Moody’s Cuts China’s Credit Outlook to Negative, Citing Risks from Burgeoning Gov’t Debt

Another 198,000 metric tons of U.S. SRW wheat for delivery to China

Jim Wiesemeyer

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December 05, 2023 09:00 AM

Another 198,000 metric tons of U.S. SRW wheat for delivery to China

Today’s Digital Newspaper

MARKET FOCUS

Moody’s downgrades China’s credit rating outlook to negative
J.P. Morgan Private Bank’s outlook for 2024
Industrial producer prices in Eurozone see year-on-year decline of 9.4%
Consumer inflation expectations in Eurozone next 12 months steady at 4.0%
WTI crude oil futures mark lowest point in past five months
Ag markets today
USDA daily export sale: 198,000 MT SRW wheat to China during 2023-2024 MY
Surge in wheat futures to 11-week high driven by exports, particularly to China
Brazil exports record amounts of soybeans, corn in November
Canadian wheat production bigger than expected
Ag trade update
NWS weather outlook
Pro Farmer First Thing Today items

CONGRESS

A lengthy congressional must-do list

ISRAEL/HAMAS CONFLICT

Israel starts an invasion of southern Gaza

RUSSIA & UKRAINE

Freed Russian convicts return, wreak havoc in Ukraine and back home

POLICY

Another increase in ERP Phase 2 payment
Questions and answers about the Highway Trust Fund

CHINA

China’s colossal hidden-debt problem is coming to a head
Moody’s revised China’s credit outlook from ‘stable’ to ‘negative’
U.S. moves to crack down on money behind fentanyl trade
China’s state banks support yuan
‘World first’: Chinese scientists create high-power microwave weapon for small drones

ENERGY & CLIMATE CHANGE

CFTC proposing federal guidelines for voluntary carbon credit derivatives

LIVESTOCK, NUTRITION & FOOD INDUSTRY

France on ‘high’ alert for HPAI
WOAH warns of ASF vaccine risks as Vietnam readies exports
Lawmakers push to allow hot food purchases with SNAP benefits in farm bill

HEALTH UPDATE

WSJ: CVS Health planning significant overhaul in how prescription drugs are priced

POLITICS & ELECTIONS

Argentine President-elect Milei to introduce omnibus bill during investiture speech
North Dakota Gov. Doug Burgum suspends his presidential campaign
GOP debate stage will have just four lecterns in Tuscaloosa, Ala., tomorrow

OTHER ITEMS OF NOTE

Bloomberg Businessweek, a weekly magazine since 1929, is going monthly

MARKET FOCUS

— Equities today: Asian and European stock markets were mixed to weaker in overnight trading. U.S. stock indexes are pointed toward lower openings. U.S. Dow opened 85 points lower as a credit downgrade of China’s debt is overshadowing mostly good Composite PMI data overseas. In Asia, Japan -1.4%. Hong Kong -1.9%. China -1.7%. India +0.6%. In Europe, at midday, London -0.6%. Paris +0.2%. Frankfurt +0.2%.

U.S. equities yesterday: All three major indices finished with losses to start the week, with the Dow falling short of making it into positive territory before the close. The Dow ended down 41.06 points, 0.11%, at 36,204.44. The Nasdaq ended down 119.54 points, 0.84%, at 14,195.49. The S&P 500 lost 24.85 points, 0.54%, at 4,569.78.

— Agriculture markets yesterday:

Corn: December corn rose 3/4 cent to $4.85 1/2, a mid-range close.
Soy complex: January soybean futures saw sustained selling throughout the session, falling 18 3/4 cents to $13.06 1/4. January meal futures dropped $4.40 to $408.30. January bean oil futures slipped 21 points to 51.24 cents.
Wheat: March SRW wheat rose 17 3/4 cents at $6.20 1/2 and nearer the session high. Prices hit a six-week high. March HRW wheat gained 11 cents to $6.57 3/4, near the session high and hit a three-week high. Spring wheat futures rose 6 cents to $7.36 1/4.
Cotton: March cotton fell 74 points to 78.68 cents, ending near the session low and the lowest close since Nov. 8
Cattle: February live cattle fell $2.05 to $167.075, near the session low and hit an 11-month low. January feeder cattle closed down $3.90 at $210.525, near the session low and hit a contract low.
Hogs: February lean hog futures rallied 70 cents before ending the day at $70.80, while nearby December futures lost 55 cents to $68.05.

