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Dow rises almost 200 factors as Wall Road heads for profitable first half

U.S. stocks climbed near record highs on Wednesday as the market completed a successful first half and second quarter of 2021.

The Dow Jones Industrial Average rose around 190 points, boosted by strong days for Walmart and Boeing, while the S&P 500 was up 0.1%. The Nasdaq 100 lost around 0.1%.

Wednesday is the last day of the second quarter and the last day of the first half of 2021. At the start of the session, the S&P 500 was up 14% year-to-date, while the Nasdaq Composite and the Dow were both up 12%. For the quarter, the S&P 500 is up 8%. The S&P 500 and Nasdaq all posted new record closings on Tuesday.

The S&P 500 is heading for its fifth consecutive positive month, rising 2.1% to 4,291.80 in June. The broad index is also on track for its best first half since 2019.

Investors have shrugged off the high inflation readings and continued to buy stocks in hopes that an economic comeback for the pandemic would continue and that the Federal Reserve would for the most part maintain its loose policies. The top three Dow winners this year are Goldman Sachs, American Express, and Walgreens Boots Alliance, all of which are up more than 30%. Chevron, Microsoft, and JPMorgan Chase are each up more than 20%. The technology and health sectors of the S&P 500 both closed Tuesday with record highs.

The gains came as nearly 60% of adults in the US received a COVID-19 vaccine, which allows the economy to reopen quickly. Still, new variants of the virus have raised some concerns that other restrictions such as wearing masks would have to be reintroduced as the pace of vaccinations has slowed.

Investors have “a number of reasons to be constructive,” wrote Tom Lee, Managing Partner and Head of Research at Fundstrat Global Advisors, citing economic dynamism, strong credit markets and possible fiscal stimuli.

Lee raised his S&P 500 target for 2021 from 4,300 to 4,600 in a statement to his customers on Tuesday evening. The new forecast means a 7% gain from here.

Jeff Kilburg, chief investment officer at Sanctuary Wealth, told CNBC that he is optimistic for the second half of the year thanks to the Federal Reserve’s continued commitment to economic recovery.

“We can fight inflation what we want and we can fight over what metric to use for inflation, but I think at the end of the day we really see the Fed’s commitment,” Kilburg said, adding that The amount of investor money on the sidelines should keep minor pullbacks from turning into major corrections.

Some investors and strategists have cited the spread of the Delta variant of Covid-19 as a risk for the markets in the second half of the year. However, JPMorgan’s Marko Kolanovic said in a statement to clients on Wednesday that the variant shouldn’t hurt stock markets, citing low death rates in countries with widespread vaccination.

Good first halves for the market usually bode well for the rest of the year. Whenever there was double-digit growth in the first half of the year, the Dow and S&P 500 never ended this year with an annual decline, according to Refinitive data from 1950.

One group that helped the broader market to its latest record high are semiconductors. The VanEck Semiconductor Index has risen 6% since June 18 and more than 3% in the first two days of this week.

“Semis have recovered strongly and in the last two trading days have finally broken the downtrend that has existed since this high in mid-February. New highs and a broken downward trend? It’s been a big week for Semis. ”Bespoke Investment Group said in a statement to clients.

Pending home sales rose to their highest level since 2005 in May. However, mortgage demand fell last week, the Mortgage Bankers Association said on Wednesday, with high prices and low supply crowding out some potential buyers. The readings came after a spike in home prices, reflected in the S&P CoreLogic Case-Shiller Index, which drove homebuilders stocks up on Tuesday.

The Institute for Supply Management’s Chicago Purchasing Managers Index came in lower than expected in June but was still expanding.

During Tuesday’s regular session, stocks barely changed in light trading, although the S&P 500 hit its fourth straight session and an all-time high.

Stocks are unlikely to see much movement until Friday’s labor market report gives a better idea of ​​the state of the economy. According to a Dow Jones poll, economists expect 683,000 new jobs in June.

On Wednesday, payroll firm ADP reported that private payrolls rose 692,000 in June, exceeding expectations. However, the company’s May figure has been revised downwards.

– CNBC’s Robert Hum contributed to this report.

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Dwell Covid Information and Delta Variant Updates

Here’s what you need to know:

Credit…Rodrigo Paiva/Getty Images

The coronavirus has reversed a steady rise in life expectancy in Brazil, with an estimated decline of 1.3 years in 2020 and an even more accelerated drop during the first months of 2021, according to a new report published in the journal Nature Medicine.

Significant, abrupt declines in life expectancy are rare and Brazil’s represents a major blow given the strides the country had made in improving health outcomes in recent decades, said Marcia Castro, the chair of the Department of Global Health and Population at Harvard, the lead author of the study.

“We expect declines of this magnitude when you have a major shock that leads to high mortality, like a war or a pandemic,” she said.

Brazil has reported more than 514,000 deaths from Covid-19, an official death toll surpassed only by that in the United States, which has lost more than 604,000 people. Even so, the United States, which has a considerably larger population, experienced a slightly lower life-expectancy drop last year: 1.13 years.

The pandemic has continued to steadily worsen in Brazil, where vaccinations have lagged. At least 18 million Brazilians have been infected so far, or at least one in 11 people, and the country is averaging over 65,000 new reported cases and over 1,600 deaths a day, according to official data. But, as in India, which has the world’s third-largest official death toll, many experts believe the numbers understate the true scope of the country’s epidemic. So far, about a third of Brazil’s population has had at least one shot of a vaccine, according to Our World in Data.

