If there was one sentence that bound together the Canadian officials and Japanese executives at the Canadian ambassador’s residence in Tokyo on Tuesday night, it was this: “We are not the targets.” For all the bullying and bluster of President Donald Trump’s trade broadsides, it’s now clear that his real aim is elsewhere. Ally-bashing and auto tariffs are a side show. Changing the U.S. relationship with China is the main event. If you missed Walter Russell Mead’s piece in Monday’s Wall Street Journal, it’s worth reading now. He calls it “Cold War II.”
For the moment, that campaign is clearly hurting China more than the U.S.—giving temporary credence to the president’s view that trade wars can be won. China began the week scrambling to inject liquidity into a slowing economy, but that led its currency to plummet, forcing countermeasures to limit the outflow of capital. Alibaba chief Jack Ma said this morning the U.S. will suffer more in the long run.
I’m at ground zero, in Guangzhou today, where we are preparing for our second Fortune Global Tech Forum, which is being held November 29 and 30. Details here. News below.
And by the way, apologies to Canadian Finance Minister Bill Morneau for the “n” that went missing from his name in yesterday’s newsletter.
Tears for Sears
Sears Holdings may file for bankruptcy as soon as this week, according to a Wall Street Journal report that says the company has retained M-III Partners to organize the filing. Sears has until Monday to pay back $134 million in debt, and its poor financial performance apparently doesn’t have lenders lining up for the restructuring plan being touted by CEO and chairman Edward Lampert. WSJ
SoftBank and WeWork
The Japanese conglomerate SoftBank is reportedly in talks to put a big chunk of its “Vision Fund”—as in, $20 billion of the $100 billion vehicle—into the office-rental business WeWork. SoftBank has already invested $4.4 billion in WeWork, which claims to be a tech company rather than a real-estate firm. Recode
HSBC has settled with federal prosecutors in the U.S. over its alleged miss-selling of mortgage-based securities ahead of the financial crisis. The settlement is worth $765 million. The bank’s U.S. chief, Patrick J. Burke: “The U.S. management team is focused on putting historical matters into the rear view mirror and completing the turn-around of HSBC’s U.S. operations.” BBC
U.S. Treasury Secretary Steven Mnuchin has warned China not to devalue its currency as a trade-war tactic. The renminbi has fallen somewhat this year, though that’s largely a result of the trade war (see above.) Mnuchin acknowledged that the depreciation was due to China’s “own economic issues,” but said: “We are going to absolutely want to make sure that as part of any trade understanding we come to that currency has to be part of that.” Financial Times
Around the Water Cooler
South Korea is considering lifting some of its sanctions against North Korea, in an effort to boost peace talks. The South imposed the sanctions in 2010 after 45 of its sailors were killed in an attack on a warship. The move would mostly be symbolic, though, as U.S. sanctions mean the South cannot just restart joint economic projects with the North. Associated Press
Apple bought a Danish company called Spektral at the end of last year, it has now emerged. According to local media, the price was around $31 million. Spektral develops machine-learning technology for image and video-editing purposes—its software makes it possible to identify things in images and remove them from their surroundings. Nordic9
According to a new Reuters report, Amazon designed an “artificial intelligence” recruitment system that it had to ditch, after it turned out the system displayed a bias against female candidates. The thing with machine-learning systems such as this is that they train themselves on existing patterns, and in this case Amazon fed the system the resumes that it had received over a decade. Most of those applications were from men, and the system trained itself to discriminate against women. Reuters
Huawei has unveiled a couple of “AI” chips that rival products from Qualcomm, Samsung, Intel and Nvidia. One is aimed at datacenters; the other at Internet-of-things connected devices. Both are designed to process a lot of data very quickly, and they could help the Chinese firm boost its enterprise business. CNBC