— Ag markets today: Corn, soybeans and wheat traded on both sides of unchanged while holding in tight ranges during the overnight session. As of 7:30 a.m. ET, corn futures were trading mostly around a penny lower, soybeans were 1 to 2 cents higher and wheat futures were 2 to 5 cents lower. Front-month crude oil futures were modestly weaker, while the U.S. dollar index is trading mildly firmer this morning.

Cattle futures, cash market still searching for bottoms. Cattle futures faced more heavy selling pressure on Monday as the technical picture continued to erode. Last week’s average cash cattle price fell another $2.32, marking the fourth straight weekly decline, with prices dropping $10.44 over that span. Traders expect cash market weakness this week unless futures aggressively bounce.

Cash hogs drop again, pork cutout firms. The CME lean hog index dropped another 74 cents to $69.84 (as of Dec. 1), extending the seasonal price decline in the cash hog market. The pork cutout value firmed 88 cents on Monday to $84.43, led by a $3.88 gain in primal bellies.

— Quotes of note:

J.P. Morgan Private Bank’s outlook for 2024 suggests that higher interest rates have made bonds more competitive with stocks, similar to the situation before the Global Financial Crisis. A summary of their perspective:

— Bonds vs. stocks: The report indicates that due to higher interest rates, bonds have become a more attractive investment option compared to stocks. This shift in relative attractiveness is reminiscent of the period before the Global Financial Crisis.
— Stability and income: Jacob Manoukian, head of U.S. investment strategy at J.P. Morgan Private Bank, emphasizes the role of bonds in providing stability and generating income. Bonds offer coupon payments that generate consistent income for investors. Moreover, when economic growth slows, bond prices tend to rise, offering potential capital appreciation.
— Favorable position for bonds: J.P. Morgan Private Bank believes that the recent increase in bond yields has positioned bonds to excel in terms of both stability and income. This suggests that bonds could be a valuable asset class for investors in the current economic environment.

“Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities.” — Spotify CEO Daniel Ek, in a memo announcing job cuts.
What goes up… “If you think of the supply problems as pushing up the price, the healing of supply problems should be pushing down the price back to whatever the equilibrium is.” — UBS economist Alan Detmeister.

— In October, industrial producer prices in the Eurozone experienced a year-on-year decline of 9.4%, which is an improvement compared to the previous month’s record 12.4% drop. This decrease was slightly less severe than the market consensus, which had anticipated a 9.5% decrease. Several factors contributed to these changes:

Energy costs: The rate of decline in energy costs slowed down in October, with a decrease of 25.0% compared to 31.2% in September. This suggests a somewhat less rapid fall in energy prices, which influenced the overall producer price index.
Intermediate goods: The cost of intermediate goods decreased at a faster pace in October, with a year-on-year decrease of 5.3% compared to 4.8% in the previous period.
Inflation deceleration: Inflation decelerated for various categories, including capital goods (3.7% vs. 4.1%), durables (3.7% vs. 4.3%), and non-durable consumer goods (4.2% vs. 5.5%). This indicates a slowdown in the rate of price increases for these goods.

Excluding energy, producer prices experienced a slight year-on-year decrease of 0.2% in October. This is noteworthy because it marks the first month of decline since October 2020. However, on a monthly basis, producer prices increased by 0.2%, which is the third consecutive month of growth.

— Consumer inflation expectations in the Eurozone for the next 12 months held steady at 4.0% in October 2023. This level matches the highest seen since April. Additionally, expectations for inflation three years ahead have remained unchanged at 2.5%. The uncertainty surrounding these inflation expectations over the next 12 months has also remained stable.

