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U.S. covid-19 relief talks hit snag over lawsuit protections (nationthailand.com)

U.S. covid-19 relief talks hit snag over lawsuit protections

InternationalDec 12. 2020Senate Majority Leader Mitch McConnell, R-Ky., second from left, at the U.S. Capitol in Washington on Dec. 10. 2020. MUST CREDIT: Bloomberg photo by Al Drago. 

By Syndication Washington Post, Bloomberg · Erik Wasson, Laura Litvan

Bipartisan talks on a nearly trillion-dollar pandemic relief bill in Congress are hung up on differences between Republicans and Democrats on shielding companies from virus-related lawsuits, raising doubts about a deal and risking dragging negotiations past next week.

While Republicans and Democrats are closer than ever to agreeing on a price tag for a stimulus measure — coalescing around a $900 billion figure — there’s no sign they can get a deal anytime soon.

Senate Majority Leader Mitch McConnell is urging lawmakers to drop aid for state and local governments and liability protections, and to proceed with a smaller bill without either. That pitch continues to be rejected by House Speaker Nancy Pelosi and other top Democrats who are open to a pause in liability lawsuits in exchange for the $160 billion in state aid floated by a bipartisan group of negotiators.

A group of Republican and Democratic senators trying to forge a compromise was able to agree to a formula for distributing state and local aid on Thursday, but talks have bogged down on liability.

“It’s pretty difficult,” Senator Mitt Romney, a Utah Republican and member of the group, said Thursday evening. “We’ve got a week left to be able to resolve all the issues,” and it’s a “very broad area,” he said.

U.S. equity futures sank on the news that the negotiations have faltered.

The continued struggles spurred renewed calls by Senate Republican leaders to move on from the group’s efforts and pass a small bill without either state aid or lawsuit protections.

Sen. John Thune of South Dakota, the chamber’s No. 2 Republican, said the group of Republican and Democratic senators likely cannot produce a solution to limiting liability of employers in connection with Covid-19 infections that would satisfy Republicans. Democrats probably won’t like it, either, he added.

“My sense is that they’re not going to get there on the liability language,” he said at the Capitol. “They’re just not going to be able to thread the needle.”

At the same time, the Senate has yet to pass a one-week stopgap spending bill needed to keep the federal government running beyond Friday night, when current funding runs out. Lawmakers plan to attach any covid-19 relief deal to a comprehensive spending bill they’re working on separately to provide appropriations from Dec. 18 into 2021.

One reason for the holdup on the stopgap bill is an attempt by progressive Sen. Bernie Sanders of Vermont and conservative Sen. Josh Hawley of Missouri to attach provisions granting most Americans $1,200 stimulus checks.

The bipartisan plan doesn’t have stimulus checks, while a $916 billion relief proposal by Treasury Secretary Steven Mnuchin provides $600 to individuals and children and leaves out $300 a week in supplemental jobless benefits.

Sanders and Hawley told reporters Thursday even if they allow the stopgap to clear the Senate Friday, they would make other attempts at brinkmanship to get the direct payments in the bill next week.

The bipartisan group is discussing an enhanced pause in covid-19 lawsuits, combined with a process for developing a liability standard in the future along with a standard that would apply now, according to a person familiar with the talks. A pause would give states some time to write liability laws in 2021.

A bipartisan meeting of senators engaged on the liability language met late Thursday and Republicans rejected the latest offer by Democrats, according to a Senate aide familiar with the discussions. The plan includes a temporary freeze on lawsuits, an enhanced ability for companies to defend themselves if their actions are found to have caused harm, and a fund to reimburse employers for judgments against them if they are determined to have acted under the best available covid safety guidance.

A key goal of Democrats was to keep actions under state law while and allowing state legislatures time to further craft their own liability shields. Republicans rejected that, the aide said, adding the more discussions are planned for Friday.

Sen. John Cornyn of Texas, another member of McConnell’s team, said the bipartisan group’s approach on liability falls far short of what Republican leaders want — which is to ensure that lawsuits against employers are tried in federal and not state courts.

“The reason why we need a federal standard is because there will be inevitable cherry-picking and venue-shopping — and then you start certifying class actions in those states that don’t have liability protection,” Cornyn said, adding that the gang’s ideas are too tilted toward plaintiff lawyers. “Basically, that will be the standard in the country.”

