US ECONOMY & POLITICS

Fed’s Kaplan says watching delta, may need to adjust views – Reuters, 8/20/2021

• Dallas Federal Reserve President Robert Kaplan said on Friday he was watching carefully for any economic impact from the Delta variant of the coronavirus and might need to adjust his views on policy “somewhat” should it slow economic growth materially.
• “It’s unfolding rapidly,” Kaplan told Fox Business Network. Kaplan has previously said he would like the Fed to begin tapering its asset purchases in October.
• “So far it’s not having a material effect” on consumer activity like dining out, he said, but “it is having an effect in delaying return to office, it’s affecting the ability to hire workers because of fear of infection,” and may be affecting production output, he said.

Internal State Department Cable Warned of Kabul Collapse – Wall Street Journal, 8/20/2021

• An internal State Department memo last month warned top agency officials of the potential collapse of Kabul soon after the U.S.’s Aug. 31 troop withdrawal deadline in Afghanistan, according to a U.S. official and a person familiar with the document.
• The classified cable represents the clearest evidence yet that the administration had been warned by its own officials on the ground that the Taliban’s advance was imminent and Afghanistan’s military may be unable to stop it.
• The cable, sent via the State Department’s confidential dissent channel, warned of rapid territorial gains by the Taliban and the subsequent collapse of Afghan security forces, and offered recommendations on ways to mitigate the crisis and speed up an evacuation, the two people said.
• The cable, dated July 13, also called for the State Department to use tougher language in describing the atrocities being committed by the Taliban, one of the people said.

Three Vaccinated Senators Have Tested Positive for Covid-19 – Wall Street Journal, 8/20/2021

• Three vaccinated U.S. senators said Thursday they had tested positive for Covid-19 and were all experiencing mild symptoms.
• Sens. Angus King (I., Maine), Roger Wicker (R., Miss.) and John Hickenlooper (D., Colo.) said that they were experiencing breakthrough Covid-19 cases, despite having been vaccinated earlier.
• A handful of breakthrough Covid-19 cases have recently surfaced in the U.S. Capitol, as the highly transmissible Delta variant has surged across the country.
• Earlier this month, Sen. Lindsey Graham (R., S.C.) tested positive for Covid-19.
• He too was vaccinated.

EUROPE & WORLD

China Passes One of the World’s Strictest Data-Privacy Laws – Wall Street Journal, 8/20/2021

• China has approved a sweeping privacy law that will curb data collection by technology companies, but that policy analysts say is unlikely to limit the state’s widespread use of surveillance.
• China’s top legislative body, the Standing Committee of the National People’s Congress, passed the Personal Information Protection Law at a meeting in Beijing on Friday, according to the state-run Xinhua News Agency.
• The national privacy law, China’s first, closely resembles the world’s most robust framework for online privacy protections, Europe’s General Data Protection Regulation, and contains provisions that require any organization or individual handling Chinese citizens’ personal data to minimize data collection and to obtain prior consent.
• However, unlike in Europe, where governments face more public pressure over data collection, Beijing is expected to maintain broad access to data.

China Delays Anti-Sanctions Law for Hong Kong – Wall Street Journal, 8/20/2021

• Beijing delayed plans for a new law that could bar banks and companies in Hong Kong from complying with sanctions on China’s people, reflecting caution about a measure that has sent a wave of concern through the city’s business community.
• China’s legislature had planned to implement new laws in Hong Kong and Macau mirroring the antiforeign sanctions law that was passed on the mainland in June in response to a series of restrictive measures imposed by the U.S. and Europe.
• But in an unexpected move, the Standing Committee of the National People’s Congress decided not to press ahead for now while it studies the issue, Tam Yiu-chung, a Hong Kong delegate to the panel, said Friday.
• The delay is a reprieve for companies that had feared the Catch-22 of violating Chinese law by upholding sanctions or violating U.S. law by not doing so.

China Closes U.S. Auditor as Tensions Mount Over Forced Labor Allegations – Wall Street Journal, 8/20/2021

• Chinese authorities have shut down a U.S. labor auditor’s local China partner, escalating Beijing’s campaign to counter forced-labor allegations in its northwest Xinjiang region and potentially complicating efforts by multinationals to certify supply chains in the country.
• China-based Shenzhen Verite, which is affiliated with U.S. labor rights nonprofit Verite, was closed following an April raid on its offices by Chinese security forces, according to people with knowledge of the matter.
• Though Verite was a small player in China’s auditing industry, companies including Walt Disney and Apple have hired the Amherst, Mass.-based company to consult on labor issues at Chinese factories.
• The nonprofit also had a reputation for producing investigations that lent credibility to corporations grappling with labor rights-related issues, according to other auditors.

