A deal to avert a US government shutdown was agreed late last night but legislation promising trillions of dollars for infrastructure, the environment, healthcare and education remains mired amid political infighting between moderate and progressive Democrats.  Senate majority leader Chuck Schumer said lawmakers had reached an agreement to avoid a government shutdown tomorrow by extending government spending until December 3.

Things appear to be getting worse, not better, along the global supply chain, which was upended by the coronavirus pandemic over a year ago. That means entire companies and industries are going to have to deal with more extremes for the foreseeable future. In an open letter to the United Nations General Assembly, business leaders from the International Chamber of Shipping, IATA and other transport groups sounded the alarm on the risks of the supply chain.

The private equity groups Blackstone, Carlyle and Hellman & Friedman are set to raise almost $15bn of debt on Thursday across bond and loan markets as they close in on financing the largest leveraged buyout since the 2008 financial crisis. The hefty debt issuance will go towards the buyout groups’ $34bn acquisition of a majority stake in family-owned Medline, one of the largest medical supply manufacturers in the US.

Inflation and the prospect of higher interest rates are prompting investors to dump government bonds and reposition their stock portfolios. The Fed meeting last week indicated a willingness to respond to growing inflationary pressures by lifting borrowing costs as soon as next year, as well as tapering bond buying as soon as November. Combined with surging prices for oil and other commodities, the rhetoric was enough to send bond yields flying, with the 10-year Treasury climbing 20 basis points over the last week alone.

Inflation and tapering aren't the only forces spooking investors. Debt ceiling drama is intensifying in Washington ahead of a Thursday night deadline, with the risk of a partial shutdown starting Friday morning. Nearly two weeks later, on Oct. 18, the government will run out of money to meet its obligations to debtholders, according to Treasury Secretary Janet Yellen.

Investors today will be eyeing the public debut of Warby Parker, which will hit the New York Stock Exchange via a direct listing (a cheaper, but less common way of going public). The company is known for its affordable eyeglasses that are sold online and through its network of 145 stores. Last night, the NYSE assigned a reference price of $40 to Warby's 111.5M outstanding shares, giving it a valuation of around $4.6B

Stocks traded mixed yesterday as investors closely monitored developments in Washington, D.C., as lawmakers rush to try and avert a government shutdown and advance a bevy of new measures.

The increase in flying and rebound at Boeing gave a boost to durable-goods orders in August, but ongoing supply shortages held back automakers and remain a drag on the nation’s economic recovery.  Orders for durable goods rose 1.8% last month and business investment also rose for the sixth month in a row. Economists polled by the Wall Street Journal had forecast a 0.6% increase.

Facebook is putting a hold on the development of a kids’ version of Instagram, geared toward children under 13, to address concerns that have been raised about the vulnerability of younger users.  The announcement follows an investigative series by The Wall Street Journal which reported that Facebook was aware that the use of Instagram by some teenage girls led to mental health issues and anxiety.

At least three Federal Reserve officials said they are ready to pull back on stimulus even though they don’t see a threat from inflation.  They stressed, however, that the move, known as tapering, isn’t providing any signal about looming interest rate hikes.

Stocks are marginally lower this morning as traders braced for the final week of a volatile September.  The retreat is being led by tech stocks, and comes asTreasury yields pushed higher. The 10-year Treasury yield increased on economic optimism and inflation fears, briefly topping 1.5% on Monday. That’s the highest since June and up from 1.30% at the end of August.

The deadline in the debt ceiling showdown in Washington approaches, with a government shutdown possible on Friday, Oct. 1.  Democrats have disagreements within their party as well over a $1.2T infrastructure bill and a $3.5T reconciliation bill. A temporary spending bill would need to pass Thursday night. Congress has raised the debt ceiling more than a dozen times in the last 20 years, with the last major face-off coming in 2011 between the GOP and the Obama administration.

Polestar, the Swedish high-end electric vehicle company, has signed a deal to go public at a $20 billion valuation, via a merger with a SPAC backed by the Gores Group and Guggenheim Capital. Polestar is owned by Volvo Cars and Volvo’s Chinese parent, Geely. Polestar has two models on the road, and it wants to launch three more by 2024. It delivered approximately 10,000 vehicles in 2020.  Almost unbelievably, its valuation is conservative for an EV company. 

The latest crackdown in China is still making headlines, with Macau now in the regulatory crosshairs of the CCP. The largest gambling market in the world has historically operated as a special administrative region, meaning it was at least an arm's length away from Beijing. But the area known for casino gambling is also plagued with money laundering, triggering a fresh look from the Chinese government.  Casino stocks like Wynn Resorts, Las Vegas Sands, and MGM Resorts suffered big losses on Wednesday and Thursday on word of increased government supervision.