The decline in life expectancy is a jarring setback for Brazil, Latin America’s largest nation, which has spent billions of dollars in recent decades to expand the reach and quality of its universal public health care system.

Between 1945 and 2020, life expectancy in Brazil increased from 45.5 years to 76.7 years, an average of about five months per year. The setbacks of the Covid-19 era have reverted the country to 2014 levels, according to the study.

Brazil experienced a second wave of coronavirus cases in the first few months of this year that has been far deadlier than the first one, which receded at the end of 2020.

Dr. Castro and fellow researchers estimated that the resulting decline in life expectancy for 2021, based on the death toll recorded in the first four months of the year, will be about 1.78 years.

States in the Amazon region — including Amazonas, Rondônia, Roraima and Mato Grosso — experienced the steepest declines in life expectancy last year. Dr. Castro said states in the northeast, where governors imposed relatively strict quarantine measures, experienced lower drops.

Dr. Castro said Brazil’s life expectancy rate was likely to decline even more as the virus continued to kill hundreds of people each day, many of whom are relatively young. The average daily death toll for the past week was 1,610, according to a New York Times tracker.

“The decline in 2021 is going to be just horrible,” Dr. Castro said. “We are now losing even younger people.”

Kim Jong-un during a meeting of North Korea’s Politburo on Tuesday, where he spoke of a “great crisis” in the country’s pandemic response.Credit…Korean Central News Agency/Korea News Service, via Associated Press

North Korea’s leader, Kim Jong-un, said that lapses in his country’s anti-pandemic campaign have caused a “great crisis” that threatened “grave consequences,” state media reported on Wednesday.

Mr. Kim did not clarify whether he was referring to an outbreak in North Korea, where the authorities had said there were no cases of the virus. But state media reported that the matter was serious enough for Mr. Kim to convene a meeting of the Political Bureau of his ruling Workers’ Party on Tuesday, during which Mr. Kim reshuffled the top party leadership.

Senior officials neglected implementing antivirus measures and had created “a great crisis in ensuring the security of the state and safety of the people,” Mr. Kim said.

Mr. Kim also berated party officials for their “ignorance, disability and irresponsibility,” said the official Korean Central News Agency.

A report said there would be some “legal” consequences for the officials.

The news agency said that some members of the Politburo and its Presidium, as well as some Workers’ Party secretaries, were replaced. In North Korea, all power is concentrated in the leadership of Mr. Kim, and he frequently reshuffles party officials and military leaders, holding them responsible for policy failures.

The North claims officially to be free of the virus, although outside experts remain skeptical, citing the country’s threadbare public health system and lack of extensive testing.

Still, North Korea has enforced harsh restrictions to contain transmission.

Last year, it created a buffer zone along the border with China, issuing a shoot-to-kill order to stop unauthorized crossings, according to South Korean and U.S. officials. South Korean lawmakers briefed by their government’s National Intelligence Service last year have said that North Korea executed an official for violating a trade ban imposed to fight the virus.

Last July, when a man from South Korea defected to the North, North Korea declared a national emergency for fear he might have brought the virus.

But Mr. Kim has also shown confidence that at least his inner circles were virus-free, sometimes presiding over meetings of party elites where no one wore masks.

During the meeting on Tuesday, Mr. Kim urged party officials to double down on his efforts to build a “self-reliant” economy. As North Korea’s economy has been hit hard by the pandemic, Mr. Kim has acknowledged that his five-year plan for growth had failed and instructed his officials to wage an “arduous march” through difficult economic times. This month, he warned of a looming food shortage.

The party meeting on Tuesday “suggests that the situation in the country has worsened beyond the capacity of self-reliance,” said Leif-Eric Easley, an associate professor of international studies at Ewha Womans University in Seoul.

“Pyongyang may be setting up a domestic political narrative to allow the acceptance of foreign vaccines and pandemic assistance,” he said. “Kim is likely to blame scapegoats for this incident, purging disloyal government officials and replacing them with others considered more capable.”

A vaccination center in New Delhi in May. The Delta variant was first identified in India and has reached at least 85 countries.Credit…Atul Loke for The New York Times

Last week, health officials announced that the Delta variant was responsible for about one in every five Covid-19 cases in the United States, and that its prevalence had doubled in the last two weeks.

First identified in India, Delta is one of several “variants of concern,” as designated by the Centers for Disease Control and Prevention and the World Health Organization. It has spread rapidly through India and Britain and poses a particular threat in places where vaccination rates remain low.

Here are answers to some common questions.

It’s not clear yet. “We’re hurting for good data,” said Dr. Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota.

But some evidence of a potential shift is emerging in Britain, where Delta has become the dominant variant.

“What we’ve noticed is the last month, we’re seeing different sets of symptoms than we were seeing in January,” said Tim Spector, a genetic epidemiologist at King’s College London, who leads the Covid Symptom Study, which asks people with the disease to report their symptoms in an app.

Headaches, a sore throat, and a runny nose are now among those mentioned most frequently, Dr. Spector said, with fever, cough and loss of smell less common.

These findings, however, have not yet been published in a scientific journal, and some scientists remain unconvinced that the symptom profile has truly changed. The severity of Covid, regardless of the variant, can vary wildly from one person to another.

Although there is not yet good data on how all of the vaccines hold up against Delta, several widely used shots, including those made by Pfizer, Moderna and AstraZeneca, appear to retain most of their effectiveness against the Delta variant, research suggests.

“If you’re fully vaccinated, I would largely not worry about it,” said Dr. Ashish K. Jha, dean of the Brown University School of Public Health.

