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Just how much of a rebuke to Trump is Congress’s veto override?

InternationalDec 30. 2020

By The Washington Post · Amber Phillips

WASHINGTON – Republicans in Congress are about to hand President Donald Trump the biggest legislative loss of his presidency by helping Democrats override a Trump veto for the first time. On Monday, the House of Representatives overwhelmingly voted to override his veto of what is normally a broad bipartisan defense bill. The Republican-controlled Senate is setting up a vote to do the same this week.

It’s worth asking how much of a rebuke this is by Trump’s own party. In one sense, it’s big. In today’s hyperpartisan environment, members of a party don’t willingly and easily override the president of the same party. This veto override is coming from a GOP that has been consistently loyal to Trump, even as he has forced party members to overturn many of their core principles.

Republicans have been willing to distance themselves these past four years from their previous views on immigration, government spending, election security and even acknowledgment of the results of a free and fair election. But most drew the line here, on funding and supporting the military.

But there are also plenty of reasons not to read too much into this. The first is the most obvious: Trump is leaving office in a few weeks. It’s simply less risky for Republicans to override a veto now that he won’t be president much longer. The Washington Post’s Karoun Demirjian counts that Congress has tried and failed to override eight other Trump vetoes.

Republicans have occasionally voted in ways that rebuke Trump, if not this forcefully. Most notably, in 2018, Congress took a historic vote to end the Trump administration’s participation in the war in Yemen. But most often, their concerns about the president have been expressed only in private rooms.

This veto override is happening after Trump significantly weakened his negotiating power with Congress on a separate matter, a dual bill on coronavirus relief and government spending. After his administration negotiated key parts of the package and Congress passed it by wide margins, Trump publicly opposed it.

He kept Congress in doubt for days about the fate of perhaps the most important legislation of 2020 before eventually signing it Sunday. He exacted precisely zero concessions, and he arguably made his party look bad in the process. Coronavirus stimulus is popular, but Trump cast a spotlight on the fact that Republicans didn’t want to do it, writes The Post’s Aaron Blake.

Republicans saw no reason to negotiate with the president during or after his holdout on the coronavirus bill. Earlier Monday, most Republicans in the House voted against a Democratic-approved bill to increase the coronavirus stimulus checks in the legislation from $600 to $2,000, a move Trump supports. It’s not clear if the Republican Senate will take this up, even though Trump has made expanded stimulus checks one of his core issues this past week.

Perhaps things would have been different for Trump on the defense bill had he not severely frustrated members of his own party just days before they were scheduled to consider overriding him.

Finally, some powerful Republicans did side with Trump on the defense bill. Minority Leader Kevin McCarthy of California, the top House Republican, said he would vote against overriding Trump’s veto, even though just weeks earlier he voted for this very legislation. (He wasn’t able to vote Monday because he was recovering from elbow surgery, reported C-SPAN’s Craig Caplan.) A handful of other House Republicans who originally supported the legislation before Trump’s veto also effectively voted against it Monday.

In the Senate, Sen. Lindsey Graham, R-S.C., a Trump ally, may do the same. Graham made regular appearances on the president’s Twitter feed Monday, urging Republicans to consider Trump’s demands. (Chief among them is an unrelated provision to make it easier to sue social media companies for content on their sites.)

We’ll see how many, if any, Senate Republicans join Graham.

The reality is that Trump has never been very good at dealing with Congress. Its members have often played along, at least rhetorically. He has kept Republican lawmakers from publicly criticizing him. And he did get a remarkable number of them to deny that he lost the presidential election, a moment without parallel in modern American history.

But Monday’s veto override in the House underscores that Trump has struggled to actually change their minds on policy. He never got the money he sought for his border wall with Mexico. He was forced to accept harsher policies toward Russia than he wanted. And he’s going to leave office without Congress acquiescing to his last-minute demands.

That Republicans are rebuking Trump so forcefully and clearly suggests a significant weakening of his power over Congress when it comes to policymaking. But there are also reasons not to read too much into this in regard to Republicans’ relationship with Trump. We’ll never know what may have happened if Trump were heading into a second term, rather than out of the White House in a few weeks.

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Biden accuses Trump appointees of obstructing transition on national security issues

InternationalDec 29. 2020

By The Washington Post · Amy B Wang, Jenna Johnson, Dan Lamothe

President-elect Joe Biden on Monday accused President Donald Trump and his political appointees of obstructing the transition of power to his incoming administration, particularly in the national security sphere, an escalation in tone after reports of isolated difficulties in the transition process last week.

https://www.washingtonpost.com/video/c/embed/7d8fe81e-2fc6-49d0-bb07-314b2e830f59?ptvads=block&playthrough=false

Biden specifically called out the Office of Management and Budget and the Defense Department as agencies where his transition team had encountered “roadblocks” from political leadership.

“Right now, we just aren’t getting all the information that we need from the outgoing administration in key national security areas. It’s nothing short, in my view, of irresponsibility,” Biden said of the resistance his team was facing. He warned that such delays could allow enemies of the United States to take advantage of vulnerabilities, citing a recent massive cybersecurity breach that compromised several U.S. agencies.

