Five Things You Need to Know to Start Your Day
Trump’s top negotiator confirmed his tariff threat and accused Beijing of reneging on trade commitments. A former Goldman Sachs banker implicated in the 1MDB scandal is in plea talks in the U.S. And China’s own Starbucks rival is seeking up to $510 million in a U.S. IPO. Here are some of the things people in markets are talking about today.
President Donald Trump’s top trade negotiator said the U.S. plans to raise tariffs on Chinese goods Friday, accusing Beijing of backpedaling on commitments it made in negotiations and confirming the substance of Trump’s weekend threats. People familiar said he made them after being told Chinese officials had refused to agree to a deal that required changes to Chinese law, a change with big implications for provisions aimed at ending China's practice of forcing U.S. companies to share proprietary technology. The U.S. thought those issues were resolved. Still, talks will continue, U.S. Trade Representative Robert Lighthizer said.
U.S. futures fell and Asian stocks are set to fall after Lighthizer’s comments. The Chinese yuan dropped. Prior to his remarks, U.S. stocks had pared losses from a sell-off sparked by Trump’s threat to escalate the trade war, with investors taking solace from news that China will still attend talks this week. S&P 500 futures dropped 0.7 percent in Asian trading after a rollercoaster session in the cash index, and Nikkei 225 futures in Chicago declined. The Australian dollar kept sliding, and the yen ticked higher.
A 1MDB Plea
Former Goldman Sachs banker Roger Ng is in plea talks to avoid a U.S. trial on charges he broke anti-bribery laws and conspired to launder money embezzled from Malaysia’s state investment fund 1MDB. Prosecutors say bribes and kickbacks were paid in connection with Goldman’s bond offerings, which helped the fund raise more than $6 billion and generated $600 million in fees for the bank, in a scandal that shook the financial world. Malaysia is tracing the web of transactions linked to 1MDB and former premier Najib Razak’s accounts.
The Fed is amplifying its warnings about the perils of risky corporate debt, with a report showing the market for it grew 20% last year while lending standards kept slipping. Particularly striking is that the businesses with the biggest loads are also taking on the most risk, and default protections are eroding. The central bank has sounded the alarm about leveraged loans and weakening standards since last year, but defaults remain low. When we delved into big deals last year, we found a trillion-dollar powder keg.
Luckin Coffee, the ambitious homegrown upstart challenging Starbucks’ dominance in China’s nascent coffee culture, is seeking to raise up to $510 million in a U.S. IPO. It's planning to sell 30 million ADSs for $15 to $17 each, which would make it the sixth largest offering on U.S. exchanges so far this year, data compiled by Bloomberg show. The unicorn has been burning through cash to try to overtake the Seattle chain, and it’s confident it’s got a winning model in its small outlets.
What we've been reading
This is what's caught our eye over the last 24 hours.
©2019 Bloomberg L.P.