DealBook Briefing: China vs. U.S. Could Be a Long, Slow Grind

Its economy struggling, China may try to inflict maximum political damage, even hoping that a prolonged trade war could derail President Trump's re-election campaign.

August 7, 2019 Good Wednesday morning. (Was this email forwarded to you? Sign up here.)

President Trump and President Xi Jinping of China in June.  Kevin Lamarque/Reuters China may be ready for a long fight with the U.S. The latest tussles between Washington and Beijing over trade and currency appear to suggest one thing: China thinks the tensions will drag on. China is digging in, Chao Deng and Chun Han Wong of the WSJ write, with President Xi Jinping “struggling to rejuvenate a sluggish economy.” He now “needs to appear strong, to preserve his firm grip on the political apparatus and public propaganda machine,” Jane Perlez and Alexandra Stevenson of the NYT write. So China may try to inflict “maximum political damage,” according to Nathaniel Taplin of the WSJ. Officials appear to hope that a prolonged trade war would weaken the U.S. economy enough to derail President Trump’s re-election campaign. The Trump administration sees things differently. “The reality is we would like to negotiate,” Larry Kudlow, the White House’s top economic adviser, told CNBC yesterday. “We’re planning for the Chinese team to come here in September. Things could change with respect to the tariffs.” But this may now have grown beyond the U.S. and China. “Investors are coming to grips with the reality that the trade war is escalating and spreading into the global currency market,” Neil Irwin of the NYT writes. • “Whatever happens next — and whether this turns out to be the beginning of a major turning point for the global economy or just one rough day on the markets — it is clear that the trade war is no longer confined to trade.” More: The stock markets took a breather yesterday after it appeared that Beijing would not use the value of its currency as a continuing weapon in the trade war — at least, not immediately. ____________________________ Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London. ____________________________   LM Otero/Associated Press Weakening the dollar? That’s not easy President Trump has made no secret of his frustration that the U.S. dollar has strengthened against other currencies. But whether he could really weaken it is an open question, writes Matt Phillips of the NYT. Weaker currencies can look attractive, because they “make a country’s exports cheaper for buyers overseas, giving a country a competitive advantage.” Governments have historically shied away from weakening their currencies, “in part because they were afraid it would also lead to an ugly bout of inflation, which was traditionally viewed as the big risk of a weak currency.” This week, China showed that it was possible by letting the value of its renminbi slide past a symbolic 7 to the dollar mark. It’s not clear whether that was a deliberate response to the trade war. But the U.S. doesn’t have the same levers to pull, Mr. Phillips explains: • “It has some capacity to intervene in financial markets by using the Exchange Stabilization Fund, a vehicle under the control of the Treasury secretary, with about $100 billion of buying power.” • “In the past, when American politicians wanted to change the value of the dollar, they had to coordinate efforts involving a number of countries.” • “Persuading China to let its currency strengthen to help the United States is a different situation all together.” A mockup of the Disney Plus streaming app.  The Walt Disney Company Disney shows the costs of the streaming wars The media giant is bigger than ever after its takeover of most of 21st Century Fox. But it still isn’t immune to the financial toll of competing against streaming services like Netflix. The company reported a 51 percent drop in profits for its most recent quarter compared with the same period last year. That’s largely because of $553 million in losses in its streaming division, up from $168 million a year ago. And the company expects those losses to climb to $900 million in the current quarter. Fox also weighed on its profits. Disney, which bought its rivals’ assets to bolster its own streaming services, disclosed that Fox’s business was in worse shape than expected. (It had to take a write-down on the X-Men movie “Dark Phoenix,” for example.) But Disney hopes to compete with Netflix on price. It plans to price a bundle of streaming services — Disney Plus, ESPN Plus and Hulu — at $12.99 a month, matching what Netflix charges for its basic service. (One difference: ESPN and Hulu carry ads; Netflix doesn’t.) Media companies have to pay big to compete in video. AT&T (which must still determine what its forthcoming HBO Max service will cost), Comcast’s NBCUniversal and others have to reckon with the costs of doing business against Netflix and Amazon. ADVERTISEMENT Trump fights California over his tax returns President Trump and Republican Party officials sued the state yesterday over a new law that requires presidential candidates to release tax returns to qualify for the state’s primary ballot, Annie Karni of the NYT reports. California’s law is meant to force Mr. Trump to disclose his tax returns, a decades-old precedent that he broke during the 2016 campaign and shows no sign of complying with now. The Republican National Committee called it “a naked political attack” against the president in a lawsuit that it filed yesterday. Mr. Trump and his re-election campaign argued in a separate lawsuit that states don’t have the power to “supplement” constitutional requirements for the presidency. A previous version of the law was vetoed by the last California governor, Jerry Brown, over questions about its constitutionality. Jim Watkins, the owner of 8chan.  