Endgame Possibilities

Amid all the disagreements, lawmakers are starting to talk about missing the Dec. 18 deadline and negotiating after Christmas. It’s the latest delay in talks that have gone on since July.

While Mnuchin has been on calls with lawmakers, one player who hasn’t stepped up is President Donald Trump — leaving the possibility he could use his influence over Senate Republicans to seal a deal.

With the clock ticking down, the drama could yet increase. Should closed-door talks fail to produce a package, each chamber of Congress could attempt to resolve the differences on the floor, attaching competing stimulus proposals to the Dec. 18 funding bill and daring the other body to vote it down.

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Hong Kong’s Jimmy Lai charged with collusion under security law (nationthailand.com)

Hong Kong’s Jimmy Lai charged with collusion under security law

InternationalDec 12. 2020Jimmy Lai, second left, is led away from his residence by law enforcement officials in Hong Kong on Aug. 10. MUST CREDIT: Bloomberg photo by Paul Yeung. 

By Syndication Washington Post, Bloomberg · Iain Marlow, Felix Tam

Hong Kong media tycoon and prominent pro-democracy activist Jimmy Lai is being charged with foreign collusion under the city’s sweeping national security law, a move likely to prompt further international criticism of China’s political crackdown on the former British colony.

The charges were reported by local media on Friday and appeared to later be confirmed by police in a statement that didn’t specifically mention Lai by name, as per the force’s typical practice.

“After in-depth investigation by National Security Department of Hong Kong Police, a 73-year-old man was charged with an additional offense of ‘collusion with a foreign country or with external elements to endanger national security,'” the police said, adding the case “will be mentioned” at the West Kowloon Magistracy on Saturday morning.

In early December, Lai, the 73-year-old founder of Next Digital Ltd. and owner of the pro-democracy Apple Daily newspaper, was denied bail on new charges relating to his dramatic August arrest under Hong Kong’s controversial new security measures.

The formal charges under the national security law, which Beijing forced on the city in late June after bypassing the local legislature, could prompt further criticism from the U.S. and the U.K., which have both criticized the law as an erosion of Hong Kong’s freedoms.

Chinese and Hong Kong officials have defended the law as necessary to restore stability to the Asian financial hub after it was rocked by sometimes-violent protests throughout 2019.

Shares of Next Digital climbed 18% in afternoon trading after the reports Lai was to be charged. Hong Kong residents have piled into shares of the company to show support for Lai, including a more than 1,100% surge in two days after his arrest in August that propelled the stock to a seven-year high.

Lai is a prominent critic of Beijing and Hong Kong’s authorities, while his Apple Daily newspaper has vigorously championed the city’s protest movement. In an interview with Bloomberg TV in late May, he called on U.S. President Donald Trump to hammer Hong Kong’s economy to punish authorities for their imposition of the national security law.

“Our only salvation is for President Donald Trump to impose sanctions,” he said at the time, adding that the most impactful initial move would be to freeze the bank accounts of top Chinese officials. “We are very hopeful that by the weekend he will impose very draconian sanctions on China.”

His arrest and a dramatic police raid on the Apple Daily’s newsroom in August prompted an outcry from foreign governments including the U.K., which said the law was being used to crack down on press freedoms in the former British colony.

U.K. Prime Minister Boris Johnson’s spokesman, James Slack, said at the time that Lai’s arrest was “further evidence that the national security law is being used as a pretext to silence opposition.”

A group of western envoys wrote an open letter in November condemning the erosion of media freedoms in the Asian financial hub, a situation they said had been worsened by Beijing’s imposition of the “vaguely defined” national security law.

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Yellen gets a shot to throw Treasury’s clout into climate fight (nationthailand.com)

Yellen gets a shot to throw Treasury’s clout into climate fight

InternationalDec 12. 2020Janet Yellen, former chair of the U.S. Federal Reserve, speaks during the American Economic Association and Allied Social Science Association Annual Meeting in Atlanta on Jan. 4, 2019. MUST CREDIT: Bloomberg photo by Elijah Nouvelage. 

By Syndication Washington Post, Bloomberg · Saleha Mohsin, Jennifer A. Dlouhy

Janet Yellen has promised to make fighting climate change a priority as Treasury secretary, spurring hope among activists she will put the issue at the center of U.S. economic policy for the first time.

