Know someone who would like this newsletter? Forward it to them.
The World
Streets in major Chinese cities were deserted as people stayed home to protect themselves from a surge in COVID-19 cases that has hit urban centres from north to south. China is in the first of an expected three waves of COVID cases this winter, according to the country's chief epidemiologist, Wu Zunyou. Further waves will come as people follow the tradition of returning en masse to their home areas for the Lunar New Year holiday next month. (Reuters)
Covid-19 is spreading rapidly through China’s biggest cities, leading to widespread medicine shortages and exposing Beijing’s lack of preparation after authorities reversed strict pandemic controls. Residents of Shanghai, Shenzhen and other cities reported pharmacies have sold out of fever medicine and Covid tests, while social media images contrast long queues outside Covid clinics with otherwise empty streets. (Financial Times)
North Korea's state media said the country conducted an "important, final phase" test on Sunday for the development of a spy satellite, which it seeks to complete by April 2023. The report was released a day after the South Korean and Japanese militaries reported the isolated North's launch of two intermediate-range ballistic missiles towards its east coast. (Reuters)
UK airport strikes to wreak havoc: Border Force strikes threaten misery for millions of passengers arriving at UK airports during the first restriction-free Christmas in three years. Officials also fear that passengers could be made to wait more than two hours in queues at passport control as strikes hit the peak Christmas holiday period. More than 1,000 members of the Public and Commercial Services (PCS) union employed by the Home Office to staff passport control desks are due to strike from Friday. (The Times)
Chancellor Olaf Scholz inaugurated Germany’s first liquefied natural gas terminal, declaring that the speed with which it was put into service is a signal that Europe’s biggest economy will remain strong. (Associated Press)
The leaders of Hungary, Romania, Georgia and Azerbaijan finalized an agreement on an undersea electricity connector that could become a new power source for the European Union amid a crunch on energy supplies caused by the war in Ukraine. The agreement involves a cable running beneath the Black Sea that would link Azerbaijan to Hungary via Georgia and Romania. The deal comes as Hungary, which has lobbied heavily against EU sanctions on Russia for its war in Ukraine, is seeking additional sources for fossil fuels to reduce its heavy dependence on Russian oil and gas. (Associated Press)
Negotiators at a U.N. summit to protect nature were closing in on a new global deal on Sunday that could see 30% of the world's land and seas protected by 2030, with hundreds of billions of dollars directed toward conserving wild places and species. China, the president of the COP15 conference in Montreal, released a proposed text on Sunday morning that ministers welcomed, with some reservations. (Nikkei Asia)
Federal officials say urgent action needed to protect shrinking Colorado River reservoirs. (Los Angeles Times)
EU member states have reached a deal on the world’s first major carbon border tax, finalizing the details in the face of claims from the bloc’s key trading partners that the levy creates protectionist trade barriers. Environmental regulators and ministers from across the bloc signed off on the introduction the Carbon Border Adjustment Mechanism (CBAM), a tool that will force foreign importers to cover the cost of their carbon emissions. (Financial Times)
A majority of voters think the economy will be in worse shape in 2023 than it is now and roughly two-thirds say the nation’s economic trajectory is headed in the wrong direction. The WSJ survey suggests a recent burst of positive economic news—moderating gas prices and a slowing pace of inflation—haven’t altered the way many feel about the risk of a recession, something many economists have forecast as likely. (Wall Street Journal)
Economy
Powell Puts US Pay Hikes at Heart of Fed’s 2023 Inflation Fight: Fed Chair Jerome Powell has a new North Star to guide his fight against inflation, and it will put American paychecks at the heart of monetary policy next year. Powell says he’s looking at a price-gauge that covers everything from health care and haircuts to a night in a roadside motel. Because wages are an especially big cost for those service industries, “the labor market holds the key to understanding inflation in this category,” he told the Brookings Institution in November, in his final set-piece speech before the Fed’s latest interest-rate hike. (Bloomberg)
