The Opening Belle - Nikkei Soars To 29 Year High

 European Opening Calls:#FTSE 6578 +1.16%#DAX 13880 +0.65%#CAC 5614 +0.45%#AEX 630 +0.34%#MIB 22346 +0.26%#IBEX 8194 +0.48%#OMX 1894 +0.42%#IGOpeningCall— IGSquawk (@IGSquawk) December 29, 2020 

The Democratic-led U.S. House of Representatives voted 275-134 to meet President Donald Trump’s demand for $2,000 COVID-19 relief checks on Monday, sending the measure on to an uncertain future in the Republican-controlled Senate.

But even as Democrats helped secure approval for what the Republican president sought on stimulus payments, they spearheaded a House vote just a short time later to override his veto of a separate $740 billion defense policy bill. The rebuke, in Trump’s final weeks in office, would be the first veto override of his presidency if seconded by the Senate this week.

Trump last week threatened to block a massive pandemic aid and spending package if Congress did not boost stimulus payments from $600 to $2,000 and cut other spending. He backed down from his demands on Sunday as a possible government shutdown loomed, brought on by the fight with lawmakers.

But Democratic lawmakers have long wanted $2,000 relief checks and used the rare point of agreement with Trump to advance the proposal - or at least to put Republicans on record against it - in the vote on Monday, less than a month before he leaves office.

It is not clear how the measure to increase aid checks will fare in the Senate, where individual Republican lawmakers have complained the higher amount would add hundreds of billions of dollars to the latest relief bill.

Increasing the checks would cost $464 billion, according to the Joint Committee on Taxation, which prepares cost estimates for legislation before Congress.

The Senate is due to convene on Tuesday, and Senate Democratic Leader Chuck Schumer said he would then seek passage of the higher stimulus checks bill in the chamber, where Republicans have the majority. Senate Majority Leader Mitch McConnell on Sunday made no mention of Senate plans for a vote, after welcoming Trump’s signing of the relief bill.

The U.S. Treasury Department is anticipating sending the first wave of $600 stimulus checks to U.S. individuals and households as early as this week, as previously planned, a senior Treasury official said on Monday.

“Republicans have a choice, vote for this legislation, or vote to deny the American people the bigger paychecks that they need.”

The Trump administration on Monday strengthened an executive order barring U.S. investors from buying securities of alleged Chinese military-controlled companies, following disagreement among U.S. agencies about how tough to make the directive.

The Treasury Department published guidance clarifying that the executive order, released in November, would apply to investors in exchange-traded funds and index funds as well as subsidiaries of Chinese companies designated as owned or controlled by the Chinese military.

Secretary of State Mike Pompeo said Monday that the announcement “ensures U.S. capital does not contribute to the development and modernization of the People’s Republic of China’s (PRC) military, intelligence, and security services.”

“This should allay concerns that U.S. investors might unknowingly support (Chinese military-controlled companies) via direct, indirect, or other passive investments,” he added.

Specifically, some media outlets reported that Treasury was seeking to exclude Chinese companies’ subsidiaries from the scope of the White House directive, which bars new purchases of securities of 35 Chinese companies that Washington alleges are backed by the Chinese military, starting in November 2021.

The guidance released on Monday specifies that the prohibitions apply to “any subsidiary of a Communist Chinese military company, after such subsidiary is publicly listed by Treasury.” It added that the agency “intends to list” publicly traded entities that are 50% or more owned by a Chinese military company or controlled by one.

“Treasury’s published FAQ represents a clear victory for the U.S. security community in its determined effort to preserve strong capital markets sanctions associated with [the executive order] — the first of their kind,” said Roger Robinson, a former White House official who supports curbing Chinese access to U.S. investors.

The November executive order sought to give teeth to a 1999 law that mandated that the Department of Defense compile a list of Chinese military companies. The Pentagon, which only complied with the mandate this year, has so far designated 35 companies, including oil company CNOOC Ltd and China’s top chipmaker, Semiconductor Manufacturing International Corp.

Since the November order, index providers have already begun shedding some of the designated companies from their indexes.

ERG rallies behind Boris Johnson as European ambassadors give green light to agreement

Eurosceptic Tory MPs in the influential European Research Group are poised to give their seal of approval to the EU-UK trade deal within hours, in a fresh boost for prime minister Boris Johnson.

EU ambassadors in Brussels on Monday gave the green light for the trade agreement to come into provisional force from January 1 in a move designed to prevent border disruption as the Brexit transition period ends.

The deal is due to be voted on and ratified in full by the European Parliament in early 2021 and is expected to be approved in Britain’s House of Commons on Wednesday, although MPs will have only five hours to debate the bill.

