US ECONOMY & POLITICS

U.S. manufacturing, services activity expanding rapidly in November: IHS Markit – Reuters, 11/23/20

• U.S. business activity expanded at the fastest rate in more than five years in November led by the quickest pickup in manufacturing since September 2014, a survey showed on Monday in an indication the economy keeps making progress at clambering out of the COVID-19 recession even as infections surge.
• Markit’s manufacturing index climbed to 56.7 from 53.4 in October, above the median forecast in a Reuters economists’ poll of 53. A reading above 50 indicates expansion.
• The services index, meanwhile, rose to 57.7 – the highest since April 2015 – from 56.9 a month earlier. The Reuters poll had pegged the expectation at 55.0.
• Markit’s composite index – a blend of the manufacturing and services readings – increased to 57.9 from 56.3 in October. It was also the highest since April 2015.

White House Weighs New Action Against Beijing – Wall Street Journal, 11/23/20

• Senior Trump administration officials say they are pushing for new hard-line measures against Beijing, even as President Trump winds down his final two months in office.
• The most ambitious effort would create an informal alliance of Western nations to jointly retaliate when China uses its trading power to coerce countries, administration officials say. They say the plan was sparked by Chinese economic pressure on Australia after that country called for an investigation into the origins of the Covid-19 pandemic.
• Under the joint retaliation plan, when China boycotts imports, allied nations would agree to purchase the goods or provide compensation. Alternatively, the group could jointly agree to assess tariffs on China for the lost trade.
• The administration is also looking to broaden its ban on imports from China’s Xinjiang region that are made with forced labor, and add companies to a Commerce Department blacklist, including Chinese chip maker Semiconductor Manufacturing International Corp. SMIC already faces tough licensing requirements when buying from U.S. firms.
• The senior officials acknowledged that the new measures face the hurdle of a waning Trump administration. Should they succeed, they would also need the incoming Biden administration to endorse the effort and carry it forward.

Exclusive: In latest China jab, U.S. drafts list of 89 firms with military ties – Reuters, 11/22/20

• The Trump administration is close to declaring that 89 Chinese aerospace and other companies have military ties, restricting them from buying a range of U.S. goods and technology, according to a draft copy of the list seen by Reuters.
• The list, if published, could further escalate trade tensions with Beijing and hurt U.S. companies that sell civil aviation parts and components to China, among other industries.
• Commercial Aircraft Corp of China (COMAC), which is spearheading Chinese efforts to compete with Boeing and Airbus, is on the list, as is Aviation Industry Corporation of China (AVIC) and 10 of its related entities.
• The list is included in a draft rule that identifies Chinese and Russian companies the U.S. considers “military end users,” a designation that means U.S. suppliers must seek licenses to sell a broad swath of commercially available items to them.
• News of the list comes at a sensitive time for the U.S. aerospace industry as Boeing seeks Chinese approval of its 737 MAX after it was cleared by U.S. regulators last week.

Student Loan Losses Seen Costing U.S. More Than $400 Billion – Wall Street Journal, 11/23/20

• The U.S. government stands to lose more than $400 billion from the federal student loan program, an internal analysis shows, approaching the size of losses incurred by banks during the subprime-mortgage crisis.
• The Education Department, with the help of two private consultants, looked at $1.37 trillion in student loans held by the government at the start of the year.
• Their conclusion: Borrowers will pay back $935 billion in principal and interest.
• That would leave taxpayers on the hook for $435 billion, according to documents reviewed by The Wall Street Journal.
• After decades of no-questions-asked lending, the government is realizing that it has a pile of toxic debt on its books.
• By comparison, private lenders lost $535 billion on subprime-mortgages during the 2008 financial crisis, according to Mark Zandi, chief economist at Moody’s Analytics.

Joe Biden Picks Antony Blinken for Secretary of State – Wall Street Journal, 11/23/20

• President-elect Joe Biden intends to nominate Antony Blinken to serve as secretary of state, turning to a trusted diplomat and foreign-policy adviser to oversee his work to rebuild U.S. relationships around the globe, according to people familiar with the decision.
• The former vice president is also expected to nominate diplomat Linda Thomas-Greenfield to serve as U.S. ambassador to the United Nations and to select Jake Sullivan, a State Department veteran, to serve as national security adviser, the people said.
• The announcement of Mr. Blinken’s selection is expected by Tuesday at the latest, people familiar with the selection said. Mr. Biden said last week that he had also settled on a pick for Treasury secretary.

