US ECONOMY & POLITICS

High Inflation, Falling Unemployment Prompted Powell’s Fed Pivot – Wall Street Journal, 12/6/2021

• The abrupt shift opens the door to the Fed raising interest rates next spring rather than later in the year to curb inflation, marking a significant policy pivot by Chairman Jerome Powell shortly after President Biden offered him a second four-year term leading the central bank.
• Inflation has surged this year—to 5% in October from a year earlier, according to the Fed’s preferred gauge—amid strong demand for goods and services and supply-chain bottlenecks associated with reopening the economy.
• Mr. Powell’s turnabout accelerated over the past month as a slew of new data showed price pressures rising and broadening amid a robust economic recovery, according to public comments and recent interviews.
• The Fed has moved cautiously this year to withdraw stimulus in part because of a new framework officials adopted last year that set aside the central bank’s longstanding preference for pre-emptively raising rates to head off inflationary pressures.
• Officials are giving more weight to the prospect that the aggressive fiscal- and monetary-policy responses to the pandemic last year altered traditional recessionary dynamics, buoying wage growth that normally takes longer to recover after a downturn.

U.S. Won’t Send Officials to Beijing Winter Olympics – Wall Street Journal, 12/6/2021

• The Biden administration won’t send U.S. officials to attend the coming 2022 Winter Olympics in Beijing, staging a diplomatic boycott that drew immediate criticism from China.
• The decision to withhold official U.S. representation at the Olympics was made several weeks ago, though administration officials waited to make the announcement to allow some time to pass after a phone call last month between President Biden and his Chinese counterpart, Xi Jinping, to stabilize tense relations, advisers to the administration said.
• While such a boycott would keep U.S. officials from attending the games, the move wouldn’t affect participation by athletes.

Fauci Says U.S. Is Reviewing Travel Restrictions on Daily Basis– Bloomberg, 12/6/2021

• The U.S. is reevaluating the travel ban on eight southern African countries as more information about the omicron variant and its spread becomes available, White House medical adviser Anthony Fauci said Sunday.
• The U.S. has barred entry from South Africa, Botswana, Zimbabwe, Namibia, Lesotho, Eswatini, Mozambique and Malawi.
• That’s prompted criticism from international officials, with United Nations Secretary General Antonio Guterres last week likening the restrictions to “travel apartheid.”
• U.S. officials have defended the restrictions as a way to buy time to learn more about the variant and develop possible countermeasures.
• Fauci also indicated that the U.S. was encouraged by reports from South African officials that the rapid spread of omicron hadn’t yet resulted in a spike in hospitalizations in that country, an indication that the strain could be less virulent.

New York mayor plans vaccination mandate for private-sector employers – Reuters, 12/6/2021

• New York City Mayor Bill de Blasio said on Monday he planned to issue a COVID-19 vaccine mandate for private-sector employers that will go into effect on Dec. 27, calling it a “pre-emptive strike.”
• Several indicators on Monday showed the spread of COVID-19 were increasing in the most populous city in the United States, including the percentage of people who are testing positive for the virus, according to data from New York City.
• In November, a U.S. appeals court upheld its decision to put on hold an order by President Joe Biden for companies with 100 workers or more to require COVID-19 vaccines, rejecting a challenge by his administration.

EUROPE & WORLD

Evergrande moves toward restructuring; state swoops in to contain risk – Reuters, 12/6/2021

• Evergrande has set up a risk management committee as the cash-strapped property developer inches closer to a debt restructuring that has loomed for months over global markets and the world’s second-largest economy.
• The real estate giant, which is grappling with over $300 billion in liabilities and is at risk of becoming China’s biggest ever default, said on Monday that the committee included officials from state entities and would play an important role in “mitigating and eliminating the future risks” of the group.
• Evergrande shares slumped to a record low on Monday as it teetered, yet again, on the brink of default with the end of a 30-day grace period looming on dues totaling $82.5 million.
• Chinese authorities have ramped up efforts to reassure markets that Evergrande’s woes can be contained.
• In the latest move, China’s central bank said on Monday it would cut the amount of cash that banks must hold in reserve, its second such move this year, releasing $188 billion in long-term liquidity to bolster slowing economic growth.
• The recent tumble in Evergrande’s dollar-denominated bonds accelerated with the March 2022 issue dropping 4.35 cents in the dollar to 27.7 cents, while other issues like the 2024 and 2025 bonds , tumbled to record lows below 20 cents, MarketAxess data showed.

Rout in Chinese Internet Stocks Rolls On in Hong Kong – Wall Street Journal, 12/6/2021

• Chinese internet stocks fell in Hong Kong on Monday following a selloff in comparable American depositary receipts late last week, as the fear of more U.S. delistings led many investors to re-evaluate the risks of an already battered technology sector.
• The Hang Seng Tech Index, which tracks the 30 largest technology companies listed in the city, slid 3.3% to its lowest level, after Alibaba, JD.com, and other internet stocks logged sizable declines.
• The benchmark, which launched in July 2020, has lost close to a third of its value this year, and is down 45% from a peak in February.
• Chinese ride-hailing company Didi’s decision to delist from the New York Stock Exchange has triggered a wall of worries about the future of Chinese internet and technology stocks listed on American stock exchanges.
• On Sunday, the China Securities Regulatory Commission responded to market concerns regarding delisting, saying that it has always maintained an open attitude toward Chinese companies choosing to list overseas and that it fully respects companies choosing their listing venues.

China Cuts Reserve Requirement Ratio as Economy Slows – Bloomberg, 12/6/2021

• The People’s Bank of China will reduce the reserve requirement ratio by 0.5 percentage point for most banks on Dec. 15, releasing 1.2 trillion yuan ($188 billion) of liquidity, according to a statement published Monday.
• The decision comes after an improvement in recent industrial and broader economic data, although Beijing’s tighter curbs on the property market have led to a slump in construction and worsened a liquidity crisis at real-estate firms including embattled China Evergrande Group.
• The PBOC decision was closely followed by a statement from top leaders pledging to stabilize the economy in 2022, with a Politburo meeting signaling an easing of some property curbs.
• The Monday meeting of the Politburo will be followed by the Central Economic Work Conference sometime this month, which will flesh out economic policy plans for the next year.

Aung San Suu Kyi Sentenced to Four Years in Myanmar Prison – Wall Street Journal, 12/6/2021

• Myanmar’s ousted civilian leader, Aung San Suu Kyi, was sentenced to four years imprisonment after being found guilty on two charges, the first verdicts in a raft of criminal cases that the country’s military has brought against her since seizing power 10 months ago.
• The guilty verdicts are likely to spark more unrest in the Southeast Asian nation, which was plunged into turmoil after the coup on Feb. 1.
• Ms. Suu Kyi’s conviction is the most recent sign that the junta has no intention of loosening its grip and follows harsh punishments recently meted out to several of her allies.
• Ms. Suu Kyi was sentenced on Monday alongside two others, ousted President Win Myint and a senior member of her political party, Myo Aung, according to the person familiar with the cases.
• All three were found guilty of incitement, while Ms. Suu Kyi and Mr. Win Myint were also convicted of violating a disaster-management law.

Factmonster – TODAY in HISTORY

• Construction of the Washington Monument was completed. (1884)
• Jefferson Davis, the first and only president of the Confederate States of America, died in New Orleans. (1889)
• A presidential address was broadcast on the radio for the first time when Calvin Coolidge spoke before Congress. (1923)
• Hugo Chavez elected president of Venezuela. (1998)