YouTube Using tech to stop mass shootings will be tough President Trump has called on social media companies to analyze what users do to help law enforcement prevent mass shootings. But that idea faces problems that have long bedeviled the tech industry. • There’s the sheer volume of the data to sift through, the WSJ notes: About 4.75 billion pieces of content are shared on Facebook every day, for example. • And there’s little time to react: People planning assaults now tend to publish material about their intentions no more than an hour before attacking. • Artificial intelligence tools that are meant to help provide early warning signs are currently “more artificial than intelligent,” according to Alex Stamos, Facebook’s former chief security officer. Some websites insist that free speech is sacrosanct. Jim Watkins, the owner of 8chan, the website on which the suspect in the El Paso shooting published a racist manifesto outlining his motivations, said that efforts to shut down his site were silencing free speech. “It is disturbing to me that it could be so easily shut down,” he said of 8chan. But politicians intend to put pressure on social media in the wake of the shootings. Democratic lawmakers called on Mr. Watkins to testify about 8chan’s efforts to clamp down on extremist content. And the House Homeland Security Committee said it would consider legislation that includes creating a national commission on social media companies and terrorism content. More: Walmart’s C.E.O., Doug McMillon, said the company would be “thoughtful and deliberate” in its response to the shooting in its El Paso store last weekend and to the issues that have “been raised in the broader national discussion around gun violence.” And even congressional Republicans are starting to support “red flag” laws meant to help take guns away from people who pose an imminent danger.   Terry Ratzlaff for The New York Times Inside Uber’s plan to rule public transit The ride-hailing service craves growth — and it thinks that helping people get around cities using public transit could be a solution, Kate Conger of the NYT reports. Uber is working with cities and transit agencies in the United States, Canada, Britain and Australia “to provide tickets, to transport people with disabilities or sometimes to substitute for a town’s public transportation system entirely.” Since 2015, Uber has struck more than 20 such deals. The idea is to become an “Amazon of transportation,” a kind of one-stop shop for car, bike, scooter, bus and train trips. “Doing so would help Uber draw more riders, especially as the company faces questions from Wall Street about whether it can make money and revive its once red-hot growth rate,” Ms. Conger writes. Cities can tap Uber’s network of drivers “to provide rides in areas that do not have reliable bus routes. Cities often subsidize the rides so that passengers pay what amounts to a bus fare rather than a typical Uber fee. Uber generally earns a subsidy from the transit agency, a fare from the rider or both.” Not everyone is convinced. “There are real questions about forming partnerships that may end up pushing riders away from public transportation,” Adie Tomer, a Brookings Institution policy fellow who studies infrastructure use, told the NYT. “It’s a dangerous game for transit agencies to make agreements with ride-hailing companies.” More: A study commissioned by Uber and Lyft showed that the ride-hailing services are making urban traffic worse. Revolving door Dick Costolo, Twitter’s former C.E.O., and Adam Bain, the site’s former C.O.O., have created 01 Advisors, a start-up advisory and investment firm. Sheila Lirio Marcelo is stepping down as C.E.O. of Care.com, after the WSJ found that the online marketplace did limited vetting of caregivers on its platform. Julia Angwin was reinstalled as editor in chief of the tech news site The Markup. David Rubin was elected as the next president of the Academy of Motion Picture Arts and Sciences. Jon Huntsman Jr. resigned as U.S. ambassador to Russia amid speculation that he may run again for governor of Utah. The speed read Deals • SoftBank’s second Vision Fund might not really have the $108 billion it claims. (WSJ) • Barneys’ bankruptcy filing has burned its majority owner, the onetime hedge-fund star Richard Perry. And how the luxury retailer could make a comeback from Chapter 11. (WSJ, NYT) • How JPMorgan Chase courted WeWork to try to win a lead role in the company’s I.P.O. (Bloomberg) • Vivendi is near a deal to sell a 10 percent stake in Universal Music Group, the label for artists like Taylor Swift, to Tencent of China at a $33 billion valuation. (FT) • Mastercard agreed to buy the real-time payments unit of Nets Group for $3.2 billion. (FT) Politics and policy • A federal judge dismissed one of two charges against Gregory Craig, a top lawyer in the Obama administration, over his legal work for the Ukrainian government. (NYT) • The N.R.A. reportedly discussed buying a mansion near Dallas for its C.E.O., Wayne LaPierre, last year. (WaPo) • Denials of U.S. visas to Mexicans who might use American social services have skyrocketed under the Trump administration. (Politico) • Two top House Democrats asked the National Archives to hand over records related to Brett Kavanaugh’s tenure in the White House. (CNBC) Brexit • British and European officials are blaming each other for the growing likelihood that Britain will leave the E.U. without an agreement. (Bloomberg) • The opposition Labour Party ruled out a coalition government to stop a no-deal Brexit unless it could lead the effort, likely dooming the campaign. (FT) • Britain’s counterterrorism chief said a no-deal Brexit would endanger the country’s national security. (Guardian) Trade • How the World Trade Organization could deal with the trade fight between Japan and South Korea. (Nikkei) • Forty-six U.N. members, including the U.S. and China, signed an agreement meant to create an easier way of settling commercial cross-border trade disputes. (Reuters) Tech • More than five million people pay to use Tinder. (NYT) • President Trump suggested, without evidence, that Google might try to rig the elections against him in 2020. (CNBC) • Twitter said it might have used private data for ad targeting without users’ permission. (Hill) • The messaging app Kik said that an S.E.C. lawsuit that declared its $100 million initial coin offering illegal had “repeatedly” twisted facts. (FT) • Bitcoin’s value appears increasingly correlated with the price of gold. (Bloomberg Opinion) • Take a peek inside Google’s design lab. (Fast Co.) Best of the rest • Novartis hid manipulated data while it sought approval for a $2.1 million gene therapy treatment, according to the F.D.A. (NYT) • Large British accounting firms are getting ready to dump risky clients. (FT) • Toni Morrison, the first African-American woman to win the Nobel Prize in Literature, died on Monday. She was 88. (NYT) • Some big funds are slowly moving away from investments in companies that contribute to climate change. (Bloomberg) • HSBC’s interim C.E.O. said he wanted “less process and more action” at the bank. (Bloomberg) Thanks for reading! We’ll see you tomorrow. You can find live updates throughout the day at nytimes.com/dealbook. We’d love your feedback. Please email thoughts and suggestions to business@nytimes.com.