“As our nation is in a period of transition, we need to make sure that nothing is lost in the handoff between administrations. My team needs a clear picture of our force posture around the world and our operations to deter our enemies,” Biden said in remarks from Wilmington, Del. “We need full visibility into the budget planning underway at the Defense Department and other agencies in order to avoid any window of confusion or catch-up that our adversaries may try to exploit.”

The pointed accusation by a president-elect that the incumbent was putting national security at risk by refusing to cooperate underscored the unprecedented and divisive nature of the current transition.

With less than a month before Inauguration Day, Biden has been laying the groundwork for how to tackle the gargantuan twin challenges that he will face as soon as he assumes the presidency – ending the coronavirus pandemic and rebuilding the economy. He has steadily filled vacancies in his Cabinet and in senior positions in his government, which will take over at noon on Jan. 20.

He has been met with remarkable resistance from Trump, who has refused to concede the election and has continued attempting to overturn the results. Trump blocked any transition efforts outright for more than two weeks before relenting, at least initially. He has declined to say whether he will attend Biden’s inauguration, and the incoming team planning the event assumes he will not.

Trump also has appeared increasingly uninterested in the nation’s most critical matters, instead pressuring allies to change the results of an election that his own administration said had been free of widespread fraud. On Dec. 23, he vetoed a defense authorization bill that included raises for service members, forcing a veto override effort this week. He complained that the measure would allow the renaming of military facilities honoring Confederate soldiers and had not included an unrelated measure punishing social media companies. He threatened to veto a coronavirus relief measure, delaying benefits before he eventually signed it Sunday.

On Monday, Trump continued to tweet conspiracy theories about the election – at one point retweeting a view that opponents were guilty of “treason” – and spent much of the day at his private golf club in Florida.

Meanwhile, Biden and Vice President-elect Kamala Harris attended a virtual briefing with 15 national security and foreign policy advisers, including several would-be Cabinet nominees. In comments that followed, Biden said the advisers told him that many of the agencies critical to national security have sustained “enormous damage” during the Trump administration.

“Many of them have been hollowed out in personnel, capacity and in morale, in the policy processes that have atrophied or have been sidelined, in the disrepair of our alliances . . . in the general disengagement from the world,” Biden said. “And all of that makes it harder for our government to protect the American people, to defend our vital interests in a world where threats are constantly evolving and our adversaries are constantly adapting.”

Acting defense secretary Christopher Miller disputed Biden’s accusation, saying in a statement Monday night that more than 400 defense officials have participated in 164 meetings with the transition team and provided more than 5,000 pages of documents. Miller said these efforts “already surpass those of recent administrations,” despite a compressed time frame.

Miller had, however, abruptly postponed all transition meetings on Dec. 18, saying in a statement then that the Biden team and Trump administration had mutually agreed on a pause through the holiday season. Biden team officials have denied that was the case. An official familiar with the situation who spoke on the condition of anonymity to discuss the matter said no meetings have occurred since then. The Defense Department announced late Monday that three meetings are scheduled for this week, two related to the pandemic and one on cybersecurity.

The Office of Management and Budget did not immediately respond to Biden’s comments.

Biden said Monday that most government agencies have shown “exemplary cooperation” with his transition team, especially given the challenges of the pandemic and the Trump administration’s effort to stall conversations, but that his staff has encountered “obstruction from political leadership” when they could not afford to waste any time. He noted that four years ago, he and then-President Barack Obama gave the incoming Trump-Pence administration “access to all that we had.”

In raising concerns about the transition, Biden was careful to distinguish between political appointees in the agencies and the career professionals who he said had cooperated fully.

“They never stopped doing their job and continued to serve our country, day in and day out, to keep their fellow Americans safe,” Biden said of the career government workers. “These agencies are filled with patriots who’ve earned our respect, and who should never be treated as political footballs.”

As an example of the potential impact of the obstruction, Biden pointed to the pandemic, which in December killed more Americans than in any previous month. More than 330,000 have died since March, with nearly 19.3 million sickened.

“We’ve learned so painfully this year the cost of being unprepared,” Biden said.

Biden said that under his administration, the Federal Emergency Management Agency will play an “enormous part” in the “safe, equitable and efficient distribution of vaccines to as many Americans as possible, as quickly as possible.” Harris and her husband plan to receive vaccinations in Washington on Tuesday.

“We want to make sure that our administration is poised to make full use of FEMA’s domestic reach and capacity,” Biden said.

In his Monday remarks, Biden also took issue with Trump’s handling of foreign affairs, repeatedly saying that the United States needs to strengthen its alliances with like-minded countries, not just to confront the pandemic but also to address climate change and “strategic challenges” from China and Russia.

“Right now there’s an enormous vacuum,” Biden said. “We’re going to have to regain the trust and confidence of a world that has begun to find ways to work around us or work without us.”

Biden said he was also briefed Monday on the steps needed to “clean up the humanitarian disaster that the Trump administration has systematically created on our southern border.”

Biden said that the work will start on his first day in office but could take some time, especially when it comes to rebuilding the nation’s capacity for processing asylum claims. He has previously pledged a comprehensive immigration plan on his first day in office.

“We’re going to work purposefully, diligently and responsibly to roll back Trump’s restrictions starting on day one,” he said. “But it’s not as simple as throwing a switch to turn everything back on, especially amid a pandemic.”

