US ECONOMY & POLITICS

Giant Gap Persists Between Job Openings and Available Workers – Wall Street Journal, 12/8/2021

• U.S. job openings continue to far outpace the number of available workers, with nearly five million more open positions than people seeking work.
• There are around 11 million job openings in the U.S., according to estimates from job-search site ZipRecruiter, based on their analysis of online job postings and government data sources.
• That compares with 6.9 million people who are unemployed but say they want to work.
• The share of the working-age population that is either employed or seeking employment, known as the labor-force participation rate, rose slightly last month, but not enough to keep employers from having to compete for workers.
• The November labor-force participation rate was 61.8%, still below the 63.4% rate in January 2020 ahead of the pandemic.
• The unemployment rate dropped to 4.2% last month, from 4.6%, as more people entered the workforce.
• The shift in labor participation came as improved employment opportunities, waning Covid-19 worries and lower levels of government support drew people into the labor force last month, economists say.
• Savings built up during the height of the pandemic may also be dwindling, leading people to again seek work, they add.

Two-Year Treasury Yields Erase Omicron Drop on Hawkish Fed Bets, 12/7/2021

• Two-year Treasury yields have erased their post-Thanksgiving tumble as traders bet the omicron impact on the U.S. economy won’t delay Federal Reserve rate hikes.
• The yield on the short-dated notes closed at 0.69% Tuesday — the highest since March 2020 — having rallied some 25 basis points from last week’s low as investor fears about the new coronavirus variant abated.
• The benchmark 10-year yield remains more than 20 basis points below its Thanksgiving peak.
• The prospect of tighter Fed policy — with a rate hike priced in for June — is pressuring the shorter-end of the bond market.
• The spread between five-year and 30-year Treasury yields has narrowed to the least since March 2020.

Sen. Joe Manchin Holds Back Support for Social-Spending Bill – Wall Street Journal, 12/7/2021

• Sen. Joe Manchin declined to commit to voting for Democrats’ roughly $2 trillion social-policy and climate package, citing concerns about inflation and the length of programs, weeks before the Christmas deadline party leaders are racing to meet.
• “The unknown we’re facing today is much greater than the need that people believe in this aspirational bill that we’re looking at,” Mr. Manchin said Tuesday.
• Democrats say the package is fully paid for and point to reports from Moody’s Investors Service and others projecting no major inflation impact.
• Senators are currently discussing with the nonpartisan parliamentarian what provisions can comply with the budget maneuver, according to aides, putting some immigration- and drug-pricing-related provisions in peril.
• Even if it passes the Senate, the legislation is expected to be different than the House-approved version and would need to be sent back to the House for final passage before Mr. Biden can sign it into law.

EPA Trims Ethanol Mandate for Gasoline as Biofuel Pressures Pump Prices – Wall Street Journal, 12/7/2021

• The Environmental Protection Agency on Tuesday proposed reducing the amount of ethanol and other biofuels that must be blended into gasoline this year and retroactively lowered last year’s mandate, in a win for refiners who warned that raising the requirement would lift prices at the pump.
• The decision comes as the price of ethanol, the most-dominant biofuel, has risen to its highest level in a decade.
• The EPA said it would require refiners to add 18.52 billion gallons of ethanol and other biofuels to be blended into gasoline for 2021—down from a mandate of 20.09 billion gallons previously set for 2020.
• Agency officials also lowered the amount required for 2020 to 17.13 billion gallons, down from the 20.09-billion-gallon target it had set in late 2019, the last time the blend rate was set.
• At the same time, however, the EPA raised the proposed biofuel mandate for 2022 to 20.77 billion gallons, which it said would be the highest requirement ever.

House Approves $778 Billion Defense Bill – Wall Street Journal, 12/8/2021

• The House voted Tuesday to approve a $778 billion defense-policy and budget bill that authorizes $25 billion more in defense spending than requested by President Biden and contains a provision to create a commission on the War in Afghanistan, three months after America’s longest war ended in a chaotic and bloody withdrawal.
• The National Defense Authorization Act, or NDAA, passed 363 to 70 with the backing of a majority of both Democrats and Republicans.
• The legislation includes pay raises for troops and money for military construction, ships and aircraft, and typically passes Congress with broad bipartisan support.
• The bill boosts military spending by about 5% over last year’s budget, exceeding Mr. Biden’s request of $752.9 billion for the Defense and Energy departments’ national-security programs.
• The legislation would establish a 16-member, bipartisan commission to study U.S. involvement in Afghanistan from 2001 to 2021.
• The bill also would authorize a National Global War on Terrorism Memorial on the National Mall.

