US ECONOMY & POLITICS

U.S. business activity cools in mid-December amid COVID-19 resurgence -IHS Markit – Reuters, 12/16/20

• U.S. business activity slowed in the first half of December as renewed restrictions to slow a resurgence in new COVID-19 infections hurt the services sector.
• Data firm IHS Markit said on Wednesday its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to a reading of 55.7 early this month from 58.6 in November.
• A reading above 50 indicates growth in private sector output.
• The survey’s flash composite new orders index fell to 55.1 this month from a reading of 57.5 in November.
• Its flash services sector PMI dropped to a reading of 55.3 this month from 58.4 in November.
• The survey’s flash manufacturing PMI dipped to a reading of 56.5 from 56.7 in November. Economists had forecast the index for the sector, which accounts for 11.3% of the economy, declining to 55.7 in December.
• A measure of new orders received by factories fell to a reading of 55.7 from 57.4 in November. But a gauge of factory employment rose to 52.1 from a reading of 51.7 in November.

U.S. Shoppers Pull Back Spending at Start of Holiday Season – Wall Street Journal, 12/16/20

• U.S. retail sales, a measure of purchases at stores, restaurants and online, dropped a seasonally adjusted 1.1% in November from the prior month, the Commerce Department said Wednesday, amid a surge in coronavirus cases and new business restrictions in some states.
• Sales were up by 4.1% when compared with the same month a year ago.
• Retail sales for October were revised to a decline of 0.1% from an earlier estimate of a 0.3% increase.
• Other data show that spending has continued to lag since the Thanksgiving holiday.
• JPMorgan Chase’s tracker of 30 million credit and debit cardholders recorded a 4.1% decline in spending from a year earlier in the week through Dec. 11.
• Credit- and debit-card data collected by research firm Affinity Solutions and research group Opportunity Insights showed that overall spending was down 11.6% in the week ended Nov. 29 compared with January levels.

Congressional Leaders Discussing Adding a Second Round of Stimulus Checks – Wall Street Journal, 12/16/20

• Congressional leaders were closing in on a coronavirus relief deal Wednesday expected to include another round of direct payments to households feeling the pain of the pandemic’s battering of the global economy, according to people familiar with the negotiations.
• The package under discussion was expected to exclude the two thorniest issues: funding for state and local governments and liability protections for businesses and other entities operating during the pandemic, according to people familiar with the talks.
• But congressional leaders were discussing adding a second round of direct checks, potentially of a smaller size than the initial round of checks, which directed $1,200 to individuals and $500 per dependent.
• Sens. Bernie Sanders (I., Vt.) and Josh Hawley (R., Mo.) have been among the loudest proponents of adding a second round of direct payments, which are also broadly popular with the public.
• The overall cost of the package under discussion Wednesday was slightly under $900 billion, according to people familiar with the talks.
• White House press secretary Kayleigh McEnany said Tuesday that President Trump, who has called for a new round of checks to most Americans, would wait and see what a possible deal looks like.

Biden Visits Georgia to Rally Support for Democrats in Senate Runoffs – Wall Street Journal, 12/15/20

• President-elect Joe Biden sought Tuesday to galvanize early voting in Georgia’s pivotal Senate runoff elections, imploring Democrats to help give him a working majority at the start of his administration.
• “Don’t wait!” Mr. Biden said at a drive-in event in Atlanta, urging people to make a plan to vote early, prompting honks from the assembled vehicles. “I think Georgia is going to shock the nation with the number of people who vote on Jan. 5.”
• The president, who has claimed voter fraud in Georgia’s November election, has been feuding with state Republican leaders in the weeks before the runoff.
• Mr. Trump retweeted a tweet from Atlanta attorney Lin Wood earlier in the day suggesting that Gov. Brian Kemp and Secretary of State Brad Raffensperger, both Republicans, “will soon be going to jail.”

Biden to Pick Jennifer Granholm, Gina McCarthy for Energy, Climate Roles – Wall Street Journal, 12/15/20

• President-elect Joe Biden is planning to tap former Obama administration Environmental Protection Agency chief Gina McCarthy as national climate adviser and former Michigan Gov. Jennifer Granholm as Energy secretary, according to people familiar with the matter.
• In Ms. McCarthy’s role, she will lead a newly formed White House Office of Domestic Climate Policy.
• Ali Zaidi, New York’s deputy secretary for energy and environment, will serve as Ms. McCarthy’s deputy, people familiar with the matter said.
• Mr. Biden’s top advisers also have expressed increased interest in picking Rep. Deb Haaland (D., N.M.) to lead the Interior Department.
• But House Democrats have pushed back, telling transition officials that they can’t afford to lose another lawmaker to the administration because of the party’s slim majority, people familiar with the discussions said.

Biden Selects Pete Buttigieg as Transportation Secretary – Wall Street Journal, 12/15/20

• President-elect Joe Biden has selected former South Bend, Ind., Mayor Pete Buttigieg, his former Democratic primary rival, to lead the Transportation Department, Mr. Biden said Tuesday.
• Mr. Buttigieg dropped out of the race in March and endorsed Mr. Biden along with other moderate Democrats.
• Leading the Transportation Department, he is expected to play a prominent role in the incoming Biden administration’s push to rebuild the nation’s roads and bridges.
• Mr. Buttigieg, who represented a city of about 100,000 people, beat out several others with experience dealing with much larger transportation systems, including Los Angeles Mayor Eric Garcetti and Sarah Feinberg, the acting president of New York City’s transit system, people familiar with the matter said.

