U.S. markets are poised to open lower today, after the Trump administration imposed levies on thousands of goods made in China and Beijing retaliated.
September 3, 2019
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Mark Ralston/Agence France-Presse — Getty Images
Welcome to the latest stage of the trade war
U.S. stock markets are poised to open lower today after the Labor Day holiday, two days since the Trump administration imposed tariffs of 15 percent on thousands of goods made in China. It’s further evidence that Washington’s trade fight with Beijing shows no sign of ending soon.
The average tariff on Chinese goods is now over 21 percent, compared with 3.1 percent when President Trump came into office. Among the products affected are clothing, food, lawn mowers, cereal bowls and more.
Beijing responded with tariffs of its own on American goods, and yesterday lodged a new complaint with the World Trade Organization.
The tariffs will cost American households an average of $460 a year, according to new research. That number is likely to rise as further tariffs are expected by the end of the year, which amount to levies on nearly everything that comes to the U.S. from China.
The latest clash has rewritten the rules of trade “in ways that have no recent historic precedent” and are driving the world’s two largest economies further apart, Ana Swanson of the NYT writes.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York and Michael J. de la Merced in London.
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Photo by NASA/EPA, via Shutterstock
Dorian’s damage could cost businesses billions
Hurricane Dorian, one of the most powerful Atlantic storms on record, is continuing to thrash the Bahamas with deadly winds and rain — and it may still wreak havoc on Florida.
At least five people were confirmed dead as of this morning, as storm surges rose 12 to 18 feet above normal tide levels. Thousands of homes were believed to be damaged or destroyed on Abaco Island, east of Grand Bahama.
It’s currently a Category 3 storm, after having reached Category 5 status when it made landfall on Sunday.
“We are in the midst of a historic tragedy,” said Hubert Minnis, the prime minister of the Bahamas, noting that the first floors of the Grand Bahama hospital and his office had been flooded.
Hurricane Dorian is expected to move northward later today, with forecasters expecting heavy damage to Florida and other parts of the Eastern Seaboard. A hurricane warning was extended to about 240 miles of the Florida coast yesterday afternoon. Airlines have already canceled more than 1,100 flights.
Khalid al-Falih Maxim Shemetov/Reuters
Saudi Arabia replaces the chairman of Aramco
The Saudi government removed its energy minister, Khalid al-Falih, as chairman of Saudi Aramco yesterday, as the state-owned oil company resumes planning its I.P.O. He was replaced with Yasir al-Rumayyan, the head of Saudi Arabia’s sovereign wealth fund.
Mr. al-Falih tweeted yesterdaythat it was “an important step to prepare the company for the public offering,” and wished Mr. al-Rumayyan “every success.”
News reports suggest the switch was meant to further separate Aramco from the Saudi government, so that the oil company would not be seen as simply an arm of the state when it finally goes public. (That’s despite the fact that Saudi Arabia would still control the vast majority of Aramco’s shares.)
But Mr. al-Falih’s demotion suggests tensions over Aramco’s I.P.O. planning. He has reportedly been privately cautious about taking the oil company public, only to be overruled by the kingdom’s de facto ruler, Crown Prince Mohammed bin Salman. His power had already been weakened days ago, when the Saudi government stripped him of responsibility for the country’s industrial and mining policies.
In his place at Aramco is Mr. al-Rumayyan, who is seen as a close ally of Prince Mohammed. “I suspect they want to accelerate the I.P.O. timeline,” Helima Croft, the chief commodities strategist at RBC Capital Markets, told Bloomberg.
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British pound slips as Parliament enters Brexit showdown
The value of the pound sterling has slipped below $1.20, its lowest level in years, after Prime Minister Boris Johnson threatened to schedule a general election on Oct. 14 if Parliament passes legislation seeking to block Britain from leaving the European Union without a deal.
The move is meant to dissuade rebels within his Conservative Party from allying with opposition parties on the bill, which is expected to be introduced today. The legislation would force the prime minister to seek a three-month extension in talks with the E.U. if he can’t reach a deal by mid-October.
The government has urged Conservatives to reject the move, arguing that it would weaken its negotiating leverage with Brussels. British government officials say that they are still working to secure a deal on Brexit, but analysts see the chance of reaching one as increasingly remote.
Mr. Johnson hopes to shore up his defenses by calling an early election. The threat might scare some Conservative rebels back in line. And by holding an election before Brexit — and before any chaos that might emerge if Britain leaves without a deal — he could expand his majority in Parliament.
Casper Klynge of Denmark. Laerke Posselt for The New York Times
Meet the world’s first ambassador to the tech industry
Denmark became the first country in the world to appoint a senior ambassador to the tech world. It’s a recognition by a relatively small country that the industry represents a new global superpower, Adam Satariano of the NYT writes.
• The ambassador, Casper Klynge, is a veteran Danish diplomat who has worked in Afghanistan and Kosovo. He was one of 55 applicants for the tech post when it was created two years ago.
