2019年5月29日 星期三

DealBook Briefing: Could the Trade War Spread to Wall Street?

Both inside and outside the White House, there are growing calls for a weakening of China's links to U.S. financial markets.
May 29, 2019
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Alibaba banners at the New York Stock Exchange in 2014.
Alibaba banners at the New York Stock Exchange in 2014.  Jason Decrow/Associated Press
The next trade battle: China’s access to Wall Street?
Both inside and outside the White House, there are growing calls for a weakening of China’s links to U.S. financial markets, Keith Bradsher and Ana Swanson of the NYT report.
• “Some trade experts and others urging the Trump administration to keep a hawkish stance are discussing whether the White House should curb China’s access to Wall Street.”
• A bipartisan group of senators urged the administration last month to increase disclosure requirements for Chinese companies listed in the U.S. if they pose national security risks or are complicit in human rights abuses.
• Steve Bannon, Mr. Trump’s former chief strategist, has said that a lack of transparency about the ultimate owners of Chinese companies is problematic.
• “The New York Stock Exchange and Nasdaq are breaching their fiduciary responsibility to institutional investors, the pension funds of hardworking Americans,” Mr. Bannon said. “It’s outrageous. All of it should be shut down immediately.”
Adding urgency to the news: Alibaba, the Chinese e-commerce giant, is now considering listing shares in Hong Kong, five years after its hugely successful I.P.O. in New York. (Its shares would trade in both markets.) The company has long considered that option, and unidentified sources told the NYT that geopolitical worries were not the driving force for considering the listing.
It’s not clear if Mr. Trump wants to block China from U.S. markets. And for now, Chinese companies can still go public in America: Two weeks ago, Luckin Coffee, a Chinese rival to Starbucks, surged in its trading debut in New York, though its shares have since fallen.
But China has a nuclear option: Sell some of its $200 billion worth of U.S. stocks, which would throw markets into turmoil. But that could also hurt the investment return on China’s assets.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London.
Huawei doubles down in its fight with the U.S.
The Chinese technology company is ramping up its legal challenge to a freeze-out by Washington, as it continues to favor public spats over quiet negotiations, Paul Mozur of the NYT writes.
• “The Chinese telecommunications giant filed a motion on Tuesday in the United States to accelerate its lawsuit against the White House.”
• The lawsuit argues that a ban on U.S. government agencies buying its hardware “is unconstitutional because it singles out Huawei as a danger without giving it any chance to appeal.”
• “The request for summary judgment could expedite an outcome without the costs and time of a full trial, including avoiding handing over sensitive corporate information during the discovery process.”
• “It also could give the company a chance to present its arguments publicly in front of a judge in just a few months rather than wait for a trial to unfold.”
It embarked on a media campaign, outlining its thinking in a WSJ op-ed and at a news conference at its headquarters in Shenzhen, China. This isn’t a new tactic: “Huawei has repeatedly turned to the American court system and press” in recent months, Mr. Mozur notes, including by offering “carefully managed and regularly scheduled interviews” with its founder, Ren Zhengfei.
But so far Huawei has little to show for its aggressive approach, Mr. Mozur writes.
More: South Korea is caught between the U.S. and China over the Huawei fight. Huawei’s biggest selling point: Its 5G prices are basically irresistible. And Mr. Ren said of speaking with Mr. Trump: “If he calls me, I may not answer.”
Jean-Dominique Senard, left, the chairman of Renault, and Hiroto Saikawa, the C.E.O. of Nissan.
Jean-Dominique Senard, left, the chairman of Renault, and Hiroto Saikawa, the C.E.O. of Nissan.  Kim Kyung-Hoon/Reuters
Nissan’s worries about Fiat-Renault
Fiat Chrysler’s proposal to merge with Renault has been lauded by investors and analysts. But Nissan, Renault’s Japanese partner, appears to be less enthusiastic.
Renault executives kept Nissan in the dark about their talks with Fiat until days before the proposal was announced, the NYT reports. That probably aggravated existing tensions between the two companies over their alliance, which came to light after the arrest of their former mutual chairman, Carlos Ghosn.
