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Five Things You Need to Know to Start Your Day
(Bloomberg) --
Good morning. Trump’s advisers are considering an interim China deal to delay tariffs, Draghi’s stimulus package divided colleagues, and bankers are gathering at the Dubai Ritz. Here’s what’s moving markets.
Tariff Teaser
Officials in U.S. President Donald Trump’s administration have discussed offering a limited trade agreement to China that would delay and even roll back some U.S. tariffs for the first time. In exchange would be Chinese commitments on agricultural purchases and intellectual property. The president himself sounded less convinced, saying he’d consider an interim offer, though “there’s a deal or there’s not a deal.” What might be behind the potential new approach? For one, recent poll numbers show that the trade war isn’t popular with a lot of voters and commodity prices are angering farmers.
Draghi Drama
ECB President Mario Draghi’s departing stimulus package –- resuming bond purchases and cutting interest rates further below zero –- faced unprecedented opposition in the Governing Council, with France, the Netherlands and Germany all opposing the plan. While Draghi ultimately prevailed, investors are now doubting how effective the package will be without some help from governments by way of fiscal policy. So far, signs on that front haven’t been encouraging, with Germany saying this week it’s sticking to a balanced budget. Draghi, however, won’t have to spend too much time smoothing things over with his hawks – he hands over the reins to successor Christine Lagarde next month.
Dubai Ritz
The mammoth initial public offering of Saudi Aramco got into gear as dozens of bankers gathered at the Dubai Ritz Carlton to start work, just a day after the news of their appointment. The IPO, which may happen as soon as November, comes amid a revival in interest in such offerings in Europe. EQT, the largest buyout firm in the Nordic region, yesterday kicked off the biggest global IPO for a private equity firm in 12 years while Germany’s TeamViewer was already oversubscribed on the second day of investor meetings. One reason for the burst of activity? European companies are taking advantage of a small window between the summer break and any potential upheaval ahead of the Oct. 31 Brexit deadline.
Brexit
Brexiteers may want to rid themselves of their EU obligations, but some in government see advantages of another country’s system: Departing Speaker of the House of Commons John Bercow said the U.K. might need a U.S.-style constitution to prevent future governments overriding laws passed by Parliament. Across the pond, the European Commission’s Brexit negotiator, Michel Barnier, told members of the European Parliament that there are insufficient grounds for reopening formal talks with the U.K., according to the Guardian. One brief bit of good news for U.K. Prime Minister Boris Johnson came from a Belfast court, which ruled Thursday that leaving the EU without a divorce agreement wouldn’t violate the peace accord in Northern Ireland.
Coming Up...
Asia stocks are showing modest gains as trade optimism continued to grow and the S&P 500 rose to just under its all-time high Thursday. Credit Suisse turned overweight on global stocks, even as other firms are reducing holdings amid economic growth concerns. We expect updates from Fraport and J.D. Wetherspoon, whose boss has been known to use earnings statements to stir the Brexit pot. His latest jab? Cutting the price of pints to demonstrate what he thinks life would be like from Oct. 31 for U.K. drinkers without those pesky EU tariffs.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- Superhuman AI bots know when to fold ‘em.
- What Brexit has in common with the English Civil War.
- How to get rid of billionaires, by Thomas Piketty.
- That four-day week? A long way off.
- Anxiety and the Instagram influencer.
- The latest boon for high-frequency traders? Climate change.
- Inside the U.S. military’s five-star layovers.
To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net
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