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Facebook requiring U.S. employees to be vaccinated to return to work

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An employee of the Internet company Facebook walks through the courtyard of the company campus in Menlo Park, California.

Christoph Dernbach | picture alliance | Getty Images

Facebook will require U.S. workers returning to its offices to be vaccinated, the company said on Wednesday.

“As our offices reopen, we will be requiring anyone coming to work at any of our US campuses to be vaccinated,” VP of People Lori Goler said in a statement. “How we implement this policy will depend on local conditions and regulations.”

Facebook will create processes for those who can’t be vaccinated for medical or other reasons, Goler said. The company will continue to evaluate its approach outside the U.S., Goler added.

Facebook had already told full-time employees that most of them could continue working from home beyond the pandemic if their jobs could be done remotely.

The news comes after Google CEO Sundar Pichai told employees earlier the same day that Google would delay its return to office plans by one month, citing the fast-spreading delta variant. Pichai also said returning workers would have to be vaccinated.

Apple earlier delayed its return to office plans, though it has not come out publicly with a vaccine requirement for workers. The company will require customers and staff to wear masks in many of its U.S. retail stores regardless of vaccination status beginning on Thursday, a person familiar with the matter told CNBC’s Josh Lipton.

Though employer-mandated vaccine requirements seemed rare just a few weeks ago, the rise of the delta variant and new guidance from the Centers for Disease Control and Prevention seem to have played a role in shifting some executives’ thinking.

On Tuesday, the CDC walked back its earlier mask guidance for fully vaccinated people, saying that they should again wear masks indoors in places with high Covid-19 transmission rates. CDC Director Rochelle Walensky said the change was due to new information on the delta variant, showing that some vaccinated people infected by the strain could continue to spread it to others.

WATCH: Employers weigh Covid vaccine mandates and incentives for employees

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Elon Musk says the chip shortage is a ‘short-term’ problem

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Tesla Motors CEO Elon Musk speaks to the media next to its Model S.

Nora Tam | South China Morning Post | Getty Images

Tesla CEO Elon Musk said Friday that the ongoing semiconductor crisis will be over by next year.

The tech billionaire said he thinks chip shortage is a “short-term” problem as opposed to a long-term one. 

“There’s a lot of chip fabrication plants that are being built and I think we will have good capacity by next year,” Musk said at an Italian tech event that was streamed online Friday.

Musk did not specify which chip plants he was referring to.

Chip heavyweights Intel and TSMC have announced plans to build new plants in the U.S. but they won’t come online for several years yet.

Glenn O’Donnell, a vice president research director at advisory firm Forrester, believes the shortage could last until 2023.

“Because demand will remain high and supply will remain constrained, we expect this shortage to last through 2022 and into 2023,” he wrote in a blogpost in April.

The global chip shortage has had a major impact on a wide range of industries, but the automotive sector has been particularly badly hit. Big names in the industry such as Ford, Volkswagen and Daimler have all been forced to suspend production at various points and cut their manufacturing targets as a result of a lack of chips.

Impact on Tesla

During the company’s first-quarter earnings, Musk said that Tesla had some supply chain issues, before going on to reference the chip shortage. 

“This quarter, and I think we’ll continue to see that a little bit in Q2 and Q3, had some of the most difficult supply chain challenges that we’ve ever experienced in the life of Tesla and same difficulties with supply chain, with parts — over the whole range of parts. Obviously, people have heard about the chip shortage. This is a huge problem.”

Consulting firm AlixPartners predicted this week that the chip shortage will cost the automotive industry $210 billion in revenue this year alone. 

“Of course, everyone had hoped that the chip crisis would have abated more by now, but unfortunate events such as the COVID-19 lockdowns in Malaysia and continued problems elsewhere have exacerbated things,” said Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners, in a statement.

Carmakers use semiconductors in everything from power steering and brake sensors, to entertainment systems and parking cameras. The smarter cars get, the more chips they use.

In 2019, Tesla started producing cars with custom AI chips that help on-board software make decisions in response to what’s happening on the road.

Musk said in July that production of Tesla’s Powerwall product, a backup battery for the home, was “lagging” as a result of the chip shortage.

 

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Orient Capital Research on Evergrande debt crisis, investor worries

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Embattled developer China Evergrande‘s situation is not a surprise, given the steps taken by Beijing to reign in excessive debt in the property sector, according to Orient Capital Research’s Andrew Collier.

“This is all a bit of a tempest in a teapot, which sounds funny given that the whole world is worried about Evergrande right now,” Collier, managing director at the research firm, told CNBC’s “Street Signs Asia” on Thursday.

Collier pointed to Beijing’s “three red lines” policy introduced last year, which was aimed at preventing developers from loading up on debt as well as to deflate the property bubble.

“The end result is one of the largest companies and the most indebted is not surprisingly, in trouble,” he said, referring to Evergrande.

“The fact that they’re continuing … to force developers to try to deleverage is an indication that they think this is a good campaign,” Collier added.

The Chinese authorities’ rationale for such an action is “pretty obvious,” he explained. “They figure that if they don’t do this, then they’re going to have an even bigger crisis on their hands and the entire property market goes into a bubble territory more than it is, and then collapses.”

The ongoing crisis surrounding debt-ridden Chinese developer Evergrande has captured global investor attention for much of this week, and rattled markets.

Hong Kong’s Hang Seng index fell nearly 3% this week, while major indexes on Wall Street also tumbled amid the risk-off sentiment — although they staged a relief rally later in the week.

If Beijing so desires, it can actually “release the brakes” and ask state proxies such as regional banks to step in and recapitalize Evergrande, Collier said.

