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DealBook Briefing: Beijing’s Plan to Get to a Trade Deal


Good Friday morning. ICYMI: Treasury Secretary Steven Mnuchin told me at the DealBook D.C. Summit yesterday that the U.S. could issue 50-year bonds, and possibly even 100-year bonds. (Was this email forwarded to you? Sign up here.)

Beijing appears to be focusing on two ways to break a deadlock in negotiations to end the trade war: making concessions to the U.S. on some imports, and keeping discussions in Washington next month to just a few topics.

• China has reportedly made inquiries about resuming big purchases of American pork and soybeans, something that President Trump has wanted — and that Beijing had promised to do.

• It’s also hoping to keep future talks with American officials limited to trade issues, leaving aside thornier matters like national security, the WSJ reports. A more focused approach, Beijing hopes, will lead to a quicker way out of the trade battle.

U.S. markets rose yesterday on hopes that a breakthrough is in sight, with the S&P 500 inching toward a record high. But experts warn that the U.S. and China still aren’t close to a deal, and that significant disagreements have to be resolved.

Commentators continue to warn about the consequences of a prolonged trade war: “A deepening division between the U.S. and China would further disrupt trade, investment and movement of people, which together are a source of innovation and prosperity,” Peter Coy writes in Bloomberg Businessweek.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin and Stephen Grocer in New York, and Michael J. de la Merced and Lindsey Underwood in London.

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The co-working company is reportedly discussing limiting the sweeping voting rights of its chief, Adam Neumann, to get its embattled initial public offering back on track, the FT reports, citing unnamed sources.

• Cutting back Mr. Neumann’s control of WeWork through supervoting shares is one of the options being discussed within the company, according to the FT.

• Another possibility is eliminating the ability of his wife, Rebekah, to have a say in picking his successor.

Discussions about the potential moves are a sign of how much must change at WeWork for the company to pull off its I.P.O. Prospective investors have expressed concern about the company’s corporate governance and valuation, as well as whether it will ever turn a profit.

Another indicator of the chaos: The WSJ reports that WeWork has only now chosen to list its shares on the Nasdaq stock exchange, a decision that companies usually make months before embarking on the I.P.O. process.

WeWork expects to begin meeting with potential shareholders next week, and open its shares for trading the week of Sept. 23, the WSJ adds.

One big caveat: All of the decisions must be signed off by Mr. Neumann.

More: This year hasn’t been kind to tech darlings looking to go public, as Uber, Lyft and WeWork show.

The European Central Bank’s decision to cut a key interest rate and restart a money-printing scheme was aimed at shoring up the continent’s economy as it heads toward a potential recession. But it faced criticism from many corners.

• The central bank cut its main deposit rate to minus 0.5 percent, from minus 0.4 percent, adding pressure on banks to lend more money. (But it exempted some bank holdings from the penalty to spare them additional pain.)

• It also plans to buy $22 billion worth of bonds every month starting in November, a way of injecting money into Europe’s financial system and suppressing interest rates.

Expect the E.C.B. to keep monetary policy loose for a while. The bond-buying program will run “for as long as necessary,” the central bank said.

But it wants European countries to step up. When Mario Draghi, the E.C.B.’s outgoing president, was asked whether the message was that the central bank wouldn’t come to political leaders’ aid forever, he said, “Definitely yes.”

Mr. Draghi’s move didn’t appease two key constituencies:

• Berlin officials ignored the E.C.B.’s call for fiscal stimulus as Germany’s economy heads toward a recession, according to the WSJ. They instead said its monetary policy was hurting the German financial sector and ordinary savers.

President Trump tweeted that the moves were meant to lower the euro’s value against the dollar and hurt U.S. exports. (He then criticized the Fed again for not cutting American interest rates.)

Drivers for the ride-hailing service filed a class-action lawsuit against the company in California this week, accusing it of wrongly classifying them under the state’s employment test, Noam Scheiber of the NYT writes.

Uber failed to meet minimum pay requirements, as well as overtime and expense reimbursements, according to the complaint.

The lawsuit hinges on a 2018 decision by the state’s Supreme Court that requires companies to classify workers as employees rather than contractors if it directs or controls their work or if what they do is part of the company’s usual business.

The drivers filed their lawsuit hours after state lawmakers passed a bill that would require companies to go further and provide employees protections like unemployment insurance, workers’ compensation and paid sick leave, and not just a minimum wage and overtime pay.

Uber argues that it may not have to reclassify its drivers. The company’s chief legal officer, Tony West, said “several previous rulings” had found that Uber drivers perform a task that is “outside the usual course of Uber’s business.” Legal experts told Mr. Scheiber that the company’s argument is unlikely to win in court.

More: Uber and Lyft are still fighting for a compromise over the new law. And here’s how the gig-economy employment rules could have implications beyond the tech industry.

The state-owned oil giant of Saudi Arabia has officially kicked off the underwriting process for its initial public offering, which could break records as the biggest market debut in history, the WSJ reports.

The company has chosen nine banks so far to underwrite the I.P.O., according to the WSJ: JPMorgan Chase, Morgan Stanley, Goldman Sachs, Bank of America, Citigroup, HSBC, Credit Suisse and two domestic firms. (Aramco has hired Moelis & Company and Lazard as additional advisers.)

