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The World
U.S. officials have been insisting that they are no longer in the shutdown business, and will not order any closures to contain the latest surge in coronavirus cases. But Omicron may be taking the decision out of their hands. So many workers are testing positive or calling in sick that businesses, schools, government agencies and more are being crippled by staff shortages that may force them to close some operations anyway. Airlines began canceling flights in large numbers on Christmas Eve. Broadway shows have been canceled. Major companies have delayed or entirely jettisoned return-to-office plans. Many colleges are switching back to virtual classes to start the semester. Infected police officers, firefighters, paramedics, and transit workers are leaving shifts unfilled. (New York Times)
The positivity rate in Congress has topped 13%; masks must be upgraded, attending physician says. (Washington Post)
Starbucks is requiring its U.S. employees to be vaccinated against Covid-19 or submit to regular testing, one of the first large restaurant chains to take such a step ahead of potential federal vaccination mandates for large employers. (Wall Street Journal)
Hong Kong will require at least one Covid shot to enter restaurants, schools and other venues starting Feb. 24. (Bloomberg)
UK Prime Minister Boris Johnson confirmed there will be no new Covid restrictions, saying Omicron is “plainly milder” — but the “plan B” curbs will remain in place as hospitals face “considerable” pressure. (The Times)
Roundup: 1) Covid cases rise by 948% in Florida in 2 weeks; 2) L.A. County coronavirus transmission rate at highest point since early months of pandemic; 3) Scotland’s Covid hospital admissions double in a fortnight. (The Guardian, Los Angeles Times, The Times)
The U.S, China and three other nuclear-armed countries collectively known as the “P5” pledged to use nuclear weapons only for defensive purposes. The move comes amid rising concerns over the growth of China’s military presence in the Pacific and advances in weapons technology. Along with Britain, France and Russia, Washington and Beijing affirmed that “a nuclear war cannot be won and must never be fought.” The five countries are the permanent members of the United Nations Security Council and signatories to the Treaty on the Non-Proliferation of Nuclear Weapons (NPT). (South China Morning Post)
Hong Kong’s free press is on the brink of extinction after the two largest remaining independent news websites in the Chinese territory announced they were shutting down in the space of a week. Citizen News, an online news site founded in 2017, said it would cease operations, citing safety concerns for its reporters. The decision, which will diminish further the once freewheeling and aggressive Hong Kong press corps, was announced after pro-democracy publication Stand News closed last Wednesday. (Financial Times)
Airlines canceled more than 3,000 flights yesterday, the worst cancellation day of the holiday season. Southwest Airlines and SkyWest Airlines, which operates regional flights for several major carriers, were responsible for about a third of all cancellations over the weekend and Monday. (New York Times)
FlightAware offers real-time cancellation stats — by airline, origin airport, and destination airport. (FlightAware)
AT&T and Verizon agreed to a two-week delay in rolling out a new 5G service that airlines said may interfere with aircraft electronics and pose a safety hazard. The companies issued separate statements two days before their planned Jan. 5 launch, and one day after rebuffing a request for delay from U.S. transportation officials. (Bloomberg)
Top Risks 2022: Every year, Eurasia Group produces its list of the top 10 geopolitical risks for the coming year. #1) No zero COVID: In general, developing countries will be hit hardest, and political incumbents will bear the brunt of public anger. Demand for booster shots in wealthier countries will prevent effective vaccines from becoming more widely available. New outbreaks will slow economic growth in emerging markets, and leave poorer governments with more debt. #2) A technopolar world: That’s a reference to the intensifying conflict between governments and the world’s largest tech companies over who will set the rules in the digital space that’s playing an ever-larger role in our lives and our politics. #3) US midterms: In November, Republicans will probably win back majority control of the House of Representatives – and maybe the Senate. If so, Democrats will view GOP control as the illegitimate result of a voter-suppression campaign, and Republicans will see victory as further evidence of 2020 election fraud. Public trust in American political institutions will take an even larger hit. Risks 4-10: China at home; Russia; Iran; Two steps greener, one step back; Empty lands; Corporates losing the culture wars; and Turkey. (Eurasia Group)
Economy
Sarah Bloom Raskin has emerged as the leading candidate to be President Biden’s choice for vice chair of supervision at the Federal Reserve, with an announcement as early as this week. By settling on Raskin, a former deputy Treasury secretary, Biden is giving progressive senators like Elizabeth Warren (D-Mass.) a policy and personnel win on a position about which they care deeply. He's also avoiding a potentially perilous confirmation fight in a 50-50 Senate. Raskin, currently a law professor at Duke University married to Rep. Jamie Raskin (D-Md.), served as a Fed governor before she joined President Obama’s Treasury department. She's been confirmed by the Senate twice, the last time by a voice vote. (Axios)