Biden opened his comments by addressing the Christmas Day explosion in Nashville, Tenn., saying federal, state and local law enforcement “are working around-the-clock to gain more information on motive or intent.” He praised Nashville police and other first responders, saying that “their bravery and coolheadedness” probably saved lives. Local and federal authorities have said a local man whose remains were found in the wreckage was responsible for the explosion, which spread destruction for blocks.

“This bombing was a reminder of the destructive power that individuals and small groups can muster,” Biden said, “and the need for continuing vigilance across the board.”

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House musters votes to override Trump’s veto of defense bill, setting up first such rebuke during his presidency

InternationalDec 29. 2020

By The Washington Post · Karoun Demirjian

WASHINGTON – The House voted Monday to reject President Donald Trump’s veto of a $741 billion defense authorization bill, setting up the first congressional override of his presidency just days before he exits office.

The 322-to-87 vote was comfortably more than the two-thirds of the House that was needed to pass the measure and set up the legislation for a similar override vote in the Senate this week. But the House’s margin of victory was smaller than the support the same bill received earlier this month, before the president’s veto. Some Republicans who supported the measure three weeks ago did not vote to override the president’s veto.

Trump made good on repeated threats to veto the legislation last week, when he sent the bill back to Congress with a laundry list of objections. Among the president’s complaints were that it ordered the Pentagon to change the names of military installations commemorating Confederate generals; restricted his ability to pull U.S. troops out of Germany, South Korea and Afghanistan; and did not repeal an unrelated law giving certain liability protections to technology companies.

His move led some of his stalwart supporters, including House Minority Leader Kevin McCarthy, R-Calif., to announce that they would not cross the president’s veto, even though they had voted for the defense bill. But despite those gestures of solidarity, the president has never had the numbers to sustain a veto, according to congressional officials.

In a statement after the vote, House Speaker Nancy Pelosi, D-Calif., called on Trump to “end his eleventh-hour campaign of chaos,” and respect the will of Congress.

Trump should “stop using his final moments in office to obstruct bipartisan and bicameral action to protect our military and defend our security,” she said.

Since the summer, the National Defense Authorization Act – an annual measure authorizing funds for everything from overseas military operations to pay increases for service members – has had overwhelming, veto-proof support in both chambers of Congress and the backing of a majority of each political party.

Over several weeks, many leading Republicans, particularly in the Senate, engaged in a concerted effort to get Trump to back off his veto threat, arguing that if the president’s push to retain the Confederate names kept the defense bill – for the first time in six decades – from becoming law, he would be on the wrong side of history.

They also appealed to Trump to abandon his insistence that the bill repeal Section 230 of the Communications Decency Act, a law that shields social media companies from legal liability for what third parties post to their websites. Trump has taken special aim at the law as part of his vendetta against Facebook, Google and Twitter for what he alleges is anti-conservative bias.

On Sunday night, Trump included a mention of Section 230 in a statement announcing he had signed a federal budget and pandemic relief bill into law.

“Congress has promised that Section 230, which so unfairly benefits Big Tech at the expense of the American people, will be reviewed and either be terminated or substantially reformed,” Trump said.

Trump’s statement did not represent a concession from Congress but a reflection of reality. While Democrats and most Republicans are in agreement that Section 230 needs revisiting, they also believe that it should be changed through a more careful process rather than shoehorning it into the defense bill.

Some leaders hope that Trump’s statement could free some Republicans who were loath to cross his veto over the Section 230 issue to support Monday’s override vote in the House.

Speaking on the floor just before the vote, the House Armed Services Committee’s top Republican, Rep. Mac Thornberry, R-Texas, implored his colleagues to do so.

“It’s the exact same bill, not a comma has changed,” he said, calling on those who had backed the legislation earlier this month to vote in support of it again.

Panel chairman Rep. Adam Smith, D-Wash., also said that the defense bill presented Congress with a rare opportunity to close the year out on a high note.

“We put together a bipartisan, bicameral product that has gotten an overwhelming number of votes,” Smith said. “Let’s show the American people that the legislative process works, at least a little better than sometimes they think it does.”

The bill now heads to the Senate, which must also pass the measure with a two-thirds majority in order for it to become law. That vote could happen as soon as Wednesday.

Congress to date has never been able to muster the votes to override a Trump veto, of which there have been nine since the start of his presidency. That is a higher rate of vetoes than either Barack Obama or George W. Bush, who each issued 12 vetoes over eight years in office. Before them, Bill Clinton issued 36 vetoes and George H.W. Bush issued 29. Each of those presidents faced at least one veto override by Congress.

Parts of the bill run against key elements of Trump’s agenda. The bill’s provisions restricting troop reductions at foreign outposts were inspired by Trump’s efforts to do so over the objections of Congress. Similarly, its prohibition on presidents using their emergency authority to move unlimited military construction funds to pay for domestic projects is a response to Trump’s efforts to siphon off billions of military funds to pay for a border wall.

