Dow Slips Amid New Travel Curbs – Wall Street Journal, 12/22/20
- The Dow Jones Industrial Average slipped Tuesday as concerns about elevated Covid-19 infection levels and a new strain of the virus in England overshadowed Congress’ approval of a Covid-19 relief package.
- Much of the stock market has lost steam this week as some nations began taking steps to curtail travel in an effort to contain the emergence of a fast-spreading variant of coronavirus from England.
- The U.K. imposed stringent restrictions on social and business activity, prompting concern that more countries may also be required to adopt measures that would hamper the global economic recovery.
- Investors are trying to gauge whether the new strain of Covid-19 will impact the efficacy of vaccines that are being rolled out this month.
- Late Monday, a fresh $900 billion-fiscal stimulus package was passed. Yet that wasn’t enough to propel stocks significantly higher Tuesday morning, despite investors’ bets that the bill will bolster spending by American consumers and aid small businesses.
- Data on Tuesday showed that U.S. gross domestic product—the value of all goods and services produced across the economy—increased at an annualized rate of 33.4% in the third quarter.
Covid-19 Live Updates: Total U.S. Infections Pass 18 Million – Wall Street Journal, 12/22/20
- Newly reported Covid-19 cases in the U.S. rose slightly from a day earlier, putting the nation’s total infected at more than 18 million, as Congress approved a new stimulus check and the vaccine rollout continued.
- The nation reported more than 190,000 new cases for Monday, up from 189,099 a day earlier, according to data compiled by Johns Hopkins University.
- The number of newly reported cases each day tends to be lower toward the beginning of the week, as fewer people are tested over the weekend.
- Hospitalizations hit a new record of 115,351, according to the Covid Tracking Project, after hovering below 114,000 for three days. Capacity in some states has been stretched as hospitalizations have surged over the past week, including in California, South Carolina and Georgia.
- European countries are battling an uptick in Covid-19 cases amid fears that a new strain of the coronavirus, detected in the U.K., has made its way to the continent.
- It is highly likely the new strain is already in Germany, Lothar Wieler, president of the Robert Koch Institute for infectious diseases, said Tuesday, even though the institute hasn’t identified its presence.
- There were 19,528 new infections and 731 deaths reported Tuesday, according to the RKI, a week after Germany entered a harder lockdown to combat a record level of new infections and deaths.
- In France, the number of daily infections began climbing again after a weekslong decline. France reported 5,797 new cases on Monday, raising the seven-day average to 14,177 after bottoming out at 10,438 on Dec. 5.
- Taiwan, one the world’s biggest successes in containing Covid-19, reported its first case of local transmission in about eight months, traced to a New Zealand pilot.
- Taiwan, with a population of about 24 million, has reported a total of 770 coronavirus infections and seven deaths.
Covid-19 Variant Could Make Herd Immunity More Difficult, Says BioNTech – Wall Street Journal, 12/22/20
- The new coronavirus variant that is spreading across the U.K. could make it more difficult to reach so-called herd immunity, according to the chief executive of BioNTech SE, the German company that developed the Covid-19 vaccine with Pfizer Inc.
- A more contagious version of the virus means a greater number of people than originally expected would need to be vaccinated to halt its spread, said Ugur Sahin, CEO of BioNTech.
- The threshold at which herd immunity is achieved varies between diseases. That threshold is related to the speed of the viral spread, known as R. Most experts agree the herd immunity threshold for coronavirus is between 60% and 70% of a population.
- That threshold is related to the speed of the viral spread, known as R. Most experts agree the herd immunity threshold for coronavirus is between 60% and 70% of a population.
- If the new strain becomes prevalent and boosts the R number, countries may face further outbreaks even after 70% of their population has been immunized, Dr. Sahin said.
- The vaccine has already proven effective against 20 other known mutations that appeared in recent months, he added. Should a new mutation render the vaccine ineffective, BioNTech can develop another tailored to the new coronavirus variant in six weeks, according to Dr. Sahin.
- It is, however, unclear whether regulators such as the U.S. Food and Drug Administration would require a new vaccine to undergo fresh trials and a new authorization process.
Apple shares rise on report of 2024 car rollout plan – Reuters, 12/22/20
- Shares of Apple rose 3% on Tuesday, a day after Reuters exclusively reported that the iPhone maker is aiming to produce a passenger vehicle by 2024 with its own battery technology.
