Aurelia Butler

TOKYO (Reuters) -Japan’s cabinet approved its first extra budget for this fiscal year on Friday with spending worth $315 billion to cushion the blow from the COVID-19 pandemic, as the country keeps its stimulus taps open even as other economies close theirs.Featuring cash payouts to households with children, financial support for corporations and tourism discounts, the extra budget contains some elements of populist spending despite the image of Prime Minister Fumio Kishida as a fiscal hawk.Kishida is prioritising economic growth over fiscal reform near-term to encourage citizens to share the fruits of growth under a wealth distribution policy dubbed “new capitalism.” He remains under pressure to top up spending in the run-up to upper house elections next summer.”Japan is in the midst of a coronavirus crisis and the stimulus package has been compiled based on our stance of mobilising necessary fiscal spending without hesitation,” Finance Minister Shunichi Suzuki told reporters after a cabinet meeting.”It’s true that will cause underlying fiscal conditions to become even more severe. We must continue efforts on fiscal reform.”The extra 36 trillion yen ($315.68 billion) in spending will be financed by additional government bonds worth 22 trillion yen, straining the industrial world’s heaviest debt burden.Kishida’s government will next month compile an annual state budget for fiscal 2022/23, aiming to implement seamless spending over a 16-month period to underpin the world’s third-largest economy.The budgets are also targeted at boosting growth in the green and digital sectors and strengthening chip factories, while the ruling bloc on Friday began debate on an annual tax code revision focused on measures such as tax incentives to encourage wage hikes.However, analysts doubt the extra budget will boost growth.”Fiscal spending of the package makes up 10.3% of nominal GDP. If economic impacts push up real GDP only by 5.6% as per government expectations, it cannot be called wise spending,” said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities. “This is a failure as a boost to growth.”The government earmarked 774 billion yen for boosting advanced chip output in the extra budget, including a fund worth 617 billion yen to back production bases over multiple years.Kishida’s cabinet last week unveiled the 79 trillion yen economic package with a record 55.7 trillion yen in spending.The finance ministry will keep market issuance of interest-bearing government bonds (JGB) unchanged as it reviews its issuance plan for this fiscal year following new stimulus.Of the record 221.4 trillion yen of market issuance, 138.2 trillion yen of interest-bearing bonds will be left unchanged for issuance for the fiscal year ending in March 2022.($1 = 114.0400 yen) More

Investing.com — Risk assets around the world tumble after South Africa identified a new strain of heavily-mutated Covid-19 virus which appears to have driven out the delta variant in the regions where it has been located. The WHO will hold an emergency meeting to determine whether it represents a variant ‘of concern’. Equities, emerging market currencies, crypto and oil are among the hardest hit asset classes. The news puts an extra shadow over this year’s Black Friday. Here’s what you need to know in financial markets on Friday, 26th November.1. New Covid-19 strain identifiedHealth authorities in South Africa identified a new strain of the Covid-19 virus, triggering fears that it may be able to avoid the defenses of the current generation of vaccines.The new strain, known as 1.1.529, quickly became the dominant one in those regions of South Africa where it was identified. The World Health Organization has convened an emergency meeting for Friday to discuss whether the strain constitutes a variant of concern. If so, it will be given the name of the Greek letter ‘nu’.Incidences of the strain have already been identified in Hong Kong, in both cases in patients who had recently travelled to southern Africa. It is not clear yet whether the disease is more dangerous to humans than the delta variant. However, the emergence of a new strain at a time when cases are already at record highs in Europe is likely to raise the risk of longer and more severe restrictions.2. Markets tumble on fears of new lockdown waveRisk assets around the world took the news badly, with European stock indices falling over 4% in some cases before steadying a little.In equities, the familiar pattern of pandemic trading reasserted itself quickly, with travel and hospitality stocks faring worst and health and e-commerce stocks outperforming.  In foreign exchange, haven currencies such as the yen and Swiss franc outperformed, while the dollar surged against commodity currencies and sterling, which was forced into yet another sharp repricing of interest rate risk. Crypto currencies also suffered due to forced liquidations. By 6:30 AM ET, Bitcoin had fallen 5.4% to a seven-week low, while Ethereum fell 6.9%, Dogecoin fell 7.8% and Cardano fell 6.2%.3. U.S. stocks set for sharp sell-offU.S. stock markets are set to open sharply lower later, with low liquidity exacerbating the size of the moves. All stocks travel-related are set to open under pressure, with Boeing (NYSE:BA) down 6.4% in premarket, AirBNB stock down 6.9% and Marriott stock down 7.2%. Airline and cruise line stocks are, inevitably, faring worst, down between 7% and 12%.By 6:15 AM ET, Dow Jones Futures were down 812 points, or 2.3%, while S&P 500 Futures were down 1.9% and Nasdaq 100 Futures were down 1.3%.The news also fit financial stocks, in reducing the chances of an early interest rate hike by the Federal Reserve. The biggest winners were those early pandemic trades that have been shorted aggressively as the economic outlook brightened in recent months, such as Zoom Video  (NASDAQ:ZM) stock and Peloton  (NASDAQ:PTON) stock.4. Black Friday prospects hit The new Covid-19 has cast another shadow over what was already threatening to be another subdued Black Friday for retailers, perhaps making people think twice before running down cash balances any further.With many stores having stayed closed on Thursday and others reluctant to encourage crowds of shoppers to pack into stores, it’s not at all clear how the coming weekend for sales will shape up relative to previous ones. Various retailers, especially in fashion, saw their stocks plunge after warning of inventory shortages and supply chain constraints in their September/October quarter earnings, and the Wall Street Journal cited Adobe (NASDAQ:ADBE) data on Friday suggesting that digital ‘out of stock’ messages are up more than 260% from their levels of two years ago.Black Friday comes this year at a time when retail sales growth is showing signs of fatigue, after months in which U.S. consumers have run down pandemic-induced savings. Personal spending still remained strong in October, however, rising 1.3% on the month, its biggest monthly increase since March.5. Oil slides on fears of fresh setback to air travelCrude oil was also on course for its worst day since July in response to the news, amid revived fears that mobility restrictions will hit a tentatively recovering air travel market and maybe more local travel too.The rebound in air travel is a key component in 2022 demand growth forecasts, representing the only major part of oil demand which is still clearly lagging 2019 levels.The European Union and U.K. have already suspended incoming flights from South Africa, while the U.K. ban extends to a handful of southern African states.By 6:30 AM ET, U.S. crude futures were down 6.8% at $73.06 a barrel, having earlier hit a two-month low, while Brent crude futures were down 5.9% at $77.33 a barrel. More