Nissan has long complained that Renault dominates their alliance, despite becoming the bigger partner. Nissan sold 5.5 million cars in its most recent fiscal year; Renault sold fewer than 4 million.
A merger with Fiat could give Renault even more leverage over Nissan. The combined European carmakers would have nearly double the sales of Nissan, the FT reports.
It’s hell” for Nissan’s C.E.O., Hiroto Saikawa, whether he says yes or no to the Renault-Fiat deal, the analyst Koji Endo told the FT.
But Nissan could benefit. It would have a 7.5 percent voting stake in a combined Renault-Fiat, versus its current 15 percent nonvoting stake in Renault. And Fiat and Renault would want the Japanese company’s electric-car technology and strong presence in China.
So Mr. Saikawa may have some negotiating power. One unnamed investor told the FT: “What Nissan may have lost is a chance to be a dominant force in the merger, but they can preserve their independence.”
The global slowdown divides corporate America
While the U.S. economy is resilient, the picture overseas is gloomy, and profits at companies focused on the rest of the world are suffering, Stephen Grocer of the NYT reports.
“A wide divide has developed in the performance between the companies with the most exposure to the rest of the world and those that are mostly focused on the United States.”
• “At companies in the S&P 500 that draw more than half their revenue from abroad, first-quarter profits fell about 12 percent.”
• “By contrast, earnings at firms that generate most of their sales within the United States grew about 6 percent.”
The earnings slide was greatest for those with the largest exposure to the global economy and the escalating trade war between Beijing and Washington, including tech companies like Apple and semiconductor manufacturers.
“The split could persist as the Trump administration ratchets up the trade war,” Mr. Grocer adds. “Wall Street analysts now expect profits at companies with the most overseas exposure to fall 1.4 percent in 2019, compared with a 6 percent increase for domestically focused companies. At the start of the year, analysts forecast that profits for those two sets of companies would grow 6.9 percent and 8.4 percent.”
Jeff and MacKenzie Bezos
Jeff and MacKenzie Bezos  Evan Agostini/Invision, via Evan Agostini/Invision/AP
MacKenzie Bezos pledged her fortune to charity
The novelist and ex-wife of Jeff Bezos is one of the latest signatories of the Giving Pledge, to which the rich promise to donate most of their wealth to charitable causes.
Ms. Bezos will own a roughly 4 percent stake in Amazon once her divorce from Mr. Bezos is finalized in July. That’s worth about $36 billion as of yesterday’s close.
“I have a disproportionate amount of money to share,” she wrote in a letter explaining her decision. “My approach to philanthropy will continue to be thoughtful. It will take time and effort and care. But I won’t wait. And I will keep at it until the safe is empty.” (Mr. Bezos praised the move, tweeting, “Go get ‘em.”)
Her decision highlights how little Mr. Bezos gives. The Amazon founder has drawn criticism for donating little to charitable causes compared with peers such as Bill Gates, Warren Buffett and Michael Bloomberg. (His biggest donation to date: $2 billion last year, to help homeless families and preschoolers, which was made with Ms. Bezos.)
And it reignited criticism of the Giving Pledge itself. Signatories have no legal obligation to follow through on their promises, and it’s hard to track their charitable donations.
Other new additions to the Giving Pledge this year:
• The WhatsApp co-founder Brian Acton
• The hedge fund billionaire Paul Tudor Jones
• The British financier David Harding
• The Coinbase founder Brian Armstrong
Who is the savior of G.M.’s Lordstown plant?
President Trump proudly announced earlier this month that a buyer had been found for a shuttering G.M. plant in Lordstown, Ohio. But Nelson Schwartz, Matt Goldstein and Neal Boudette of the NYT write that there’s a lot of uncertainty about the factory’s potential savior.
• The would-be buyer is a company affiliated with Workhorse, an electric vehicle maker. It would have to raise at least $300 million to get the plant up and running again.
