MNI US Open: Delta Testing Global Economic Confidence

EXECUTIVE SUMMARY:

• MNI CHINA LIQUIDITY INDEX: CONDITIONS SEEN EASING IN AUGUST
• GERMAN IFO BUSINESS CONFIDENCE FALLS MORE THAN EXPECTED
• BOJ NAKAMURA: JAPAN'S ECONOMY FACES LONGER ROAD TO RECOVERY
• CREDIT SUISSE POSTPONES U.S. OFFICE RETURN FOR UNVACCINATED
• CHINA REOPENS TERMINAL AT WORLD'S THIRD-BUSIEST PORT

Fig. 1: German IFO Falls More than Expected In August

Source: IFO, MNI

NEWS:

GERMAN IFO (BBG): German businesses are growing increasingly concerned that a global supply squeeze and rising infections will damp the economic recovery. A gauge by the Munich-based Ifo Institute fell to 99.4 in August from 100.7 in July, more than economists predicted in a Bloomberg survey. An index measuring expectations also fell, while current conditions were judged more favorably. Strong consumer spending boosted Europe's largest economy more strongly than initially expected in the second quarter, as services came roaring back after pandemic curbs were loosened. Germany's strong manufacturing sector though is being held back by a stubborn shortage of parts and raw materials, caused in part by coronavirus outbreaks in Asia. Most businesses expect these problems to persist until next year.

BOJ: Bank of Japan board member Toyoaki Nakamura said that the recovery path will be slower than the pace seen in July in updated comments on Wednesday of the growing downside risks to economy caused by the spread of Covid-19. "The recent spread of coronavirus is beyond the view made in July and downward pressure on the economy will continue for the time being," Nakamura told reporters, elaborating on remarks made earlier in the day to business leaders in Miyazaki City via an online conference.

CREDIT SUISSE / COVID (BBG): Credit Suisse Group AG has pushed back the date from which it will require all U.S. staff to return to the office to Oct. 18, as the Delta variant of Covid-19 continues to spread, according to a memo sent to staff and seen by Bloomberg. A Sept. 7 return-to-office date remains in place for vaccinated workers, with those who have already returned told they should continue to come in, according to the memo which was signed by managers including investment bank division head Christian Meissner, Jay Kim and David Miller who head up trading and investment banking activities respectively.

CHINA / GLOBAL SHIPPING (BBG): The Meishan terminal at China's second-busiest port reopened Wednesday following a two-week shutdown that further snarled already stressed shipping routes in Asia. The terminal will start the resumption of normal operations Wednesday, a port official said at a press conference in the city of Ningbo. The terminal was about a quarter of the Ningbo-Zhoushan port's capacity and was shut from Aug. 11 after a worker was found to be infected with Covid-19.

ECB (RTRS): The European Central Bank could revise up its macroeconomic projections for the eurozone again in September after recent solid activity indicators in the third quarter, ECB Vice President Luis de Guindos said on Wednesday. "In a few days, the ECB will release its economic forecasts again, every time we have updated it has been for the better and this may happen again," De Guindos told a financial event in Spain.

U.S. / TECH / CYBERSECURITY (AP): President Joe Biden is meeting Wednesday with top executives from some of the country's leading technology companies and financial institutions as the White House works to enlist the private sector's help in firming up cybersecurity defenses against increasingly sophisticated attacks.The summit comes during a relentless stretch of ransomware attacks that have targeted critical infrastructure, in some cases extorting multi-million-dollar payments from major corporations, as well as other illicit cyber operations that U.S. authorities have linked to foreign hackers.

U.S. TAX (BBG): American companies would face steeper penalties for shifting profits abroad in a plan from Senate Democrats that offers the clearest picture yet of the higher levies that big firms could be paying from next year.In draft legislation released Wednesday, Senate Finance Committee Chairman Ron Wyden is outlining his vision for how to reform the global tax system for multinational corporations, which Democrats say have been subject to lax rules that for decades have allowed them to shift profits and jobs outside the U.S."Overhauling the international tax code is central to our efforts to restore fairness," Wyden said in a statement on the legislation, which was co-authored by fellow Finance Committee members Sherrod Brown and Mark Warner. Increased corporate-tax levies will "fund critical investments like the paid leave and the expanded child tax credit—Social Security for our children" Democrats are planning, he said.

CHINA/TAIWAN/JAPAN: Wires and social media reporting comments from the Chinese Foreign Ministry criticising the proposed talks between Japan's governing Liberal Democratic Party (LDP) and Taiwan's governing Democratic People's Party (DPP). Comments state that Japan should stop meddling in China's internal affairs. Talks due to take place on Friday to discuss regional security and are the first bilateral talks between the two parties.

NORD STREAM II: A ruling from the Duesseldorf Higher Regional Court, delivered earlier this morning, could complicate the eventual operation of the Nord Stream II gas pipeline, currently under construction between Russia and Germany. The ruling states that EU rules on energy supply apply to the pipeline, specifically that the owner of the pipeline must be a separate entity to that supplying the gas in order to ensure fair competition. The net effect of the ruling will not be to stop the completion of the pipeline, but, as Stephen Stapczynski at BBG tweets: "In order to comply with the rules, Nord Stream 2 must be certified as an independent transmission or system operator under the EU regulation. While that doesn't require Gazprom to sell ownership rights in the unit, it must give up control and command rights toward its leadership". This in turn will take time and additional funds (the project has so far cost USD11bn).

UK DATA (BBG): Britain's construction, manufacturing and food preparation industries are pushing wages higher across the economy due to a shortage of workers to fill available jobs. Building companies increased advertised pay by 6.7% from February to July 2021 to draw more workers into the industry, according to data from jobs site Indeed. That compares with wage growth of just 0.8% across all jobs.

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