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DealBook Briefing: China’s Potent Arsenal for Trade Retaliation

Good Friday. Bayer is reportedly willing to pay as much as $8 billion to settle more than 18,000 U.S. lawsuits about links between cancer and its Roundup weedkiller, Bloomberg reports. (Want this by email? Sign up here.)

The trade war is now bigger than tariffs

Since President Trump threatened last week to impose new tariffs on virtually everything China ships to the U.S., the wide variety of options open to Beijing for retaliation have begun to emerge, Alexandra Stevenson of the NYT reports.

China has a list of potent tools at its disposal. It has already stopped buying American crops. It may weaponize its currency by letting the value of the renminbi continue to slide. (Its midpoint was set today at its weakest level since 2008.) Its mining industry could hold back minerals that are vital for tech companies. And its policymakers are openly discussing doing without American trade.

But the U.S. is playing hardball. “The White House is holding off on a decision about licenses for U.S. companies to restart business with Huawei,” Bloomberg reports, citing unnamed sources. That move is said to have been spurred by Beijing’s decision to halt purchases of U.S. farm goods.

“The alternation of fights and talks is likely to become a normal status quo,” Wang Yiming, the deputy director of a Chinese state-linked think tank, said in an interview published by the state news media. “We need to be prepared for the trade war to last a long time.”

But markets appear to not be panicking. The S&P 500 rose 1.9 percent yesterday, and many investors sold safe-haven assets like gold and bonds, as the threat of a rapid devaluation of China’s currency abated.

“The two sides could still reach a truce of some sort,” Ms. Stevenson writes. Mr. Trump’s top economic adviser, Larry Kudlow, expects to hold talks in Washington with Chinese officials next month.

ImageCreditMark Lennihan/Associated PressWhy JPMorgan maintained ties with Jeffrey Epstein

Compliance officers at JPMorgan Chase wanted to sever ties with the financier a decade ago, after he was first accused of sex crimes. But Mary Erdoes, the head of the bank’s wealth-management unit, fought to keep him close, Emily Flitter and Jessica Silver-Greenberg of the NYT report.

Compliance officials recommended cutting ties to Mr. Epstein after regulators ordered the bank to comb through its list of clients to find potentially problematic relationships, Ms. Flitter and Ms. Silver-Greenberg report, citing unnamed former senior executives and employees.

But Ms. Erdoes managed to keep Mr. Epstein on board at JPMorgan, according to Ms. Flitter and Ms. Silver-Greenberg. She has long been seen as a favored lieutenant of the bank’s C.E.O., Jamie Dimon, and an expert at wooing rich clients.

She argued that Mr. Epstein was a lucrative client who helped recruit new customers to JPMorgan’s private-banking unit.

Ms. Erdoes wasn’t Mr. Epstein’s only fan at the company. Jes Staley, who preceded Ms. Erdoes as head of the wealth-management unit, had brought in the financier as a client in the first place. Mr. Staley even visited Mr. Epstein while he was in jail on a state prostitution charge.

JPMorgan disputed the NYT’s report. A spokesman said that Ms. Erdoes would not overrule compliance controls, and added that she remembered meeting Mr. Epstein only once, when she dismissed him as a client.

ImageCreditDrew Angerer/Getty ImagesSoulCycle’s billionaire investor faces backlash for Trump support

Stephen Ross, the billionaire whose real estate firm, Related, has invested in the upscale fitness companies Equinox and SoulCycle, is the latest Trump donor to take heat for his support of the president.

Mr. Ross will host a fund-raiser for President Trump in the Hamptons today. Together, his event and another gathering are collecting millions of dollars for the Trump campaign. Mr. Ross said in a statement that he had known Mr. Trump for over 40 years, and that he both agrees and disagrees with the president on many issues.

A boycott of Equinox and SoulCycle has erupted online, Katie Rosman of the NYT writes. Related owns a majority stake in Equinox, though Mr. Ross — as one of several partners who collectively own the company — himself owns a minority stake. (SoulCycle has described Mr. Ross as a “passive investor.”)

Rivals to Equinox and SoulCycle are seizing the opportunity. “We understand there are a lot of people in New York and Boston who are going to be canceling their gym memberships,” Patrick Walsh, the C.E.O. of Town Sports, a rival gym operator, told Bloomberg. “We want to make sure they have a place to work out.”

The protests show a growing public pushback against the president’s backers. Representative Joaquin Castro, Democrat of Texas, drew attention — and criticism — this week when he tweeted a list of San Antonio residents who have given money to Mr. Trump’s re-election campaign.

Investors have 5.2 billion reasons to worry about Uber

The ride-hailing giant reported a $5.2 billion loss for its second quarter yesterday. Most of that came from costs tied to its I.P.O. in the spring, but there were other signs of struggle, too.

• The loss was the biggest Uber has ever disclosed.

• Excluding charges related to employees’ stock-based compensation, the company still lost $1.3 billion.

• Uber also disclosed that its revenue had risen just 14 percent from a year ago, its slowest growth rate yet.

The problem is competition. Uber still pays hefty subsidies in its ride-hailing division to lure customers, though the company says the payments are shrinking. It is also locked in a price war with rivals in the fast-growing food delivery sector, and investing heavily in other delivery services.

Shares in Uber fell 12 percent in after-hours trading. Many of the company’s investors have been willing to put up with huge losses, but only while the company grows quickly.

“We think that 2019 will be our peak investment year,” Dara Khosrowshahi, the company’s C.E.O., told Kate Conger of the NYT.

ImageCreditJohn G Mabanglo/EPA, via ShutterstockFacebook’s new push into news

Facebook is pitching a new media initiative to license articles from some of the largest American news publishers and display that content inside its mobile app, Mike Isaac of the NYT reports, citing unnamed sources.