Pockets of unvaccinated people, however, may be vulnerable to outbreaks in the coming months, scientists said.

“When you have such a low level of vaccination superimposed upon a variant that has a high degree of efficiency of spread, what you are going to see among under-vaccinated regions, be that states, cities or counties, you’re going to see these individual types of blips,” Dr. Anthony Fauci, the nation’s leading infectious disease expert, said on CNN on Tuesday. “It’s almost like it’s going to be two Americas.”

“Hamilton” qualified for millions under the federal Shuttered Venue Operators Grant program to help its five productions reopen.Credit…Cindy Ord/Getty Images

Until the pandemic shuttered all of its productions, “Hamilton” was making a lot of money: It has played to full houses since it opened in 2015, and on Broadway it has been seen by 2.6 million people and grossed $650 million.

So why is the show getting $30 million in relief from the federal government, with the possibility of another $20 million coming down the road?

The answer is that, before the pandemic, “Hamilton” had five separately incorporated productions running in the United States — one on Broadway and four on tour — and, under the rules set up for the government’s Shuttered Venue Operators Grant program, which provides pandemic relief for the culture sector and live-event businesses, each was eligible for $10 million to help make up for lost revenue.

“Remember when Chrysler and GM were about to go bankrupt? In the same way that the federal government came in to bail out auto companies, it’s doing the same thing for all of show business with this legislation,” said the show’s lead producer, Jeffrey Seller. “It’s returning us to health and it’s protecting the well-being of our employees.”

Seller said that none of the money would go to the show’s producers (including him) or its investors, and none would be used as royalties for artists (including the show’s creator, Lin-Manuel Miranda).

Instead, he said, the money will be used to remount the shuttered productions, and to reimburse the productions for pandemic-related expenses.

The rollout of the Shuttered Venue Operators Grant initiative, a $16 billion federal aid program designed to help get cultural organizations back on their feet after the pandemic forced many to close, has been plagued by delays and confusion. But the Small Business Administration, which is administering the program, has begun announcing grant recipients, and there are indications that Broadway and its affiliated businesses could fare well.

A Maricopa County constable signing an eviction notice in Phoenix last year.Credit…John Moore/Getty Images

The Supreme Court on Tuesday refused to lift a moratorium on evictions that had been imposed by the Centers for Disease Control and Prevention in response to the coronavirus pandemic.

The vote was 5 to 4, with Chief Justice John G. Roberts Jr. and Justices Stephen G. Breyer, Sonia Sotomayor, Elena Kagan and Brett M. Kavanaugh in the majority.

The court gave no reasons for its ruling, which is typical when it acts on emergency applications. But Justice Kavanaugh issued a brief concurring opinion explaining that he had cast his vote reluctantly and had taken account of the impending expiration of the moratorium.

“The Centers for Disease Control and Prevention exceeded its existing statutory authority by issuing a nationwide eviction moratorium,” Justice Kavanaugh wrote. “Because the C.D.C. plans to end the moratorium in only a few weeks, on July 31, and because those few weeks will allow for additional and more orderly distribution of the congressionally appropriated rental assistance funds, I vote at this time to deny the application” that had been filed by landlords, real estate companies and trade associations.

He added that the agency might not extend the moratorium on its own. “In my view,” Justice Kavanaugh wrote, “clear and specific congressional authorization (via new legislation) would be necessary for the C.D.C. to extend the moratorium past July 31.”

At the beginning of the pandemic, Congress declared a moratorium on evictions, which lapsed last July. The C.D.C. then issued a series of its own moratoriums.

“In doing so,” the challengers told the justices, “the C.D.C. shifted the pandemic’s financial burdens from the nation’s 30 to 40 million renters to its 10 to 11 million landlords — most of whom, like applicants, are individuals and small businesses — resulting in over $13 billion in unpaid rent per month.” The total cost to the nation’s landlords, they wrote, could approach $200 billion.

The moratorium defers but does not cancel the obligation to pay rent; the challengers wrote that this “massive wealth transfer” would “never be fully undone.” Many renters, they wrote, will be unable to pay what they owe. “In reality,” they wrote, “the eviction moratorium has become an instrument of economic policy rather than of disease control.”

In urging the Supreme Court to leave the moratorium in place, the government said that continued vigilance against the spread of the coronavirus was needed and noted that Congress had appropriated tens of billions of dollars to pay for rent arrears.

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Biden infrastructure plan would minimize U.S. debt, add to GDP: Wharton research

U.S. President Joe Biden stops at La Crosse Municipal Transit Utility in La Crosse, Wisconsin, the United States, on Jan.

Kevin Lemarque | Reuters

A bipartisan infrastructure deal by President Joe Biden and a group of senators would not only help economic growth but also reduce national debt, according to a new study by the University of Pennsylvania’s Wharton School.

Wharton School researchers said the additional $ 579 billion in new infrastructure spending would increase domestic production by 0.1% and reduce US debt by 0.9% by 2050.

“Over time, as new spending declines, IRS enforcement continues, and revenue increases from increased production, national debt will decrease 0.4 percent from baseline, and 0.9 percent in 2040 and 2050, respectively “Wrote the Wharton team.

Speaking to CNBC Tuesday, Wharton’s chief economist Jon Huntley said that improvements in public capital (roads, bridges, and other physical infrastructure) make private capital (trucks and trains moving goods for businesses) more productive over time .

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Fewer potholes and disruptions in rail traffic add up to US economic activity over the years and encourage further private sector investment.

The projected increase in GDP and the simultaneous reduction in national debt, albeit modest, is likely welcome news for the Democrats and Republicans who brokered the deal with the White House.