• “What has the biggest impact on daily society? A country in southern Europe, or in Southeast Asia, or Latin America, or would it be the big technology platforms?” he told Mr. Satariano in an interview.
• But after two years on the job, Mr. Satariano writes, “Mr. Klynge is under no illusions of where Denmark’s concerns figure in the minds of Silicon Valley executives.” The ambassador has yet to meet with tech moguls like Mark Zuckerberg of Facebook or Sundar Pichai of Google.
• Yet Mr. Klynge has warned Silicon Valley to ignore Denmark at its peril, since as an E.U. member, the country has a say on the bloc’s increasingly active role in regulating the tech industry.
More: The E.U.’s executive arm is planning new laws on A.I. and the use of Big Data.
Ray Dalio, left, with Jeff Taylor, a fellow Bridgewater Associates executive. @RayDalio
When Ray Dalio went to Burning Man
The hedge fund billionaire tweeted yesterday that he had just returned from Burning Man, the annual counterculture festival in the Nevada desert:
Just back from Burning Man. Reminds me of Woodstock with better art (installations) and less good music. What a great vibe and what amazing creativity!
He also tweeted a picture of himself in Burning Man garb with a co-worker at Bridgewater Associates, Jeff Taylor.
Mr. Dalio’s presence is another sign that a gathering originally created for artistic hippies has increasingly attracted the wealthy. Tech executives in Silicon Valley have made the pilgrimage for years; financiers apparently are now eager to attend.
That’s despite efforts by organizers to return Burning Man to its egalitarian roots. In February, they disinvited one camp for wealthy attendees. (That camp charged as much as $100,000 for a two-bedroom unit with a bathroom and air-conditioning.)
Not everyone was impressed by Mr. Dalio. One reply to his tweet read, “Wish there was a way to short Burning Man.”
Revolving door
Arnaud Deboeuf, a senior executive in the alliance between Renault and Nissan, has resigned.
The retailer Hudson’s Bay, which owns Saks, reportedly plans to close its 15 Dutch stores and lay off 1,400 workers.
The speed read
Deals
• Two law firms, Allen & Overy of Britain and O’Melveny & Myers of the U.S., called off merger talks, reportedly over how to value each firm. (FT)
• The activist hedge fund Jana Partners has taken a 9 percent stake in the owner of the Outback Steakhouse chain and plans to push for a change in strategy. (Reuters)
• The hedge fund Eminent Capital, which owns 4.4 percent of Just Eat, said it will oppose the British food delivery company’s $6 billion deal to merge with a rival, Takeaway.com. (FT)
• The Swedish private equity firm EQT plans to go public with an I.P.O. that could raise about 800 million euros, or $875 million. (Reuters)
• An Italian court gave Vivendi, a big shareholder in the telecom company Mediaset, the chance to challenge a plan to merge Mediaset’s Italian and Spanish businesses. (Bloomberg)
Politics and policy
• President Trump has played down reports about North Korea’s growing nuclear capabilities, but experts are increasingly worried. (NYT)
• France is leading an effort to offer Iran $15 billion in credit to persuade Tehran to comply with the 2015 nuclear deal, but the U.S. may object to the move. (NYT)
• House Democrats reportedly plan an investigation into any role Mr. Trump played in paying off women like Stormy Daniels and Karen McDougal. (WaPo)
• The Trump administration may protect one group of migrants in the U.S., Venezuelans, as an electoral strategy to win Florida. (Politico)
• Unions are missing out on a rise in employee activism on issues like pay and sexual discrimination. (NYT)
Tech
• Repressive governments around the world have increasingly turned to shutting down the internet to stifle dissent. (NYT)
• Facebook is experimenting with removing “like” counts from its News Feed. (TechCrunch)
• New consumer apps may soon allow Americans to get their medical records on their smartphones. But groups like the American Medical Association worry it could weaken patient privacy protections. (NYT)
• The venture capital firm Andreessen Horowitz is pushing back against Washington’s efforts to clamp down on cryptocurrencies. (WSJ)
• How China could have become a powerhouse in semiconductors in the 1960s — but squandered its chances. (SCMP)
Best of the rest
• Argentina has imposed new restrictions on access to foreign currencies, as the country’s economy worsens. (NYT)
• Deutsche Bank’s C.E.O., Christian Sewing, is investing 15 percent of his monthly pay in shares in the bank. (Bloomberg)
• Under Jeremy Corbyn, the leader of Britain’s opposition Labour Party, the British government could seize about 300 billion pounds, or $360 billion, worth of stock in British companies and give it to workers, according to a new analysis. (FT)
• Boeing’s 737 Max planes may not return to the skies until next year. (WSJ)
• How Saudi Arabia’s push to set up alliances with major Western sports organizations may be an effort to rehabilitate its image. (Guardian)
• It wasn’t exactly a hot summer for Hollywood, and economic fears may be to blame. (NYT)