Still, he sees authorities as “likely to inflict some pain” on investors to send a clear message that they’re tired of excess in the property sector.

Why global markets are nervous

Collier said there were two reasons why global markets are worried about Evergrande’s troubles.

First, the global financial crisis in 2008 was property-related, he explained. It was sparked by a U.S. housing bubble more than a decade ago. Lehman Brothers, the world’s fourth-largest investment bank at that time, underwrote tens of billions of dollars’ worth of securities backed by risky mortgages during a U.S. housing bubble.

The bank eventually collapsed, having filed the largest corporate bankruptcy in U.S. history. That bankruptcy spilled over to other banks, triggering the global financial crisis.

Still, the current situation in China is different from that 2008 crisis, according to the analyst: “They have direct loans to developers that are problematic, but they don’t have a whole bunch of capital sitting around with a bunch of traders … making up bad securities.”

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Furthermore, the Chinese authorities also have “ways of manipulating the banking system.”

That could come in the form of indirect cash injections from the People’s Bank of China to the banks, or through forcing state proxies to step in and aid Evergrande, which the analyst said is “probably what’s going to happen.”

The other area of concern for investors is the importance of China’s property market to its overall economy, as well as the fiscal health of local governments, Collier said.

That means that a crisis in the property sector will translate into problems within the Chinese economy, causing an impact on areas such as global iron ore prices and consumption of goods.

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Energy pressures could outlast Covid supply shocks

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European Central Bank President Christine Lagarde.

DANIEL ROLAND | AFP | Getty Images

LONDON — The volatility in energy prices could outlast the current Covid-related supply issues in the global economy, European Central Bank President Christine Lagarde has said.

The euro zone has been impacted, like many other regions, by disruptions in supply chains brought about by the coronavirus pandemic and subsequent social restrictions. For example, the German auto industry has had to deal with bottlenecks caused by a semiconductor shortage.

However, a surge in energy prices — and its impact on inflation figures — may be a much longer-term issue for the region, Lagarde told CNBC’s Annette Weisbach in an exclusive interview Thursday.

“Things will fall into place as new sources of supply will be identified,” she said, describing the current economic environment as “an adjustment period.”

“Energy is going to be a matter that will probably stay with us longer. Because we are transitioning, as well, from fossil industry driven sources of energy … We aspire to be much less [reliant on] fossil sources,” Lagarde said.

Gas crisis

The euro zone — and the wider European continent — is grappling with a natural gas shortage that’s pushing up energy bills for consumers. Some governments, notably Spain, Greece and France have started to intervene to offset some of the economic damage for citizens.

However, there’s quite a lot of uncertainty about the duration of these price pressures in the energy market and what they will ultimately mean for inflation across the 19-member region.

Some industry experts have suggested recent price surges, notably for natural gas, have been accentuated by the EU’s new climate policies and are a simple reality of the broader push toward renewables.

The EU’s climate chief, Frans Timmermans, has insisted that the price increases are not the bloc’s fault. “Only about a fifth of the price increase can be attributed to CO2 prices rising,” he told the European Parliament earlier this month. “The others are simply about shortages in the market.”

When asked about climate targets and the transition toward renewables, and whether it would be inflationary or deflationary, Lagarde replied: “We are beginning to see some studies and academics who are looking into it and I think the jury is still out.”

“My hunch having read some of those is that it is likely to be pushing prices up for a short period of time and probably later on it might have some deflationary impact,” she added.

Inflation more stable next year

The ECB’s only mandate is to work toward price stability, defined as an inflation target of 2%. Big swings in consumer prices increase the likelihood of monetary action from central banks.

This has been a big theme for ECB watchers as consumer prices have been rising consistently in recent months. In fact, inflation surged to a 10-year-high in August and further spikes are likely in the coming months.

“What is true though is that we have been revising upward many of our projections in the last three quarters. Things have picked up faster and that is true for growth, that is true for inflation, and that is true for employment. So, in a way it is a package of good news because it means that our economies are responding,” Lagarde said.

“But of course it induces frictions,” she said,” those bottlenecks, those supply chains that have been disrupted because of the pandemic and where reinitiating the machine is taking time.”

“But in the main of all of that, we hope it will last when it comes to growth, so that activity continues; we hope it will last when it comes to jobs so that employment continues and unemployment goes down; and for prices we think that there will be a return to much more stability in the year to come, because many of the causes of higher prices are temporary,” Lagarde told CNBC.

Earlier this month, the ECB estimated an inflation rate of 2.2% at the end of year. This number is then expected to come down to 1.7% and 1.5%, respectively in 2022 and 2023. Revised forecasts are due in December.

“When you look, you know, at what’s causing [higher inflation], a lot of it has to do with energy prices. You look back a year ago and prices were rock bottom. They have of course moved up and the difference is explaining a lot of the inflation that unfortunately people are experiencing at the moment, the same goes to VAT impact,” Lagarde said Thursday, reiterating the central bank’s stance.

‘No idea’ on time lag with Fed

Nonetheless, there’s a lot of anticipation in the market about what the ECB will do now regarding monetary policy — as well as the Fed. In the United States, Federal Reserve officials reiterated Wednesday that a tapering of bond buying is coming “soon.”

The U.S. central bank is facing similar pressures to the ECB, with inflation rates also moving higher and an overall improvement in economic sentiment since the coronavirus pandemic first emerged.

However, Lagarde could not compare the ECB’s timeline with the Fed’s plan to soon reduce its stimulus.

“I have no idea. I have no idea because we are operating with different programs,” she said.

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