Yellen, President-elect Joe Biden’s nominee to lead the Treasury Department, has already endorsed a tax on carbon dioxide emissions and urged countries to set up independent councils that can pursue aggressive climate policies without political interference.

Advocates are appealing for her to go even further if confirmed, seizing her role as one of the most powerful people in finance to wield fiscal policy in the campaign against global warming. Some have outlined plans for how Yellen could trigger tighter regulation of oil and gas company finances under the Dodd-Frank Act — even going so far as to require them to sell off fossil fuel assets.

“Yellen will have the power to help move trillions of dollars out of fossil fuels and trillions more into renewables,” said Jamie Henn, director of the non-profit advocacy group Fossil Free Media. “She could do more for the Green New Deal than nearly any other cabinet position.”

Yellen declined to be interviewed for this article. Biden’s transition team said the incoming administration intends to turn the threat of climate change into a way to bolster the economy and create jobs.

Yellen’s Treasury Department is expected to play a central role in that effort by helping shape stimulus spending to pull the U.S. out of recession and fulfill Biden’s promise to invest as much as $2 trillion on clean energy.

Both Biden and Yellen’s ambitions for big clean-energy spending could be constrained by Congress, where Republicans will hold at least 50 seats in the Senate. Conservatives have assailed congressional Democrats’ ambitions for a wave of spending to propel clean power and energy efficiency, including through expanded tax cuts and investments, as a socialist wish list.

Yellen’s interest in addressing climate change dates to her time in the Clinton administration, when she was the head of the Council of Economic Advisers. And she doesn’t mince words about the threat.

“It will have absolutely devastating consequences for humanity if we don’t address it, and time is running out to take the steps that are necessary,” she said in an October interview with Bloomberg News.

Climate change is already affecting energy investments, raising the risk that oil, gas and coal reserves will lose value or be barred from development as governments clamp down on the greenhouse gas emissions generated by burning fossil fuels. Even non-energy investments in commercial buildings and real estate are at greater peril with the encroachment of rising seas and more intense storms fueled by climate change.

Yellen “understands the critical links between the country’s economic health and climate change,” said Andrew Steer, president of the World Resources Institute. As Treasury chief, “Yellen would have strong authority to bring climate risks and opportunities more centrally into U.S. economic and financial systems.”

Progressive Democrats argue that enlisting the Treasury Department in the battle against climate change is consistent with Biden’s plan to take a whole-of-government approach to the issue.

“The private sector won’t take this seriously unless the government takes a stand,” said Rhiana Gunn-Wright of the Roosevelt Institute.

Critics of the approach say Congress — not the Treasury Department — should take the lead in addressing climate change and the financial risks it poses.

“Significant new policy, like that addressing climate, shouldn’t be set by financial policy or any other statute that was never intended to address such a major issue,” said Kyle Isakower, a senior vice president at the American Council for Capital Formation, a free-market think tank. With legislation specifically designed to address the risks of climate change, “financial policy can play an appropriate role.”

Any aggressive moves would invite conflict with the U.S. oil and gas industry, which is already bracing for the Biden administration to tighten environmental mandates on drilling and block development on federal lands.

Some options, such as greater capital holding requirements for banks that have fossil investments, are “a terrible idea,” said Norbert Michel, director of Heritage Foundation’s Center for Data Analysis.

“If we are going to talk about a climate disaster where the Earth burns up, a bank holding an extra 2% capital or not lending to certain companies isn’t going to change that,” Michel said.

The Treasury Department can have global influence by charting new climate finance strategies through the Group of 20, the International Monetary Fund and the World Bank. Financing can be directed toward emissions-lowering projects overseas, with the Treasury encouraging the phaseout of fossil fuels subsidies as well as increased funding focused on closing coal plants.

Yellen in October joined former Bank of England Governor Mark Carney in urging governments to establish climate change councils empowered to confront the problem. The G30 Working Group led by Yellen and Carney emphasized that the scale of the challenge “means that carbon prices alone are not enough,” and must be buttressed by investments in low-carbon infrastructure and clean energy research.