Market perspectives:

— Outside markets: The U.S. dollar index was higher, with the euro, yen and British pound all weaker against the greenback. The yield on the 10-year U.S. Treasury note was weaker, trading around 4.21%, with a negative tone in global government bond yields. Crude oil futures were under modest pressure, with U.S. crude around $72.55 per barrel and Brent around $77.50 per barrel. Gold and silver futures were narrowly mixed ahead of U.S. trading, with gold firmer around $2,045 per troy ounce and silver weaker around $24.74 per troy ounce.

— WTI crude oil futures have experienced a further decline, reaching $72.3 per barrel, marking their lowest point in the past five months. Several factors contribute to this decrease:

Doubts about OPEC+ supply cuts: Doubts have emerged regarding the effectiveness of supply cuts agreed upon by OPEC+ members. Last week, key members, including Saudi Arabia, UAE, and Kuwait, announced additional cuts amounting to 2.2 million barrels per day. However, a significant portion of these cuts, around 1.3 million barrels per day, were an extension of voluntary reductions by Saudi Arabia and Russia. The Kremlin also mentioned that the agreed-upon cuts would take some time to have an impact.
Softening economic data: Concerns have arisen regarding weakening energy demand due to softening economic data in major economies. Economic indicators suggest a potential slowdown in demand for oil, which can put downward pressure on prices.
Geopolitical tensions: Rising geopolitical tensions in the Middle East, particularly the escalation of fighting in Gaza, have contributed to market unease. Such tensions can disrupt oil supplies and increase market volatility.

Bottom line: Despite Saudi Arabia’s suggestion of possible ongoing cuts beyond the first quarter, the market remains cautious, with uncertainties surrounding the effectiveness of the cuts and concerns about demand. These factors have driven crude oil prices to their lowest levels in five months.

— Brazil exports record amounts of soybeans, corn in November. Brazil exported 5.196 MMT of soybeans in November, slightly topping the previous record for the month. For the first 11 months of 2023, Brazil exported nearly 98 MMT soybeans, up almost 18% from the prior record from two years ago. Brazil exported a record 7.406 MMT of corn during November, far exceeding the previous high for the month. For August through November, Brazil shipped almost 34 MMT of corn, 28% more than the prior record for that four-month period.

— USDA daily export sale: 198,000 MT SRW wheat to China during 2023-2024 MY

— Wheat futures reached an 11-week high, hitting $6 per bushel. This surge is primarily attributed to stronger-than-expected exports, with the USDA on Monday confirming the sale of 440,000 metric tons of U.S. soft red winter wheat to China. This sale to China is particularly noteworthy as it marks the largest such purchase since 2020, and it reflects China’s effort to reduce imports from the Black Sea region. This morning USDA announced another SRW wheat sale to China, this time for 198,000 metric tons. The total U.S. SRW wheat to China now stands at 1.4 million tons. The sale tightens SRW to the point where the market structure could change if any additional sales are made, an analyst notes. Despite the record wheat production observed in Russia over the past two years, which has kept global wheat prices relatively low, there are indications that the situation may be changing. Several factors contribute to this potential shift:

Decrease in output: Other major wheat-producing countries, including Australia, Canada, Argentina, and Ukraine, are showing signs of decreased output.
Canada: Although wheat harvests in Canada are surpassing earlier expectations, the government still predicts the second-smallest crop in six years, suggesting a potential supply constraint.
Australia: Australia’s winter wheat production forecast has increased slightly. However, dry weather conditions are expected to result in a 37% smaller harvest compared to the previous year, which could impact global supply.
Ukraine: Ukraine’s grain exports have dropped to 13.4 million metric tons since July, which may affect global wheat availability.

— Canadian wheat production bigger than expected. Canada’s wheat crop is estimated at 32.0 MMT by Statistics Canada, up from the 29.8 MMT forecast in September and higher than the 31.1 MMT traders expected. StatsCan raised its Canadian canola crop estimate to 18.3 MMT, which was right in line with pre-report expectations. While the estimates are higher than previously forecast, Canadian production declined 6.9% from year-ago for wheat and 2.0% for canola.