- Central to the company’s strategy is a new battery design that could “radically” reduce the cost of batteries and increase the vehicle’s range, Reuters reported.
- “If Apple has achieved a battery breakthrough, this could serve as a driver to finally move forward with production given battery costs are one of the main obstacles to mass adoption of EVs,” Evercore analyst Amit Daryanani wrote.
- It remains unclear who would assemble an Apple-branded car, but sources have said they expect the company to rely on a manufacturing partner to build vehicles.
Alaska Airlines agrees to buy 23 Boeing 737 MAX jets – Reuters, 12/22/20
- Alaska Airlines has agreed to buy 23 Boeing 737 MAX 9 jets, the companies said on Tuesday, confirming an Oct. 8 Reuters report that the U.S. planemaker was in talks with Alaska to stimulate demand for the jet’s comeback.
- The order, worth some $2.96 billion at list prices before expected steep discounts, comes less than three weeks after European budget airline Ryanair also placed a lifeline order for 75 Boeing 737 MAX jets.
- The deal was expected to include significant discounts given the 737 MAX’s recent woes and plunging demand for airplanes during the coronavirus crisis, industry sources have said.
- Even at a fraction of the MAX’s list price of $129 million, the deal could help Boeing to stem a cash hemorrhage caused by a stockpile of roughly 450 undelivered MAX jets.
Google, Facebook Agreed to Team Up Against Possible Antitrust Action, Draft Lawsuit Says – Wall Street Journal, 12/22/20
- Facebook and Alphabet’s Google agreed to “cooperate and assist one another” if they ever faced an investigation into their pact to work together in online advertising, according to an unredacted version of a lawsuit filed by 10 states against Google last week.
- The suit, as filed, cites internal company documents that were heavily redacted. The Wall Street Journal reviewed part of a recent draft version of the suit without redactions, which elaborated on findings and allegations in the court documents.
- Ten Republican attorneys general, led by Texas, are alleging that the two companies cut a deal in September 2018 in which Facebook agreed not to compete with Google’s online advertising tools in return for special treatment when it used them.
- The lawsuit itself said Google and Facebook were aware that their agreement could trigger antitrust investigations and discussed how to deal with them, in a passage that is followed by significant redactions.
- In the companies’ contract, “the word [REDACTED] is mentioned no fewer than 20 times,” the lawsuit says. The unredacted draft fills in the word: Antitrust.
MGM Holdings, Studio Behind ‘James Bond,’ Explores a Sale – Wall Street Journal, 12/22/20
- MGM Holdings, the movie studio behind the “James Bond” franchise, is exploring a sale, according to people familiar with the matter, betting that its library of content will prove attractive to companies pursuing growth in streaming video.
- Closely held MGM has tapped investment banks Morgan Stanley and LionTree and begun a formal sale process.
- The company has a market value of around $5.5 billion, based on privately traded shares and including debt, the people said.
- The studio has contemplated a sale at various points over the past few years, but potential suitors have previously balked at the price MGM was seeking.
ArcelorMittal, Nippon Steel to build new electric arc furnace in U.S. – Reuters, 12/22/20
- Japan’s Nippon Steel and ArcelorMittal will spend $775 million to build an electric arc furnace at their U.S. joint venture in Alabama, with a planned start date in the first half of 2023, Nippon Steel said on Tuesday.
- The new furnace, to be constructed at their 50-50 joint venture AM/NS Calvert, will have an annual capacity of 1.5 million metric tonnes and will produce hot-rolled, cold-rolled and coated steel sheets.
- With the new furnace, Calvert will be able to manufacture some of the slabs needed to produce its steel sheet products on its own, which would shorten lead time and improve productivity, Japan’s biggest steelmaker said in a statement.
- The new furnace will also produce slabs for automotive flat products, including advanced high-tensile steel sheets, it said.
U.S. publishes list of Chinese and Russian firms with military ties – Reuters, 12/22/20
- The Trump administration on Monday published a list of Chinese and Russian companies with alleged military ties that restrict them from buying a wide range of U.S. goods and technology.