Mortgage Buydowns Make a Comeback: Soaring interest rates have revived a product that fell out of favor after the financial crisis. Scores of lenders are touting temporary buydowns as a way to soften the blow of rates for buyers. (Wall Street Journal)
Union Pacific says it will stop imposing temporary limits on certain businesses’ shipments while it reviews the policy that federal regulators and shippers criticized at a hearing last week. Union Pacific has put more than 1,000 of these embargoes in place this year — significantly more than all the other major freight railroads combined — as part of its effort to clear up congestion along the railroad. (Associated Press)
Mounting global price pressures threaten to trigger more rate rises: Underlying price pressures are still mounting in most major developed economies despite the recent falls in headline inflation, indicating that central banks will have to keep tightening policy in the coming months. Core inflation — which excludes changes in food and energy prices, and is viewed by rate-setters as a better measure of the persistence of price pressures — is accelerating in many parts of the world according to an analysis of official statistics by the FT. Core rates were still rising in November in the majority of the 33 countries tracked by the FT and remain well above the 2 per cent level of inflation that most central bankers target. (Financial Times)
Marc Benioff tells Salesforce workers that new employees are ‘facing lower productivity’. Benioff, cofounder and co-CEO of Salesforce, said in a Slack message to employees on Friday that the company’s newest workers weren’t productive enough. “Are we not building tribal knowledge with new employees without an office culture?” Benioff asked in a message viewed by CNBC. (CNBC)
Technology
Apple prepares for App Store shake-up ahead of European Union mandates: In a historic shift, Apple is planning to open up the iPhone and iPad to alternative app stores and sideloading in an effort to meet EU requirements that take effect in early 2024. That means that, for the first time, iPhone and iPad users in Europe will be able to install third-party software from alternative app stores, the web or other locations. Apple is also preparing to give developers greater access to camera functions, its near-field communications chip and the Find My location features. And the company is dropping its requirement that third-party web browsers use Apple’s WebKit engine from Safari. It’s all a response to Europe’s landmark Digital Markets Act, which aims to even out the playing field between platform owners and third-party developers. It’s a major turnabout for Apple, which spent years lobbying against sideloading. (Bloomberg)
Twitter laid off engineers in its infrastructure organization on Friday evening, reducing the staff in the part of the company that keeps the social media service running, according to a person familiar with the situation. The layoffs, which came days after some leaders in the organization were fired, are the latest in a series of employee cuts Musk has made at Twitter which have shrunk the workforce by nearly 75% over the past six weeks. (The Information)
Normally bellicose China’s meek response to US chip restrictions raises eyebrows: Beijing typically ‘retaliates fully plus 10 per cent’, but this time it doesn’t seem to have many punitive options. ‘It is a puzzle,’ says an American analyst. ‘On everything else, they seem to have skin that’s thinner than Saran Wrap.’ (South China Morning Post)
Social Media Seen as Mostly Good for Democracy Across Many Nations, But U.S. is a Major Outlier: Across the countries polled, a median of 57% say social media has been more of a good thing for their democracy, with 35% saying it has been a bad thing. There are substantial cross-national differences on this question, however, and the United States is a clear outlier: Just 34% of U.S. adults think social media has been good for democracy, while 64% say it has had a bad impact. In fact, the U.S. is an outlier on a number of measures, with larger shares of Americans seeing social media as divisive. (Pew Research Center)
Smart Links
Electric vehicle production set to surge in 2023 despite low sales. (Reuters)
The Buzz Is Gone: Tech Companies (With a Few Exceptions) Are Reining In Once-Legendary Holiday Parties. (The Information)
2022’s unlikely economic winners. (The Economist)
Asian talent faces U.S. visa crisis as tech sector slashes jobs. (Nikkei Asia)
Green hydrogen booms in Asia as companies rush into projects. (Nikkei Asia Review)
Germany's small hospitals are disappearing. (Deutsche Welle)
Tech’s latest controversy? The return of the five-day, in-person work week. (TechCrunch)