The entire package, approved by the bipartisan senatorial group and the Biden administration, approves spending of $ 1.2 trillion over the next five years. The additional $ 579 billion includes more than $ 300 billion for transportation projects, while $ 266 billion would be allocated to investments in digital, disaster, environmental and energy infrastructure.

Biden is in the middle of a road show promoting the plan and told the Wisconsin crowds Tuesday that it will “change the world for families” in Badger State.

The deal will “ensure” [high speed broadband] is available in every American household, including the 35% of rural families who currently forego it, “he added. The president is expected to travel to Michigan this weekend to further praise the deal.

Still, Biden’s transnational mission to generate support for the measure underscores the fragility of even bipartisan efforts to repair the country’s transport infrastructure. The president himself nearly doomed the deal last week when he said he would veto the infrastructure bill if it were not passed along with a larger bill backed entirely by Democrats.

He later withdrew from that promise when it became clear that the comments had angered Republicans.

The latest Wharton study comes months after the school analyzed the Biden government’s first infrastructure proposal, called the American Jobs Plan. This original plan included spending approximately $ 2 trillion over eight years and was estimated by Wharton to reduce economic output by 0.8% in 2050.

When asked why the bipartisan plan would increase GDP over the next 29 years while the original Biden plan would not, Huntley stated that the latest legislation does not include changes to the corporate tax rate and no minimum tax on book income.

By removing corporate tax hikes in the bipartisan plan, legislators have reduced negative tax distortions that would ultimately have reduced corporate investment incentives and household savings incentives.

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Your Wednesday Briefing – The New York Instances

We cover new restrictions as Asia and Australia battle the Delta variant and as rebels recapture Tigray’s capital.

Asia-Pacific countries with slow vaccination campaigns are trying to slow the spread of the more contagious Delta variant of the coronavirus by resorting to a new round of restrictions.

Bangladesh and Malaysia are urging residents to stay home, and Bangladesh is sending soldiers to patrol the streets to make sure no one is outside. In Australia, authorities in Sydney, Brisbane, Perth and Darwin have imposed strict curfews.

Tired residents become frustrated as in some cases they have already gone through multiple locks. “My restaurant is known for its hospitality and communal dishes, the opposite of social distancing,” said a restaurant owner near Kuala Lumpur. For his business, this lock could be “the last straw,” he said.

Context: Studies have shown that Covid-19 vaccines against the Delta variant are still largely effective, although protection is significantly lower for those who are partially vaccinated. “If we can get a really high vaccination rate, it will change the game completely,” said an epidemiology expert in Melbourne.

Eight months after the attack by the Ethiopian army on the Tigray region, the civil war takes a turn: Tigrayan fighters recapture the regional capital Mekelle. Local residents celebrated in the streets. Here are the latest updates.

The rebels have signaled that they have little desire for a ceasefire. Senior rebel members said they would continue to fight and be ready to pursue Eritrean troops who have joined Ethiopian forces on their territory.

The dramatic turnaround was a blow to Prime Minister Abiy Ahmed, who launched an offensive last November that he promised would be over in a few weeks. After eight months of violence accusing Eritrean troops of atrocities, the war now looks like it could drag on.

Turn the tide: The war began with Tigrayan troops clearly on the defensive. But the rebels have managed to regroup. In addition, the invasion and human rights violations have drawn numerous recruits into the arms of the group.

The toll: Almost two million people have been displaced from their homeland. The region faces a long list of crises, including water and education shortages, and a famine that leaves millions of people starving.

The commander of the US-led mission in Afghanistan, Gen. Austin Miller, warned that the country could be on the path to a chaotic, multi-layered civil war as US and international forces prepare to withdraw in the coming weeks.

“Civil war is certainly a path that can be imagined if it continues on its way,” Miller said during a rare press conference in Kabul. “That should concern the world.”

He did not provide a timeline for completing the withdrawal, but said he had reached a point where he would soon end his command, which began in September 2018.

New York’s dining scene has changed due to the creative outdoor table settings made necessary by the pandemic. But how does the city keep the romance alive while the outbreak subsides and the rules are relaxed? Our food reviewer has a few answers.

In 1897 invading British soldiers stole thousands of artifacts from the Kingdom of Benin, now part of Nigeria. In the UK, the events are known as the Punitive Expedition. In Nigeria, they are known as the Benin massacres because of the residents who killed British troops.

Activists, historians and royals in Nigeria have called for the art to be returned, but museums resisted, arguing that their global collections served “the people of every nation.”

However, given Europe’s grappling with its colonial history, some institutions are changing their position. Germany has announced that it will return a significant number of Benin bronzes (as the items are called) over the next year, and the National Museum of Ireland is planning to return 21 items. The work is expected to move to a new museum in Benin City due to be completed in 2026.

That’s it for today’s briefing. Until next time. – Melina

PS Christina Goldbaum, a reporter at the Metro desk who reported from East Africa, strengthens our Afghanistan team.

The latest episode of “The Daily” is about the building collapse in Miami.

Claire Moses wrote the arts and ideas. You can reach Melina and the team at briefing@nytimes.com.

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Inflation is again close to targets and that ought to be celebrated: BIS

A crowded bar in Paris’ 6th Arrondissement as Parisians embrace the lifting of Covid-19 restrictions as cafes and restaurants across France re-open for the first time in over 6 months.

Kiran Ridley | Getty Images News | Getty Images

LONDON — The recent surge in consumer prices is temporary and should be celebrated, Claudio Borio, head of the economic and monetary department at the Bank for International Settlements, told CNBC.