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Quick Take: China’s crackdown on its internet giants

InternationalDec 29. 2020

By Syndication Washington Post, Bloomberg

China’s biggest internet companies got that way with at least tacit support from the government. Now two events have raised doubts about where those giants stand: the last-minute suspension of a stock offering by billionaire Jack Ma’s sprawling Ant Group Co. due to regulatory pressure; and the introduction of a draft antitrust policy seemingly designed to rein in the most powerful, including Alibaba Group Holding Ltd. (Ant’s major backer) and Tencent Holdings Ltd., operator of the WeChat super-app.

In the final days of 2020, regulators fired their opening salvos — opening an investigation into alleged monopolistic conduct at Alibaba and ordering Ant to refocus on its roots as a digital-payments provider. All that has left investors worried about what’s next for China’s Big Tech players and if the unusual freedom enjoyed by entrepreneurs like Ma might be coming to an end.

1. What happened?

Years of loose regulatory oversight in China helped Ant become a fintech giant, with businesses spanning payments, banking, wealth management and insurance. But just ahead of what was to be a $35 billion mega-listing in Shanghai and Hong Kong, Chinese authorities slapped new rules on the consumer-lending industry, in which Ant is the biggest player. That led to an indefinite suspension of Ant’s Nov. 5 initial public offering. The following week regulators proposed new rules intended to curb monopolistic practices across its internet landscape, spooking investors and wiping $290 billion off the value of market leaders including Tencent and Alibaba over two days.

2. Why the assault now?

We don’t know exactly. As is almost always the case, the country’s leaders have said little about their intentions, apart from protecting consumers and maintaining financial stability by mitigating risks. Some analysts and investors say they think regulators are merely reasserting their oversight power, not looking for drastic changes. Others think they may have grown frustrated with the swagger of tech billionaires and want to teach them a lesson by breaking up their companies — even if it means short-term pain for the economy and markets. What is known is that at a conference in October, Ma blasted China’s financial system as outdated and complained that regulators were shortsighted. He was summoned to Beijing for a rare joint meeting with the country’s top financial officials. The new regulations soon followed. The Wall Street Journal reported Nov. 12 that Chinese President Xi Jinping was furious at Ma’s speech and personally made the decision to halt the IPO.

3. Why is Jack Ma getting singled out?

The charismatic impresario behind two of the country’s largest corporations, Ant and Alibaba, is arguably the one person most closely identified with the meteoric rise of China’s internet sector. Long a regular face on the global conference circuit, the flamboyant billionaire has all but vanished from public view since Ant’s IPO got derailed. As of early December, he was advised by the government to stay in the country, a person familiar with the matter has said.

4. Is this a big change for China?

The government has played an important role in developing the tech sector, aided by a massive consumer market. In manufacturing, it intervened directly many times to reach the point where much of the world’s technology is made in China, even if it’s not always by Chinese companies. The central metropolis Zhengzhou, dubbed by locals as iPhone City, wouldn’t have become Apple Inc.’s biggest production base without government incentives. While less active in software and services, China facilitated their development by effectively creating its own version of the internet that’s blocked off from the rest of the world by what’s known as the Great Firewall. In the absence of Facebook Inc. or Twitter Inc., Tencent’s WeChat and Sina Corp.’s Weibo have flourished as social networks. Once Alphabet Inc.’s Google pulled out, Baidu Inc. extended its dominance of desktop search.

5. And the internet?

Early movers Alibaba and Tencent grew massively and came to dominate the entire ecosystem. Together with Ant they had a combined market capitalization of nearly $2 trillion in early November — easily surpassing state-owned behemoths like Bank of China Ltd. as the country’s most valuable companies. Their networks of investments encompass the vast majority of Chinese start-ups in arenas from artificial intelligence (SenseTime, Megvii) to fresh veggies (Meicai) and digital finance (Ant Group). Their patronage helped groom a new generation including food and travel giant Meituan and Didi Chuxing — China’s Uber. Rare are those that prosper outside their aura, the largest being TikTok owner ByteDance Ltd.

6. What are the legal issues?

China’s antitrust watchdog is seeking feedback on 22 pages of vaguely worded edicts that would establish a framework for curbing potentially anti-competitive behavior such as forced exclusivity deals, algorithm-based prices favoring new users or below-cost pricing to eliminate competitors. In that sense it echoes concerns raised by regulators worldwide who are investigating whether Facebook, Google and other internet giants are leveraging their dominance to squash competition, or abusing user data. Consumers in China in recent years also have protested against the gradual erosion of their privacy via technology from facial recognition to big data analysis.

7. What’s this about VIEs?

Embedded in the rules is a reference to the need for official approval for mergers and acquisitions involving Variable Interest Entities. The VIE model has been used by Alibaba and others to sell shares overseas, because Chinese law restricts foreign investment in internet companies (along with banking, mining and private education). The exotic corporate structure — pioneered by Sina and its investment bankers during a 2000 IPO — magically turns a Chinese company into a foreign one with shares that overseas investors can buy. But it has never been formally endorsed by Beijing, leaving investors perennially nervous about their bets unwinding overnight.

8. Has this happened before?

Yes, to an extent. China has a tradition of cracking down in fits and starts, or making examples out of high-profile companies. Tencent, for instance, became a target of a campaign to combat gaming addiction among children in 2018. While its shares took a hit, they eventually recovered to hit new highs. Alibaba has done the same after running afoul of authorities on everything from unfairly squeezing merchants to turning a blind eye to fakes. But the present scrutiny is shaping up to become one of the largest concerted actions against private enterprise in decades.