Yellen can start by simply addressing the issue — making the case to American workers and businesses that climate policies “can spur economic growth, ensure strong employment and resilient financial markets,” Duke University’s Tim Profeta and former White House officials Joseph Aldy and Himamauli Das wrote in a 24-page memo for the Biden-Harris transition.

“The secretary of the Treasury and the Treasury Department are crucial to the success of the administration’s efforts to move the U.S. and global economy to a low-carbon trajectory and to protect the economy from climate change shocks,” the three wrote in their blueprint for the agency.

Activists say one key platform Yellen will have is as head of the Financial Stability Oversight Council, which brings together the Fed, Securities and Exchange Commission, the Commodity Futures Trading Commission and other agencies. The panel can direct individual agencies and regulators to better address specific risks, such as global warming.

FSOC is “supposed to be a mechanism to force financial regulators to do their job” and address “emerging risks” and get “the entire financial system to focus on those, to regulate them better,” said Graham Steele, director of Stanford University’s Corporations and Society Initiative.

As Treasury chief, Yellen could push the council to develop recommendations for climate-focused financial regulatory reform and regulations. She also could encourage the FSOC to label oil and gas companies as non-bank systemically important financial institutions, or SIFIs, a designation that would trigger enhanced regulation and supervision by the Fed.

The Dodd-Frank Act requires the Fed to craft “enhanced prudential standards” for any designated non-bank SIFIs, and the council has the authority to recommend what the standards should be.

Applying such a designation could allow the Fed to require stress testing on the oil and gas industry — with company portfolios evaluated under scenarios involving strict greenhouse gas emissions limits or rapid global temperature change. The Fed could use the findings to set capital limits and restrict fossil fuel investments on the basis of their prospective risks to financial security.

The idea has gotten a boost from corporate watchdogs and environmental activists, including the Evergreen Action group founded by former aides to Washington State Governor Jay Inslee’s presidential campaign.

“The Treasury Department has the power to disentangle our financial system from fossil fuel investments which put us all at risk, make substantive green investments and stabilize our financial system,” Evergreen Action said in a policy memo.

The Federal Reserve Bank is taking steps to address the issue, with a Federal Reserve Bank of San Francisco conference last year, and in November, the Fed’s first-ever declaration that climate change poses a risk to financial stability.

Yellen, a former Fed chair who understands that governments and companies prefer certainty, said in the Bloomberg News interview that a “predictable path” is the best course.

It’s “not saying we need to tear down every power plant that still uses coal,” she said. “But when new power plants are built the incentives need to be there to do something that’s emits fewer greenhouse gases.”

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China sends sanctioned official to AmCham dinner in Beijing (nationthailand.com)

China sends sanctioned official to AmCham dinner in Beijing

InternationalDec 12. 2020A worker lowers a Chinese national flag in front of Tiananmen Gate in Beijing on Nov. 9, 2014. MUST CREDIT: Bloomberg photo by Tomohiro Ohsumi. 

By Syndication Washington Post, Bloomberg

Beijing sent a top official sanctioned by the U.S. to an AmCham China dinner, in a show of defiance that could feed criticism of the business group in Washington.

The Chinese government was represented at the annual American Chamber of Commerce event Thursday in Beijing by Wang Chen, a member of the Communist Party’s Politburo. Wang is also vice chairman of the National People’s Congress and among the 14 officials sanctioned by the U.S. on Monday over the body’s role in constraining freedoms in Hong Kong.

China often designates a representative with an economically focused portfolio, such as Vice Premier Hu Chunhua, the guest at last year’s dinner. Wang spent much of his career in various propaganda roles, including a stint as editor-in-chief of the People’s Daily, the party’s top mouthpiece.

“Other developments this week involved political considerations, of which we’re not a part,” AmCham China Chairman Greg Gilligan said in an e-mailed statement, referring to the tit-for-tat sanctions imposed on officials from both countries. “We are an independent organization that aims to be a commercial bridge on behalf of our members between the U.S. and China.”

The group’s members include some of the best known corporations in America, such as Walmart and the Coca-Cola.

A spokesperson for the U.S. Embassy declined to comment on Wang’s attendance, adding that no one from the embassy attended the event due to last-minute Covid-testing requirements.