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N.Y. Today: The Deadly Waters Off the Rockaways

What you need to know for Wednesday.

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New York Today The Deadly Waters Off the Rockaways By AZI PAYBARAH It's Wednesday. New York City will restrict cars along 14th Street in Manhattan, giving preference to buses and trucks, beginning Monday. Weather: Grab the umbrella! Showers and thunderstorms may start at about 2 p.m. Temperatures in the mid- to upper 80s. Alternate-side parking: In effect until Sunday (Eid al-Adha). Victor J. Blue for The New York Times The waters off the Rockaways are popular in the summer, but they can also be deadly — especially when lifeguards are not on duty. This week, a 15-year-old drowned in Jamaica Bay. It was the fourth drowning in the Rockaways since July 9, raising concerns over water safety as people seek relief from the heat. "This is a state of emergency," said Donovan Richards, the city councilman whose Queens district includes the area. "It's hotter than normal, and a lot of our folks don't have access to air conditioning." He added, "The only pool I have right now is the ocean." Joshua Odozi Jr., 15, was found dead on Monday. Joshua was seen struggling to stay afloat in the bay on late Sunday afternoon, and a 29-year-old man dove into the water to try to rescue him, according to news reports. The man, Jonathan Pender, told The New York Post, "I had him in my hands." But Joshua "was panicking and he went back under." Investigators said they recovered Joshua's body on Monday afternoon. Later, a family friend, Sherell Footman, told the paper, "The seaweed wrapped around his leg and pulled him down." Just days before, on July 31, the body of John Munoz, 18, was found near a Rockaway Beach jetty. "He was playing and I guess he slipped and the tide came and took him away," Mr. Munoz's sister, Yesenia Rodriguez, told The Daily News, adding that the police "got there about five minutes later, but they weren't able to get him." On July 9, a Long Island couple, Umarie Chamble and Keylon Ramsay, were celebrating a friend's birthday near Beach Ninth Street and Seagirt Boulevard. "Her boyfriend, Keylon, doesn't know how to swim, and she was trying to teach him and that's when it happened," Ms. Chamble's cousin told The Daily News. The couple had gone into the water shortly after 10 p.m. All four deaths were on or near the east side of the Rockaway Peninsula, Mr. Richards, the city councilman, said. Crystal Howard, a spokeswoman for the parks department, said, "We are saddened by these unfortunate deaths. We want everyone to be safe and implore New Yorkers to only go swimming in designated waters during operational hours, when lifeguards are on duty." Most beach drownings in New York City have occurred after hours. Thirty-four people drowned at public beaches from 2009 through the beginning of this month, according to figures from the city's Department of Health and Mental Hygiene. Only six of the drownings happened while a lifeguard was on duty. Beach lifeguards end their shifts at 6 p.m. Lifeguards are on duty from 10 a.m. to 6 p.m. daily during beach season (Memorial Day weekend through Sept. 8). Swimming is prohibited when lifeguards are not present. Mr. Richards wants lifeguards on duty until at least 8 p.m. There is a higher rate of drownings at beaches than at pools. Between 1987 and 2010, there have been 171 drownings at New York State facilities, according to figures from the state Department of Health. Nearly half of the drownings were at pools; the rest were at beaches. But there are more than 6,000 pool facilities, compared with about 1,600 beach facilities. New York City has eight beaches and 53 outdoor pools, and about 1,400 lifeguards. Mr. Richards and Mark Treyger, a city councilman whose district includes Coney Island, have said they want swimming and water safety lessons in the public school curriculum in waterfront communities. Mr. Richards also wants more lifeguards in the Rockaways. He said he learned to swim during first period at Jamaica High School. Mr. Richards's wife, Tameeka, "grew up in Rockaway, and she can't swim." From The Times State Assemblywoman Latoya Joyner, a sponsor of a measure to change New York adoption law. Brittainy