9. Is the internet being singled out?

China’s private sector has maintained a delicate relationship with the Communist Party for decades, and has only recently been recognized as central to the nation’s future (Ma was confirmed as a Communist Party member in 2018). While Xi’s government has been steadily tightening its grip on the world’s second-largest economy, it had taken a relatively hands-off approach toward the internet, e-commerce and digital-finance spheres. That could be changing as Big Tech amasses evermore influence and power through the data and loyal patronage of hundreds of millions of consumers.

10. Will Ant – or anyone else – get broken up?

Beijing told Ant to overhaul its suite of services — which include consumer loans, wealth management and insurance. It stopped short of calling for splitting the company but the language left that option open. The central bank stressed it was important Ant “understand the necessity of overhauling its business” and told it to come up with a plan and timetable as soon as possible. Authorities also berated Ant for what they said was subpar corporate governance and disdain toward regulatory requirements. As for other companies, Beijing is expected to tread cautiously, looking to rein in their growing clout without undermining some of the nation’s biggest corporate success stories. It’s unclear when or whether Beijing will wring concessions from Alibaba in its antitrust investigation, or what they could be.

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Novavax begins U.S. phase 3 trial of coronavirus vaccine

InternationalDec 29. 2020

By Syndication Washington Post, Bloomberg · John Tozzi, Linus Chua

Novavax Inc. will start the final-stage trial of its coronavirus vaccine with 30,000 people in the U.S. and Mexico, opening another avenue for shots to fight the pandemic, the National Institute of Allergy and Infectious Diseases said.

The trial, to be completed across 115 locations, is the latest large-scale effort in the U.S. to evaluate vaccines to protect against the virus that’s killed more than 330,000 Americans. The company is also studying the vaccine in a large trial in the U.K. that’s completed dosing. Initial results from that trial should be released early next year, Chief Executive Officer Stan Erck said Monday in an interview on Bloomberg Television.

Erck said the trials underway will show whether the Novavax vaccine is similarly effective to shots already authorized in the U.S. that have demonstrated greater than 90% protection from illness.

“We don’t know until we know,” Erck said. Based on earlier studies of the immune response prompted by the Novavax shot, “we expect similar results,” he added.

If successful, Novavax’s shot would expand an arsenal that includes vaccines from Pfizer Inc. and Moderna Inc. that were authorized for emergency use this month. Other vaccines from Johnson & Johnson and AstraZeneca Plc are also in large-scale trials.

Novavax’s experimental NVX-CoV2373 vaccine uses a different mechanism than the Pfizer and Moderna shots, which rely on messenger RNA, a technology being used in vaccines for the first time. The Novavax shot is made from a “stabilized” form of the coronavirus spike protein incapable of causing infection. It also contains an adjuvant, a substance designed to enhance the immune system response.

Erck also said he thought the Novavax shot would likely prove effective against a new variant of the SARS CoV-2 virus spreading in the U.K. and elsewhere that is suspected of being more easily transmitted.

The company has been working to build manufacturing capacity across the globe, with commercial-scale factories worldwide ready to produce millions of doses, Erck said.

The U.S. trial of Novavax’s vaccine will be conducted with Operation Warp Speed, the federal government’s effort to accelerate vaccine development.

“The launch of this study — the fifth investigational coronavirus vaccine candidate to be tested in a phase 3 trial in the United States — demonstrates our resolve to end the pandemic through development of multiple safe and effective vaccines,” Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said in a statement.

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Once a billionaire factory, Korea’s beauty industry turns ugly

InternationalDec 29. 2020A customer tries an eyeliner at an Amorepacific store in Seoul, South Korea, on Sept. 12, 2018. The pandemic has made cosmetics less central to women’s daily routines, ending the wealth created by the rapid rise in popularity of Korean beauty products. MUST CREDIT: Bloomberg photo by SeongJoon Cho

By Syndication Washington Post, Bloomberg · Yoojung Lee

Three years ago, Suh Kyung-Bae was the second richest person in South Korea. Today he’s barely Top 10, a stark reversal in a K-beauty boom known for minting billionaires, not breaking them.

Suh’s $3.6 billion fortune — down from roughly $8 billion in 2017 — is largely comprised of shares in his family’s cosmetics conglomerate, Amorepacific Group, which have fallen more than 40% from a mid-January high. The parent of brands like Innisfree, Laniege and Sulwhasoo, Amorepacific was struggling even before covid-19, and the pandemic has ushered in a slew of lifestyle changes that have made cosmetics less central to women’s daily routines.

That’s brought a halt to the wealth created by the rapid rise in popularity of Korean beauty products and the dealmaking frenzy that followed. From 2010 to 2014, foreign companies spent at least $215 million to acquire cosmetics firms there, according to a September report by Samjong KPMG. In the five years that followed, the country became the world’s fourth-largest exporter of beauty products, and the deal volume ballooned to $5 billion, not including transactions for undisclosed sums.

