U.S. trade deficit widens to $97.8B / Waymo-Zeekr partnership / Morgan Stanley invests $110M in China joint venture

Plus, Apple's Foxconn India unit closed temporarily

Inside.com Part of   Network December 29, 2021

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U.S. flag seen on a container ship U.S. imports surged by 4.7%, while exports declined 2.1% in November, widening the trade deficit to $97.8B. The trade deficit reached an all-time high in November, up 17.5% from $83.2B in October, beating the previous record of $97B set in September. More: Retail inventories increased by 1.3%, not accounting for automotive inventory.  In November, wholesale inventories increased by 1.2%. In the third quarter, the economy grew at an annualized pace of 2.3% and continued its upward trajectory in the fourth quarter.  Trade has been a drag on GDP growth for the fifth quarter in a row, although inventories increased output in the third quarter.

Waymo's driverless taxis Alphabet Inc’s autonomous driving arm Waymo announced an OEM partnership with Zeekr, China-based Geely’s EV subsidiary. An all-electric Zeekr vehicle, designed in Sweden, will be integrated with Waymo Driver autonomous technology before its deployment as driverless taxis.  More: Waymo’s integration with Zeekr will serve as a platform for its transportation-as-a-service (TaaS) service through the Waymo One fleet of self-driving vehicles. The ride-hailing car is designed for easy accessibility with low floor height, B-pillarless design, and increased headroom and legroom.  The car has been conceptualized to be without a steering wheel or pedals and to adhere to all U.S. safety standards. Passengers will have screens and chargers within arm’s reach.

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Morgan Stanley Morgan Stanley will invest $110M (698M yuan) in its Chinese joint venture with China Fortune Securities Co., increasing its stake by 4.06% to 94%. The JV was formed in 2011. More: The incoming investment, pending regulatory approval by China Securities Regulatory Commission (CSRC), will increase the registered capital of the JV to $268M (1.71B yuan). The Wall Street bank's investment will liquidate its Chinese counterpart's shareholding to 5.94% from 10% earlier.   In July this year, Morgan Stanley purchased 39% of China Fortune's shares, effectively owing 90% of the JV.  The JV brokerage firm was also rebranded to Morgan Stanley Securities China Co Ltd. Zoom out: Since China permitted foreign banks to become majority stakeholders, eight foreign banks have garnered a majority stake in JV brokerage firms.

The steel industry in the U.K. is bracing for a decline in trade in 2022, when European Union competitors will enjoy a 25% price advantage exporting to the U.S. market. Existing tariffs will stay on all U.K. steel imports into the U.S., while the EU reached an agreement to remove tariffs on a quota of steel and aluminum imports into the U.S. beginning in January.  More: Former President Donald Trump first imposed tariffs on steel imports in 2018 under Section 232 of the Trade Expansion Act, as the then administration believed that imports were restricting the U.S.’s ability to produce its own steel. Since the tariffs, U.K. steel exports to the U.S. have decreased by 50%.  Even if the steel is worked on and exported by EU companies to the U.S., steel originating from the U.K. would still be subject to strict tariffs.

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SEC Medallion Financial Corp. and its president, Andrew Murstein, were charged by the SEC with fraud for allegedly inflating stock prices. The SEC said that Murstein paid California-based media strategy firm Ichabod's Cranium Inc to promote Medallion on websites.  More: The company and its president allegedly paid for over 50 articles and positive comments promoting the Medallion business.  Murstein also exaggerated the worth of Medallion's banking division to compensate for loan losses. Ichabod's Cranium and owner Lawrence Meyers were also charged with fraud. Medallion's value fell from $1.3M in 2013 to $150,000 in 2017.

Foxconn's closed plant in India Apple placed its iPhone assembly subcontractor Foxconn’s unit in southern India on probation following the discovery of substandard dormitories and dining rooms for workers in the unit. The probation is in response to the protests that erupted earlier this month, following reports of food poisoning in over 250 women workers from the factory. More: The plant, which employs over 17,000 workers, has been temporarily closed after 150 women were hospitalized for food poisoning treatment.  Apple has appointed an independent auditor to access conditions.  The California-based technology company issued a list of corrective measures to Foxconn to ensure the dormitory and dining rooms are revamped and meet their strict standards. Foxconn will restructure the management team and improve facilities immediately while continuing to pay all workers before the operations are restarted. The subcontractor is also working with local authorities for required clearances. Last year another subcontractor Wistron Corp’s factory was placed on probation, and Apple decided to withhold awarding further business until workers were provided with better facilities.  Apple’s Indian factories are essential in its strategy to reduce dependence on China.

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Karan Chafekar is a Management Consultant, Business enthusiast, Formula 1 lover, and a Licensed Pilot. He is also a part-time automobile and aviation fanatic, and a full-time introvert. Editor Aaron Crutchfield is based in the high desert of California. Over the last two decades, he has spent time writing and editing at various local newspapers and defense contractors in California. When he's not working, he can often be found looking at the latest memes with his kids or working on his 1962 Ford.

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