- The final list does not include Commercial Aircraft Corporation of China (COMAC), or the Hong Kong subsidiaries of Colorado’s Arrow Electronics and Texas-based TTI, a Berkshire Hathaway electronics distributor.
- Those companies were on the draft list seen by Reuters.
- However, Shanghai Aircraft Design and Research Institute, which designs COMAC planes, and Shanghai Aircraft Manufacturing Co, which manufactures COMAC planes, are on the list.
- The final list names 103 entities, 14 fewer than on the draft list seen by Reuters in November.
- Fifty-eight are designated under China, down from 89, and 45 entities are tied to Russia, up from 28.
US ECONOMY & POLITICS
Congress Passes Covid-19 Relief, Spending Package with Overwhelming Support – Wall Street Journal, 12/22/20
- Congress overwhelmingly approved $900 billion of relief for households and businesses battered by the coronavirus pandemic, passing an emergency measure aimed at buoying the country through a difficult winter and into a new year.
- Both the House and Senate on Monday night also approved a seven-day continuing resolution to keep the government funded until the larger package is signed. Mr. Trump signed the short-term bill early Tuesday morning.
- The 5,593-page package approves another round of direct checks of $600 per adult and $600 per child, adds $300 to weekly unemployment payments for 11 weeks and extends two other unemployment programs, supplies more than $300 billion in relief for small businesses, including a second round of the Paycheck Protection Program, and pours more than $50 billion into distributing coronavirus vaccines, as well as testing and tracing efforts.
- House Speaker Nancy Pelosi (D., Calif.) and Senate Minority Leader Chuck Schumer (D., N.Y.) said they would press to pass more assistance next year, when President-elect Joe Biden is in office.
- But some Republicans said the $900 billion price tag was too high in a year when Congress has already spent more than $3 trillion to combat the pandemic’s health and economic blows.
- “It’s clear that government has worsened the economic damage and acted as the biggest obstacle to economic recovery,” Sen. Rand Paul (R., Ky.) said on the Senate floor Monday night. “The answer is not printing up and distributing ‘free money.’ It’s opening the economy.”
- Mr. Paul voted against the package.
U.S. Home Sales Decline in November after Five Monthly Gains – Wall Street Journal, 12/22/20
- Sales of previously owned homes slipped in November from a month earlier, as the supply of homes for sale fell to a new low.
- Existing-home sales fell 2.5% in November from October to a seasonally adjusted annual rate of 6.69 million, the National Association of Realtors said Tuesday. The November sales marked a 25.8% increase from a year earlier.
- The supply of homes on the market at the end of November was the lowest level on record going back to 1982.
- A widespread shortage of homes for sale has prompted competition among buyers and pushed prices higher.
- The median existing-home price rose 14.6% from a year earlier to $310,800, NAR said.
Consumer confidence declines in December-survey – Reuters, 12/22/20
- U.S. consumer confidence unexpectedly fell in December, likely as a deterioration in the labor market amid renewed business restriction to slow the raging pandemic offset the rolling out of a vaccine for COVID-19.
- The Conference Board said on Tuesday its consumer confidence index dropped to a reading of 88.6 this month from 92.9 in November. Economists polled by Reuters had forecast the index ticking up to 97.0 in December.
- The index was at 132.6 in February.
U.S. third-quarter GDP growth revised slightly up; momentum waning – Reuters, 12/22/20
- The U.S. economy grew at a record pace in the third quarter, fueled by more than $3 trillion in pandemic relief, the government confirmed on Tuesday, but appears to have lost momentum as the year drew to an end amid raging new COVID-19 cases and dwindling fiscal stimulus.
- Gross domestic product rebounded at a 33.4% annualized rate last quarter, the Commerce Department said in its third estimate of GDP.
- That was revised slightly up from the 33.1% pace reported last month and reflected more robust consumer and business spending than previously estimated.
- After-tax profits without inventory valuation and capital consumption adjustment, which corresponds to S&P 500 profits, rebounded at a 36.1% rate in the third quarter, revised down slightly from the 36.6% pace estimated last month.
- Consumer spending, which accounts for more than two-thirds of U.S. economic activity, led the broad recovery last quarter, accelerating at a 41.0% rate, rather than the previously estimated 40.6% pace.
- Business spending was revised up to a 22.9% rate in the third quarter from the previously reported 21.8 pace, thanks robust investment in equipment. But business spending on nonresidential structures contracted for a fourth straight quarter.