Estee Lauder Cos. made Have & Be Co., widely known for its Dr. Jart+ line, its first acquisition of an Asian beauty brand in November 2019. That deal, worth $1.1 billion, turned founder ChinWook Lee into a billionaire. Goldman Sachs Group Inc. bought a minority stake in GP Club Co., best known for face masks, making founder Kim Jung-woong one of the country’s richest people. Unilever Plc, L’Oreal SA and other multinational companies also got stakes in Korean cosmetics firms, creating massive windfalls for their founders.

But the pandemic has taken a double hit on K-beauty. Social distancing and remote work have lessened demand for makeup and led to store closures. Beauty retail sales in the U.S., the No. 3 market for Korean exports, will be down more than 7% in 2020, according to market research firm Mintel.

For Korea, coronavirus travel restrictions have also cut off the flow of big-spending Chinese tourists and individual merchants who buy tax-free goods in bulk and sell them back home. Meanwhile, China’s customers have more access to global brands and are increasingly interested in products made locally.

“Now it’s naive to think that cosmetic products with made-in-Korea tags would simply win over Chinese customers,” said Lina Oh, a Seoul-based analyst at Ebest Investment & Securities Co.

Neither Have & Be nor GP Club have released financial information for 2020; GP Club’s plan for an initial public offering in 2019 hasn’t been rescheduled.

A store employee applies a foundation in a Laneige sore in Singapore on Sept. 12, 2017. The pandemic has taken a double hit on K-beauty, with social distancing and remote work lessening demand for makeup, and travel restrictions cutting off big-spending Chinese tourists. MUST CREDIT: Bloomberg photo by Nicky Loh

For Amorepacific, consolidated revenue for the first nine months of the year fell 23% to $3.4 billion (3.7 trillion won) from the same period in 2019, according to a company filing. For the first time in its history, the group announced last month a plan to offer voluntary retirement targeting employees who have worked for more than 15 years. The company declined to comment on its plans or on Suh’s personal fortune.

At the same time, the pandemic has accelerated the shift to online in the beauty industry. Amorepacific’s revenue for the segment has seen substantial growth, pushing it to prioritize that part of the business. Cosmetics giant L’Oreal, whose sales dropped 12% in the first half of 2020, launched 300 digital services this year, including live beauty tutorials.

Amorepacific plans to reduce the number of Innisfree stores in China but anticipates that overall, digital sales will make up half its business there next year, according to Yuanta Securities Korea. In the domestic market, the company sees the share of online revenue growing to 30% from 20%.

“Spending on cosmetics was already down before covid,” said Hye-mi Kim, an analyst at Cape Investment & Securities Co. in Seoul. “covid made it even less necessary. Only must-have items like skin care products or those for facial problems are doing okay.”

Meanwhile, South Korea has new billionaires rising, like Seo Jung-jin, founder of pharmaceutical firm Celltrion Inc., which is developing a covid-19 antibody treatment. Seo’s wealth has almost tripled this year to $14.6 billion, making him the country’s new second-richest man.

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Gold miners set for another banner year

InternationalDec 29. 2020Heavy machinery operates at the Fimiston Open Pit mine, operated by Kalgoorlie Consolidated Gold Mines Ltd. in Kalgoorlie-Boulder, Western Australia, Australia, on Aug. 8, 2018. MUST CREDIT: Bloomberg photo by Carla Gottgens

By Syndication Washington Post, Bloomberg · Aoyon Ashraf

The good times for gold miners are expected to continue next year, especially for those that are able to tighten spending and increase returns to investors.

The rally in gold prices has helped miners expand their margins and generate record levels of free cash flow, allowing many to pass on profits to shareholders already, Scotiabank analyst Tanya Jakusconek said.

“With miners’ balance sheets in great shape, we believe investors will benefit from much higher dividends over the coming years,” Jakusconek wrote in a note to clients. Kinross Gold Corp., for example, offers “particularly compelling value,” as long as it continues to demonstrate sustainable cash flow over the coming quarters.

With the outbreak of the coronavirus, the price of gold hit a record in 2020 after demand for safe-haven assets surged against a backdrop of “lower-for-longer” interest rates, trillions of dollars in stimulus spending and a weaker U.S. dollar.

With none of those factors expected to change anytime soon, Credit Suisse analyst Fahad Tariq said he expects next year to be another “banner year for gold” with prices heading to an average of $2,100 per ounce.

The “key differentiator” among mining stocks will be those with strict spending habits, Tariq said. If miners keep on a path of returning capital to shareholders, and continue to generate significant free cash flow, their valuation multiples should expand, he said.

Spot gold prices are down from an all-time high in August after the rollout of coronavirus vaccines reduced demand for havens, but they remain up about 24% for the year. While the FTSE World Index of equities is on track to return 13% in 2020, the NYSE Arca Gold Miners Index has climbed 23%.

The sell-off in the second half of the year likely facilitated a “shakeout of weaker names” that had participated in the first-half rally, Delbrook Capital founder and portfolio manager Matthew Zabloski wrote in a letter to investors. But now he expects a “big rebound” in precious metal prices, which could again lift the sector. He sees interest rates remaining low as swelling liabilities around the globe make rapidly increasing rates “intolerable,” he said.

Top picks by Credit Suisse’s Tariq include Newmont Corp., Barrick Gold Corp., Agnico Eagle Mines Ltd., Yamana Gold Inc. and Endeavour Mining Corp.

