Five Things You Need to Know to Start Your Day

(Bloomberg) --

Trump lets loose on everything from trade to Turkey, emerging markets stagger to month end, and Coca-Cola orders a $5.1 billion cup of joe. Here are some of the things people in markets are talking about today. 

Trade war, part 6,433

Recalibrating the outlook for global trade has become a daily chore for most investors, and today offers more to digest than usual after President Donald Trump’s wide-ranging interview with Bloomberg News on Thursday. As well as threatening to walk away from the World Trade Organization ``if they don’t shape up,’’ the president turned his guns on Europe, branding the European Union “almost as bad as China, just smaller.” The response so far from Europe has been muted, with one policy maker calling the comments simply ``regrettable.’’ As for the Asian nation, it won’t outlast the U.S. in a trade showdown, Trump said. He wants to push on with a plan to impose tariffs on $200 billion in Chinese imports as soon as next week, according to people familiar with the situation. There was more positive rhetoric around America’s neighbors, however, with Trump saying a deal with Canada to revamp Nafta is close. And at least one bank CEO is shrugging off the risks of protectionism.

Talkative Trump 

Trade wasn't the only thing on the president's mind in his interview, which took in everything from Iran to impeachment. For U.S. investors one comment stands out in particular: Trump said he’s considering a capital gains tax break by issuing a regulation that would index gains to inflation, a move that could  slash tax bills for investors when selling assets such as stock or real estate. Meanwhile, the president has no regrets over his pick for Fed chair, suggests the likes of Google, Amazon and Facebook may be an “anti-trust situation,” and is personally disappointed by Turkish President Recep Tayyip Erdogan over his refusal to release an American evangelical pastor.

EM infection 

Add the Indian rupee and Indonesian rupiah to the list of afflicted emerging-market assets. Right now it's the crisis in Argentina that's proving too strong to resist for the wider developing-nation complex, after the peso on Thursday dropped by as much as a fifth, despite the central bank raising rates to a world-beating 60 percent. The sour mood fed into the Asian session, sending the rupee to a record low and the rupiah to its weakest since 1998 as EM currencies stumble to the end of a miserable month. One bright spot though: even as Turkey's ongoing spat with the U.S. heaps pain on its economic situation, policy makers eased pressure on the lira by cutting tax on domestic deposits, and raising it for foreign exchange. That’s effectively a rate hike without hiking; the lira rose.

Markets

Markets aren’t in a panic, but the mood is cautious. Overnight, the MSCI Asia Pacific Index fell 0.3 percent, with Japan’s Topix Index slipping 0.2 percent as a mild bid for safe-haven assets pushed the yen 0.2 percent higher. In Europe, the Stoxx 600 Index dropped 0.6 percent as of 6:08 a.m. Eastern Time, with all the major national gauges in the red. Automakers were leading the decline after Trump also rejected an EU offer to scrap tariffs. S&P 500 futures pointed to a drop at the open, the 10-year Treasury yield was at 2.848 percent and gold jumped. 

Coke adds more caffeine

Coke wants an even bigger caffeine fix, it seems. Coca-Cola Co. agreed to buy the U.K. chain Costa Coffee for 3.9 billion pounds ($5.1 billion), stepping into battle with the likes of Nestle SA and Starbucks Corp. as soft drink makers continue efforts to diversify. The move comes days after PepsiCo Inc. agreed to pay $3.2 billion for SodaStream International Ltd., which makes carbonated-water dispensers. “Hot beverages is one of the few remaining segments of the total beverage landscape where Coca-Cola does not have a global brand,” Coke CEO James Quincey said. For Costa's current owner, Whitbread Plc, it looks like a good deal: it bought the company in 1995 for 19 million pounds, when the brand had 39 shops. Costa now has more than 3,800 locations in 32 countries. Whitbread shares surged in London.

What we've been reading

This is what's caught our eye over the last 24 hours.

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