Mike Jubinville with MarketsFarm told Pro Farmer, “Canadian production estimates were increased across most crops in this report. The only crops not seeing a big change were those grown in the heart of the Prairie drought regions during this past summer... that being central-south areas of western Saskatchewan and southern Alberta. That’s also typically the drier area of the Prairies and is outside the primary canola growing region. In terms of ‘real’ market influence... not sure I see anything game-changing coming from this report. While demand for high-quality/high-protein spring wheat from Canada has been strong this year so far (exports are running about 8% ahead of last year to date), the price trend remains weak.”

— Ag trade update: South Korea purchased 65,000 MT of corn to be sourced from the U.S., South America or South Africa. Japan is seeking 132,504 MT of milling wheat in its weekly tender. Egypt tendered to buy an unspecified amount of wheat from multiple origins.

— NWS weather outlook: Excessive rainfall and flooding potential continues across the Pacific Northwest over the next few days... ...Moderate upslope snow forecast across the central Appalachians into Wednesday... ...Warming trend increases across the Great Plains through midweek.

Items in Pro Farmer’s First Thing Today include:

• Quiet, two-sided overnight price action in grains
• Cordonnier cuts Brazilian crop estimates
• Eurozone producer prices inch up in October but still well below year-ago

CONGRESS

— A lengthy congressional must-do list. The House is only scheduled to be in session this week and next before members leave town until Jan. 9. Here is a rundown on some major topics confronting Congress.

Little progress has been made in resolving fiscal year (FY) 2024 spending plan details, and Rep. Frank Lucas (R-Okla.) has stated that these spending issues need to be addressed before the House can shift its focus to a new farm bill. Lucas emphasized the importance of first securing government funding through the end of September to align with the timing of the farm bill. This would allow appropriators to resume their work, potentially paving the way for progress on the farm bill. However, the prospects for assembling a FY 2024 spending package for Agriculture appear to be minimal, as the initial version proposed by the House was rejected. Lucas, along with other lawmakers, favors establishing a pathway to conference with the Senate to reach an agreement on the spending package. While Lucas mentioned the possibility of another continuing resolution (CR) to maintain government funding, House Speaker Mike Johnson (R-La.) has previously ruled out such an option. Currently, lawmakers face a Jan. 19 deadline to fund USDA and other government agencies, with another deadline on Feb. 2 for a separate group of agencies. The situation remains uncertain, with funding issues needing resolution before significant progress on the farm bill can be expected.
Schumer: NDAA talks snared in China-related disputes. Senate Majority Leader Chuck Schumer (D-N.Y.) attributed the impasse in negotiations over a compromise fiscal 2024 defense authorization bill to disagreements over China-related provisions with House Republicans. As a result of these disagreements, it appears that the completion of the bicameral National Defense Authorization Act (NDAA) is unlikely to happen early in the week as initially hoped by proponents of the bill. Instead, it may contribute to the ongoing legislative challenges and logjams on Capitol Hill in the lead-up to the holidays.
FISA: The House Judiciary Committee is scheduled to consider legislation Wednesday that would add a warrant requirement to a powerful spy authority (section 702 reauthorization/ Foreign Intelligence Surveillance Act), sharpening a divide between privacy-minded lawmakers and the Biden administration.
Border talks may resume. Senate Republicans are expected to send Democrats a counterproposal in hopes of restarting critical border-security negotiations. Republicans are linking inclusion of border policy reform to further aid to Ukraine, Israel and Taiwan. “Schumer has made hollow threats to force a vote on this $106 billion package while refusing to come to the table and negotiate,” Sen. Roger Marshall (R-Kan.) told Fox News Digital on Monday. “He may be able to bully his caucus into voting for this bogus bill, but Senate Republicans are dug in. We will not budge until meaningful border security policies are secured,” he said. Marshall, who sits on the Senate Committee on the Budget and Committee on Homeland Security & Governmental Affairs, said Republicans “will vote down cloture, and we will not move an inch until there’s a bill that puts our national security over foreign countries.”
The White House’s supplemental request, which was sent to Congress in October, includes $61.4 billion for Ukraine, $14.3 billion for Israel (with $10.6 billion allocated for military aid), $13.6 billion for some border measures such as speeding up asylum processing, and significant investments in Indo-Pacific security assistance, totaling around $7.4 billion. Additionally, there’s $9 billion earmarked for humanitarian aid in Ukraine, Israel and Gaza.
Senate Republicans are softening their criticism of the House’s efforts to potentially impeach President Biden. While some Senate Republicans are not enthusiastic about holding a Biden impeachment trial, they are not actively discouraging the House from voting to authorize an impeachment inquiry. House Speaker Mike Johnson (R-La.) is proceeding with plans for an inquiry vote, which his predecessor, Rep. Kevin McCarthy (R-Calif.), avoided. Sen. John Cornyn (R-Texas) has defended such a vote, suggesting it could provide House Republican-led committees with more leverage in court regarding subpoenas related to Biden’s actions.
Republicans assert Hunter Biden payments tie him to father’s Chinese business. Republicans claimed that payments made by Hunter Biden to his father, Joe Biden, are evidence of a connection between Joe Biden and his son’s Chinese business activities. According to documents released by the House Committee on Oversight and Accountability, Hunter Biden made three payments to his father in 2018, totaling slightly more than $4,000. These payments came from a business account associated with Hunter Biden’s Chinese business dealings. However, Democrats have a different interpretation of these documents. They argue that the payments were simply Hunter Biden reimbursing his father, Joe Biden, who was not in office at the time. The reimbursement was for certain expenses, such as payments Joe Biden was making on a truck that Hunter Biden was using.

