China’s Billionaires Are Losing Billions Fast

There’s no need to get the violins out, though. Huang’s net worth is still above $35 billion, Ma’s fortune sits above $46 billion and Zhong’s wealth stands at $60 billion.

But it does highlight the impact caused by China’s sector-by-sector demolition job. Big Tech, gaming, online tutoring, and ride-hailing have been among the hardest hit, while Macau gambling is the latest industry feeling the pain.

The crackdown appeared indiscriminate at first, but at least now a pattern is emerging—China seems to be going after what it deems societal problems. That’s highly subjective and makes the next target unpredictable.

One such problem seems to be inequality. President Xi Jinping took aim at the country’s superrich last month, calling for “common prosperity” and vowing to “adjust excessive incomes.”

$27 billion is quite an adjustment.

—Callum Keown

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Grocers Already Squirreling Away Thanksgiving Turkeys, Holiday Staples

U.S. supermarket chains have already started buying turkeys, cranberry sauce and other holiday staples in preparation for Thanksgiving, traditionally the busiest time of year, hoping to avoid the shortages and supply-chain problems that left some store shelves empty last year.

• Jeff Culhane, senior vice president of merchandising for 162-store Tops Markets in Williamsville, N.Y., said the chain “locked down” turkeys in February and ordered gravy, cranberry sauce, nutmeg, cinnamon, and holiday sprinkles early, and is squirreling them away in its warehouses.
• Grocery delivery provider Fresh Direct started ordering turkeys in February, a month earlier than usual, and 2% to 3% more supplies than usual. It also ordered sugar, flour and other ingredients earlier for its prepared foods.
• Supermarket executives say they are buying holiday foods earlier than usual from more brands, to lock in supplies. Some say canned pumpkin deliveries have been delayed and they are planning to sell more store-brand versions if needed.
• Grocery sales have been stronger than expected this year, even after restaurants lifted pandemic restrictions. Overall, retail sales rose 15.1% over August 2020 and 0.7% from July, quieting fears that higher prices would reduce consumer demand.

What’s Next: Grocers warned that consumers still might not find their favorite brand, flavor or size for holiday meals. Prices could also be higher, as retailers pass along higher transportation, labor and commodities costs due to ongoing truck driver shortages and shipping delays.

—Janet H. Cho

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Invesco Reportedly in Merger Talks With State Street’s Asset Management Business

Investment management firm Invesco is in merger talks with State Street ’s asset management business, The Wall Street Journal reported.

• Invesco has $1.5 trillion of assets under management and the asset management division of State Street oversees $4 trillion.
• The Journal report indicated that no deal was imminent, and that people familiar with the discussions cautioned the companies might not end in an agreement.
• Invesco shares were rising nearly 8% on the news in premarket trading Friday, with State Street’s stock gaining 0.5%.

What’s Next: Pressure to lower costs has forced the asset management industry to consolidate in the past few years. Industry leader BlackRock has more than $9 trillion of assets under management.

—Pierre Briançon

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Biden Reframes His Economic Agenda as Tax Relief for Working Families

President Joe Biden on Thursday reframed his $3.5 trillion economic agenda and $1 trillion infrastructure plan as essential to supporting middle-class families who work hard and pay their taxes, but are still struggling to recover from the pandemic.

• Biden said his proposals would cut taxes for 50 million families, provide universal prekindergarten, reduce healthcare premiums and prescription drug costs, lower child care and elder care costs, and help millions of women return to the workforce.
• Biden said Republican lawmakers who object to raising taxes on the largest companies and wealthiest households are the same ones who passed the 2017 tax cuts that favored the wealthy.
• The U.S. Chamber of Commerce and the Business Roundtable have criticized the proposal for raising taxes generally, and some executives have warned that it will crimp business investment and jobs.
• Fifteen Nobel Prize winners in economics have endorsed Biden’s agenda, saying it makes “critical investments” in human capital, the care economy, and equitable tax reforms and would enable more Americans to “participate productively in the economy” and ease longer-term inflationary pressures.

What’s Next: Biden’s plan includes measures to reduce the damage from extreme weather events, from hurricanes and flooding to wildfires and drought. Every dollar spent on investing in clean energy, making the power grid more resilient and fortifying levees and structures “saves $6 down the road,” he said.

—Janet H. Cho

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Proposed Changes to EV Tax Credits Draw Fire From Some Auto Makers

Democrats have tucked new tax credits into the $3.5 trillion spending bill to encourage the adoption of electric vehicles, but some of the proposals are drawing criticism from some car makers over a supposed advantage for Detroit’s Big Three.