“For those countries … that have been trying very, very hard to get inflation up unsuccessfully, having inflation persistently higher, roughly at target, that would actually be very good news and one should rejoice about that,” Borio told CNBC’s Julianna Tatelbaum in an interview.

His comments come after inflation readings have beaten expectations in both the U.S. and Europe over recent months — dividing policymakers.

Some European officials believe the region’s pandemic-induced stimulus program should be scaled back in the face of rising prices, while others argue that inflation will be temporary and so monetary policy should remain loose.

Inflation can be a tricky economic indicator: If it is too high, it erases the purchasing power of consumers; if it is too low, it can reduce economic growth. 

“The real problem is if inflation proves to be higher, uncomfortably higher for uncomfortably long,” Borio said.

However he stressed that the BIS — which is known as the central bank of central banks — expects the increase in inflation to be “transitory.”

Until recently in the euro zone, inflation has been persistently low in the wake of the global financial crisis and the region’s sovereign debt crises. But prices have experienced a massive increase in recent weeks.

Annual Inflation in the euro zone rose to 2% in the month of May, slightly above the ECB’s target of “below, but close to, 2%.” This has been linked to the easing of various social-distancing rules across the 19 euro nations and consumers’ willingness to spend more.

However, European Central Bank President Christine Lagarde has insisted that the uptick in inflation is temporary, and that it will fall back below target in the foreseeable future.

“Inflation has picked up over recent months, largely on account of base effects, transitory factors and an increase in energy prices. It is expected to rise further in the second half of the year, before declining as temporary factors fade out,” she said at a press conference earlier this month.

Speaking to CNBC, Borio agreed that “so far, most [of] what is going on is essentially temporary.”

“We have one-off increases in prices which are basically bouncing back from where they were before; we’re having technical effects, so-called base effects; we’re seeing, indeed, there are speed limits to [the] world economy,” he added.

The latest ECB forecasts point to a headline inflation of 1.9% at the end of 2021, followed by a decrease to 1.5% and 1.4% in 2022 and 2023, respectively.

In the BIS latest annual report, released Tuesday, the institution said that “normalising policy will not be easy” for central banks.

This subject has already sparked some divisions within the ECB, with hawkish member Jens Weidmann pushing for the coronavirus-stimulus program to be lifted step-by-step.

Whereas other ECB members are worried about a premature scaling back of the program.

Correction: This article has been updated to correct the spelling of Claudio Borio, head of the economic and monetary department at the Bank for International Settlements.

 

 

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Hong Kong’s Safety Regulation: One 12 months Later, a Metropolis Remade

HONG KONG – With each passing day, the border between Hong Kong and the rest of China is fading faster.

The Chinese Communist Party is rebuilding this city, permeating its once lively, irreverent character with ever more open signs of its authoritarian will. The structure of daily life is attacked as Beijing shapes Hong Kong into something more familiar, more docile.

Local residents are now teeming with police hotlines with reports of disloyal neighbors or colleagues. Teachers were told to fill students with patriotic zeal through 48-volume book sets entitled “My Home Is In China.” Public libraries have withdrawn dozens of books, including one on Rev. Dr. Martin Luther King Jr. and Nelson Mandela.

Hong Kong has always been an improbability. It was a flourishing metropolis on a headland of inhospitable land, an oasis of civil liberties under iron rule. As a former British colony that returned to China in 1997, the city was promised freedom of speech, assembly and press unimaginable on the mainland in an agreement that Beijing called “one country, two systems”.

But under Xi Jinping, China’s leader, the Communist Party is fed up with Hong Kong’s dueling identities. For the party, they made the city unpredictable and even brought it to the brink of rebellion in 2019 when anti-government protests erupted.

Now, armed with the sweeping national security law it imposed on the city a year ago, Beijing is pushing to transform Hong Kong into yet another of its mainland megacities: economic engines that instantly stifle disagreements.

“Hong Kong people from all walks of life have also recognized that ‘one country’ is the foundation and foundation of ‘two systems’,” said Luo Huining, Beijing’s senior official in Hong Kong, this month.

Hong Kong today is a montage of unfamiliar and for many unsettling scenes. Police officers were goose-stepped in the Chinese military style, replacing decades of British-style marching. City guides regularly denounce “external elements” that seek to undermine the country’s stability.

Senior officials in Hong Kong have gathered with their hands raised to pledge allegiance to the country, just as mainland bureaucrats are regularly called to “biao tai”, Mandarin, to “express their position”.

When the government ordered ordinary employees to sign a written version of the oath, HW Li, a seven-year-old civil servant, resigned.

The new requirements not only require loyalty professions; they also warn of dismissal or other vague consequences in the event of violations. Mr. Li heard some supervisors nag their co-workers to fill out the form right away, and employees vie for how quickly they complied.

“The rules that should protect everyone – as employees and as citizens alike – are being weakened,” said Mr. Li.

In some corners of society the rules have been completely rewritten. However, Beijing denies failing to keep its promises to Hong Kong and insists on reiterating them.

When China revised Hong Kong’s electoral system to purge disloyal candidates, Beijing described the change as “Hong Kong’s perfecting electoral system.” When Apple Daily, a major pro-democracy newspaper, was forced to close after police arrested its senior executives, the party said the publication had abused “so-called freedom of the press”. When dozens of opposition politicians organized an informal pre-election, Chinese officials accused them of subversion and arrested them.

