The daily business briefing: September 28, 2021
Ford steps up EV push, Senate Republicans block bill needed to prevent shutdown, and more
Ford steps up EV push with 3 battery plants and electric truck factory
Ford announced Monday that it would build three U.S. battery factories and an electric truck plant, significantly boosting its commitment to electric vehicles and creating 11,000 jobs over four years. The automaker said its plan to invest $11.4 billion with a South Korean partner would give it the capacity to produce more than a million electric vehicles per year by the second half of this decade. Ford and its battery cell partner, South Korea's SK Innovation, will officially unveil the plans Tuesday alongside the governors of Kentucky and Tennessee and United Auto Workers president Ray Curry. "I think the industry is on a fast road to electrification," Ford's executive chairman, William C. Ford Jr., told The New York Times in an interview. "And those who aren't are going to be left behind."
Senate Republicans block bill needed to avert shutdown
Senate Republicans on Monday blocked a measure to avert a government shutdown and possible default on federal debt, pushing the country closer to a fiscal crisis. The vote was 48-50, with 60 votes needed to advance the legislation. No Republicans joining Democrats in support of the bill. Congress has through Thursday to pass a government funding package to prevent a partial government shutdown on Friday. Treasury Secretary Janet Yellen has warned Congress might have to act as soon as next month to prevent a first-ever federal debt default. Democrats also are trying to resolve infighting so they can pass a $1 trillion bipartisan infrastructure bill and a $3.5 trillion spending package. Both bills are crucial for President Biden's economic agenda.
Dallas and Boston Fed presidents resign amid stock-trade scrutiny
The Federal Reserve banks of Dallas and Boston said Monday that their presidents are stepping down after their stock trading during the coronavirus pandemic triggered a review of the central bank's ethics rules. Dallas Fed President Robert Kaplan said he decided to retire because "unfortunately, the recent focus on my financial disclosure risks becoming a distraction to the Federal Reserve's execution of that vital work." Boston Fed President Eric Rosengren said earlier Monday he was stepping down nine months early for health reasons. Kaplan and Rosengren are both 64, and most regional Fed leaders have to retire at 65. Both regional Fed presidents decided to resign separately and were not forced to resign by Fed Chair Jerome Powell, according to The Wall Street Journal.
Stock futures fall as bond yields continue to rise
U.S. stock index futures fell early Tuesday as bond yields rose to a three-month high and investors moved away from tech stocks sensitive to rising interest rates. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down by 0.4 percent and 0.8 percent, respectively, several hours before the opening bell. Futures for the tech-heavy Nasdaq dropped by 1.5 percent. Expectations that the Federal Reserve soon will tighten monetary policy has helped push up bond yields, with the yield on the benchmark 10-Year Treasury note rising for a sixth consecutive day Tuesday. As yields rise, bonds become more attractive relative to stocks, especially tech stocks expected to show profit growth.
China power cuts threaten to deepen shortages for shoppers
Power cuts in China are forcing many factories to shut down, threatening possible shortages of smartphones and other goods ahead of crucial holiday shopping season. The manufacturing plants have had to suspend operations to avoid going over energy-use limits imposed by Beijing as part of a push to reduce pollution and emissions that contribute to global warming. Economists say the factories used up their energy quotas faster than expected this year as they tried to keep up with demand as it rebounded from a pandemic-induced swoon. "Beijing's unprecedented resolve in enforcing energy consumption limits could result in long-term benefits, but the short-term economic costs are substantial," Nomura economists Ting Lu, Lisheng Wang, and Jing Wang said in a report Monday.