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The World
Sen. Joe Manchin (D-W.Va.) is open to reengaging on the climate and child care provisions in President Biden's Build Back Better agenda if the White House removes the enhanced child tax credit from the $1.75 trillion package — or dramatically lowers the income caps for eligible families. The holdback senator's engagement on specifics indicates negotiations between him and the White House could get back on track, even after Manchin declared he was a “no” on the package on Dec. 19. (Axios)
China and Russia military cooperation raises the prospect of a new challenge to American power: Russian President Putin and Chinese leader Xi oversaw an ambitious joint military exercise in China this summer, which along with reported collaborations in aviation, undersea and hypersonic-weapons technology point to a solidifying defense alignment. Western officials and defense experts are growing more convinced of the closer relationship based on recent economic alliances, military exercises and joint defense development, as well as the few public statements from government leaders. The Office of the Director of National Intelligence reported that Beijing and Moscow are now more aligned than at any point in the past 60 years. (Wall Street Journal)
President Biden assured President Volodymyr Zelensky during a call Sunday that the U.S. and its allies will "respond decisively if Russia further invades Ukraine.” (Axios)
Russia’s sabre-rattling in Ukraine has reignited the debate in Finland as to whether the Nordic country should join Nato, defying demands from Moscow that seek to limit expansion of the military alliance in Europe. Both the president Sauli Niinisto and the prime minister Sanna Marin used their new year addresses to underscore that Finland retained the option of seeking Nato membership at any time. “Let it be stated once again: Finland’s room to maneuver and freedom of choice also include the possibility of military alignment and of applying for Nato membership, should we ourselves so decide,” Niinisto said. (Financial Times)
France removed a temporary EU flag from the Arc de Triomphe after it drew fury from conservatives and the far right. The flag was intended to mark the start of France's six-month EU presidency. (Agence France Presse)
Germany, Austria and Luxembourg hit out at Brussels’ plans to classify nuclear power as a sustainable technology in the EU’s landmark labelling system for green investment, which is central to Europe’s plans to decarbonize the bloc’s economy. Germany’s economy minister said: “It is questionable whether this greenwashing will even find acceptance on the financial market.” Austria’s minister for climate and energy said Vienna would consider suing the European Commission if the classification of nuclear power as green went ahead. Luxembourg’s energy minister called the inclusion of nuclear power a “provocation.” (Financial Times)
Germany pulled the plug on three of its last six nuclear power stations as it moves towards completing its withdrawal from nuclear power as it turns its focus to renewables. The last three nuclear power plants - Isar 2, Emsland and Neckarwestheim II - will be turned off by the end of 2022. (Reuters)
Israel approved the distribution of a fourth coronavirus vaccine dose to Israelis over the age of 60, and to medical workers, who have gone at least four months since receiving their booster shot. Meanwhile, up to a third of Israelis are predicted to get COVID in next 3 weeks with tests running out. (Times of Israel)
Goldman Sachs told its U.S. employees to work from home for the first two weeks of the year, joining Wall Street competitors that had already given similar instructions. Employees who are able to work remotely should do so until Jan. 18 in response to rising infection rates, the investment bank said. (New York Times)
Unvaccinated U.S. travelers added to French 10-day quarantine list. (Reuters)
AT&T and Verizon rebuffed a request from federal transportation officials to voluntarily delay the launch of new 5G wireless services, extending a showdown that could lead to potentially disruptive U.S. flight restrictions as soon as this week. The cellphone carriers offered a counterproposal that would further dim the power of their new 5G service for six months to match limits imposed by regulators in France, giving U.S. authorities more time to study more powerful signals’ effect on air traffic. The companies had planned to launch the service Wednesday in up to 46 of the nation’s largest metropolitan areas. (Wall Street Journal)
Over 4,000 flights were cancelled around the world on Sunday, more than half of them U.S. flights, adding to the toll of holiday week travel disruptions due to adverse weather and the surge in coronavirus cases caused by the Omicron variant. (Reuters)
United Airlines is offering its pilots triple pay to pick up trips for most of January to help ease its staffing shortage. (CNBC)
Economy
Inflation soared by the most in at least a decade in Istanbul last month, and Turkey President Tayyip Erdogan's government sharply raised nationwide electricity and natural gas prices for the new year. Prices also jumped for petrol, car insurance and some bridge tolls, adding more strain to an economy facing surging inflation and a currency crisis that was triggered by a series of unorthodox interest rate cuts. (Reuters)
European gas prices fell further in holiday period sell-off: Trading volumes are thin as mild weather and fresh supplies from vessels rerouted to the region curb demand. (Financial Times)