Stimulus Deal Likely to Spur Faster Economic Growth Later Next Year – Wall Street Journal, 12/22/20
- The coronavirus-relief bill passed by Congress on Monday will likely spur a stronger economic recovery in the second half of 2021, though it may be arriving too late to stave off a further slowdown this winter, analysts say.
- Capital Economics now sees U.S. gross domestic product expanding 5.5% next year, up from a previous forecast of 5% growth.
- Oxford Economics, another research firm, estimates the additional federal spending should add about 1 percentage point to next year’s GDP growth, which it forecasts at 4.5%.
- The bump isn’t likely to materialize immediately, however, economists said.
- Economists surveyed by The Wall Street Journal earlier this month projected economic growth would slow to an annual rate of 1.9% in the first quarter from a 4.1% clip in the fourth quarter, even as most of them assumed Congress would reach another stimulus deal.
- A Congressional Budget Office analysis of the pandemic-relief package passed earlier this year found that the Paycheck Protection Program of aid to small business added 36 cents to U.S. GDP for every dollar spent.
- That compares with 67 cents on the dollar from enhanced unemployment benefits, 60 cents on the dollar from stimulus checks and 88 cents on the dollar from direct aid to state and local governments.
Biden to Nominate Miguel Cardona as Education Secretary – Wall Street Journal, 12/22/20
- President-elect Joe Biden plans to nominate Connecticut Education Commissioner Miguel Cardona as Education secretary, according to people familiar with the internal deliberations.
- If confirmed, Mr. Cardona would seek to implement Mr. Biden’s pledge to expand resources for public schools, make public college tuition-free for families making less than $125,000 annually and restore Obama-era civil rights guidelines that the Trump administration rescinded.
- Mr. Cardona was appointed Connecticut’s education commissioner in August 2019. Before that, he was a fourth grade teacher in Meriden, Connecticut, and later became an elementary school principal.
U.S. lenders score small business relief, accounting help in pandemic package – Reuters, 12/22/20
- The long-awaited $900 billion U.S. pandemic aid package will help banks by boosting borrowers’ finances and easing a key small-business lending program’s rules, lobbyists and analysts said.
- In addition, they said, it will grant accounting relief to help banks sustain loan forbearance programs.
- Among the biggest wins is a new streamlined process for writing off PPP loans. Under the program, lenders have dished out more than five million PPP loans worth a total of $525 billion to small businesses, on behalf of the government.
- The bill simplifies forgiveness for loans of $150,000 or less, allowing businesses to attest on a one-page form that they used the PPP funds for payroll and other businesses expenses.
- It also allows those expenses to qualify for deductions, simplifying tax returns for millions of borrowers and their lenders.
- It also tightens language promising lenders will not be held responsible if borrowers break the PPP rules, pledging no enforcement action may be taken against the lender if they acted in good faith and complied with relevant federal and state regulations.
EUROPE & WORLD
WeChat Becomes a Powerful Surveillance Tool Everywhere in China – Wall Street Journal, 12/22/20
- China’s do-everything app, WeChat, has become one of the most powerful tools in Beijing’s arsenal for monitoring the public, censoring speech and punishing people who voice discontent with the government.
- Authorities are increasingly using the app from Tencent to justify arrests or issue threats, say dissidents, consumers and security researchers.
- Released in 2011, WeChat and its domestic sister app, Weixin, now have—Tencent says—more than 1.2 billion monthly active users in China, where its pervasiveness extends beyond any app used in the U.S.
- In addition to messaging, Chinese consumers use it to share photos, pay utility bills, hail taxis, get news, book doctors’ appointments and use government services.
- But that utility has come with a cost. WeChat was one of the primary venues where government censors tried to restrict information during the outbreak in Wuhan.
- In addition to taking down content that was deemed sensitive, users say WeChat routinely blocks accounts for discussing issues ranging from the pandemic to human rights abuses in the Xinjiang region. After users’ accounts are blocked, police will often question them.
- The U.S. Congress passed the Embargo Act. (1807)
- Hamid Karzai sworn in as president of Afghanistan. (2001)
- President Obama officially repealed the “Don’t Ask, Don’t Tell” military policy. (2010)