Wang said Beijing would continue to create a favorable business environment for foreign companies and “treat all enterprises registered in China equally,” according to a report by state-run China Central Television. He said he hoped that AmCham could play an active role in facilitating two countries “re-launching dialogue, returning to normal tracks and rebuilding mutual trust.”

The move demonstrated how American executives operating in the world’s second largest economy have little say over what political figures they are required to deal with. The Trump administration has sanctioned dozens of Chinese officials in recent months, including two Politburo members, over their alleged roles in crackdowns on human rights in Hong Kong and the predominately Muslim region of Xinjiang.

Chinese Foreign Ministry spokeswoman Hua Chunying said Wang appeared at AmCham’s invitation and praised the group’s commitment to cooperation between the two countries. “This just shows that the so-called sanctions by the U.S. are unpopular and will not be supported by all sectors of the U.S.,” Hua told a regular news briefing Friday in Beijing.

The appearance by such an official at an AmCham event could feed criticism in Washington that the U.S. business community hasn’t sufficiently defended broader American interests while pursuing access to the Chinese market. Earlier this week, China censored a professor’s speech boasting about “‘China’s old friends’ on Wall Street, who had access and control over the D.C. politicians” after the remarks went viral in the U.S.

Wang made no mention of sanctions during his speech and the tone of his remarks was “totally friendly” said Henry Wang, president of the Center for China and Globalization. He added said sending a Politburo member “shows the high level of importance” with which China treats the event.

“We believe that fostering better communication between the people of our two countries is needed now more than ever,” said AmCham’s Gilligan.

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Bond market’s great reflation trade upended by Fed intervention (nationthailand.com)

Bond market’s great reflation trade upended by Fed intervention

InternationalDec 12. 2020The Federal Reserve building in Washington, D.C., U.S., on Dec. 1, 2020. MUST CREDIT: Bloomberg photo by Stefani Reynolds. 

By Syndication Washington Post, Bloomberg · Vivien Lou Chen

The Federal Reserve is casting a long shadow over the world’s biggest bond market, derailing a classic recovery trade and underscoring how an era of central-bank intervention will reverberate for some time to come.

The mere hint that the Fed may take additional steps to hold down long-term rates is causing Treasury traders to scale back so-called steepener bets — a tried-and-true strategy that has generated big profits over the years as economic rebounds pushed yields higher. Barclays is keeping a lid on the size of its positions. Incapital is using options, rather than actual bonds, for a hedged — and more cautious — riff on the trade. And Nick Maroutsos of Janus Henderson Investors says some “could get flattened” by the wager.

It’s the latest example of how the Fed’s outsized presence in markets, which began with the 2008 financial crisis and shows no signs of ending, is distorting traditional trading strategies: It’s squelching volatility, adding fuel to a record-setting advance in stocks, leaving credit markets priced to perfection, and curbing Treasury yields at levels that no longer fully reflect market sentiment or investors’ belief in the economy.

Were it not for Fed policymakers frequently affirming that they’ll do whatever it takes to bolster the economy — comments that accentuate the commitment they made this summer to keep rates low for as long as they can — the 10-year yield would likely already have bounced back above 1%. Perhaps, well above it, some say. Instead, it’s edged lower every time it’s come close to that level since March, dragged down by traders worried the Fed could adjust its bond purchases as soon as next week’s meeting. Policymakers have said a hard cap on yields remains in their toolbox.

“It’s hard for a trader to have any conviction, when you are just one announcement away from the Fed crushing your trade,” said Patrick Leary, senior trader and chief market strategist for Incapital, a Chicago-based underwriter and distributor of corporate bonds. “You don’t want to put it all out there or ride a trade for too long.”

For months, investors have been trained to buy bonds on price dips, given the perceived readiness of the Fed to prevent an alarming increase in rates. Even when last week delivered one of the biggest daily spikes of 2020, 10-year Treasury yields failed to breach 1%. They’re now at about 0.9% — despite similar-maturity breakeven rates continuing to rise as stock and metals markets price in reflation. The yield curve from 2 to 10 years, after touching a three-year high above 80 basis points on Dec. 4, has also retreated.

Higher yields are a double-edged sword for the Fed. On the one hand, they can signal greater confidence in the recovery and, indeed, officials might even welcome them if they’re accompanied by rising inflation expectations. But the flip side is that rates that climb too much also raise long-term borrowing costs, which is one of the last things the economy needs with the pandemic raging and millions still out of work.