Advisers were spotted in the Ritz Carlton hotel in Dubai for the offering’s kickoff meeting yesterday, Bloomberg News reports. Saudi government officials were also spotted on the property.

They’re weighing whether to block U.S. institutions from buying into the I.P.O., Bloomberg reports, citing unnamed sources. The company is reportedly worried about the legal risks of selling to American investors.

U.S. institutions with overseas funds could still buy into the offering, but purely American ones would miss out.

That could be a big issue for the oil behemoth, but nothing has been decided yet, Bloomberg adds.

Senator Warren doesn’t bring up President Barack Obama much, and when she does it’s mostly positive. But Alex Thompson of Politico details how their relationship was “far more combative” than what she acknowledges in public.

• “Amid the financial crisis, Warren had become an unlikely star of the left with unambiguous moral outrage and an ability to explain complex financial topics in ways that made them fodder for dinner-table conversation,” Mr. Thompson writes.

• “She parlayed her newfound status into a push for the Consumer Financial Protection Bureau to be part of the Dodd-Frank financial reform bill.” Ms. Warren wanted to run the agency, but was ultimately passed over.

• “Tensions between Warren and Obama were palpable to White House aides,” Thompson writes. “For Warren, the years of the financial crisis are now the touchstone of her political career, validating the conviction at the heart of her presidential candidacy: The system is rigged.”

More: Last night’s Democratic presidential debate showed how most candidates favored policies that go beyond Mr. Obama’s actions.

Goldman Sachs has hired Marco Argenti, a former Amazon Web Services executive, as co-chief information officer. And Atte Lahtiranta will join from Verizon as chief technology officer.

Dane Holmes, Goldman’s head of human capital management, is the latest partner to leave.

British American Tobacco will cut 2,300 jobs, including 20 percent of its senior roles.

Deals

• The parent company of the Hong Kong Stock Exchange is reportedly considering increasing its takeover bid for the London Stock Exchange Group above $36.6 billion, after getting a cold shoulder from the London exchange’s investors. (FT)

• Shares in SmileDirectClub shares slid 28 percent in their market debut yesterday, the worst market debut for a unicorn start-up this year. (CNBC)

• Cloudflare, a web services company, raised $525 million in its I.P.O., above expectations. (Bloomberg)

• More companies should consider going public through a direct listing, as Spotify and Slack have done, the venture capitalist Bill Gurley says. (CNBC)

• Advocacy groups and unions urged the F.T.C. to consider blocking drugmaker AbbVie’s planned $63 billion purchase of the Botox maker Allergan. (Reuters)

Politics and policy

• The Trump administration moved to repeal of major Obama-era limits on polluting chemicals that could be used near streams, wetlands and other bodies of water. (NYT)

• Beto O’Rourke called on banks and credit card companies to address gun violence by refusing to provide services for some firearms sales. (NYT)

• Companies and trade groups are considering fighting a proposed ban on most flavored vaping products, to protect mint and menthol brands. (NYT)

• President Trump said he was planning a tax cut for the middle class that would be announced in the next year. (Bloomberg)

• Andrew Yang said he would give 10 families a total of $120,000 in the next year as part of a pilot program for his universal basic income plan. (Politico)

Brexit

• Prime Minister Boris Johnson may leave Northern Ireland partly inside the European customs union to get a deal for departing the E.U., though he continues to rule out keeping the territory fully in the bloc’s economic orbit. (NYT)

• The opposition Labour Party faces continuing division on its Brexit policy at its annual conference. (FT)

Jeffrey Epstein

• M.I.T.’s president, Rafael Reif, conceded that top administrators at the university had allowed donations from the financier so long as he made them anonymously. (NYT)

• LinkedIn’s founder, Reid Hoffman, says he regrets his role in helping rehabilitate Mr. Epstein’s reputation after the financier’s conviction on state prostitution charges. (Axios)

• Harvard is reviewing millions in donations it received from Mr. Epstein. (CNBC)

• A nonprofit that Mr. Epstein operated, which had an account at Deutsche Bank, appears to have been designed to generate tax benefits. (WSJ)

Tech

• Google reached a settlement with the National Labor Relations Board over employee complaints that the company has stymied dissent. (NYT)

• Square has lent $5 billion to small businesses and consumers and applied for a banking license — but says it isn’t a financial company. (WSJ)

• Google is changing its algorithm to better surface “original reporting.” (NYT)

• The F.B.I. is reportedly investigating Mithril Capital, the venture capital firm co-founded by Peter Thiel. (Recode)

Best of the rest

• The billionaire Carl Icahn plans to move his home and business to Florida to avoid New York’s higher taxes. (Bloomberg)

• Municipal bonds appear to be consistently underpriced, meaning that taxpayers pay more in interest. (WSJ)

• Nestlé announced plans to eliminate greenhouse-gas emissions from its supply chain by 2050. And Gucci plans to make its supply chain carbon-neutral by the end of the month. (Fortune, NYT)

• The economist Thomas Piketty is back with a new book: 1,200 pages on how to abolish billionaires. (Fortune)

Thanks for reading! We’ll see you next week.

You can find live updates throughout the day at nytimes.com/dealbook.

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