Good morning. I hope you had a good Thanksgiving. As you will have noticed, we took the day off to mark this holiday, but are glad to be back with you today.Global stocks and oil prices tumbled on Friday as investors dashed for shelter in haven assets after a new coronavirus variant shook market sentiment. A broad sell-off in European shares followed similar moves in Asian markets. Europe’s Stoxx 600 fell 3.1 per cent in early trade, with France’s CAC 40 index and Germany’s Dax 30 down by similar margins.The B.1.1.529 Sars-Cov-2 variant, first identified in Botswana, is believed to be behind a surge in Covid cases in southern Africa over the past week and has alarmed global health officials because of its apparent ability to evade vaccines and spread more quickly than the Delta variant.“Things have escalated on the Covid front quite rapidly over the last 12 hours,” said Jim Reid, a strategist at Deutsche Bank. Yesterday, the new variant “was slowly starting to gather increasing attention but overnight it has begun to dominate markets”, he said. Thank you for reading FirstFT Americas. Here is the rest of today’s news — Zehra

Five more stories in the news1. Countries ban travellers from southern Africa over Covid variant The EU and UK moved to impose travel restrictions on a group of southern African nations as a surge in cases of a heavily mutated coronavirus variant caused alarm among global health officials.2. US commission calls for tighter controls on flows to Chinese markets The latest annual report from the US-China Economic Security Review Commission highlighted security concerns from a huge rise in US investment. 3. France cancels UK invitation to migrant crisis talks France has withdrawn an invitation to the UK home secretary to join talks on the migrant crisis following a public letter from Prime Minister Boris Johnson to President Macron. The letter called for French and British reciprocal maritime patrols in each other’s territorial waters and for the thousands of migrants who reach English shores to be returned to France. The FT View: Progress in tackling the cross-Channel migrant problem relies on the UK and France setting aside divisions.4. Criminal prosecutors review Deutsche Bahn fraud allegations Public prosecutors in Stuttgart are assessing fraud allegations raised by the two whistleblowers. If they conclude there is reasonable suspicion of potential criminal conduct, they can launch a criminal investigation under German law.5. Saif al-Islam Gaddafi barred from Libya’s presidential poll Libya’s electoral body has barred the son of the late dictator from contesting the oil-rich north African state’s election, citing his convictions.