Surging demand for a US Federal Reserve facility where investors stash cash overnight is set to ebb in 2022 after a record run last year, as a shortage of low-risk assets that generate positive returns eases. Investors parked record amounts of money in 2021 in the Fed’s overnight reverse repo facility where cash is exchanged for ultra-safe securities such as US Treasuries. Daily usage of the RRP averaged $1.6tn in December, surging to a record $1.9tn on the final day of the year. Average daily usage for December 2020 was zero. The facility, which acts as an investment of last resort, has attracted such elevated demand all year because of a shortage of safe, short-dated Treasury bills that left investors such as money market funds with fewer safe places to deploy their cash. But in 2022 the RRP’s popularity will begin to wane, strategists say. (Financial Times)
Even in a hot market, L.A. won’t allow rent hikes for most tenants until 2023: As the U.S. nears the beginning of the third year combating COVID-19, tenants in L.A. are receiving a benefit few others have. Landlords are prohibited from raising the cost of more than 650,000 rent-stabilized units citywide, which represents nearly three-quarters of L.A.’s apartment stock. No rent hikes will be allowed for most L.A. tenants until 2023. And possibly beyond. What tenants and their advocates celebrate is lamented by landlords, who say costs have risen sharply, including labor and materials for building repairs and city fees for trash pickup. (Los Angeles Times)
Southeast Asia's soaring exports fuel hopes of recovery in 2022, as central banks are seen shifting to rate hikes to protect home currencies. (Nikkei Asia Review)
Turkey’s inflation climbed to a nearly two-decade high on the back of a weakening lira that is driving up the cost of food and other basic goods and destabilizing the wider economy. Annual inflation rose to 36.08% last month, up from 21.3% in November — the highest inflation rate since 2002. (Wall Street Journal)
M&A deals in Turkey estimated to be $15.5 billion in 2021 - KPMG. (Reuters)
Tesla opened a new showroom in Xinjiang, the remote region where Chinese authorities are carrying out a campaign of forcible assimilation against religious minorities that has become a public-relations quagmire for Western brands. The electric car maker started operations at the new showroom in Urumqi, the capital of Xinjiang, the company said in a Dec. 31 post on its official account on China’s popular Twitter-like social-media platform Weibo. “On the last day of 2021, we meet in Xinjiang. In 2022, let us together launch Xinjiang on its electric journey!” Tesla wrote in the post. (Wall Street Journal)
Technology
Apple briefly hit a market cap of $3 trillion during intraday trading on Monday, before dropping back under the mark shortly afterwards. Apple broke the barrier when its share price hit $182.86. Apple rose 2.5% to close at $182.01, just missing closing the trading day at the $3 trillion mark. The milestone is mostly symbolic but it shows investors remain bullish on Apple stock and its ability to grow. At a market value of $3 trillion, Apple tripled its valuation in under four years. (CNBC)
Oculus device sales in 2021 are estimated to be between 5.3M and 6.8M units, up from an estimated 3.5M units in 2020. Meanwhile, the chip industry faces a recruitment gap, as plans for new fabs in the US will require an estimated 70K to 90K more workers by 2025 compared to 2020 levels. (Wall Street Journal, WSJ-2)
Instant delivery startups test a new tactic: Slower delivery. Instant-delivery startups promising to ferry groceries to customers in 15 minutes or less have rushed to expand in major cities like New York and Chicago in the past year. But they’re burning far more cash in the U.S. than in other countries where they operate, causing several of them to test major changes to their business model—including longer delivery windows that could allow the startups to pack in more orders per trip. (The Information)
Mercedes-Benz is the latest automaker to make a grab for the title of the longest-range electric vehicle with the reveal of the Vision EQXX, a solar-powered concept car capable of exceeding 1,000 kilometers (648 miles) on a single charge. That’s enough to get the Vision EQXX from New York City to Cincinnati, or Berlin to Paris, or Bejing to Nanjing, on a single charge. And it’s impressive in contrast to other long-range EVs currently on the road today, like the Lucid Air (520 miles) and Tesla Model S Long Range Plus (402 miles). But unlike those vehicles, the Vision EQXX is just a concept with no concrete production plans, for now. (The Verge)
Smart Links
Tesla stock closes up 13% after reporting record vehicle deliveries for 2021. (CNBC)
Junior lawyer burnout: M&A boom accelerates exit from elite firms. (Financial Times)
David Bowie’s estate sells songwriting catalog to Warner Music for $250M. (Variety)
Bed Bath & Beyond’s wedding registry business slips, as Amazon & Target attract couples ahead of anticipated wedding boom. (CNBC)
Asia's sports industry races to join frenzied NFT market. (Nikkei Asia Review)
AWS is too big to fail. (The Information)