Good Evening. U.S. equities fell on Monday as the global mood was pulled down by anger in China over the country’s harsh COVID rules as Wall Street returned after a holiday weekend.
The S&P 500 declined by 1.54%, while the Dow Jones declined by 1.45%. The Nasdaq Composite finished the day down by 1.58%.
During the Christmas shopping season, Apple’s (AAPL) supply chain is being disrupted by demonstrations in China, posing one of its greatest operational problems in years.
Bloomberg reports that Apple supplier Foxconn will produce 6 million fewer iPhones than projected due to protests over China’s zero-COVID policy at the manufacturer’s Zhengzhou site. Workers at the facility with 200,000 employees have criticized the policy’s rigorous lockdowns, citing, among other things, a lack of proper food supply.
Apple centered its supply chain on China because of its comparatively affordable and skilled labor force. However, COVID-induced chip shortages and rotating lockouts have compelled Apple to consider alternatives to China.
For the time being, the iPhone manufacturer must continue to depend on its current partner facilities and hope that lockdowns at the Zhengzhou facility will be lifted. In an effort to prevent future supply chain bottlenecks, the company will likely focus more on manufacturing partners outside of China.
ANOTHER COMPANY FILES FOR CHAPTER 11
BlockFi, a cryptocurrency lending, and borrowing platform filed for Chapter 11 bankruptcy protection on Monday, becoming the latest cryptocurrency company to fail after the rapid demise of offshore trading site FTX.
Who is BlockFi? The company was founded in 2017 by Zac Prince and Flori Marquez and was one of many crypto firms that introduced lending and borrowing using cryptocurrency collateral.
How much? In its Chapter 11 petition, BlockFi disclosed that its three largest creditor claims are a $729 million indenture from Ankura Trust, a distressed loan administration company, a $275 million loan from West Realm Shires, the US holding company of FTX, and a $30 million settlement payment to the U.S. Securities and Exchange Commission.
Why did it happen? Berkley Research Group’ stated that BlockFi’s bankruptcy filing was not the result of a lack of internal oversight, but rather a “liquidity shortage” that began in the first two weeks of November, when its affiliate company Alameda defaulted on approximately $680 million of BlockFi’s collateralized loan obligations.
THE WEEK AHEAD
Employment report coming: Friday will see the release of the November employment data, which is anticipated to reveal the second consecutive monthly slowdown in US employment growth. Nonetheless, it is anticipated that the economy gained 200,000 jobs last month, which would reflect a still-healthy labor market and keep the Fed on track to raise interest rates.
Twitter verification is also on the way, according to Elon Musk, who claims this week will mark the launch of Twitter’s new verification system. After multiple delays and adjustments, the Twitter CEO has confirmed that the platform’s verification program will go live on Friday. Checks for individuals will be blue, checks for businesses will be gold, and checks for government accounts will be gray.