Michigan Board Is Under Pressure to Delay Election Results – Wall Street Journal, 11/23/20

• The usually obscure board that certifies Michigan’s elections is under heightened pressure ahead of a scheduled Monday vote to approve ballot results giving President-elect Joe Biden the state’s 16 electoral votes.
• The Republican National Committee on Saturday asked the Michigan Board of State Canvassers to take an additional two weeks and conduct an audit of the vote count in Wayne County, which includes Detroit.
• The RNC’s request echoed a demand by John James, the Republican U.S. Senate candidate who lost to incumbent Democrat Sen. Gary Peters in unofficial results, to look into discrepancies in poll records for Detroit and surrounding Wayne County, and the processes Detroit officials used for counting a record number of mail-in ballots.
• Mr. James’s campaign sent the state board 30 pages of arguments and affidavits from people who say they witnessed problems with absentee vote-counting at Detroit’s convention center during Election Week.

EUROPE & WORLD

Europe’s Economy Set to Contract Again as Lockdowns Bite – Wall Street Journal, 11/23/20

• The European economy appears set for a fresh contraction in the final quarter of 2020, as business surveys indicate that lockdowns aimed at containing the coronavirus have led to a sharp decline in activity in the dominant services sector.
• Data firm IHS Markit said its composite Purchasing Managers Index for the eurozone—a measure of activity in the services and manufacturing sectors—fell to 45.1 in November from 50.0 in October, reaching its lowest level since May.
• The PMI for the services sector fell to 41.3 from 46.9 in November, pointing to an even larger decline in activity than in October.
• By contrast, the PMI for the manufacturing sector continued to point to an increase in activity, albeit at a slower pace.
• Faced with a new lockdown, service providers cut jobs at a faster rate than in the previous month, according to the survey of purchasing managers, while the decline in manufacturing employment was less sharp.
• Overall, employment fell for the ninth straight month.
• The French economy relies quite heavily on consumer services, and saw a sharp decline in activity during November.
• Germany is more dependent on manufacturing goods for export, and its economy continued to expand.
• A survey of U.K. purchasing managers pointed to a similar decline in activity, again concentrated in the services sector following a national lockdown that came into effect on Nov. 5.

Israel’s Netanyahu, Saudi Crown Prince Hold First Known Meeting – Wall Street Journal, 11/23/20

• Israeli Prime Minister Benjamin Netanyahu met Saudi Arabia’s crown prince in the kingdom on Sunday, according to two Saudi government advisers, in their first known meeting and amid a U.S. push to normalize ties between the longtime foes. Saudi officials have denied the meeting took place.
• Mr. Netanyahu made the secret trip on Sunday evening to the seaside corner of northwest Saudi Arabia to join U.S. Secretary of State Mike Pompeo’s meeting with Prince Mohammed bin Salman.
• Yossi Cohen, the director of Israel’s spy agency, accompanied the Israeli prime minister, according to Israel’s Army Radio.
• The leaders discussed several issues, including normalization of ties and Iran, but no substantial agreements were reached, one of the senior Saudi advisers familiar with the talks told The Wall Street Journal. He said the meeting lasted a couple of hours.
• Israel has already made deals to normalize ties with Bahrain, the United Arab Emirates and Sudan and Israeli and American officials have said other such deals are under way, though could be affected by the results of the November U.S. elections.

China Vows to Investigate Bond-Market Misconduct – Wall Street Journal, 11/23/20

• China warned it would show zero tolerance for misconduct in the debt markets, after a series of defaults by state-backed groups unsettled investors.
• The warning came from the Financial Stability and Development Committee, a body that groups together China’s central bank and other top financial regulators and that is chaired by Vice Premier Liu He, President Xi Jinping’s point person on economic and financial issues.
• It followed interventions by other actors, including the securities regulator, a stock exchange, and the industry body for the debt industry, as authorities moved to calm unease that has sent yields on riskier debt to their highest in nearly two years.
• Beijing will “investigate and deal with fraudulent issuance, false information disclosure, malicious transfer of assets, misappropriation of issued funds and other illegal activities,” the committee said over the weekend after meeting.

Factmonster – TODAY in HISTORY

• The first jukebox was installed at the Palais Royal Saloon in San Francisco. (1889)
• U.S. wartime food rationing, of meat, butter, and other foods, ended.  (1945)
• People’s Republic of China was seated at the UN Security Council. (1971)