White House National Security Adviser O’Brien Cuts Trip Short to Address SolarWinds Hack – Wall Street Journal, 12/15/20

• White House national security adviser Robert O’Brien has cut short a multicountry trip to Europe to return to the U.S. to address the suspected Russian hack of government agencies, signaling growing alarm within the Trump administration about a cyber espionage campaign considered potentially one of the most damaging in years.
• The hack continued for months, largely undetected by the Trump administration and cybersecurity firms, until the past week, according to people familiar with the matter.
• Current and former officials and cybersecurity experts have described the hack as an espionage operation rather than one aimed at damaging computer networks, and said it represents a significant counterintelligence failure.

Texas’ Tax Advantage Is All About Individuals, Not Business Taxes – Wall Street Journal, 12/16/20

• Moves by high-profile companies to Texas from California are likely to improve the personal finances of executives and offer employees more affordable housing—but make little difference to the firms’ tax bills.
• Oracle and Hewlett-Packard Enterprise are the latest big corporations to announce moves to the Lone Star State.
• Elon Musk, the chief executive of Tesla, is also moving to Texas, and the electric car company is expanding there.
• The announcements have highlighted the vastly different tax and regulatory systems in the country’s two most populous states. The biggest difference: High-paid executives who move can see their state income-tax bills go from 13.3% to nothing.
• The Tax Foundation, a conservative-leaning Washington group, puts Texas 11th in its ranking of state business-tax climates, with California 49th.

EUROPE & WORLD

Brexit Negotiations Inch Forward—With One Key Obstacle – Wall Street Journal, 12/16/20

• Negotiators moved closer to an agreement on the future relationship between the U.K. and European Union, officials from both sides said, though they remained far apart on a major stumbling block: access by EU boats to British waters.
• With just over two weeks to reach and ratify a deal covering economic, trade and security arrangements, European Commission President Ursula von der Leyen told EU lawmakers it remains impossible to say with certainty whether an agreement is coming together.
• But in comments that echoed views of people involved in the negotiations, Mrs. von der Leyen checked off a series of issues where the two sides have narrowed or resolved differences linked to a central EU demand: that the U.K. commit to standards on issues such as state aid, labor and environmental regulation, that will ensure fair competition once Britain leaves the bloc.
• However, Mrs. Von der Leyen, who has been increasingly drawn into negotiations in recent weeks, warned that on fisheries, the divisions were still stark.

BMW eyes upper end of 2020 margin target for automotive division – CFO – Reuters, 12/16/20

• German luxury carmaker BMW expects the operating profit margin at its automotive segment to come in at the upper end of its guidance in 2020, finance chief Nicolas Peter said, adding that business had recovered faster than expected.
• The group now expects the segment’s margin on earnings before interest and tax (EBIT) to come in at 2%-3%, having previously expected 0%-3%, Peter said.
• The group last month said Chinese demand for luxury cars had helped third-quarter profits rise nearly 10%, though it warned a new wave of coronavirus infections sweeping Europe and the United States posed a “considerable” risk to business.
• “We can see it in our order intake, but it’s definitely not of the same magnitude we saw in spring.”

Cathay Pacific sees H2 loss ‘significantly higher’ than H1 – Reuters, 12/16/20

• Hong Kong’s Cathay Pacific Airways expects a “significantly higher” second-half loss than its record first-half loss, driven by low demand, restructuring charges and impairments on its fleet of planes, it said on Wednesday.
• The airline reported a HK$9.87 billion ($1.27 billion) loss in the first half due to the pandemic. Analysts had on average forecast a full-year loss of HK$18.3 billion before the announcement, according to 13 polled by Refinitiv.
• The airline reported a 98.6% fall in passenger numbers in November, though a smaller 26.2% decline in cargo carriage.
• Cathay said in October it would cut 5,900 jobs to help it weather the pandemic, including nearly all of the positions at its regional airline Cathay Dragon, which it shut down.
• The airline expects to operate less than 50% of its normal passenger capacity in 2021 due to border closures.
• In the first half, it plans to operate well below 25%, but it forecasts a possible recovery in the second half as COVID-19 vaccines are rolled out more widely.

Huawei Gets Conditional Green Light in Germany as Government Approves Security Bill – Wall Street Journal, 12/16/20

• The German government on Wednesday moved to allow the use of Huawei’s technology in 5G mobile networks in exchange for assurances by the Chinese vendor about the safety of its gear, in a rebuke to the Trump administration.
• The bill, which still requires parliamentary approval, marks a setback for the outgoing U.S. administration, which has long lobbied European allies to reject Huawei’s technology.
• In light of German industry’s dependence on China—the country is Germany’s largest trade partner and the biggest market for many German companies—Berlin has been reluctant to saddle up with Washington, instead seeking a middle ground that would allow Huawei to do business in Germany but with sufficient monitoring to appease its wary U.S. ally.
• Under the bill, networking-equipment vendors would have to give assurances that their gear is safe to use, making them financially liable for any breach. The legislation would also require vendors and operators to give German security agencies far-reaching technical and legal means to monitor the network’s integrity.

Factmonster – TODAY in HISTORY

• The Boston Tea Party took place. (1773)
• Grigori Rasputin assassinated by a group of noble Russian conspirators. (1916)
• The Battle of the Bulge during World War II began in Belgium. (1944)
• Colin Powell was selected to become the first African-American secretary of state. (2000)