ISRAEL/HAMAS CONFLICT

— Israeli forces closed in on Khan Younis in the Gaza Strip in what could be the decisive battle of the two-month-old war. Israel is considering flooding Hamas’s tunnel network with seawater. Israeli troops said they had encircled “Hamas strongholds” in Jabalia, a refugee camp in northern Gaza.

RUSSIA/UKRAINE

— Freed Russian convicts return, wreak havoc in Ukraine and back home. Russian convicts who were freed to fight in Ukraine are now going home to Russia, and dozens of communities have been brutalized by their new crimes, according to a Wall Street Journal review (link) of court documents and interviews with friends and relatives of suspects and victims.

POLICY UPDATE

— Another increase in ERP Phase 2 payment. Total payments under the Emergency Relief Program (ERP) have moved up to $8.26 billion as of Dec/ 3 as ERP Phase 2 payments continue to edge higher. Phase 2 payments reached $814.0 million to 10,117 recipients, up from $974.08 million the prior week. Phase 1 payments remained at $7.45 billion.

— Questions and answers about the Highway Trust Fund. On Oct. 18, the House Transportation and Infrastructure Committee’s Subcommittee on Highways and Transit convened a hearing at which Chad Shirley, a principal analyst at the Congressional Budget Office, testified on the status of the Highway Trust Fund.1 After the hearing, Ranking Member Rick Larsen and Reps. John Garamendi, Seth Moulton, and Patrick Ryan submitted questions for the record. This document (link) provides CBO’s answers.

CHINA UPDATE

— Moody’s affirmed China’s credit rating at A1 on but revised the outlook from “stable” to “negative.” This move is based on several key factors:

Lower than expected economic growth: China’s economic growth has fallen below expectations. This could be due to various factors such as trade tensions, global economic uncertainties, and internal challenges. The agency expects China’s economic growth to slow to 4% annual GDP in 2024 and 2025.
Property crisis: The country is facing a property crisis, which can have a significant impact on its economy. A downturn in the real estate sector can lead to reduced investments, financial instability, and unemployment.
Increasing financial support: Moody’s has expressed concern over the Chinese government’s increasing financial support for struggling municipal authorities and companies. This raises questions about the sustainability of such support and its potential impact on government finances.
Rising national debt: China’s national debt has been growing as the government attempts to stimulate its economy and mitigate the effects of economic challenges. The substantial increase in debt levels can pose long-term financial risks.