The Russian state-controlled gas giant Gazprom, which has been accused of causing Europe’s energy crisis, has cashed in a £179 million dividend from its London-based international trading arm. The huge payout is likely to intensify calls for a windfall tax on fossil fuel companies that have profited from the energy price chaos, which is set to pile immense pressure on household bills. (The Times)
The Yamal-Europe pipeline which usually sends Russian gas west into Europe was flowing east from Germany to Poland on Sunday for the 13th straight day. (Reuters)
The UK boss of PwC said criticism of the audit industry from politicians and regulators was harming the profession and risked making it more difficult to attract new recruits. Retaining qualified auditors also “becomes much harder if there’s a current of external negativity”, Kevin Ellis, UK chair and senior partner at PwC, told the Financial Times. PwC said its attrition levels for recently qualified auditors were 8 per cent higher than in other parts of its business this year, an increase from a 6 per cent differential in 2020. (Financial Times)
Goldman Sachs Senior Global Economist Daan Struyven discussed the firm’s outlook on U.S. and worldwide labor participation: “We're finding that job-retention schemes are associated with better labor-force participation performance. On the other hand, what we're also finding in the data is that labor-productivity growth in the U.S. has outperformed, perhaps because U.S. firms continue to produce a lot with a smaller number of workers. A second potential benefit is that if the post-pandemic economy looks structurally very different, with more jobs in some industries and fewer jobs in others, then there actually might be benefits to the U.S. system because you allow people to switch from old jobs to new jobs. There’s a potential reallocation benefit. We look for a partial [U.S. participation] rebound, but we think the participation rate will remain structurally below its pre-pandemic trend in the U.S. The main reason is that job losses have likely triggered permanent exits from the labor force in the U.S., especially among workers who are near retirement age. But we do look for a partial rebound, as some of the factors I’ve mentioned that are now weighing on participation diminish in importance. The fiscal effect will probably diminish as some of the savings that people built up are partially depleted. The negative effect of virus fears on participation, that we also document here, will probably also diminish as hopefully the virus situation improves, especially after an omicron wave.” (Goldman Sachs)
Singapore's 2021 GDP grew at its fastest pace in over a decade, while South Korea factory activity quickened but output and export orders shrunk. (Reuters)
Technology
The Consumer Electronics Show said this week’s giant Las Vegas event will go forward in person, but will end one day early. Many large tech companies and media outlets are choosing not to attend in person amid the fast-spreading Omicron variant. CES said it’s shortening the show to run Jan. 5-7 "as an additional safety measure." (Axios)
Apple is likely to finish switching to its silicon by WWDC, plans the biggest MacBook Air redesign in its history and an iPhone 14 with a hole-punch-sized notch. Further, Apple's second-generation AirPods Pro will feature support for Lossless audio and a charging case that can emit a sound for location tracking purposes. (Bloomberg, MacRumors)
China’s freeze on new video game licenses is extending into 2022, which has led about 140,000 small gaming-related firms to close their operations and prompted the industry’s biggest publisher to pursue expansion overseas. China has not published a list of approved new titles since the end of July. This marks the country’s longest suspension of new game licenses since a nine-month hiatus in 2018 that followed a regulatory reshuffling. (South China Morning Post)
10 Tech Events of 2021 That Will Shape the Future: When the next decade dawns, we’ll look back on this year as a pivotal one for businesses. That’s especially true because of the disruptions of the past two years. When the world shifted to working, learning and doing everything from home for a prolonged period, timetables for future technology adoption were accelerated. After years of dragging their metaphorical feet, businesses everywhere had to finally become digital to meet the overnight shifts in customer and employee needs and expectations: 1) A new generation of consumers; 2) Big tech under the microscope; 3) Augmented reality gets real; 4) Virtual reality reimagines the world of retail; 5) Chatbots add the human touch; 6) Supply chains lose the human touch; 7) AI gets an ethical upgrade; 8) The evolution of IT; 9) QR codes find their purpose; 10) The transformative Web 3.0. (Wall Street Journal)
Chip sales are set to grow nearly 10% in 2022 as risks rise. (CNBC)
Smart Links
Tesla delivered 936,172 electric vehicles in 2021, with 4Q21 setting a new record. (CNBC)
Box office ends year 60% behind 2019 with $4.5B domestically. (Hollywood Reporter)
Daniel Yergin: Second U.S. shale 'revolution' to challenge Saudis, Russia on oil. (Nikkei Asia Review)
Investors are piling into supply-chain technology. (Wall Street Journal)
El Salvador is pinning all its hopes on becoming the new Cryptoland. (Vice)
UK farmers braced for spring fertilizer crunch after prices triple. (Financial Times)