“The economy remains fragile and the post-pandemic recovery will be gradual at best,” Tariq said. “We think any near-term pullback in gold prices due to Covid vaccine approvals and rollout is a good entry point.”

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The winning credit trades that made debt investors rich in 2020

InternationalDec 29. 2020

By Syndication Washington Post, Bloomberg · Davide Scigliuzzo

It was a year like no other in credit.

Markets plunged at the onset of the pandemic, sending entire sectors teetering toward oblivion. Once solid companies were suddenly paying double-digit yields in a mad scramble for liquidity, while venerable household names could be scooped up for pennies on the dollar.

Then, just as quickly, the Federal Reserve’s unprecedented efforts to support corporate-debt markets set off a surge in prices that turned risky bets into winning wagers virtually overnight. A flurry of trading activity ensued, generating billions of dollars in additional Wall Street revenue and boosting bonuses.

Amid the banner year, a few select wagers have stood out among the rest. From travel and tech to Tupperware, here are some of the top credit trades in a year that has had no shortage of memorable deals.

Airbnb

Silver Lake and Sixth Street Partners more than doubled their money on a $1 billion lifeline they threw Airbnb Inc. in April. The second-lien loan they underwrote for the company came with warrants, which delivered outsized returns once the company completed its initial public offering. In just eight months, the two firms are sitting on paper gains well over 100%.

Less adventurous investors who preferred to stick to more senior debt were still able to take part in the rally. Airbnb’s first-lien loan, also syndicated in April, has returned about 17% over the span.

Fresh Market

Before businesses were ordered shut across the U.S. in March, Fresh Market Inc. was struggling under the weight of $1 billion in debt it had accumulated after its takeover by Apollo Global Management Inc. in 2016. Its bonds were already trading at roughly half of their face value.

But as homebound consumers began stocking up on groceries en masse, the company experienced a 25% increase in revenue in the second quarter. The company’s 9.75% notes due 2023, which dropped to as low as 39 cents on the dollar at the end of March, have since recovered to 103. That’s a total return of more than 175% for investors who timed it right.

Tupperware

A boom in home cooking and an aggressive cost-cutting plan pushed by new Chief Executive Officer Miguel Fernandez gave Tupperware Brands Corp. a much-needed boost in 2020, pulling the company back from the brink.

Tupperware’s shares have soared more than 300% this year, but its debt has also been a boon for investors. The company’s $600 million of 4.75% bonds due 2021 traded as low as 30.125 cents in May after it announced plans to buy back only some of the notes at deeply discounted prices.

Investors who scooped up the securities on the cheap and held out were handed a windfall in December, when Tupperware obtained a new loan from Angelo Gordon & Co. and JPMorgan Chase & Co., and called the remaining bonds at around par, for a total return of over 230%.

Cruise Lines

As the pandemic took hold, few industries were in more desperate need of capital than cruise lines. Not only had travel across the globe ground to a halt, but vessels had emerged as a key hot spot for contagion, casting doubts as to when sailing would be allowed to resume.

Carnival Corp. was the first to raise capital in the bond market, offering $4 billion of three-year bonds secured by ships and intellectual property with a coupon of 11.5%, one of the highest ever by an investment-grade company. The debt, which was issued at 99 cents, has returned around 25%.

Secured bonds that lower-rated Norwegian Cruise Line Holdings Ltd. and Royal Caribbean Cruises Ltd. offered in May have returned around 29% and 27% respectively.

Golden Nugget

Houston billionaire Tilman Fertitta was among the first to tap debt markets when credit began flowing again in April. But Golden Nugget, the umbrella company for much of his restaurant and casino empire, had to offer investors one of the highest yields ever seen in the U.S. leveraged loan market to get a deal done.

The loan was issued at 96 cents and pays annual interest of 12 percentage points over Libor. Two months later, half of it was repaid at a dizzying premium of 116 cents via proceeds from the sale of Golden Nugget’s online betting business to a blank-check company. The remaining outstanding amount has returned over 30%.

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Spain’s virus deaths pass 50,000 amid holiday restrictions

InternationalDec 29. 2020

By Syndication Washington Post, Bloomberg · Laura Millan Lombrana, Charlie Devereux

Spain became the fourth European country to record more than 50,000 coronavirus deaths as nations across the region start to roll out a vaccine.

Fatalities from the disease rose to 50,122 on Monday, according to Health Ministry figures. Some 408 people have died of the virus in the past week. Cases diagnosed over the last 24 hours amounted to 2,822, bringing the total to 1.88 million.

Spain is one of the countries in Europe to be hit hardest by the pandemic, forcing the government to impose a state of emergency in March. When it emerged from a strict national lockdown three months later, management of the pandemic was placed in the hands of regional governments.

While some regions ordered restrictions on movement and curfews as cases increase again, Spain hasn’t reimposed a strict lockdown like those seen in the U.K. and France in recent weeks.

The number of people dying from the virus has been slowing since November, according to Fernando Simon, the head of Spain’s medical emergency response center. However, data gathered over the holiday period can have gaps in reporting, he said at a news conference.

“We had a death rate of 1% to 1.5% in the past few weeks and in the last few days we’ve seen a rate of 0.8%, which is a good indicator that we’re making a significant effort to guarantee detection” of the virus, Simon said.