China’s power has become so ubiquitous that Chan Tat Ching, once a hero of the Hong Kong democracy movement, spent the past year urging his friends not to challenge Beijing.

Three decades ago, after the Tiananmen Square massacre in 1989, Chan, a Hong Kong businessman, helped direct an operation that smuggled students and academics from the mainland.

But Beijing is more demanding today than it was in 1989, Chan said. It had intimidated Hong Kong without even sending troops; that demanded respect.

He admitted that the security law was enforced too strictly, but said that nothing could be done.

“Some young people don’t understand. They think the Communist Party is a paper tiger, ”he said. “The Communist Party is a real tiger.”

China’s new power has also established itself in the Hong Kong business community. For decades, the mainland economy had tried to catch up with that of Hong Kong, the financial center so proud of its global identity that its government dubbed it “Asia’s metropolis.”

Now China’s economy is booming, and officials are increasingly turning Hong Kong’s global identity towards that one country.

Chinese state-owned companies have recently moved into offices in Hong Kong’s iconic skyscrapers that have been vacated by foreign banks. In November, Meituan, a Chinese grocer, ousted Swire, a British conglomerate, from the city’s main stock index. Financial analysts have called it the end of an era.

The rush on the mainland money has brought some new conditions with it.

After Beijing ruled that only “patriots” could run for office in Hong Kong earlier this year, the Bank of China International – a state-run institution – posted an advertisement for a director-level position stating that candidates should be “the country.” love”.

The central government is trying to convince Hong Kongers that the compromises on the mainland’s promise of prosperity are worthwhile. Officials encourage young Hong Kong residents to study and work in southern China’s cities of Shenzhen and Guangzhou, saying that those who do not go risk missing out on opportunities.

Toby Wong, 23, grew up in Hong Kong and had never considered working on the mainland. Her mother came from the mainland for work decades earlier. The salaries there were significantly lower.

But recently, Ms. Wong saw a subway advertisement promoting open positions in Shenzhen, in which the Hong Kong government promised to subsidize nearly $ 1,300 from a $ 2,300 monthly wage – more than at many entry-level positions at home. A high-speed rail link between the two cities allowed her to return to her mother at the weekend, who has to support Ms. Wong financially.

Ms. Wong applied to two Chinese technology companies.

“It’s not a political question. It’s a practical question, ”she said.

After all, the government is hoping to make the motivation political. At the heart of Beijing’s campaign is an attempt to educate future generations who will never think of separating the party’s interests from their own.

China’s firm grip

    • Behind the Hong Kong acquisition: A year ago, the city’s freedoms were being curtailed at breakneck speed. But the crackdown took years and many signals were overlooked.
    • Mapping China’s Post-Covid Path: China’s leader Xi Jinping tries to balance trust and caution as his country moves forward while other places continue to grapple with the pandemic.
    • A challenge for US global leadership: As President Biden predicts a battle between democracies and their adversaries, Beijing seeks to defend the other side.
    • ‘Red Tourism’ is flourishing: New and improved attractions dedicated to the history of the Communist Party, or an adjusted version of it, draw crowds ahead of the party’s centenary.

The Hong Kong government has issued hundreds of pages of new curriculum guidelines designed to “inspire affection for the Chinese people.” The geography class must confirm China’s control over the disputed areas of the South China Sea. Schoolchildren from the age of 6 learn the criminal offenses according to the Security Act.

Lo Kit Ling, who teaches a citizenship course at a high school, now makes sure to say only positive things about China in class. Although she has always tried to offer multiple perspectives on any subject, she feared that a critical perspective could be taken out of context by a student or parent.

Ms. Lo’s subject is particularly sensitive – city leaders have accused her of poisoning Hong Kong’s youth. The course had encouraged students to critically analyze China and convey the country’s economic successes alongside topics such as the Tiananmen Square raid.

Officials have ordered that the subject be replaced with an abbreviated version that emphasizes the positive.

“It’s not a class. It’s like brainwashing, ”said Ms. Lo. Instead, she will teach an elective in Hospitality Studies.

Not only school children are asked to watch out for dissenting opinions. In November, Hong Kong police opened a hotline to report suspected security law violations. “#YouCanHelp #SaveHK,” wrote the police on Twitter. An official recently applauded residents for leaving more than 100,000 messages in six months.

Constant neighborhood surveillance by informants is one of the Communist Party’s most effective tools for social control on the mainland. It’s supposed to keep people like Johnny Yui Siu Lau, a radio host in Hong Kong, from being so free in his criticism of China.

Mr. Lau said a producer recently told him that a listener reported him to the Broadcasting Authority.

“It will be a competition or a struggle to see how people in Hong Kong can protect freedom of expression,” Lau said.

Other freedoms that were once at the core of Hong Kong’s identity are disappearing. The government announced that it would censor films that are considered a threat to national security. Some officials have called for works of art by dissidents like Ai Weiwei to be banned from museums.

However, Hong Kong is not just another metropolis on the mainland. Residents have proven extremely reluctant to give up their freedom, and some have rushed to preserve totems of a discreet Hong Kong identity.

Masks labeled “Made in Hong Kong” are very popular. A local boy band, Mirror, has become a source of hope and pride as interest in canto pop resurfaces.

Last summer, Herbert Chow, who owns the children’s clothing chain Chickeeduck, installed a two-meter-tall protester figure – a woman with a gas mask and a protest flag – and other protest art in his shops.

But Mr Chow, 57, has come under pressure from his landlords, several of whom have refused to renew his leases. Last year there were 13 chickeeduck stores in Hong Kong; now there are five. He is unsure how long his city can withstand the burglaries of Beijing.