• But the head of the company, Steve Burns, wouldn’t tell the NYT whether he had raised any money or secured financial backers. “It’s a gargantuan task,” he said.
• “Workhorse, which would have a minority stake in the entity, is barely hanging on. It had just under $3 million in cash at the end of March,” Mr. Schwartz, Mr. Goldstein and Mr. Boudette write.
• “Between its founding in 2007 and the first quarter of 2019, Workhorse lost nearly $150 million. It has produced a total of 365 vehicles since its inception, fewer than Lordstown can churn out in a day.”
• “I have a lot more questions than I have answers,” Arno Hill, the Republican mayor of Lordstown, told the NYT. “Who is going to be underwriting all of this?”
Revolving door
Loretta Lynch, the former attorney general under President Barack Obama, has joined the law firm Paul Weiss as a litigation partner.
France is campaigning for Michel Barnier, who led the European Union’s negotiations over Brexit, to become the next president of the European Commission.
Walmart hired Suresh Kumar, a former executive at Google, Microsoft and Amazon, as its new technology chief.
Goldman Sachs promoted three executives to its management council: Beth Hammack, its treasurer, and James Paradise and Todd Leland, its co-presidents for Asia (excluding Japan).
Twitter is hiring a “tweeter in chief.”
The speed read
• Naspers plans to list its huge technology investment arm on the Euronext Amsterdam exchange on July 17. (Naspers)
• Sprint could reportedly collect up to $3 billion by selling its Boost Mobile prepaid wireless brand as part of its proposed merger with T-Mobile. (Reuters)
• Big investors in technology unicorns are starting to sell their stakes earlier than expected. (Axios)
• Short bets against Uber have risen to $1.5 billion. (Business Insider)
• Toyota is reportedly considering a $550 million investment in Didi Chuxing, the Chinese ride-hailing company. (Nikkei)
Politics and policy
• Transportation Secretary Elaine Chao promised to sell off her holdings in a major construction company. She hasn’t. (NYT)
• The Senate’s majority leader, Mitch McConnell, said that he would fill a Supreme Court vacancy in an election year, despite denying President Barack Obama that option in 2016. (WaPo)
• Netflix became the first major U.S. movie studio to threaten to move production out of Georgia over the state’s new anti-abortion law. (Business Insider)
• China’s state planning agency has suggested using limits on rare earth mineral exports as a weapon in the trade war with the U.S. (FT)
• The U.S. has again refrained from labeling China a currency manipulator. (CNBC)
• Cowen predicts that Apple’s profit could fall by 26 percent if China banned iPhone sales there. (Bloomberg)
• Citigroup reportedly pulled out of talks to partner with Apple on the tech giant’s forthcoming credit card because the bank thought it could never make money on the deal. (CNBC)
• Amazon is reportedly planning a purge of its small suppliers, though it denied that there is a “large-scale” plan to do so. (Bloomberg)
• Qualcomm asked a federal judge for a stay on the provisions of her recent antitrust ruling against the company while it appeals the decision. An F.T.C. commissioner was critical of the ruling: “I am dismayed that the judge took this opportunity to create new legal obligations” and “undermine intellectual-property rights.” (Reuters, WSJ op-ed)
• Hackers had access to Flipboard’s internal systems, including customer information, for more than nine months before they were spotted. (ZD Net)
Best of the rest
• Inside the race to succeed Larry Fink as the head of BlackRock. (Institutional Investor)
• Investors increasingly think that the Fed could cut rates twice this year. (FT)
• Jamie Dimon said that Wells Fargo was “irresponsible” for ousting its C.E.O. without a replacement in place. (FT)
• How the WikiLeaks of soccer is bringing down the sport’s most famous teams and players. (New Yorker)
• Wynn Resorts paid a record $35.5 million in fines to Massachusetts for failing to disclose allegations of sexual misconduct against its founder, Steve Wynn. (CNBC)
• Changes to pilot training could determine how soon Boeing’s 737 Max jets are back in the air. (FT)
• How Brexit could ruin the full English breakfast. (WSJ)
Thanks for reading! We’ll see you tomorrow.
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