With market expectations for Fed action tamping down yields, traditional signals sent by those rates have become less reliable for interpreting investor sentiment. What’s more, low rates have diminished the returns from bonds that many investors count on to offset any equities losses, forcing them to seek new hedges.

“The Fed’s manipulation of the bond market is good in theory, but producing multiple reactions with unintended consequences,” said Larry Milstein, senior managing director and head of government debt trading at R.W. Pressprich & Co. in New York. “The Fed is the 800-pound gorilla in the room, and there’s a risk that it could step in at any time and flatten the curve.”

Speculation is rife that the central bank will either offer guidance on or adjust its bond-buying program as soon as its meeting on Dec. 15-16. The majority view is that it will ultimately shift its purchases — now totaling about $80 billion a month in Treasuries — more to longer maturities, if needed, to support economic bright spots such as housing as the pandemic rages on.

It’s certainly been a year in which the Fed has dug deep. From the initial rate cuts and emergency aid programs of March to its decision to place inflation at the heart of its monetary policy, the central bank has taken a proactive approach, with officials reiterating their sensitivity to markets. Fed Chair Jerome Powell has repeated that he’s “not even thinking about thinking about raising rates,” Richard Clarida — his deputy — has said yield-curve control is still part of the Fed’s tool kit, and Randal Quarles, vice chair for supervision, opened the door to unending quantitative-easing to support Treasury trading.

Still, that’s not stopped the likes of Bank of America Corp. and Societe Generale SA from recommending steepeners this year on expectations that stimulus by both the government and central bank will bolster the economy and boost yields. But Goldman Sachs Group Inc. has shifted to a more nuanced view, targeting a steeper curve via forward contracts instead of spot positions.

At Barclays, Kevin Walter — co-head of global Treasuries trading — says he’s holding a small position in bear steepeners when he would ordinarily have a bigger one to reflect his view that the economy is on the right track, given prospects for a vaccine and fiscal stimulus.

“One thing holding me back is the possibility that, as soon as this next FOMC meeting, the Fed could be extending WAM,” or the weighted average maturity, of its purchases.

If that happens, it would cause longer maturities to outperform, creating an opportunity to put on more bear-steepener trades from a better level, he says. Even so, he sees a policy shift by the Fed as more likely next quarter.

Maroutsos at Janus, which managed about $350 billion as of September, says he “tip-toed” into a mild steepener earlier this year, and refrained from adding more in the Absolute Return strategies he helps oversee, partly because he viewed it as a crowded trade that could unwind “fast and violently.”

“We weren’t firm believers the curve would steepen anyway, and it’s been hard for us to get on board,” he said. “There are too many extenuating circumstances that could result in that trade being hurt,” such as renewed lockdowns and the prospect that a fiscal package doesn’t get passed.

Many traders began paring steepener bets last month as they reassessed the potential for more support from the Fed.

Leary of Incapital says he pulled back on the popular trade to take profits in early November, when the 10-year Treasury yield approached 1%, and positioned instead for more flattening. He’s now expressing his optimistic views on the economy via a synthetic trade that mimics the steepener — buying puts on 10-year options and calls on 2-year options, which have built-in stop outs “if I get it wrong.” He sees the 10-year yield falling to as low as 0.65% to 0.75% if the Fed tweaks its bond buying this month.

The Treasury’s decision not to extend some emergency Fed lending programs past year-end increased expectations that policy makers will act soon. Yet recently, somewhat more optimistic comments about the economy from Powell seem to have removed some of that urgency.

Even if the central bank doesn’t act next week, the U.S. faces a tough stretch ahead with the pandemic. All else equal, that should bolster demand for Treasuries, lowering yields — and make steepeners a riskier place to be through at least the year-end.

Caution toward steepeners has “definitely been a topic of conversation” among portfolio managers at Insight Investment, which oversees about $945 billion, says Jamie Anderson, head of U.S. trading, adding that the Fed can’t be blamed for putting the economy above traders.

The steepener is “definitely a position that everyone loves,” Anderson says, but there’s a lot at stake over the next few weeks. “You could ultimately be right, but the events before you get there could be extreme and everyone has a limit somewhere.”