“Fear – it can make you stronger because you don’t want to live under fear,” he said. Or “it can kill your desire to fight.”

Joy Dong contributed to the research.

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‘Get as many shares as you possibly can’

CNBC’s Jim Cramer on Monday advocated going public for Didi, the Uber-like Chinese company whose shares are set to go public in the US this week.

“I think the rating appears immediately appropriate,” said the Mad Money presenter. “If you want to speculate on a Chinese IPO, you have my blessings on Didi. I would try to get as many stocks as possible.”

Didi will be listed on the New York Stock Exchange on Wednesday under the ticker symbol DIDI. The company predicts its stock will range between $ 13-14 per share, which could earn the ridesharing giant a valuation of more than $ 60 billion. The IPO could gross the company more than $ 4 billion, which would make it one of the largest of 2021.

“There are some antitrust concerns here, but as long as you stay on the good side of the Communist Party,” said Cramer. “I doubt they’ll have much trouble with regulators.”

The antitrust concerns stem from a report that China’s market regulator is investigating whether Didi wrongly wiped out smaller competitors and whether its pricing practices are sufficiently transparent. The investigation comes after the country scrutinized other companies like Alibaba and Tencent.

Didi reported sales of $ 21.6 billion last year. The company also said it posted a profit of $ 6.4 billion in revenue for the last quarter.

Didi was ranked 5th on this year’s CNBC Disruptor 50 list.

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Ethiopian Forces Retreat in Tigray, and Rebels Enter the Capital

MEKELLE, Ethiopia — In a major turn in Ethiopia’s eight-month civil war in the northern Tigray region, Tigrayan fighters began entering the regional capital Monday night after Ethiopian government troops retreated from the city.

The Ethiopian military has occupied the Tigray region since last November, after invading in cooperation with Eritrean and militia forces to wrest control from the regional government. The Tigrayan fighters, known as the Tigray Defense Forces, spent months regrouping and recruiting new fighters, and then in the past week began a rolling counterattack back toward the capital, Mekelle.

New York Times journalists in Mekelle saw thousands of residents take to the streets on Monday night, waving flags and shooting off fireworks after hearing that Tigrayan forces had advanced to the city.

The Tigrayans’ rapid advance was a significant setback for the government of Ethiopia’s prime minister, Abiy Ahmed, who had declared when he sent his forces into the restive Tigray region last year that the operation would be over in a matter of weeks.

Sisay Hagos, a 36-year-old who was celebrating in Mekelle on Monday, said, “They invaded us. Abiy is a liar and a dictator, but he is defeated already. Tigray will be an independent country!”

Refugees and international observers have accused the invading forces of wide-ranging atrocities, including ethnic cleansing, and of pushing the region to the brink of famine.

But from the outset, the party in control of Tigray’s regional government, known as the Tigrayan People’s Liberation Front, or T.P.L.F., which for many years was the ruling party in Ethiopia, has vowed to resist.

Soldiers belonging to the Ethiopian National Defense Forces were seen leaving Mekelle in vehicles throughout the day on Monday, some of them with looted materials, according to international and aid workers. Soldiers also entered the compound of Unicef and the World Food Program, and disconnected the internet, they said. Shops in the city closed early.

Politicians with the interim government that had been installed in Tigray by Ethiopia’s central government have also retreated from Mekelle, and some were already back in the Ethiopian capital, Addis Ababa, the international officials said.

The recent shifts in Mekelle followed more than a week of escalating violence and troop movements in the Tigray region. Heavy weapons were part of the fighting on both sides, and key towns reportedly changed hands among Ethiopian, Eritrean and Tigrayan forces, U.N. security documents show.

The Tigray Defense Forces have in recent weeks captured areas south of Mekelle that until recently were controlled by soldiers from the neighboring country of Eritrea, which had allied with the Ethiopian government. The rebels say they have captured several thousand Ethiopian soldiers and are holding them as prisoners of war.

Ethiopian forces reportedly abandoned a number of strategic positions around Adigrat, Abiy Adiy and in several locations in southern Tigray.

Getachew Reda, an executive member of the Tigray People’s Liberation Front, said in a telephone interview last week that Tigrayan forces — which have mushroomed with thousands of new volunteers — have gone on the offensive, targeting four Ethiopian army divisions.

“We have launched an offensive at the divisions which we believed were critical,” Mr. Getachew said. “At the same time they have abandoned many towns and cities.”

Declan Walsh reported from Mekelle, Ethiopia, and Simon Marks from Brussels, Belgium.

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Inventory futures are little modified because the S&P 500 appears to be like to carry on to report

Futures contracts, which are pegged to the major US stock indices, changed little on Monday after the S&P 500 posted its best week since February and a new record on Friday.

Futures pegged to the S&P 500 hovered around the flatline and those pegged to the Dow Jones Industrial Average fell 17 points. Nasdaq 100 futures rose 0.2%.

A massive, bipartisan infrastructure deal appeared to be resurrected on Sunday evening after President Joe Biden made it clear on Saturday that he would not veto the bill if it comes without a separate Democrat-favored reconciliation bill. Republican senators then said on Sunday that the deal can move forward.

The president, flanked by a bipartisan group of senators, said Thursday that after weeks of negotiations, the group had reached a billion-dollar deal to improve the country’s roads, bridges, waterways and broadband. Democrats are pushing for a second bill that would include funding for issues such as climate change, childcare, health care and education.

Caterpillar stocks were higher in the pre-trading session and should add to their gains last week.