• Right now, taxpayers can deduct part of the cost of buying an electric car with a $7,500 tax credit, but that phases out after an auto maker has sold 200,000 EVs, a hurdle Tesla and General Motors have already crossed.
• The new rule would eliminate that threshold, and the credit goes up another $4,500 for purchases of EVs made with union labor. This doesn’t apply to taxpayers who earn more than $400,000 individually or $800,000 for couples.
• Toyota , Honda and Tesla, with nonunion workforces, have attacked the plan. Toyota said it punishes workers who chose not to unionize. Tesla CEO Elon Musk said it was “written by Ford/UAW lobbyists,” referring to the United Auto Workers.
• Chinese EV Maker XPeng introduced an EV that will cost less than $25,000 and comes equipped with the lidar technology that backs autonomous driving functions. And Ford said Thursday preproduction models of its F-150 Lightning truck are rolling off the line.

What’s Next: Ford also said it would invest an additional $250 million in three assembly plants, which will add 450 jobs and allow it to boost production capacity to 80,000 trucks a year.

—Liz Moyer

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IMF Head Accused of Boosting China’s Rankings in World Bank Report

Kristalina Georgieva, the current managing director of the International Monetary Fund, was accused Thursday in an official report of having applied “undue pressure” on the World Bank’s staff to boost China’s rankings in its flagship “Doing Business” report.

• Georgieva, a Bulgarian national and former European Commissioner, was chief executive of the World Bank in 2018, and overseeing a capital increase for the international institution, which included raising money from the Chinese government.
• The World Bank said after the publication of the report that it would “discontinue” the publication of its annual “Doing Business” rankings, because the investigation had “raised ethical matters, including the conduct of former Board officials.”
• Georgieva said in a release that she “disagreed fundamentally with the findings and interpretations,” without elaborating further.
• The report found that her intervention had avoided China being downgraded from the 78th to the 85th place in the “Doing Business” rankings, after the intervention of “high ranking Chinese government officials.”

What’s Next: The credibility of “Doing Business” has been increasingly questioned in the past few years, and Paul Romer, the economics Nobel laureate who was then the chief economist of the World Bank, had already denounced its lack of integrity back in January 2018. Critics may find that Georgieva’s credibility as IMF director has taken a blow.

—Pierre Briançon

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Covid Case Spike Damps Travel, Forcing Airlines to Temper Outlooks

The hoped-for rebound in air travel is being dinged by spiraling case counts of coronavirus as would-be travelers cancel flights and hold back new bookings, and the airlines are now tempering expectations, at least for the short term.

• United is trimming flights for the rest of the year. It expects to post a loss this quarter and said it would likely lose money in the fourth quarter if conditions continue. Third-quarter revenue will be 33% lower than two years ago.
• Southwest, snarled by operational issues this summer, said flying capacity in the fourth quarter will be 5% below two years ago. It had previously planned to return to 2019 levels.
• At American Airlines, third-quarter revenue will likely be below the company’s previous forecast. It still expects the third quarter to bring its strongest revenue since the pandemic’s onset.
• Food and Drug Administration advisors will be meeting Friday to consider whether to recommend a third dose of the Pfizer
  – BioNTech vaccine for Americans older than 15. The Centers for Disease Control and Prevention will be holding a similar meeting the following week. A decision on booster shots from Moderna is expected to follow soon after.

What’s Next: Recent traffic declines are smaller than the drops during previous Covid-19 case spikes, the airlines said. Some carriers said Thursday that winter holiday bookings appear to be on track.

—Liz Moyer

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Do you remember this week’s news? Take our quiz below about this week’s news. Tell us how you did in an email to [email protected].

1. Apple launched the iPhone 13 this week. The regular version of the new phone will get 2.5 hours more battery life than the previous model. What other versions of the smartphone did the company release?

a. iPhone 13 Pro
b. iPhone 13 Pro Max
c. iPhone 13 Mini
d. All of the above

2. Which Covid-19 vaccine maker plans to seek emergency-use authorization for its vaccine for children aged five to 11 early next month, and will seek the go-ahead for use in those six months to five years shortly thereafter?

a. Moderna
b. Pfizer
c. Johnson & Johnson
d. AstraZeneca

3. Which specialty lender did Goldman Sachs agree to acquire for $2.24 billion with plans to add the company to its online lending platform, Marcus?

a. GreenSky
b. Paidy
c. Afterpay
d. Pineapple Payments

4. Crude oil prices have been on the rise with WTI hovering around $73 per barrel, up roughly how much from this year’s January low?

a. 30%
b. 40%
c. 50%
d. 60%

5. General Motors is recalling all Chevrolet Bolt electric vehicles. What did GM advise Bolt owners to do in order to avoid any damages in the rare event of a fire?

a. Stop driving the car
b. Park on the top floor or an open-air deck and park 50 feet or more away from other cars
c. Immediately bring their vehicles to a dealer for repair
d. Carry a fire extinguisher

Answers: 1(d); 2(b); 3(a); 4(c); 5(b)

—Barron’s Staff

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—Newsletter edited by Liz Moyer, Mary Romano, Camilla Imperiali, Steve Goldstein, Rupert Steiner, Joe Woelfel