• “The project involves the social network striking deals potentially worth millions of dollars to publishers including The New York Times, The Washington Post and Dow Jones, parent company of The Wall Street Journal, among others.”

• “The agreements would let Facebook pull in headlines and previews of the articles from partner publications for display inside a ‘News’ tab in the Facebook app.”

• Facebook executives have reportedly offered publishers up to $3 million a year for content deals, according to the WSJ.

• The talks are said to be continuing, and it’s unclear whether any deal is close.

“Facebook is trying to differentiate its new product from past offerings,” Mr. Isaac writes, by ensuring that readers are directed to the publishers’ sites and apps.

Publishers are wary. “We tend to be quite leery about the idea of almost habituating people to find our journalism somewhere else,” Mark Thompson, C.E.O. of The New York Times Company, told Reuters in March. “We’re also generically worried about our journalism being scrambled in a kind of Magimix with everyone else’s journalism.”

ImageCreditSuzie Howell for The New York TimesCan Britain’s top bookseller save Barnes & Noble?

James Daunt fought Amazon and rescued Britain’s biggest bookstore chain, Waterstones, from collapse. Now he has a bigger challenge: doing the same thing for Barnes & Noble, David Segal of the NYT reports.

Mr. Daunt will move to New York City this month to serve as the new C.E.O. of Barnes & Noble, which was officially acquired this week by the hedge fund Elliott Advisors for $683 million. Investors hope he can repeat the kind of turnaround he pulled off at Waterstones, which returned to profitability in 2015 and now earns a steady 10 percent margin on sales of roughly $500 million.

He has said little about his plans for Barnes & Noble, “but his playbook at Waterstones offers clues about what’s coming,” Mr. Segal writes:

• His guiding assumption is that the point of a bookstore is to provide a rich experience — and he says that doesn’t happen at Barnes & Noble right now.

• “Frankly, at the moment you want to love Barnes & Noble, but when you leave the store you feel mildly betrayed,” Mr. Daunt said.

• He will probably try to turn the U.S. chain into what looks and feels like a collection of independent bookstores, as he did at Waterstones. And he said he would ensure that employees have a sense of agency.

He has a simple test for success. “If I can get the phones to stop ringing and ringing at Barnes & Noble, it will be a miracle,” Mr. Daunt told the NYT. “If I pull that off, everything else will be working. It means employees have a sense of absolute mastery over everything they do.”

Revolving door

UBS is reportedly considering hundreds of job cuts as it weighs a revamp of its investment bank.

Attorney General William Barr named Lauren Willard, a lawyer in the Justice Department’s antitrust division, as his counselor for the Trump administration’s antitrust review of tech giants.

Charles Baker will step down as Yelp’s C.F.O. to take up that position at Eventbrite.

Mario Queiroz is stepping down as the head of Google’s Pixel smartphone division to join the office of the company’s C.E.O.

Turkey has reportedly reassigned the chief economist of its central bank, Hakan Kara, and eight other officials, weeks after firing its governor.

The speed read


• Broadcom officially agreed to buy Symantec’s enterprise unit for $10.7 billion. (Reuters)

• Anadarko shareholders voted overwhelmingly to approve the oil driller’s $38 billion sale to Occidental. (Reuters)

• The restaurant delivery service DoorDash is reportedly in talks to borrow $400 million from banks ahead of a potential I.P.O. (Bloomberg)

• Companies are borrowing more than ever, but they’re spending the cash on stock buybacks, not investment. (Bloomberg)

Politics and policy

• More than a dozen banks, including Deutsche Bank, have reportedly turned over documents to federal and state authorities investigating President Trump’s businesses. (WSJ)

• “Red flag” gun laws that make it easier to confiscate guns from people who could pose threats to others aren’t perfect, but supporters say they have saved lives. (NYT)

• Despite grumbling, President Trump has had plenty of help for the economy. (NYT)

• Italy’s deputy prime minister, Matteo Salvini, called for snap elections, pitting him against the country’s prime minister, Giuseppe Conte. (Bloomberg)


• If Prime Minister Boris Johnson of Britain loses a confidence vote next month, he reportedly plans to hold a general election after the country is scheduled to leave the E.U. on Oct. 31. (FT)

• Businesses are racing to keep data flowing between Britain and the E.U. in the case of a no-deal Brexit. (Bloomberg)

• London bankers are worrying less than they had been about a no-deal Brexit. (FT)


• U.S. sanctions on Tehran have forced Iranian oil traders to adopt spy-like tactics. (NYT)

• The German official who was expected to lead Europe’s payments channel to Iran, which would help Tehran avoid U.S. sanctions, has stepped down. (FT)


• The Justice Department is reportedly studying Google’s digital advertising and search operations as part of an antitrust inquiry. (Bloomberg)

• An F.B.I. effort to monitor social media for threats could clash with Facebook’s need to comply with an F.T.C. settlement over its privacy practices. (WSJ)

• The suspect in the El Paso shooting reportedly adopted the views that motivated the attack after doing online research. Also: The police in the Philippines are investigating potential moderation negligence by 8chan, a website linked to the El Paso attack whose American owner lives in the Southeast Asian country. (WSJ)

Best of the rest

• Climate change is threatening the world’s food supply, according to a U.N. report. (NYT)

• Malaysia has filed charges against Goldman Sachs directors related to the 1MDB scandal. (NYT)

• “Harvey Weinstein started selling his real estate about six months before his downfall.” (WSJ)

• “The fate of the world’s largest exchange-traded fund rests on the health of a group of twentysomethings.” (Bloomberg)

• Hunting for an Impossible Burger? Here’s where you can buy one. (Bloomberg)

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