EUROPE & WORLD

Scholz takes over as German chancellor, ending Merkel era – Reuters, 12/8/2021

• Social Democrat Olaf Scholz was sworn in as German chancellor on Wednesday, ending Angela Merkel’s 16 years of conservative rule and paving the way for his coalition government that has promised to boost green investment and strengthen European unity.
• Scholz, 63, who over the past four years served as vice chancellor and finance minister in coalition with Merkel, won a majority of 395 votes from lawmakers in the lower house of parliament, Bundestag President Baerbel Bas said.
• In the afternoon, Merkel officially handed over the chancellery to Scholz and wished him a “steady hand” as the country faces a brutal fourth wave of coronavirus infections and challenges to its democratic order from authoritarian leaders.
• Scholz will lead an unprecedented three-way ruling coalition on the federal level with the pro-spending, environmentalist Greens and the fiscally more conservative, libertarian Free Democrats (FDP) – unlikely political bedfellows in the past.

Australia, UK join diplomatic boycott of Beijing Winter Games – Reuters, 12/8/2021

• Australia and Britain will join the United States in a diplomatic boycott of the Winter Olympic Games in Beijing, their prime ministers said on Wednesday, as other allies weighed similar moves to protest at China’s human rights record.
• Asked in parliament if his country would follow Washington, British Prime Minister Boris Johnson said: “There will be effectively a diplomatic boycott of the Winter Olympics in Beijing, no ministers are expected to attend and no officials.”
• Earlier, Australian Prime Minister Scott Morrison said its decision came because of Australia’s struggles to re-open diplomatic channels with China to discuss alleged human rights abuses in the far western region of Xinjiang and Beijing’s moves against Australian imports.
• The Winter Games will begin about six months after the Summer Games wrapped up in the Japanese capital of Tokyo following a year’s delay because of the COVID-19 pandemic.
• Ties between Australia and its top trade partner, China, are at a low ebb after Canberra banned Huawei Technologies from its 5G broadband network in 2018 and sought an independent inquiry into the origins of COVID-19.

Lego to Build New Factory in Asia to Meet Rising Demand – Wall Street Journal, 12/8/2021

• Lego plans to invest more than $1 billion in a new factory in Asia, seeking to serve growing demand for its toy bricks in the region and double down on a supply-chain strategy that held it in good stead through the pandemic.
• The world’s biggest toy maker by revenue said Wednesday that the new factory in Vietnam would make products for big markets in the region such as India, Indonesia and the Philippines.
• Construction on the new Vietnamese plant, about 31 miles from Ho Chi Minh City, is scheduled to begin next year and be completed by 2024.
• It will be Lego’s sixth factory globally, alongside sites in Denmark, Mexico, Hungary, the Czech Republic as well as China.
• The company has reported double-digit percentage sales growth in the region since 2019 and has been opening dozens of new stores in China.
• The Asia-Pacific toy and games market—the world’s largest—is forecast to grow about 28% by value between now and 2025, compared with growth of 24% for the world market, according to Euromonitor. The figures exclude videogames.

Bipin Rawat, India’s Top Military Official, Dies in Helicopter Crash – Wall Street Journal, 12/8/2021

• India’s top military official, Bipin Rawat, died in a helicopter crash in the southern state of Tamil Nadu, the country’s air force said, along with 12 others, including his wife.
• As the country’s chief of defense staff, Mr. Rawat, 63 years old, was a top aide to Prime Minister Narendra Modi.
• He was traveling with his staff and security commandos in a Russian-made Mi-17V-5 helicopter at the time of the crash on Wednesday.
• A veteran of counterinsurgency warfare, Mr. Rawat served for nearly four decades in the army.
• Mr. Rawat’s death removes a central figure in India’s military plans to counter China as tensions rise between the two countries at their disputed border, said Brahma Chellaney, a professor of strategic studies at New Delhi-based think tank the Centre for Policy Research.
• The U.S. Embassy in New Delhi said Mr. Rawat was a strong partner of the U.S., overseeing an expansion of India’s defense cooperation with the U.S. military.

Nestlé Sells $10 Billion of L’Oréal Shares Back to Beauty Giant – Wall Street Journal, 12/8/2021

• Nestlé has agreed to reduce its stake in L’Oréal in a $10 billion deal that allows the world’s biggest packaged-foods maker to capitalize on a rally in the French beauty giant’s share price.
• The maker of Nescafé coffee and Purina petfood said it would sell 22.26 million L’Oréal shares back to the French company, paring its stake to about 20% from 23%.
• Nestlé will use the proceeds to help fund its own 20 billion Swiss francs, approximately $21.6 billion, share-buyback program.
• The Swiss company has been one of L’Oreal’s top shareholders for decades, an unusual alliance among two of the world’s biggest consumer- goods companies.
• Nestlé is selling its L’Oréal shares at €400, equivalent to $451, a piece, a discount of almost 6% to the company’s closing price Tuesday but a 3% premium over the average price of the last three months, according to analysts at RBC.

Factmonster – TODAY in HISTORY

• The American Federation of Labor was founded at a convention of union leaders in Columbus, Ohio. (1886)
• Congress declared war on Japan and the U.S. entered World War II. (1941)
• John Lennon, former member of the Beatles, was shot and killed in New York City by a deranged fan. (1980)
• President Reagan and Soviet leader Mikhail Gorbachev signed the first treaty to reduce the nuclear arsenals of the two superpowers. (1987)
• President Bill Clinton signed The North American Free Trade Agreement (NAFTA) into law. (1993)