Newman/The New York Times They lost custody. Should they be able to see their children? Tiffany Cabán conceded the Queens D.A. race, dashing progressives' hopes. The stolen car was going 154 m.p.h.: A Bloods gang member tied to five deaths was sentenced to 27 years in prison. The Mandarin duck is AWOL. Enter the Hudson River beaver. The Metropolitan Opera and the conductor James Levine settled a lawsuit. He was fired in 2018 amid accusations of sexual misconduct. [Want more news from New York and around the region? Check out our full coverage.] The Mini Crossword: Here is today's puzzle. What we're reading Tracking ammunition purchases in real time: Six years after Governor Cuomo passed his signature gun control legislation, a key part has yet to be implemented. [Albany Times Union] Motorcycle backfire caused a panic in Times Square, sending shooting-wary New Yorkers and tourists running for cover. [Daily News] School buses can install cameras to catch cars illegally passing them when they are stopped. [Newsday] Japanese cheesecake is available at a bakery in Midtown Manhattan. [Eater] Coming up today Join Elizabeth D. Samet in revisiting the memoirs of Ulysses S. Grant at the New-York Historical Society in Manhattan. 7 p.m. [Free] View classic cars and try food trucks at cruise night at Historic Richmond Town on Staten Island. 5-9 p.m. [Free] Alise Morales hosts "The Roast of Your 15-Year-Old Self" — comedians ridiculing themselves as teenagers — at Union Hall in Brooklyn. 8 p.m. [$10] Test yourself with a high-intensity interval training workout, sponsored by Lululemon, at Hudson River Park in Manhattan. 6:30 p.m. [Free] — Amy Osorio Events are subject to change, so double-check before heading out. For more events, see the going-out guides from The Times's culture pages. And finally: How Mayor de Blasio went from progressive hope to punching bag Philip Montgomery for The New York Times The Times's Matt Flegenheimer writes: Mayor de Blasio said the question had a certain "affectation": Is it fun being mayor? That quibbling was the answer. For years — as his gaze has wandered from City Hall to national political pursuits, culminating in his presidential run — the mayor has invited doubts about his affection for the job he was elected to do. My piece in this weekend's New York Times Magazine aims to figure out why: Why has he, to outward appearances, found such little pleasure in the gig? Why do so many New Yorkers seem convinced he's a disaster? Crime is low. The economy is reasonably stable. What happened? In an interview, Mr. de Blasio likened his position to the priesthood. "You are taking on a different kind of mission," he said. The job is "soul-satisfying," he suggested, but it was never supposed to be "fun," in the traditional sense. [Read the full article in The New York Times Magazine.] There are days when it's easy to see his point. While he strains to jump-start his 2020 presidential bid, the mayor has not escaped the workaday political headaches that visit every municipal officeholder in the public eye. The latest: concerns over whether conflict-of-interest rules were breached when the mayor's security detail helped his daughter move. [When Mayor de Blasio's daughter moved, his security detail carried the futon.] Sometimes, it can feel mathematically impossible that Mr. de Blasio still has well over two years left in his term. And if his presidential ambitions do not deliver him to Washington, he will return to his city with this to look forward to: a looming 2021 mayoral campaign, already crackling to life, populated by candidates eager to poke at their would-be predecessor. It's Wednesday — are you having fun yet? Metropolitan Diary: Bayside Waldbaum's   Dear Diary: In 1968, my husband was transferred from his company's Chicago office to headquarters in New York. We settled in Bayside and began adjusting to our new life in Queens. Learning the shopping habits of the local residents was one of the challenges. I was in line at the Waldbaum's deli counter one day waiting my turn. An older woman next to me placed her order. "A quarter pound of the Nova from the belly under the paper," she said. I knew I had a ways to go to live like the natives. — Sarah Harrs

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