The infection rate is higher than desired, but recent data suggests that the number of cases is stabilizing, as are hospitalizations, Simon said.

Still, authorities are telling Spaniards to avoid travel between regions and gatherings of more than 10 people over the holiday season. Spain’s economy is lagging behind major euro-area peers, with a contraction of 12% expected this year. Debt is mounting and unemployment is expected to remain around 20% for at least the next two years.

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China sentences citizen journalist to four years in prison for Wuhan lockdown reports

InternationalDec 29. 2020

Zhang Zhan

By The Washington Post · Lily Kuo

TAIPEI, Taiwan – A citizen journalist who documented the desperation of residents in Wuhan at the height of China’s coronavirus outbreak was sentenced to four years in prison on Monday in a case that underlined Beijing’s extreme sensitivity to criticism of its pandemic response.

In a closed-door trial that lasted less than three hours, authorities in Shanghai handed down the sentence to Zhang Zhan, 37, for “picking quarrels and provoking trouble,” a charge often used against dissidents.

Zhang, a former lawyer turned activist, traveled to Wuhan in February, where she filmed from overwhelmed hospitals, neighborhoods and community centers, providing a rare window into the locked-down city. Her critical reports accusing the government of suppressing the voices of regular citizens and failing to inform residents of the reality of the situation contrasted with rosy state media coverage, one of the few sources of information. Zhang was detained in May.

Chinese authorities often hold sensitive trials involving human rights activists during the holiday season when much of the rest of the world is distracted. The proceedings, usually announced with little notice, are almost always held in secret. In another such case, 10 of the so-called “Hong Kong 12” protesters caught at sea while trying to flee the crackdown in their city were put on trial in the Chinese city of Shenzhen on Monday.

During Zhang’s proceedings on Monday, which rights advocates deemed little more than a show trial, the activist was given a chance to speak.

“The government should not censor the speech of its citizens,” she said, according to her lawyer, Zhang Keke.

Human rights groups and friends of Zhang are especially worried about her health in custody. On hunger strike since June, she has been force-fed via a tube and placed under restraints. She has pledged to continue her hunger strike, according to her lawyer, despite pleas from family and friends. Advocates say she has been treated more harshly because of her refusal to cooperate or admit guilt.

Zhang is one of several citizen journalists detained for reporting on Wuhan, but the first to be sentenced to prison. Her verdict comes ahead of a mission to China led by the World Health Organization to investigate the origins of the virus, a politically fraught topic as the Trump administration and other critics say Beijing should bear responsibility for the pandemic that has now claimed more than 1.7 million lives.

“It shows that we will never know the truth about the pandemic,” said Leo Lan, a research and advocacy consultant at Chinese Human Rights Defenders. “Zhang Zhan’s heavy sentence will have a deterrent effect of silencing others who witnessed what happened in Wuhan earlier this year.”

Outside the Shanghai Pudong New District People’s Court where Zhang was tried, police pushed reporters and supporters away from the building, detaining at least nine people. On social media, activists posted pictures of Zhang and signs that read: “Zhang Zhan not guilty,” calling on the international community to pay attention to her case.

“The handling of Wuhan is very sensitive. Many people in China are still very angry at the initial coverup and downplaying,” said Yaqiu Wang, China researcher at Human Rights Watch.

Separately, a notice released on Monday from the People’s Court of Yantian district in Shenzhen said a hearing for the Hong Kong residents had taken place that afternoon. The court said it would choose a future date for announcing its ruling.

The group of 12 was caught in Chinese waters in August as they tried to escape to Taiwan by speedboat after the introduction of a draconian national security law in their city. Eight of the group have been accused of illegally crossing China’s border, while two have been accused of organizing the border violation. Two minors in the group will be tried in a separate hearing.

Barricades surrounded the courthouse in Shenzhen on Monday, where foreign diplomats from the United States, Britain, Australia, Canada, Portugal and other countries were blocked from entering.

Ahead of the trial, the U.S. Embassy in China called for the detainees’ release. “Their so-called ‘crime’ was to flee tyranny. Communist China will stop at nothing to prevent its people from seeking freedom elsewhere,” the embassy said in a statement.

Human rights campaigners and lawyers have warned that the detained Hong Kongers, between the ages of 16 and 33, held incommunicado in Shenzhen for the past four months, are at risk of torture and almost certain conviction in China’s politicized justice system.

The detainees’ relatives called the hearing a “de facto secret trial.” While the notice from the Shenzhen court said lawmakers, journalists and relatives attended the trial, family members said they were denied access. Foreign reporters were also barred and told the courtroom was full.

“The unfair court proceedings [are] evidence of an obvious, draconian political persecution,” the families said in a statement Monday. “The families of the 12 have been in great agony throughout their detention. They are now only asking for the safety of their children and their earliest return to Hong Kong.”

Campaigners in Hong Kong accused the Chinese court of delaying sentencing to keep the 12 in custody for longer. At a news conference, some family members called for immediate sentencing so that they would be able travel to China to see their detained relatives.

“I want to see my son as soon as possible,” said the mother of Wong Wai-yin, one of the defendants, who did not disclose her name. “I only want to see him.”