US ECONOMY & POLITICS

Biden Aims to Win Pivotal Democrat’s Support for $2 Trillion Spending Plan – Wall Street Journal, 12/13/2021

• President Biden this week will lobby Sen. Joe Manchin, the centrist West Virginia Democrat, in an attempt to lock in a deal on a roughly $2 trillion social-policy and climate bill that Democrats hope to finish by Christmas.
• Passage hinges largely on the support of Mr. Manchin, who hasn’t endorsed the legislation. He has repeatedly raised concerns about the cost of the bill and the potential effect of new government spending on inflation. Messrs. Biden and Manchin plan to talk early this week, a Senate aide said.
• Last week, Mr. Manchin criticized Democrats’ plan to calculate revenue over 10 years but make programs in the bill last for a shorter time, which has the effect of making the bill’s cost appear smaller than the Democrats’ ultimate ambitions. Many lawmakers say they will try to extend the programs later.
• He hasn’t commented publicly since the Labor Department reported on Friday that the consumer-price index rose 6.8% in November from the same month a year ago, the highest reading in nearly 40 years.
• The Congressional Budget Office on Friday released an estimate of the bill requested by Republicans that analyzed the cost of its provisions if they were extended indefinitely, rather than on the temporary basis Democrats have proposed.
• Under that assumption, the CBO analysis found that the legislation’s provisions under that would add roughly $3 trillion to the deficit over a decade.

Fed to pivot on inflation fears in the face of another uncertain year – Reuters, 12/13/2021

• The U.S. Federal Reserve, stung by persistently high inflation and encouraged by lower-than-expected unemployment, is set on Wednesday to chart a path of higher interest rates next year as policymakers show their hands on just how soon and how much they think borrowing costs will need to increase to keep the economy on an even keel.
• Fed Chair Jerome Powell has already flagged the rate-setting committee will likely announce at its policy meeting this week that it will accelerate the end of its bond-buying program, wrapping it up by March instead of June, in order to clear the way for the Fed to lift off interest rates from near zero, where they have been held since March 2020 when the coronavirus pandemic triggered a short but deep recession.
• It will lead to policymakers’ bringing forward their projections for interest rate rises, in their so-called “dot plot,” as part of their forecasts, released quarterly, for economic growth, employment and inflation as well as the timing of interest rate rises.
• Most analysts expect the Fed to stick to forecasting three rate hikes in 2023 and 2024, given officials still expect a rapid abatement of price pressures in the latter half of next year as the pandemic recedes from view.
• How soon the Fed actually starts liftoff is less certain. Economists polled by Reuters expect the Fed to raise interest rates in the third quarter of next year, but as with other analysts, also note the risk is a hike comes sooner.
• Investors currently see a greater-than 50% probability that the Fed will raise its benchmark overnight lending rate in May, according to CME Group’s FedWatch tool.

Some Hospitals Drop Covid-19 Vaccine Mandates to Ease Labor Shortages – Wall Street Journal, 12/13/2021

• Some of the largest U.S. hospital systems have dropped Covid-19 vaccine mandates for staff after a federal judge temporarily halted a Biden administration mandate that healthcare workers get the shots.
• Hospital operators including HCA Healthcare and Tenet Healthcare as well as nonprofits AdventHealth and the Cleveland Clinic are dropping the mandates.
• Many hospitals already struggled to find workers, including nurses, before the pandemic. The shortages were compounded by burnout among many medical workers and the lure of high pay rates offered to nurses who travel to hot spots on short-term contracts.
• More recently, thousands of nurses have left the industry or lost their jobs rather than get vaccinated. As of September, 30% of workers at more than 2,000 hospitals across the country surveyed by the Centers for Disease Control and Prevention were unvaccinated.
• A federal judge in Louisiana ruled in November that the Centers for Medicare and Medicaid Services didn’t have the authority to mandate vaccines for healthcare workers, blocking a Biden administration rule that affected some 10 million workers.
• “I don’t think the mandates were helpful and I think the court in Louisiana did everyone a service,” said Alan Levine, chief executive officer of Ballad Health, which runs 21 hospitals in Tennessee and Virginia.

EUROPE & WORLD

Some Chinese companies suspend production in Zhejiang province on virus outbreak – Reuters, 12/13/2021

• More than a dozen Chinese-listed companies said they had suspended production in coronavirus-hit parts of China’s eastern Zhejiang province in response to local government’s tightened COVID-19 curbs, causing their share prices to plunge.
• Zhejiang reported a total of 173 locally transmitted cases with confirmed symptoms during the Dec. 6-12 period, official numbers showed on Monday, marking the province’s first domestic cluster outbreak this year.
• A slew of companies, including Ningbo Homelink Eco-Itech, Zhejiang Zhongxin Fluoride Materials, Zhejiang Jingsheng Mechanical & Electrical and Zhejiang Fenglong Electric, announced the production suspension through exchange filings over the weekend.
• Ningbo Homelink, which makes plastic products, said in an exchange filing late on Sunday that it had halted production in its home city Ningbo at the request of local authorities, and is taking measures to minimise the negative impact on its business.
• Zhejiang Jindun Fans, a Chinese maker of ventilation system equipment, said on Sunday that production at its subsidiary in Zhejiang’s Shaoxing city had been suspended due to local government’s anti-virus measures.
• All the companies that announced production halt vowed to fully cooperate with the local government, which will decide when production can be resumed.