Analysts suggested it was unlikely that Saif al-Islam Gaddafi’s disqualification would lead to new instability © EPA

Coronavirus digestThe World Trade Organization’s head has warned that highly charged talks on an intellectual property waiver for Covid-19 vaccines are “stuck”.Airline shares tumble as new Covid variant triggers travel restrictions, with British Airways owner International Airlines Group falling as much as 20 per cent in early trading.The days aheadBlack Friday Thanksgiving is followed by the consumer frenzy, now an international event, providing a reading of the health of the retail sector. US consumers are expected to spend between $5.1bn and $5.4bn online on Thanksgiving Day, a record for the day, Adobe Analytics said on Thursday.WHO emergency meeting over variant The World Health Organization will discuss the new coronavirus variant, first identified in South Africa and Botswana, that is believed to be spreading faster than thought.Economic indicators Huw Pill, the Bank of England’s chief economist, is due to deliver a speech on the UK’s economic outlook. France will release consumer confidence data and Switzerland will release third-quarter gross domestic product figures.Amazon workers’ Black Friday strike On one of the company’s busiest days of the year, Amazon workers in 20 countries — including the US, UK, and several in the EU — are planning protests and work stoppages. (BBC) What else we’re reading Abortion and the American divide The Supreme Court decided this summer not to block a Texas law that offers private citizens a bounty to bring lawsuits against anyone who helps with an abortion after a “foetal heartbeat” can be detected. Katie Roiphe asks, how did it come to this?What the ‘big quit’ tells us about inflation The pandemic has seen even more people decide that the labour market is not for them. But if resignation rates tell a clear story, the message from overall labour market participation is much more subtle, writes Chris Giles.The FT View: Labour markets have been reshaped by the pandemic in different ways. Honduras on edge ahead of presidential election Hondurans will go to the polls on Sunday. At stake is the stability of a country plagued by corruption, drug trafficking and one of the world’s highest murder rates. The logical case for employing reverse logic What problems could we fix by doing the exact opposite of what one might expect? Here’s a thought: environmentalists should fight climate change by buying coal mines, then shutting them down. Tim Harford takes a look at other reversals of logic.

Tim Harford: ‘Obvious and direct changes unleash indirect and less-than-obvious consequences’ © Anna Wray

Yes, there is a third way on ‘wokeness’ Liberals should aim to marginalise the whole debate on “wokeness”, writes Simon Kuper. It should not be the culture war of our time. BooksFrom politics, economics and history to art, food and, of course, fiction — FT writers and critics pick their favourite reads in our annual round-up of publishing highlights. You can browse their choices here.

© Cat O’Neil More

LONDON (Reuters) -Fear of inflation is back in vogue and tops nearly every 2022 investment outlook into year-end, but ageing populations and falling fertility rates from Berlin to Beijing may knock it off the catwalk yet again. With headline and core inflation rates at their highest in decades, squeezing real incomes as economies recover from the conronavirus pandemic, debates rage about a return to the 1970s or even 1920s and strategists model scenarios from ‘stagflation’ to ‘growthflation’.Global fund manager surveys this month still identify inflation as the biggest ‘tail risk’, far more than China’s stability, COVID-19 or asset bubbles.It’s back in the public zeitgeist too – Google (NASDAQ:GOOGL) trends show more searches for ‘inflation’ worldwide than at any point in the 17-year history of its search data – making it politically sensitive for leaders from U.S. President Joe Biden down.Faced with its persistence for months, central banks seem to have quietly dropped a mantra that the post-pandemic spike in prices will be ‘transitory’ and now look set to return more quickly to pre-COVID monetary settings.Many mega-trend analyses suggest it may be more than just base effects and bottlenecks as lockdowns lift, with some warning of ‘greenflation’ as climate fears accelerate moves to more sustainable energy before much of the new infrastructure is in place. And after a decade of electoral shocks fuelled by voter unease at stagnant household incomes, fairness and inequality has moved government agendas as some aim to redress the balance.What’s more, fractious geopolitical trends between the West on one hand and China and Russia of the other raise fears of a rollback in the supply-chain trade globalisation that helped keep goods prices low for the past 20 years.’DEMOGRAPHIC VORTEX’But one mega trend that still cools talk of overheating ahead is ageing demographics and falling per capita incomes, which the pandemic likely accelerated rather than reversed.U.S. birth rates, for example, have been falling steadily for a decade. At 1.64 per woman, they are now far below the 2.1 replacement rate necessary to keep the population stable – a rate last seen in 2007. That decline picked up in 2020 after the pandemic hit, analysts at Washington’s Brookings think tank say, and confounded early predictions of a mini lockdown baby boom.But rapid ageing due to falling births and longer lifespans is a worldwide phenomenon — most clearly in Japan, Germany, Italy and Britain — it is most pronounced in China where the Beijing had to rapidly abandon its one-child policy.”The Global Demographic Vortex”, a recent report by U.S. economist Eric Basmajian grabbed attention in financial markets.He argues this ageing would “act as a vacuum, sucking resources from the prime-age workers through taxation or debt-financed transfers, forcing central banks to hold rates at the zero-bound or quickly return after another failed attempt to combat rising inflation.”But his main point is that comparisons between today’s supply-side driven inflation and that of the 1970s are way wide of the mark given the radically different demographic backdrop.Between 1960 and 1985, the United States saw some of the most positive demographics in its history, largely due to the post-World War Two baby boom. Basmajian showed that the 20-year rolling change in the U.S. age-dependency ratio – workers as a share of retirees and children – explained almost all of the long-term inflation trends of the past 50 years.Societe Generale (OTC:SCGLY) strategist Albert Edwards, long-time market bear and cautionary voice on a deflationary “Ice Age”, said this data shows demographics are set to reach “maximum deflationary pressure” in the decade ahead.The counterview, outlined in a recent book by economists Charles Goodhart and Manoj Pradhan, is that demographic trends themselves could spur inflation by boosting workers’ wage bargaining power and cutting excess savings. And others talk of the quick rebound from the pandemic and myriad government supports lifting birth rates again and stabilising the dire 2020 readings at least.But the evidence from Japan, the country furthest down the ageing tunnel, points to a very different outcome where even in the midst of all the current angst, inflation remains dormant.Analysts at Fathom Consulting this week highlighted the correlation between falling birth rates in Japan over the past 60 years and falling expectations of per capita economic growth over future decades – suggesting the latter led to the former to amplify a hit to overall output by reducing numbers of workers.”It looks like a similar effect might now be playing out in China, potentially aggravating the growth slowdown there in years to come,” they concluded.Whether you are a believer or not, 2022 may prove to be the year when we find out.(by Mike Dolan, Twitter (NYSE:TWTR): @reutersMikeD; Editing by Alexander Smith) More