Afghanistan GDP may slump 20% after Taliban takeover – Fitch Solutions – Reuters, 8/20/2021

• Afghanistan’s economy could shrink by as much as 20% this year and its currency may slide further than it already has following the Taliban’s takeover, Fitch Solutions said on Friday.
• The Taliban seized power last weekend from a U.S.-backed government, sending thousands fleeing and potentially heralding a return to the militants’ austere and autocratic rule of two decades ago.
• “It is likely that the economy will contract sharply this year,” Anwita Basu, head of Asia Country Risk at Fitch Solutions – the analysis and research arm of Fitch Group – told Reuters.
• Basu said Afghanistan’s currency, the afghani, which has already weakened more than 7% this month against the U.S. dollar, may fall more because most of the state’s foreign-held assets have been frozen to stop the Taliban from gaining access. She added that hyper-inflation cannot be ruled out.

Japan’s consumer price falls narrow on global commodity inflation – Reuters, 8/20/2021

• Japan’s core consumer prices narrowed their annual pace of falls for three straight months in July, a sign global commodities inflation was offsetting some of the deflationary pressure from a pandemic-induced spending slump.
• Japan’s core consumer price index (CPI), which includes oil but excludes fresh food prices, fell 0.2% in July from a year earlier, marking the 12th straight month of declines, government data showed on Friday.
• The fall was due in part to a change in the base year for the CPI that gives a heavier weighting to mobile charge fees, which plunged a record 39.6% in July.
• But the drop was smaller than market forecasts for a 0.4% fall and a 0.5% decrease in June due to the boost from rising food and fuel costs, including a 19.6% spike in gasoline bills.
• The so-called core-core consumer price index, which strips away not just fresh food but energy costs, fell 0.6% in July from a year earlier.

UK July retail sales drop amid soccer frenzy and COVID ‘pingdemic’ – Reuters, 8/20/2021

• British retail sales unexpectedly fell in July, official data showed on Friday, suggesting at least some consumers skipped shopping to follow England’s run in the Euro 2020 soccer tournament, or stayed at home due to rising COVID-19 cases.
• Sales volumes fell by 2.5% from June, the biggest drop since January when Britain returned to lockdown. Economists polled by Reuters had expected a 0.4% month-on-month rise.
• The ONS said food store sales were down by 1.5%, reflecting a jump in June and the opening of more hospitality venues. Non-food stores reported a fall of 4.4%, though sales remained 5.8% above their pre-pandemic levels in February 2020.
• In a possible sign of renewed caution among shoppers, or July’s bad weather, online sales rose to 27.9% of total spending after hitting a pandemic low in June.

Covid-19 Closure at China’s Ningbo Port Is Latest Snarl in Global Supply Chains – Wall Street Journal, 8/20/2021

• A major container terminal at China’s Ningbo-Zhoushan Port remained shut a week after operations were suspended from a single Covid-19 case, with dozens of ships lining up to load cargo for western markets ahead of the year-end shopping season.
• The congestion at Meishan terminal, which isn’t expected to resume full operations before the end of the month, is spreading to other ports like Shanghai and Hong Kong as big operators divert ships away from Ningbo.
• Ningbo is the world’s third-largest container port and a big gateway for Chinese exports like furniture, home goods, toys and auto parts headed to markets in the U.S. and Europe. The Meishan terminal is one of the biggest among seven box terminals at Ningbo, moving more than 7 million boxes a year.
• The cascading effect will lead to crowding at ports along the Asia-to-Europe and trans-Pacific routes that could further slow the flow of goods. It will also hit cargo owners from giant retailers like Walmart Inc. and Amazon. com Inc. to mom-and-pop shops, which will have to deal with late deliveries and higher transport costs as they work to restock ahead of the holidays.

Factmonster – TODAY in HISTORY

• As part of his Great Society policies, Lyndon B. Johnson signed the Economic Opportunity Act which, among other things, established the Head Start program. (1964)
• The space probe Voyager 2 was launched. It continues to explore to this day, and is now more than 7 billion miles from Earth. (1977)
• U.S. cruise missiles hit suspected terrorist bases in Afghanistan and the Sudan. (1998)