The last Sears department store located in the retailer’s home state of Illinois is getting ready to close its doors for good. The shop, located in Simon Property Group’s Woodfield Mall, is scheduled to shutter on Nov. 14, the company has confirmed. Sears =, which also owned Kmart, filed for Chapter 11 bankruptcy protection in October 2018. Transformco later acquired Sears out of bankruptcy and has since closed dozens of the remaining Sears and Kmart locations across the United States.

New figures from the IIF calculate that total global debt hit a record $296tn at the end of the second quarter of 2021, up from $270tn a year earlier.  The good news for anyone worried about excess debt was that a post-lockdown rebound in global growth earlier this year caused the ratio of global debt to gross domestic product to dip slightly from a record 362 per cent in March to 353 per cent in June.
 

Joe Biden’s hopes of securing legislation that would allow the US government to negotiate lower drug prices for seniors was dealt a blow yesterday. Three moderate members of the president’s party on the House energy and commerce committee voted against the measure, scuppering the bill and handing a significant victory to pharmaceutical companies.

Goldman Sachs has agreed to buy specialty lender GreenSky. The investment bank has agreed to pay $2.2bn GreenSky as it continues to build its presence in consumer lending. It is Goldman’s second multibillion-dollar acquisition in under a month and highlights chief executive David Solomon’s intention to transform the investment bank into a more consumer-focused financial institution.

Retail sales posted a surprise gain in August despite fears that escalating Covid cases and supply chain issues would hold back consumers, the Census Bureau reported Thursday.  Sales increased 0.7% for the month against the Dow Jones estimate of a decline of 0.8%.  A separate economic report showed that weekly jobless claims increased to 332,000 for the week ended Sept. 11, according to the Labor Department.

In a bombshell WSJ report, Facebook has been conducting studies into how its photo-sharing app affects its millions of young users. Repeatedly, the company’s researchers found that Instagram is harmful for a sizable percentage of them, most notably teenage girls. More than 40% of Instagram’s users are 22 years old and younger, and about 22 million teens log onto Instagram in the U.S. each day.  Approximately 1 in 10 teenage girls with suicidal thoughts can be traced to originating on Instagram.

Prices of goods online have now risen for an unprecedented 15 consecutive months, following what was a historical period of declines, according to a new report from Adobe Digital Insights. Inflation is hitting categories including pet products, nonprescription drugs, apparel, furniture and flower arrangements.  The growth in digital sticker prices across the industry means e-commerce transactions are on pace to soon account for roughly $1 of every $5 spent by Americans, up from $1 of every $6 in 2017.

The first all-civilian mission to orbit Earth is set to take off tonight, within a five-hour launch window that opens at 5pm.  The latest endeavor supported by SpaceX will go well beyond the International Space Station at a height of 360 miles above Earth.
 

Prices that producers get for final demand goods and services surged in August at their highest annual rate since at least 2010, according to the Labor Department.  The producer price index accelerated 0.7% for the month, above the 0.6% Dow Jones estimate.  On a year-over-year basis, the gauge rose 8.3%, which is the biggest annual increase since records have been kept going back to November 2010.

First-time filings for unemployment claims in the U.S. dropped to 310,000 last week, easily the lowest of the Covid era and a significant step toward the pre-pandemic normal.  The total for the week ended Sept. 4 represented a substantial drop from the previous week’s 345,000 and is the lowest since March of 2020. 
 
Shares of the biotech company Moderna rose after they announced they are developing a two-in-one vaccine booster shot that protects against both Covid-19 and the seasonal flu.  The new vaccine, which the company is calling mRNA-1073, combines Moderna’s current COVID vaccine with a flu shot that’s also under development, according to a press release. Shares of Moderna jumped by more than 5% after the announcement.
 

Treasury Secretary Janet Yellen warned House Speaker Nancy Pelosi that the mere specter of a U.S. default can have drastic consequences for U.S. financial markets and urged Democratic leadership to raise or suspend the debt ceiling as soon as possible.  Yellen reiterated that lawmakers have until some point in October before the Treasury exhausts its extended efforts to prevent what would be a historic default.  “We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States.

Job openings outnumbered the unemployed by more than 2 million in July as companies struggled to fill a record number of vacancies.  The department’s Job Openings and Labor Turnover Survey, which the Federal Reserve watches closely for signs of slack in employment, showed 10.9 million positions open.  There are just over 8 million people in the US who are unemployed, but 10.9 million job openings.

The latest edition of the S&P CoreLogic Case-Shiller Home Price Index showed that home prices increased 18.6% from a year ago in July, marking the third consecutive month of record growth in the more than 30-year history of the index.   As in recent months, the largest price gains were recorded in Phoenix, San Diego and Seattle.