“The bipartisan infrastructure deal negotiated in Washington DC last week seems to have a chance of becoming a reality,” wrote John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, in a press release. “This program could serve the country in the short and long term in job creation, economic growth, corporate sales and profit growth, and US ability to compete with other nations in the relatively new but hypercompetitive twenty-first century compete.”

Stocks had their best week in months on Friday as investors become more confident that current US inflation is not a persistent economic threat, but rather a temporary upward trend.

The S&P 500 finished Friday with a record high of 4,280.70 while the Dow rose 237.02 points, less than 2% off its record high. While the Nasdaq Composite closed slightly lower on Friday, it rose 2.35% for the week, its best since April 9, and rose 4.45% for the month of June.

The weekly gains even came after the Commerce Department reported that the inflation indicator rose 3.4% in May, the fastest increase since the early 1990s.

Spikes in the core consumer spending index can cause heartburn among investors as the Federal Reserve likes to watch it for signs of inflation. Still, the increase actually fell short of what economists polled by Dow Jones had forecast, and reaffirmed for investors that macroeconomic price increases are likely to be temporary and manageable.

The next key economic data is the June job report that the Department of Labor is slated to release on Friday.

Economists expect the number of non-farm workers to have increased by 683,000 in June. While such a robust figure would top 559,000 in May, it would still be below the 1 million some had hoped a US economy could see a rebound after the Covid-19 crisis.

Investors will also check the June report for signs of wage inflation as employers struggle to find workers to fill positions and pandemic-era unemployment benefits run out in some states.

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Macron and Le Pen Events Each Battered in French Regional Elections

PARIS – It seemed inevitable: another duel in the French presidential elections next year between President Emmanuel Macron and Marine Le Pen, leader of the right-wing, anti-immigrant National Rally Party.

But after the nationwide regional elections on Sunday, a repeat of the second round of the 2017 elections seemed far less certain, as both Mr Macron’s centrist party, La République en Marche, and Mrs Le Pen’s party did not have a single one of the 13 mainland French regions.

The defeat was particularly devastating for Ms. Le Pen. She had portrayed the regional elections as a harbinger of her rise to power.

In the southern Provence-Alpes-Côte d’Azur region, the region where the National Rally was led in the first ballot a week ago, a center-right candidate, Renaud Muselier, defeated the National Rally candidate by a comfortable margin , according to preliminary results around 57 percent of the vote.

The National Assembly has never ruled a French region and on Sunday Ms. Le Pen accused every other party of “forming unnatural alliances” and “doing everything possible to prevent us from showing the French people our ability to be a regional executive respectively”.

Stanislas Guerini, the general director of Mr Macron’s party, said the results were “a disappointment for the majority of the president”.

They weren’t a surprise either.

Since Macron cobbled together his party as a vehicle for his advancement in 2017, he has shown little interest in its fortunes and instead relied on his personal authority and the aura of the presidency. The party, often known simply as En Marche, has never managed to establish itself at a regional or local level despite having control over parliament.

The turnout was very low. Only about 33 percent of the French chose, compared with 55.6 percent in 2015, a clear sign of dissatisfaction with politics as usual and of tiredness after the country’s long fight against the coronavirus pandemic.

This low turnout and the fact that the presidential elections are still 10 months away make extrapolation from regional results dangerous. Still, it marked a shift. A headline in the left Liberation newspaper above a picture of Mr. Macron and Ms. Le Pen read: “2022: What if it weren’t for them?”

If they aren’t, it could be Xavier Bertrand, a center-right presidential candidate who emerged as the grand prize winner today.

A sober ex-insurance agent in the northern city of Saint-Quentin, Mr Bertrand, who has already announced that he will run for president next year, won the Hauts-de-France region with around 53 percent of the vote.

His victory came despite the vigorous efforts of Mr Macron and Mrs Le Pen to make an impression in the region, the stronghold of Mr Bertrand.

“This result gives me the strength to go out and meet all the French,” said Bertrand. “There is a necessary condition for the recovery of our country: the restoration of order and respect.”

Mr Bertrand, who served as Minister of Health and then Minister of Labor in Nicolas Sarkozy’s government, did not attend any of the French elite schools and likes to portray himself as a man of the people who is sensitive to the concerns of the French working class. He is widely viewed as an effective politician with consuming ambition. Another former minister in the Sarkozy government, Rachida Dati, once said of Mr Bertrand: “He is the one who is most hungry.”

Despite leaving the largest center-right party, Les Républicains, a few years ago, Mr Bertrand remains part of their conservative family and has an instinctive hatred of Ms. Le Pen’s National Rally, which he would like to call by her previous name. the National Front.

In a way, the election marked the revival of the traditional parties: Les Républicains on the right and the Socialists on the left. Left coalitions, usually including the socialists, held power in five regions that they had already ruled.

Security has become a major concern for the French after a series of Islamist terrorist attacks in the nine months leading up to next year’s elections. This has troubled a fragmented French left that appears to have few answers to security concerns and no presidential candidate to unite around. But the regional elections have shown that it is far too early to completely dismiss the left.

For Mr Macron, who has taken a nationwide tour to reconnect with the French people after the worst of the pandemic, the results suggest that his most recent focus on winning right-wing votes that may have gone to Ms. Le Pen may need to be reconsidered.

The presidential elections are more open than expected. The French people are more angry than they appeared to be. More of that – and a 2022 competition between Mr Macron and Mrs Le Pen would be just that – may not be what they are looking for after all.

Aurelien Breeden and Daphné Anglès Reporting contributed.