Good morning from Hong Kong, where the Mid-Autumn Festival is underway, and everyone is handing out mooncakes. Mooncakes are a tradition like Christmas fruit cake—enjoyed much more in the giving than the receiving. I’ve tried three different ones in the last two days, and am done.
The holiday has shuttered markets in China, but those in the rest of Asia are modestly celebrating signs that the U.S. and China may reach an “interim” trade agreement when they meet next month. China’s top trade negotiator, Vice Premier Liu He, told business leaders that “the whole world is expecting to see progress in China-U.S. trade relations.” And President Trump said he is open to a interim deal. “I’d rather get the whole deal done,” he said, but an interim deal is “something we would consider, I guess.”
One big reason for considering it is continued evidence that the economy is slowing. The International Monetary Fund said yesterday that the trade spat could shave 0.8% off of global growth.
I’ve been traveling in China for the past two weeks, and have found near universal sentiment here for restoring good relations between the U.S. and China. The notion of a world with two separate, parallel and competing economic “spheres of interest” is not one that has much appeal on this side of the world. In Yunnan last week, former IFC CEO Jin-Yong Cai said the U.S.-China trade spat not only had economic ramifications, but also could be an obstacle to progress on the environment. In Chongqing this week, party officials took me and my Fortune colleagues on a tour of the Joseph Stilwell museum–the rare monument to an American in China.
But on the U.S. side, support for conciliation is far less clear. In a debate yesterday, Democratic presidential candidates seemed to be trying to outdo Trump on trade. “The fact of the matter is China…they’re stealing our intellectual property, they’re violating the World Trade Organization, they’re dumping steel on us,” said former Vice President Joe Biden. “In addition to that, we’re in a position where if we don’t set the rules, we’re going to find ourselves with China setting the rules. And that’s why you need to take on China.”
Even if there’s a temporary truce next month, the war is far from over.
More news below.
WeWork will reportedly list its shares on Nasdaq on the week of September 23, and it’s also planning “sweeping” governance changes such as curbing the voting power of Adam Neumann, the co-founder, and removing his wife’s ability to choose his successor in the event of his death. Investors have been rather tepid on the imminent flotation. Wall Street Journal
The U.S. budget deficit has crossed the $1 trillion mark for the first time in seven years. The achievement came in August, when the total deficit hit $1.07 trillion. It was $584.6 billion in 2016, before President Trump cut taxes. The national debt is up 13% since he took office. CNBC
President Trump is promising a “very, very inspirational” tax cut for middle-income people next year. Details remain scarce, but here he is: “It’s going to be something that I think it’s what everyone’s really looking for…It will be a very, very substantial tax cut for middle-income folks, who work so hard.” Fortune
The Trump administration is going to try stopping states from setting their own vehicle emissions rules. California is the big target here, having set tough targets that undermine the administration’s attempt to roll back Obama-era standards. Reuters
A correction to yesterday’s CEO Daily essay: British American Tobacco isn’t the company behind Camel cigarettes; R.J. Reynolds (in the U.S.) and Japan Tobacco (elsewhere) are the companies that own and manufacture the brand.
AROUND THE WATER COOLER
The European Central Bank’s new stimulus package has given a boost to European bank stocks, but there is a backlash. Société Générale’s Kit Juckes: “It’s not at all clear that the impact on the economy will be significant and it’s crystal clear that the baton needs to be handed to fiscal policy sharpish.” Guardian
The French government wants common EU-wide rules on cryptocurrencies. Finance Minister Bruno Le Maire made the call this morning, and also expressed opposition to Facebook’s Libra “stablecoin” on the basis of its threat to governments’ monetary sovereignty. The French government isn’t opposed to cryptocurrencies as such, though—Le Maire also called for the creation of a European “public digital currency.” Yahoo Finance
New Zealand could strengthen its gun laws again, in the wake of the March Christchurch massacre. Having already banned military style semi-automatics, Jacinda Ardern’s government introduced a new bill that would create a national registry of firearms. Reuters
The largest private-sector strike in the U.S. since 2007 has ben averted, after around 47,000 union workers in southern California struck a deal with grocery chains such as Albertsons and Ralphs. The new contracts provide significant wage increases, provisions for pension funds, expanded health care access for workers’ families, and additional guaranteed hours for veteran workers. CNN