Although some senior Eurosceptics have called for more time to scrutinise the legislation, the ERG is expected to give its formal approval on Tuesday, subject to a final meeting.

The ERG, which numbers about 80 MPs, was responsible for opposing attempts to achieve a softer Brexit by Theresa May, the former prime minister.

Mr Johnson can also rely on most Labour MPs to support the deal after Keir Starmer, the party leader, said last week that he would back the “tough but necessary decision” between a flawed deal and no deal. But Sir Keir is facing a mounting rebellion from Europhile Labour MPs, particularly those in seats with a strong Liberal Democrat presence.

During a meeting with national ambassadors in Brussels on Monday, the European Commission reported progress on talks with Beijing, including on the core remaining issue of workers’ rights in China. No objections were raised and a formal announcement by the commission that the deal has been reached is expected this week, according to EU diplomats.

“The commission reported on recent positive developments in the negotiations with China including on labour standards,” said one EU diplomat. “Ambassadors broadly welcomed the latest progress in the EU-China talks.” “The [European] Council presidency concluded at the end of the meeting that no delegation had raised a stop sign and that the way for a political endorsement was thus cleared,” the diplomat added.

The EU, which has been racing to meet an end of year deadline for the deal, has seen the talks as a core part of its strategy for managing increasingly tense trade relations with China, which it has identified as an “economic competitor” and a “systemic rival”.

The pact is designed to remove barriers to investment in China such as joint-venture requirements and caps on foreign equity in certain industries. Sectors set to be covered include manufacturing, financial services, real estate, environmental services, construction and auxiliary services to support shipping and air transport.

For China, the deal is set to lock in existing market-access rights while offering some investment possibilities in renewable energies. But the agreement is expected to cause frictions with the incoming administration of US president-elect Joe Biden.

The new US administration would “welcome early consultations with our European partners on our common concerns about China's economic practices”, Jake Sullivan, who will serve as Mr Biden’s national security adviser, wrote on Twitter last week.

The deal would come less than a month after the EU published a transatlantic strategy in which it urged the US to work with it to meet the “strategic challenge” posed by China.

Smaller Chinese companies and those in the retail industry are struggling to access credit amid a weak recovery in consumer spending, according to China Beige Book International, a provider of independent economic data.

Loan rejection rates for retail businesses increased to 38% in the final quarter of 2020 from 14% in the previous quarter, according to the latest quarterly report from CBBI. Rejection rates for small and medium-sized businesses rose to 24% in the final quarter, double the rate posted by large companies during the period.

“Large firms continue to gobble up whatever credit was available, enjoying much lower capital costs than their smaller counterparts, alongside higher loan applications and still falling rejections,” CBBI said. “This is the opposite of the quagmire small-and-medium enterprises find themselves in.”

The CBBI’s analysis provides a more subdued picture of China’s economic recovery than official data show, pointing to still weak consumer spending. It also suggests headwinds to Beijing’s efforts to encourage more lending to smaller, private sector businesses by assigning loan quotas to banks and supplying discounted funding.

A recovery in services revenue was driven by businesses in telecommunications, shipping, and financial services, but those in consumer-facing industries, such as chain restaurants and travel, continued to lag behind, according to CBBI.

“Don’t confuse fourth quarter’s services recovery with the ‘Chinese consumer is back’ narrative,” said CBBI’s Managing Director Shehzad Qazi. “This is a business services -- not consumer-side -- recovery. Retail sector data bear this out even more clearly, with spending on non-durables sagging.”

The CBBI’s indicators showed that goods prices, wages and other input costs have been rising since the second quarter of 2020. That contrasts with official measures of producer and consumer prices, which show deflation over the last month.

“Inflation is both less worrisome than official numbers and implies a more sensible economic trajectory,” it said.

The report was based on more than 3,400 interviews with company executives and bank staff in November and December.

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Small drones will be allowed to fly over people and at night in the United States, the Federal Aviation Administration (FAA) said on Monday, a significant step toward their use for widespread commercial deliveries.

The FAA said its long-awaited rules for the drones, also known as unmanned aerial vehicles, will address security concerns by requiring remote identification technology in most cases to enable their identification from the ground.

Previously, small drone operations over people were limited to operations over people who were directly participating in the operation, located under a covered structure, or inside a stationary vehicle - unless operators had obtained a waiver from the FAA.

The rules will take effect 60 days after publication in the federal register in January. Drone manufacturers will have 18 months to begin producing drones with Remote ID, and operators will have an additional year to provide Remote ID.

There are other, more complicated rules that allow for operations at night and over people for larger drones in some cases.

“The new rules make way for the further integration of drones into our airspace by addressing safety and security concerns,” FAA Administrator Steve Dickson said. “They get us closer to the day when we will more routinely see drone operations such as the delivery of packages.”