The new venture, Qiantang Credit Rating Co Ltd, will become the third personal credit scoring firm in China if officially approved by regulators.It will be registered in Hangzhou, Zhejiang province with a capital of 1 billion yuan ($156.50 million), the central bank said. The city is where Alibaba and Ant are based. Ant and the state-backed Zhejiang Tourism Investment Group Co Ltd would each own 35% of the venture, according to a statement by the People’s Bank of China (PBOC). Other state-backed partners, including Hangzhou Finance and Investment Group and Zhejiang Electronic Port, would hold 6.5% each. Transfar Group, a non-state-backed shareholder, would hold 7%. The remaining 10% would be held by a private equity firm.The set-up of the venture, in which Chinese state firms will take big stakes https://www.reuters.com/technology/exclusive-chinese-state-firms-take-big-stake-ants-credit-scoring-jv-sources-2021-09-01, is part of Ant’s sweeping business revamp ordered by regulators who put a sudden stop to its blockbuster initial public offering (IPO) last November.The government has pushed for state-backed firms to exert more influence over fast-growing but lightly regulated new-economy businesses, Reuters has reported.It also serves as the central bank’s year-long attempt to link loan data among different online lending platforms, and tighten controls in credit information sharing to prevent over-borrowing and fraud.Before Qiantang, the central bank had approved Baihang Credit in 2018, China’s first licensed personal credit agency with nine parties co-invested, including credit rating units of Ant and Tencent Holdings (OTC:TCEHY). It granted a second such approval https://www.reuters.com/article/china-pboc-credit-idUSL4N2IK2KR to set up Pudao Credit Rating in December 2020, a venture between the investment arm of the Beijing government and subsidiaries of e-commerce giant JD (NASDAQ:JD).com and smartphone maker Xiaomi (OTC:XIACF) Corp.($1 = 6.3901 Chinese yuan) More

The share sale, which is worth a total of HK$2.68 billion ($344 million), lowers Hui’s stake in the Shenzhen-based real estate company to 67.9% from 77%.Evergrande has been stumbling from debt deadline to deadline as it grapples with more than $300 billion in liabilities and Chinese authorities have told Hui, 63, to use some of his personal wealth to help pay bondholders, sources have said.Hui, who is the property developer’s founder, is now freeing up funds by selling luxury assets including art, calligraphy and three high-end homes.Evergrande failed to pay coupons totalling $82.5 million due on Nov. 6 and investors are on tenterhooks to see if it can meet its obligations before a 30-day grace period ends on Dec 6.Hui’s share sale represented a 19.8% discount to Wednesday closing price of HK$2.78. Data from the exchange shows block trades priced at HK$2.23 per share were carried out in the pre-market on Thursday. Before the filings, Evergrande shares closed down 10.4% at HK$2.5, versus a 2.7% drop in the broader market.($1 = 7.7959 Hong Kong dollars) More