US ECONOMY & POLITICS

Bernie Sanders Expresses Frustration With Centrists in Spending Talks – Wall Street Journal, 10/11/2021

• Bernie Sanders has pushed Congress for decades to expand the social safety net and fight climate change, with limited success. Now, with Democrats on the brink of finalizing such a package, the Vermont senator must decide how much is enough.
• The party is currently locked in negotiations over winnowing down a $3.5 trillion education, healthcare, child-care and climate plan, after Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona balked at the initial price tag.
• Last week, the self-described Democratic socialist held two media events and stepped up his criticism of Mr. Manchin and Ms. Sinema. He told reporters that the centrists needed to be clear about what they wanted—and that the entire party shouldn’t have to move all the way to them.
• Mr. Manchin has said he would like to see the package cost $1.5 trillion, while Ms. Sinema hasn’t shared any number publicly. After initially backing $3.5 trillion, President Biden has begun floating a roughly $2 trillion level as a compromise.
• As Mr. Sanders says he is holding firm, other liberals are acknowledging they will need to accept less. Rep. Pramila Jayapal (D., Wash.) who chairs a group of House progressives, told President Biden a package needed to be at least $2.5 trillion.
• As chairman of the Budget Committee, which is helping to draft the legislation, Mr. Sanders had originally proposed a $6 trillion package but came down to $3.5 trillion in order to get the support of committee members Mark Warner and Tim Kaine, both of Virginia.

Despite U.S. Employment Gains, Many Women Remain on Labor-Market Sideline – Wall Street Journal, 10/11/2021

• Many workers displaced by last year’s pandemic, especially women, have yet to return to the labor market, acting as a check against stronger job growth. And some women who did return haven’t been able to stay in the job as the Delta variant of Covid-19 raised fears and scrambled child-care plans. In September, women lost 26,000 payroll jobs.
• Many people are avoiding the workforce for fear of catching the coronavirus, according to an August survey by the job-search website Indeed.
• Other factors include parents not wanting to take jobs outside their home at a time when Covid outbreaks have pushed some classes into quarantine and led to temporary school closures, and daycare centers have limited staff. For others, the pandemic caused some to re-evaluate the choice between working and staying out of the workforce to care for family members.
• The slowing growth in the job market is especially apparent among women, whose labor-force participation shrank among both the older and younger.

Tariff Relief Plan From Biden Administration Falls Short, Businesses Say – Wall Street Journal, 10/11/2021

• U.S. businesses are panning the Biden administration’s new China trade policy, saying it fails to provide the tariff relief they expected for importers who lack cost-effective alternatives to Chinese products.
• The Office of the U.S. Trade Representative said it would consider granting exclusion waivers on 549 product categories, a fraction of the more than 2,200 items that were eligible for tariff relief earlier in the Trump years. Their beneficiaries were mostly smaller businesses, according to trade experts.
• Industry groups had hoped the Biden administration would expand the waiver program.
• “It’s disappointing that the administration didn’t go much further,” said Stephen Lamar, chief executive of the American Apparel and Footwear Association. “There are a number of other exclusions that are not on the table anymore.”
• China is by far the most important manufacturing hub for the U.S. apparel industry, which relies nearly entirely on imported products.
• China accounted for 36.6% of apparel imports by volume in 2020, more than twice the shipment from Vietnam, the No. 2 supplier, according to the association. Nearly two-thirds of imported footwear came from China.

EUROPE & WORLD

Beyond Evergrande, China’s Property Market Faces a $5 Trillion Reckoning – Wall Street Journal, 10/11/2021

• China Evergrande Group, the embattled property developer, is the first high-profile real-estate company to run into serious trouble in Beijing’s campaign to tame a roaring property market. It might not be the last.
• As China enters what many economists say is the final stage of one of the largest real-estate booms in history, it is confronting a staggering bill: More than $5 trillion in debt that developers took on when times were good, according to economists at Nomura Holdings.
• That debt is nearly double what it was at the end of 2016 and is more than the entire economic output of Japan, the world’s third-largest economy, last year.
• Global markets are braced for a possible wave of defaults, with warning signs flashing over the debt of about two-fifths of development companies that have borrowed from international bond investors.
• Asia’s junk-bond markets suffered a wave of selling last week. On Friday, bonds from 24 of the 59 Chinese development companies in an ICE BofA index of Asian corporate dollar bonds were trading at yields of above 20%, levels that indicate high risk of default.

