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What China developer Evergrande’s debt crunch means for U.S. investors: Ed Yardeni

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What China developer Evergrande’s debt crunch means for U.S. investors: Ed Yardeni


A debt crunch involving China’s second largest properly developer has caught investors’ attention in the past week.

Evergrande, the Shenzhen-based company, is facing a default on its debt burden of roughly $300 billion. The crisis has echoes to the Lehman Brothers bankruptcy, which marked its 13-year anniversary last week, a development that at the time sent shockwaves through global markets.

Ed Yardeni, president of Yardeni Research, says it’s unlikely Evergrande will have a fallout quite as severe as the Lehman bankruptcy when the global economy and credit markets collapsed. Instead, he sees it as analogous to a different event a decade even earlier.

“If it’s similar to anything,  it’s similar to Long-Term Capital Management, which is the calamity that occurred in 1998 but that was dealt with very quickly by the Federal Reserve and the major banks and it didn’t have any global implications,” Yardeni told CNBC’s “Trading Nation” on Friday.

Like with hedge fund Long-Term Capital Management, Yardeni sees government intervention in Evergrande preventing any collapse and contagion.

“The reality is it is too big to fail, and I think the Chinese government is going to intervene big time. I don’t think they’re going to save management… but it will be restructured and in a way that won’t harm the economy too much over there and won’t affect the global economy or financial markets the way Lehman did,” said Yardeni.

Even if a crisis tied to Evergrande is avoided, Yardeni does not see Chinese markets rebounding anytime soon. He says Evergrande is just one reason for investors to avoid the region.

“If you’re invested in Chinese stocks, there have been lots of reasons to get out, quite honestly,” said Yardeni. “The Chinese Communist Party which runs the government over there has been meddling, intervening in the markets, interrupting corporate governance, telling companies how they should manage their businesses. And so I think it’s a good opportunity here just to lie low. I would not be buying on the dips in China.”

Beijing has tightened regulations on industries such as technology and private education in recent months. That increased scrutiny has taken their markets and U.S.-listed Chinese stocks lower.

Continued uncertainty in China could be a benefit for U.S. markets, he adds.

“There are lots of global investors that want to be invested in areas where they feel comfortable, where there’s corporate governance rules, where there’s contract laws that are obeyed. I think a lot of money that has gone global and might have been tempted to go to China may very well come to the U.S.,” he said.

Yardeni has a 5,000 price target on the S&P 500 for the end of 2022, though he says the benchmark index could reach that level sooner. The S&P 500 closed Friday at 4,433.



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Venezuelan government suspends negotiations with opposition By Reuters

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Venezuelan government suspends negotiations with opposition By Reuters


© Reuters. FILE PHOTO: A woman walks by a mural in support of the liberation of Colombian businessman and envoy Alex Saab, who is detained in Cape Verde on charges of laundering money for the government of Venezuelan President Nicolas Maduro, in Caracas, Venezuela S

By Mayela Armas and Deisy Buitrago

CARACAS/PRAIA (Reuters) -Venezuela on Saturday said it would suspend negotiations with the opposition that were set to resume this weekend, after Cape Verde extradited Colombian businessman Alex Saab, a Venezuelan envoy, to the United States on money laundering charges.

The announcement was made by Socialist party legislator Jorge Rodriguez, who heads the government’s negotiating team. Rodriguez said the Venezuelan government would not attend the talks set to begin on Sunday.

The Venezuelan government in September named Saab – who was arrested in June 2020 when his plane stopped in Cape Verde to refuel – as a member of its negotiating team in talks with the opposition in Mexico, where the two sides are looking to solve their political crisis.

Rodriguez, reading from a statement, called the decision to suspend negotiations “an expression of our deepest protest against the brutal aggression against the person and the investiture of our delegate Alex Saab Moran.”

The leadership of Venezuela’s opposition did not immediately respond to a request for comment.

Venezuela, in a Twitter (NYSE:) post by the Ministry of Communications, denounced the extradition as a “kidnapping.”

Hours after Saab’s extradition, Venezuela revoked the house arrest of six former executives of refiner Citgo, a U.S. subsidiary of state oil company PDVSA, two sources with knowledge of the situation and a family member told Reuters.

The U.S. Justice Department charged Saab in 2019 in connection with a bribery scheme to take advantage of Venezuela’s state-controlled exchange rate. The U.S. also sanctioned him for allegedly orchestrating a corruption network that allowed Saab and Venezuelan President Nicolas Maduro to profit from a state-run food subsidy program.

Saab’s lawyers have called the U.S. charges “politically motivated.”

Cape Verde national radio reported the extradition on Saturday. The government of Cape Verde was not immediately available to comment.

The U.S. Justice Department did not immediately respond to a request for comment.

In a Twitter post, Colombian President Ivan Duque called Saab’s extradition “a triumph in the fight against drug trafficking, money laundering and corruption by the dictatorship of Nicolas Maduro.”