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EU approves $2.2 trillion stimulus plan backed by joint debt (nationthailand.com)

EU approves $2.2 trillion stimulus plan backed by joint debt

InternationalDec 12. 2020Ursula von der Leyen, president of the European Commission, speaks during a news conference in Brussels Dec. 11, 2020. MUST CREDIT: Bloomberg photo by Geert Vanden Wijngaert. 

By Syndication Washington Post, Bloomberg · Viktoria Dendrinou, Katharina Rosskopf, Andra Timu

European Union leaders meeting in Brussels resolved a standoff with two eastern member states that had threatened to delay a historic $2.2 trillion budget and stimulus package just as the latest wave of coronavirus infections ravages the continent’s economies.

A deal was agreed on Thursday with Hungary and Poland, which had angrily protested a mechanism tying funding to upholding democratic norms. The agreement paves the way for the EU to put into effect not just its seven-year budget but a 750 billion-euro ($909 billion) pandemic relief package that will be financed by joint debt.

The leaders also agreed to more aggressive cuts in greenhouse gas emissions over the next decade, paving the way for Europe to become the world’s first climate-neutral continent. The bloc will cut pollution by at least 55% by 2030, up from 40% previously.

“The agreement will help us provide a strong economic response to the crisis while preserving the rule of law,” European Commission President Ursula von der Leyen told reporters Friday morning after the all-night meeting, adding that the stimulus is a key component to the EU’s climate ambitions. “Today’s agreement puts us on a clear path toward climate neutrality in 2050.”

The German-brokered compromise on the budget offers reassurances over how the new conditions will be applied, but the rule-of-law provision will remain in place. The dispute was the culmination of years of clashes between Brussels and the two countries over everything from political meddling in the judiciary to LGBTQ rights.

Under the compromise, the conditionality will only kick in from Jan. 1 and relate to commitments under the new budget. Penalties, meanwhile, will only be enacted after the European Court of Justice has had its say, which could take months.

In truth, Hungarian Prime Minister Viktor Orban and Polish counterpart Mateusz Morawiecki had backed themselves into a corner by repeatedly decrying the linkage between EU financing and democratic standards. That mechanism, agreed on in the summer between the European Parliament and Germany — which holds the bloc’s rotating presidency — was supported by the rest of the EU, in particular states like the Netherlands that want more scrutiny over how cash is spent.

Morawiecki said he had no choice but to drop the veto, as in such a scenario “we could have ended up with a rule-of-law mechanism but without the money.”

Dutch Prime Minister Mark Rutte called the rule-of-law provision “historic.” The reaction was mixed in Budapest and Warsaw.

Gergely Gulyas, Hungary’s minister in charge of the premier’s office, said the deal prevents the budget being used for “political attacks” and includes all guarantees that Hungary and Poland requested. But the junior coalition party of Poland’s hardline justice minister, Zbigniew Ziobro, questioned whether the agreement will allow his country to remain “sovereign.”

Swedish Prime Minister Stefan Lofven said that the declaration that allowed for the agreement didn’t change the original rule-of-law mechanism that had been agreed by member states.

“There’s no compromise on the content, no compromise on the text,” Lofven told reporters in Brussels before the start of the summit. “We declared things we needed to declare.”

There was a lot at stake for Hungary and Poland. The pair are the biggest net beneficiaries of EU cash, helping their economies close the gap on their richer neighbors to the west, and are in line for at least 180 billion euros from this spending package.

Had they gone ahead with their vetoes, the EU would have switched to an emergency budget from 2021. That would have seen funding plunge in almost all areas and potentially put Poland and Hungary at the back of the line for even the limited development aid that would be available.

Investors cheered the deal, with the zloty and the forint among top performers against the euro on Thursday, marking a third day of gains.

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Disney+ to get flood of new shows as subscriptions soar (nationthailand.com)

Disney+ to get flood of new shows as subscriptions soar

InternationalDec 12. 2020The Disney+ logo on a smartphone on Nov. 18, 2020. MUST CREDIT: Bloomberg photo by Gabby Jones. 

By Syndication Washington Post, Bloomberg · Christopher Palmeri

Walt Disney shares are poised to hit an all-time high after it issued a bold forecast for its new streaming services, projecting a Netflix-like trajectory that could bring the company as many as 350 million subscribers worldwide by 2024 thanks to an onslaught of programming from Marvel, Star Wars and Pixar.