In response to Moody’s downgrade, China’s finance ministry has expressed disappointment with the decision.

Overall, Moody’s downgrade of China’s credit outlook to negative reflects concerns about the country’s economic performance, especially considering lower growth, a property crisis, and increased government support for various sectors. This development may have implications for China’s economic policies and global financial markets.

Standard & Poor’s credit rating for China stands at A+ with stable outlook. Fitch’s credit rating for China was last reported at A+ with stable outlook.

— China is currently facing a significant and potentially dangerous issue related to its hidden debt problem, the Wall Street Journal reports (link). This problem has been building up for years as cities and provinces in the country engaged in extensive borrowing and spending without proper oversight. Key points:

Massive hidden debt: Various sources, including the International Monetary Fund (IMF) and Wall Street banks, estimate that the total amount of off-balance-sheet government debt in China is somewhere between $7 trillion to $11 trillion. The exact figure remains uncertain due to the lack of transparency.
Unsustainability: Over the past year, it has become increasingly evident that the debt levels incurred by local governments in China are unsustainable. This means that these governments may struggle to meet their debt obligations.
High default risk: Economists have identified a significant portion of this hidden debt, with estimates ranging from $400 billion to over $800 billion, as particularly problematic and at a high risk of default. This poses a considerable threat to China’s financial stability.

— China’s state banks support yuan. China’s major state-owned banks actively bought yuan in currency markets on Tuesday to prevent it from weakening too much, two sources with knowledge of the matter said, with buying intensifying after rating agency Moody’s cut China’s outlook to negative (see related item). State banks were swapping yuan for U.S. dollars in the onshore swap market and quickly selling those dollars in the spot market to support the yuan. Link to details via Reuters.

— ‘World first’: Chinese scientists create high-power microwave weapon for small drones. Game-changing microwave drone weapon could see a permanent shift in military power balance. Link to details via the South China Morning Post.

ENERGY & CLIMATE CHANGE

— CFTC is proposing federal guidelines for voluntary carbon credit derivatives, seeking to bring order to a volatile market (link to release; link to pre-publication Federal Register notice). The guidelines will call on exchanges to verify the quality of these derivatives, which are linked to financial instruments used by companies to offset emissions. The value of the global carbon trading market could grow to $100 billion by 2030, up from $2 billion in 2022, according to Morgan Stanley. Environmentalists have criticized voluntary credits for doing little to combat global warming.

The proposed guidance covers factors exchanges need to consider relative to such contracts. The agency cautioned that given that voluntary carbon credits and voluntary carbon markets are “evolving,” they may need to revisit the guidance or issue additional guidance in the future.

The comment period for the proposed guidance will be open for 75 days, and will end on Feb. 16, 2024. Comments may be submitted electronically through the CFTC Comments online process (link).

LIVESTOCK, NUTRITION & FOOD INDUSTRY

— France on ‘high’ alert for HPAI. France raised the risk level of highly pathogenic avian influenza (HPAI) to “high” from “moderate” on Tuesday after the detection of new cases of the disease. The “high” risk level implies all poultry should be kept inside on farms and additional security measures taken to avoid a spread of the disease.

— WOAH warns of ASF vaccine risks as Vietnam readies exports. The World Organization for Animal Health (WOAH) warned more testing of African swine fever (ASF) vaccines is needed, triggered by Vietnam’s plans to export doses in coming months. WOAH says AVAC Vietnam JSC, the producer of one of the two vaccines, has not shared sufficient data with international researchers and bodies. It urged countries interested in using AVAC’s vaccines to conduct their own trials before approving it.

