Know someone who would like this newsletter? Forward it to them.
The World
Public trust in governments running the world's democracies has fallen to new lows over their handling of the pandemic and amid a widespread sense of economic pessimism, a global survey has found. The Edelman Trust Barometer, which for two decades has polled thousands of people on trust in their governments, media, business and NGOs, conversely showed rising scores in several autocratic states, notably China. It also highlighted that business, thanks to its role developing vaccines and adapting workplace and retail practices, had retained strong levels of trust globally, albeit with reservations about its commitment to social fairness. "We really have a collapse of trust in democracies," said Richard Edelman. (Reuters, Edelman Trust Barometer 2022)
President Biden said that he now expected President Putin would order an invasion of Ukraine, delivering a grim assessment that the diplomacy and threat of sanctions issued by the U.S. and its European allies were unlikely to stop the Russian leader from sending troops across the border. “Do I think he’ll test the West, test the United States and NATO, as significantly as he can? Yes, I think he will,” Biden said. He added, almost with an air of fatalism: “But I think he will pay a serious and dear price for it that he doesn’t think now will cost him what it’s going to cost him. And I think he will regret having done it.” Asked to clarify whether he was accepting that an invasion was coming, Biden said: “My guess is he will move in. He has to do something.” (New York Times)
Iran President Ebrahim Raisi met Russia’s Vladimir Putin as the Islamic republic seeks to expand relations with Moscow and Beijing to better withstand political and economic pressure from the U.S. Meanwhile, China, Russia and Iran are planning a joint naval exercise in the Gulf of Oman amid speculation that the three countries are teaming up in the face of pressure from the U.S. (Financial Times, South China Morning Post)
Tory MPs plotting to oust Boris Johnson granted him a reprieve until an investigation into Downing Street parties is concluded amid mounting concern that it will be more critical of the prime minister than expected. Rebels held back from submitting letters of no confidence in Johnson. (The Times)
Taiwan confirmed it is in talks with Slovenia to open representative offices on each other’s soil, after the Central European country’s leader accused China of “lecturing about democracy and peace” and criticized it for blocking Taiwanese membership of the W.H.O. Separately, Taiwan is paying $900,000 for its ally Guatemala to lobby Washington. This follows Taiwan’s increased ties with Lithuania. (South China Morning Post, Associated Press)
Any athlete behavior that is against the Olympic spirit or Chinese rules or laws will be subject to “certain punishment”, a Beijing 2022 official said in response to a question about the possibility of athlete protests at next month’s Winter Games. It comes shortly after human rights advocates told athletes they were better off staying silent for the duration of the Games and amid concerns over the online security of attendees’ data contained in a mandatory phone app. (The Guardian)
AT&T is lighting up its expanded 5G service in just eight metro areas, including Austin, Dallas-Fort Worth, Houston, Chicago, Detroit, Jacksonville, Orlando, and South Florida (PDF). This comes after both AT&T and Verizon voluntarily limited the activation of C-band spectrum around airports after facing mounting pressure from airlines. (The Verge)
United Airlines trimmed its expected 2022 flying capacity after the Omicron variant hit consumer demand. United now expects 2022 capacity to be “down versus 2019”, having forecast three months ago an increase of 5% from 2019 levels. (Financial Times)
Economy
President Biden backed the Federal Reserve’s shift towards tighter monetary policy to fight inflation, speaking at his first formal press conference in months. (Financial Times)
The Fed will likely hike rates eight times to curb inflation, Marathon Asset CEO Bruce Richards said, adding that an economic slowdown is likely to result in a recession. (Bloomberg)
The Nasdaq’s sell-off put it in “correction territory,” Wall Street lingo for a drop of more than 10%, since the tech-heavy index hit a high in mid-November of 16,057. In reality, declaring a correction today is akin to a baby boomer discovering last week that TikTok is a big deal. Many tech stocks have dropped 40% or more in the past few months—it’s just that the big dogs like Alphabet, Apple and Microsoft had been holding up better than most. (The Information)
Bank of America said its annual profit reached an all-time high in 2021 and gave a bullish outlook for the year to come in anticipation of multiple interest rate increases by the Federal Reserve and a revival in lending. (Financial Times)
Procter & Gamble says prices will keep going up: Quarterly sales rose 6%, led by health and cleaning products, with price increases accounting for half of the gain. (Wall Street Journal)
China cut key rates, stepping up monetary stimulus effort to underpin economy — while also seeking to boost its economy with a 12,000km expansion of high-speed railway by 2025. (Reuters, South China Morning Post)
Technology
The IRS will soon require selfies for online access: If you created an online account to manage your tax records with the U.S. Internal Revenue Service (IRS), those login credentials will cease to work later this year. The agency says that by the summer of 2022, the only way to log in to irs.gov will be through ID.me, an online identity verification service that requires applicants to submit copies of bills and identity documents, as well as a live video feed of their faces via a mobile device. (Krebs on Security)
Activision Blizzard shares closed down slightly at $82.15, about 15.6% below the $95 a share in cash Microsoft offered in a deal scheduled to close next year. It’s a bigger discount to a takeover offer than you’d normally find in a situation like this, a sign that Wall Street is doubtful this deal will get approved. Meanwhile, Sony's stock fell 13% , its biggest drop since October 2008, wiping $20B off its valuation. (The Information, Bloomberg)
Internal email: Google is creating a unit under its Labs division for blockchain and other distributed tech, led by engineering VP Shivakumar Venkataraman. (Bloomberg)
India has rolled out the red carpet for global chipmakers with $10.2 billion in incentives as Prime Minister Narendra Modi makes a push to establish the country as a high-tech production hub. (Nikkei Asia Review)
ASML to boost headcount by thousands to overcome chip-supply crunch. (Bloomberg)
China’s Huawei Technologies is aggressively ramping up its chip packaging capabilities to lessen the impact of a US clampdown that has cut the company’s access to vital semiconductor production technologies. (Financial Times)
Live Event
Today, 2 pm ET: Toward Xi’s third term: China’s 20th Party Congress and beyond. (Register: Brookings)
Smart Links
Women's working hours underscore gender disparity in Japan. (Nikkei Asia Review)
France ramps up nuclear power as Germany closes plants in the name of clean energy. (NPR)
Tom Brady’s buzzy celebrity NFT startup Autograph banks $170M from Silicon Valley’s top crypto investors. (TechCrunch)
Google requiring all ‘G Suite legacy free edition’ users to start paying for Workspace this year. (9to5Google)
UK financial regulators to step up scrutiny of cloud computing giants Amazon, Microsoft and Google. (Financial Times)