Evergrande creditors fear imminent default as concerns shake sector – Reuters, 10/11/2021

• China Evergrande Group offshore bondholders are concerned that it is close to defaulting on debt payments and want more information and transparency from the cash-strapped property developer, their advisers said.
• Evergrande, which could trigger one of China’s largest defaults as it wrestles with debts of more than $300 billion and whose troubles have already sent shockwaves across global markets, missed payments on dollar bonds, worth a combined $131 million, that were due on Sept. 23 and Sept. 29.
• With Evergrande staying silent on dollar debt payments and prioritizing onshore creditors, offshore investors have been left wondering if they will face large losses at the end of 30-day grace periods for last month’s coupons.
• In another development, Evergrande dollar-bond trustee Citi has hired law firm Mayer Brown as counsel, a source familiar with the matter, who declined to be named due to the sensitivity of the matter, told Reuters earlier on Friday.
• The Shanghai Stock Exchange on Friday suspended trading of two bonds issued by smaller developer Fantasia Group China, with one dropping more than 50%, after controlling shareholder Fantasia Holdings Group missed the deadline on a $206 million international market debt payment on Monday.

Japanese automakers’ China car sales tumble in September – Reuters, 10/11/2021

• Japanese automakers Honda Motor, Nissan Motor and Toyota Motor saw their sales in China tumble in September as a chip shortage hit vehicle production in the world’s biggest car market.
• Honda said it sold 121,448 vehicles in China last month, down 28% from a year earlier due to the COVID-19 pandemic and a shortage of components.
• Nissan said it sold 104,443 cars, down 26%, due to “external headwind including the ongoing pandemic, cross-industry material shortages, slowdowns, and increased competition.”
• Toyota said it sold 115,000 cars, down 36%.
• Separately, U.S. automaker General Motors, which only reports quarterly China sales, said it sold over 623,000 in July through September, down 19% from the same period last year, “impacted by the ongoing global semiconductor supply chain disruption.”

China’s Ant Group increases registered capital by 47% to $5.4 billion – Reuters, 10/11/2021

• China’s Ant Group has raised its registered capital to 35 billion yuan ($5.44 billion) from 23.8 billion yuan, public business registration records showed, as the fintech giant continues its government-mandated restructuring.
• Ant, an affiliate of e-commerce leader Alibaba Group, in a Monday statement said the increase was to support growth and was “according to relevant regulations and business needs.”
• Authorities in April ordered sweeping restructuring at Ant after halting the financial technology (fintech) firm’s record $37 billion initial public offering in November, underscoring government determination to rein in its internet giants.

Severe Drought Adds to Afghanistan’s Woes, Endangering Millions as Economy Collapses – Wall Street Journal, 10/11/2021

• This year’s deep drought is compounding the economic crisis that deepened when the Taliban overthrew the previous Afghan government, prompting the U.S. and others to freeze some $9 billion in Afghan central-bank assets and spurring a large number of the country’s professionals to leave.
• Now the scarcity of water is slashing farmers’ incomes and driving up food bills for people in cities. The United Nations estimates that the drought is threatening the livelihood of up to 9 million Afghans and affecting 25 of the country’s 34 provinces.
• Tough conditions have already put 14 million people—more than one-third of the Afghan population—in a food-security crisis, according to the U.N. Food and Agriculture Organization.
• Afghanistan’s current harvest is expected to be 15% below average due to the drought, the FAO said.

Lenovo stock drops 17% after withdrawing Shanghai listing application – Reuters, 10/11/2021

• Lenovo Group saw its stock fall more than 17% on Monday, its biggest intraday decline in over a decade, after the Chinese technology giant withdrew its application for a 10 billion yuan ($1.55 billion) share listing in Shanghai.
• The world’s biggest personal computer maker on Friday said it would withdraw its application, days after it had been accepted by Shanghai’s STAR Market.
• On Sunday, Lenovo said it had done so because of the possibility of the validity of financial information in its prospectus lapsing during the application’s vetting. It did not detail reasons why the information may no longer be valid.
• It also cited “relevant capital market conditions such as the latest circumstances in connection with the listing.”

Factmonster – TODAY in HISTORY

• The Boer War began in South Africa. (1899)
• A letter from Albert Einstein was delivered to President Franklin D. Roosevelt concerning the possibility of atomic weapons. (1939)
• The first session of Vatican II was convened by Pope John XXIII. (1962)
• The first staffed Apollo mission, Apollo 7, was launched with astronauts Wally Schirra, Donn Fulton Eisele, and R. Walter Cunningham aboard. (1968)
• Space shuttle Challenger astronaut, Kathryn Sullivan, became the first American woman to walk in space. (1984)