In a presentation to investors Thursday, the world’s largest entertainment company outlined plans for dozens of new movies and TV shows from those major brands, with an eye toward becoming a streaming behemoth in four years. The company expects its program spending to reach $14 billion to $16 billion annually by then.

Disney+, the entertainment giant’s flagship streaming platform, also is getting a price hike. The U.S. monthly rate will climb $1 to $8 in a move that executives telegraphed earlier this year. In Europe, the price will rise 29% to 9 euros ($11) a month, although there it is getting additional content aimed at adults.

Shares of Disney rose as much as 8.6% to $168 in premarket trading Friday. If that holds in New York trading, it would mark an all-time high for the stock, which has about doubled since March on the strength of the streaming business.

“The enormous success of Disney+ inspired us to be even more ambitious,” Executive Chairman Bob Iger said at the event. “Our pipeline is much more robust than we initially anticipated,” he said, adding that the Disney+ cadence should soon hit 100 new titles per year.

Disney, like other Hollywood studios, is reorienting its film and TV business toward home entertainment, and has leapfrogged many competitors with its fast subscriber growth. Yet with its new subscriber goals — including hopes for as many as 260 million Disney+ customers — the company would surpass where industry pioneer Netflix Inc. is today.

As part of the presentation, Chief Executive Officer Bob Chapek said Disney+ has soared past 86.8 million subscribers in a little over a year. The company closed the last quarter with almost 74 million.

Disney executives, including new distribution head Kareem Daniel, outlined aggressive plans to stock the Disney+ service with new programming to keep the subscriber pipeline growing over the next few years. The Covid-19 pandemic forced many Hollywood studios to slow production this year.

Future plans include 10 series from the Marvel division, 10 Star Wars TV series, and another 15 programs from Disney live action, Disney animation and Pixar.

The programming slate also includes feature-length films, such as the Disney animation picture “Raya and the Last Dragon,” which will debut on Disney+ — at an extra charge — the same time as in theaters.

Chapek said that 80% of projects are now headed to streaming, rather than the big screen. But the company’s biggest films will be saved for theaters exclusively at first. That includes movies such as “Black Widow,” a Marvel film slated for May.

“Netflix may be forced to raise its content spending substantially (vs. $14 billion in 2019) after Disney unveiled an ambitious streaming strategy, which targets as many as 260 million Disney+ users in 2024. While Netflix’s investment thesis is still intact amid a global shift to streaming, greater competition from Disney and higher spending may drag on free cash flow,” Bloomberg Intelligence media analyst Geetha Ranganathan wrote.

While Disney is sending several films, including a live-action “Pinocchio” starring Tom Hanks, directly to its streaming service, theater owners may breathe a sigh of relief that many pictures — such as an upcoming Indiana Jones feature with Harrison Ford and a new Star Wars, which will be directed by Patty Jenkins — will still go to cinemas.

As the longtime king of the box office, Disney has been careful not to alienate theater chains — even as it sends more movies directly to streaming. Warner Bros. shook up Hollywood last week with its decision to make its entire 2021 slate of 17 movies available on HBO Max the same day they open in theaters. The decision angered many in the industry, including “Tenet” director Christopher Nolan, who said the studio doesn’t “understand what they’re losing.”

Hulu, the more adult-oriented streaming service, has added 2.2 million subscribers since the last quarter, and now has 38.8 million, according to the company. ESPN+ now counts 11.5 million, up 1.2 million from early October.

Executives at the presentation also announced that ESPN and ABC will become the home for the Southeastern Conference’s top football and basketball games under a 10-year deal starting in 2024, featuring teams like Alabama and Auburn. The company will pay in the low $300 million range each year on top of previous commitments, or more than six times what CBS currently pays, Sports Business Daily reports, citing unidentified people.

Disney executives also said they will launch the Star service in Europe in February and in Latin America in June. In Europe, it will be integrated with Disney+ and include R-rated content. It will be a stand-alone service in Latin America and feature live sports.

“We’re definitely still in launch mode as it relates to Disney+ — we’re still going into new markets,” Chief Financial Officer Christine McCarthy said. “And this is where we are at this point in time. This is a minimum amount of content that you will be seeing.”