/12/2021

• China’s antitrust regulator is set to order the music streaming arm of Tencent to give up exclusive rights to music labels which it has used to compete with smaller rivals, two people with knowledge of the matter said on Monday.
• The State Administration of Market Regulation (SAMR) will also fine it 500,000 yuan ($77,150) for lapses in reporting the acquisitions of apps Kuwo and Kugou, the people told Reuters – a milder penalty than the forced sale indicated earlier this year.
• In April, Reuters reported that SAMR aimed to fine Tencent Holdings at least 10 billion yuan, and that the social media leader was lobbying for leniency. Reuters also reported that SAMR had told Tencent Music it may have to sell Kuwo and Kugou.
• Instead, SAMR will no longer require a sale but will impose the maximum 500,000 yuan fine for not properly flagging the 2016 app purchases for antitrust review, the people said on Monday.

Factmonster – TODAY in HISTORY

• England’s King Henry VIII married his sixth and last wife, Catherine Parr. (1543)
• Congress authorized the Medal of Honor. (1862)
• Democratic presidential nominee Walter Mondale announced his choice of running-mate, Geraldine Ferraro; Ferraro is first woman to run for vice president on a major party ticket. (1984)