Xi Jinping prepares to unveil a doctrine that could let him rule for life. Twitter says Musk should sell a $21 billion Tesla stake. Taiwan challenges its UN exclusion. Here’s what you need to know today.
Xi Jinping will huddle with the Communist Party this week as he lays the groundwork to defy precedent and secure a third five-year term in power at next year's party congress — and then potentially rule China for life. From Monday to Thursday, about 400 senior officials, mainly men, will meet behind closed doors in Beijing for the annual policy plenum meeting. "Common prosperity" policies are likely to be affirmed. Here’s what’s happened since Xi began his crackdown on the tech industry a year ago. In other China news, the country posted a record $84.54 billion trade surplus in October as exports surged despite global supply chain disruptions.
Stocks look set to start the week steady as investors keep watch on how price pressures impact the pace of economic recovery. Futures edged up in Japan and Australia, and fell in Hong Kong. All major U.S. equity benchmarks climbed to records Friday, with the S&P 500 posting its fifth consecutive weekly rally. That was after a larger-than-forecast and broad-based gain in U.S. payrolls indicated greater progress filling millions of vacancies as the effects of the delta variant faded. Bonds rallied, with the U.S. 10-year Treasury yield sinking below 1.5%.
Elon Musk's Twitter followers recommended he sell 10% of his Tesla shares, worth about $21 billion. Almost 58% of 3.5 million voters backed the move in a poll that he launched Saturday. The world's richest person said he'd "abide by the results" regardless of the outcome, citing the debate over the wealthy hoarding unrealized gains to avoid paying taxes. Tesla may fall when Wall Street wakes up: a cryptocurrency Tesla token on FTX recently fetched $1,138.95 — 6.8% lower than Friday's close. Last week he suggested he’d sell some stock if the UN could prove $6 billion could help alleviate world hunger.
The message from thousands carrying placards around the venue of the COP26 summit is one most insiders would agree with: Progress being made is still not enough to avoid climate catastrophe. More than 100,000 people braved rain and wind to chastise the world’s biggest emitters for not doing enough to cut planet-warming pollution. Here’s what’s been announced so far — and what those pledges mean in reality. Meanwhile, Taiwan is challenging its United Nations exclusion on the sidelines of the summit; China’s absence at the talks is slowing progress; and, away from the talks, Beijing issued guidelines to reduce pollution and cut carbon emissions.
The trade deal between the U.K. and the European Union will be thrown into question if Britain revokes its commitments to the Northern Ireland protocol, the Irish foreign minister warned. The two sides are embroiled in a stand off over the protocol, an agreement that allowed the U.K. to leave the bloc’s single market without creating a hard border on the island of Ireland. In happier free trade talks, Australia and the U.K. are both confident their agreement will be finalized by year end.
What We’ve Been Reading
What’s caught our eye over the past 24 hours:
And finally, here’s what Tracy’s interested in today
Last week I invented a new word: whackflation. The idea here is that, in the words of Citigroup Strategist Matt King, the pandemic has given the global economy an almighty “whack” that's set in motion a series of unpredictable boom-bust cycles as the system struggles to right itself. In other words, even if one thing gets fixed, a new problem can arise to destabilize things once again. Whackflation is the monetary result of these volatile swings; prices for stuff can move sharply up when supply is tight and demand is strong, but they can also drop very quickly as shortages morph into inventory gluts.
Anyway, I bring it up because of a new Odd Lots episode that's scheduled to come out today. In it, we catch up with Stinson Dean, the founder and CEO of Deacon Lumber, to talk about the market. If you haven't seen, lumber prices have fallen dramatically from their peak earlier this year. What happened? As Stinson explains, just as the lumber market seemed like it was beginning to find some sort of equilibrium, along came a new shortage to throw things off balance. This time it was in connector plates, the small bits of metal that connect wooden trusses for roofs and floors:
“You couldn’t get trusses. So it was almost like if you’re building a house, no one could get the lumber for the first floor. Then they got the lumber. Now it’s ‘we need floor trusses’ — the webbing that goes between the first and second floor — well, we can’t get that. It’s backlogged. We can’t get the plates. So I don’t really need the lumber for the second floor until I get my floor trusses in. And those are months out — months and months."
The tyranny of truss plates is a good example of whackflation: an unexpected shortage of connectors effectively transformed a dearth of lumber into oversupply, causing prices to fall sharply. The episode will be out later today. You can subscribe here, or on any podcast player, so you don't miss it.
You can follow Tracy Alloway on Twitter at @ tracyalloway.
— With assistance by Tracy Alloway
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