— Lawmakers push to allow hot food purchases with SNAP benefits in farm bill. A group of U.S. senators and representatives, comprising one-fifth of the total, is advocating for a change in the rules governing the Supplemental Nutrition Assistance Program (SNAP) as part of the new farm bill. They are urging that the farm bill should permit the purchase of hot foods with food stamps, as the current prohibition on hot food purchases is seen as outdated and not aligned with the dietary and lifestyle needs of American families. The lawmakers argue that the ban on hot food purchases disproportionately affects vulnerable Americans, including children, seniors, and individuals with disabilities who make up 80% of SNAP participants. They contend that the prohibition “disenfranchises” these individuals, particularly those with mobility issues. The legislators are encouraging the inclusion of the bipartisan and bicameral Hot Foods Act in the new farm bill, which would allow SNAP beneficiaries to use their benefits for hot food purchases.

But USDA recently reaffirmed the ban on using SNAP for hot foods, reiterating that only staple food products are eligible for SNAP participation. Foods like pizza, coffee, and fresh salads were specifically mentioned as examples of items that cannot be bought with SNAP benefits.

HEALTH UPDATE

— CVS Health, the largest drugstore chain in the United States, is planning a significant overhaul in how prescription drugs are priced. The company intends to transition away from the complex pricing formulas currently used in the pharmaceutical industry and move towards a simpler pricing model, the Wall Street Journal reports (link). Here are the key points:

Simpler pricing model: CVS Health’s new approach involves simplifying how pharmacies are reimbursed for the prescription drugs they sell. Instead of using intricate pricing formulas, they will base reimbursement on the actual cost that CVS paid for the drugs. This reimbursement will also include a limited markup and a flat fee to cover the services associated with handling and dispensing prescriptions.
Pharmacy-benefit managers and payers: CVS’s reimbursement will come from pharmacy-benefit managers and other payers, and it will be tied directly to their drug acquisition costs. This represents a departure from the existing complex measures used for payment.
Current complex pricing: The current system in the pharmaceutical industry often relies on intricate calculations and measures that do not directly correlate with the actual cost incurred by pharmacies to purchase specific drugs.

POLITICS & ELECTIONS

— Argentine President-elect Javier Milei plans to introduce an omnibus bill during his investiture speech on Dec. 10, which will be sent to Congress on Dec. 11. The bill is expected to include various reforms, such as the removal of regulations to ease private company operations, tax reform, labor reform, privatization of state-owned companies, reduction of ministries and state institutions, and the elimination of mandatory primary elections. The purpose is to expedite the debate on multiple reforms while Milei’s popularity is high, but negotiations with the opposition will be necessary for approval. These reforms aim to improve the business climate, reduce public spending, eliminate the fiscal deficit, and streamline the electoral calendar in Argentina. However, passing them may face challenges due to the government’s minority position in Congress.

— North Dakota Gov. Doug Burgum suspended his presidential campaign on Monday after failing to garner polling momentum in a crowded GOP field. Burgum’s campaign stressed his influence in electing energy as an issue on the GOP debate stage. The governor also criticized the Republican National Committee for their qualification metrics for the debates, arguing “none of their debate criteria relate to the qualifications related to actually doing the job of the president.”

— GOP debate stage will have just four lecterns in Tuscaloosa, Ala., tomorrow, as the field of qualifying candidates continues to shrink. Ron DeSantis, Nikki Haley, Vivek Ramaswamy, and Chris Christie will square off in what could be their last chance to confront each other in person before the Iowa caucuses kick off the primary season on Jan. 15. That would be the smallest debate roster Republicans have had at this point in the campaign since 2000. To participate “in the debate, candidates had to meet the Republican National Committee’s debate requirements of at least 80,000 unique donors, with at least 200 unique donors per state or territory in at least 20 states or territories, and garnering at least 6% in two approved national polls or 6% in one national poll and 6% in polls of two different early primary states.

Former President Donald Trump — the front-runner in the Republican presidential primary race — is skipping the debate, as he did the previous three. He will instead attend a fundraiser in Florida for a super PAC supporting his candidacy.

OTHER ITEMS OF NOTE

— Bloomberg Businessweek, a weekly magazine since 1929, is going monthly. Bloomberg bought the magazine in 2009. A memo said that the staff will step up its production of audio, video and events and will continue to emphasize “ambitious long-form journalism” — “long-form” being a term of art for “long.” No layoffs have been announced.

KEY LINKS

Policy Updates