The former Citgo executives, who were arrested in November 2017 after being summoned to a meeting at PDVSA headquarters in Caracas, were taken from their homes to one of the headquarters of the intelligence police, two sources said.

The six former executives had been released from jail and put on house arrest in April.

The group is made up of five naturalized U.S. citizens and one permanent resident. The U.S. government has repeatedly demanded their release.

“My father cannot be used as a bargaining chip,” said Cristina Vadell, daughter of former executive Tomeu Vadell. “I’m worried for his health, even more given the country’s coronavirus cases.”

The Ministry of Communications and the Attorney General’s office did not immediately respond to requests for comment.

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British man of Somali heritage named as suspect in Amess killing

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British man of Somali heritage named as suspect in Amess killing


A 25-year-old British citizen has been named by government officials as the terror suspect arrested for the killing of Sir David Amess, the Conservative MP fatally stabbed on Friday.

Amess, the representative for Southend West in Essex, was stabbed multiple times during a meeting with constituents at the Belfairs Methodist Church in Leigh-on-Sea. Essex Police said that a man was arrested following the incident and they were not looking for any other suspects.

One senior Whitehall official confirmed that Ali Harbi Ali, a 25-year-old Briton of Somali heritage, was the suspect being held. One individual with knowledge of the situation said that it was unknown why Ali had targeted Amess. “It’s unfathomable,” they added.

London’s Metropolitan Police declared the killing a terror incident on Saturday, with the force’s counter-terrorism command taking over the investigation from local forces.

The Metropolitan Police on Saturday evening said the suspect had been arrested under section 41 of the Terrorism Act 2000, which allows for extended detention before charge, and that magistrates had granted them until Friday, October 22, to hold the man in custody.

The force said it had conducted searches of three London addresses in connection with the investigation. It has not said where the addresses are.

Neither the force nor a Home Office official would confirm reports that Ali had been referred to the Prevent counter-terrorism programme, which aims to divert people showing signs of either Islamist or far-right radicalisation.

MI5, the UK’s domestic security service, is working closely in support of the police investigation. The Met also said a postmortem examination had been undertaken on Saturday.

Prime minister Boris Johnson, leader of the opposition Sir Keir Starmer, House of Commons speaker Sir Lindsay Hoyle and home secretary Priti Patel paid tribute to Amess in his Essex constituency.

Johnson laid a wreath that described Amess as “a fine parliamentarian and a much loved colleague and friend.” Starmer wrote that he was “a dedicated public servant, a husband and a father.”

Meanwhile Priti Patel, home secretary, said that the government would “continue to review and strengthen the measures” to protect the safety of MPs.

“We cannot be cowed by any individual or any motivation — people with motives who stop us from functioning to serve our elected democracy — so on that basis we have measures in place,” she said.

The Labour party is not expected to stand a candidate in the Southend West by-election to elect a new MP. One party insider said it would follow the Tories’ decision not to run in the 2016 Batley and Spen by-election following the death of Jo Cox, the Labour MP who was murdered outside a constituency surgery.

Amess’ killing in a place of worship shocked religious communities across the UK. Three mosques in Southend on Saturday published a joint statement denouncing the “brutal and senseless killing”.

The killing was “an indefensible atrocity, committed on the grounds of a place of worship”, the statement for Essex Jamme Masjid, Faizane Madina Masjid Southend and Southend Mosque said. “We condemn it in the strongest possible terms.”



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Massive strike averted: Hollywood crews reach a new three-year deal with studios

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Massive strike averted: Hollywood crews reach a new three-year deal with studios


General view of the Hollywood Sign on November 17, 2020 in Hollywood, California.

AaronP/Bauer-Griffin | GC Images | Getty Images

A deal has been struck between Hollywood’s studios and a union representing its film and television crews that would avert a historic strike that has threatened to shut down production across the industry.

On Saturday, The International Alliance of Theatrical Stage Employees (IATSE) and the Alliance of Motion Picture and Television Producers (AMPTP) announced a new three-year contract that addresses IATSE’s calls for better working hours, safer workplace conditions and improved benefits.

The new contract includes a 10-hour turnaround between shifts, 54 hours of rest over the weekend, increased health and pension plan funding and a 3% rate increase every year for the duration of the contract.

It comes less than a day before IATSE’s strike deadline. This strike would have been the first in the union’s 128-year history and the first major crew strike since World War II.

The deal must still be ratified by the union’s membership.

IATSE represents a wide swath of industry workers, from studio mechanics to wardrobe and make-up artists. In total, it acts on behalf of 150,000 crew members in the U.S. and Canada. Around 60,000 of those are covered by the current TV and film contracts being renegotiated.

An industry-wide strike would have essentially stopped Hollywood production across the country in its tracks, similar to what the writer’s strike did 14 years ago. That strike, between 2007 and 2008, led many shows to shorten or postpone new seasons and led to the cancellation of others.



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