G-7 Officials Warn of ‘Massive Consequences’ if Russia Invades Ukraine – Wall Street Journal, 12/13/2021

• Foreign ministers from the Group of Seven countries warned of severe consequences if Russia invades Ukraine, in a show of unity that they hope will deter Russian President Vladimir Putin from ratcheting up military pressure on the country and defuse tensions in Eastern Europe.
• Following a meeting in Liverpool, England, the ministers from the group of wealthy democracies said in a joint statement that any invasion of Ukraine would have “massive consequences” for Russia.
• “We call on Russia to de-escalate, pursue diplomatic channels, and abide by its international commitments on transparency of military activities,” the G-7 foreign ministers said in a joint statement Sunday.
• However the G-7 stopped short of laying out what measures they would take to punish Russia should it launch military action. Officials at the meeting said that these still needed to be decided at the national level.
• One U.S. State Department official said penalties could be implemented very quickly if needed.

China Seen Adding Fiscal Stimulus After Setting 2022 Targets – Bloomberg, 12/13/2021

• Economists predict China will start adding fiscal stimulus in early 2022 after the country’s top officials said their key goals for the coming year include counteracting growth pressures and stabilizing the economy.
• Curbs on the property industry are expected to remain, while there could be fewer regulatory surprises compared with sudden moves in 2021 to rein in sectors from technology to education and entertainment, the economists said.
• At the end of their three-day annual Central Economic Work Conference, the Communist Party’s top decision makers on Friday said the top priority for next year is “ensuring stability.” They also vowed to “front load” policies and keep the monetary stance flexible and appropriate.
• The economy has slowed in recent months because of the worsening property market slump, weak consumption growth, and repeated outbreaks of Covid-19, which have damaged businesses and consumers’ confidence. The meeting’s relatively hawkish language on real estate suggests that the drag from property will mostly persist.

Abandoned Projects Shatter Confidence in China’s Home Market – Bloomberg, 12/13/2021

• Construction cranes stand idle in China’s Yunnan Province, on the easternmost edge of the Himalayas. Building has ground to a halt on Hainan, off the coast of Vietnam, and up in Heilongjiang, along the Russian border.
• Across China, tens of millions of square feet of unfinished apartment buildings — the legacy of a real estate boom gone awry in 2021 — are derailing countless dreams of owning a home.
• In a country where private homeownership was only legalized two decades ago, ordinary Chinese are discovering how quickly fortunes can turn in the housing market. Creeping price declines and plummeting sales in recent months have called into question the way freewheeling property developers have financed, built and marketed homes to the masses.
• The result is a mirror image of the 2008 subprime fiasco. Back then, in the U.S., it was homebuyers who got in over their heads. This time, in China, it’s builders.
• President Xi Jinping wants to crack down on what he sees as debt-fueled excess in the real estate industry without hurting the many millions who’ve scrimped and saved to buy homes. City dwellers tend to have roughly 80% of their assets tied up in housing.

Alibaba Fires Female Employee Who Accused Then-Supervisor of Sexual Assault – Wall Street Journal, 12/13/2021

• Alibaba Group has fired a female employee who accused her then-supervisor of molestation and rape during a business trip earlier this year, according to the woman and her lawyer, refocusing attention on a sexual-assault case that sent ripples through China’s tech sector.
• The woman, identified in public only by her surname Zhou, was sent a dismissal notice on Nov. 25 for allegedly spreading false information and damaging the company, according to a copy of the notice reviewed by The Wall Street Journal.
• Ms. Zhou’s accusations in July triggered widespread debate about the prevalence of sexual misconduct in the workplace, prompting a pledge from Alibaba Chief Executive Daniel Zhang to work to change systemic cultural issues at the e-commerce giant. Several Chinese tech giants also instituted sexual-harassment policies.

Volkswagen plans to decide new gigafactory locations in H1, 2022 – Reuters, 12/13/2021

• Volkswagen said on Monday it was looking at locations for planned battery cell plants in Spain and eastern Europe and the exact sites for its third and fourth gigafactories would be determined in the first half of 2022.
• “By 2030, Volkswagen plans to open two more cell factories in Europe,” the group added in a statement.
• Volkswagen also said it was founding a European company to bundle activities in its battery related business, aiming to optimise their efficiency as it eyes becoming the world’s leading electric car manufacturer.

Factmonster – TODAY in HISTORY

• President Wilson arrived in France, becoming the first U.S. president to visit Europe while in office. (1918)
• The Polish government imposed martial law in an attempt to crush the Solidarity movement. (1981)
• George W. Bush accepted presidency 36 days after election; Al Gore, Jr., conceded. (2000)
• American forces captured Saddam Hussein who was hiding in a hole near his hometown of Tikrit. (2003)