Good morning.
Some thawing in the trade war yesterday, as reports from the U.S. Commerce and Agriculture departments show China making some of its largest purchase of ag products in over a year. Jim Sutter, chief executive of the U.S. Soybean Export Council, told the Wall Street Journal that “soybeans are a barometer” for how the talks are going, and the latest news suggests “we’re just now building up momentum again.”
Meanwhile, President Trump is scheduled to sign a limited trade agreement with Japan next Monday, which also benefits farmers, who lost out when the President pulled out of the Trans-Pacific Partnership. The deal, however, does not resolve differences over trade in autos.
But here’s the bigger story: Shannon O’Neill with the Council on Foreign Relations, writes that the last two years have seen the signing of more than a dozen trade treaties covering as much as a third of global output. Japan salvaged the Trans-Pacific Partnership that the U.S. abandoned, rechristening it with an even more awkward name (initials: CPTPP), and also sealed a deal with the EU. Europe, meanwhile, has been signing pacts throughout the Americas. Free trade is thriving; it’s just the U.S. that is being left out.
Some results: Suzuki motorcycles now have a 10% cost advantage over Harley Davidsons in Germany. Australian beef avoids the 30% tariff that Texas pays in Japan. And Canadian wheat now costs almost one-third less than U.S.-grown crops in the 11 CPTPP markets.
Is this good for American business? Clearly not. Many business leaders give Trump credit for taking on Chinese trade practices seen as abusive. But in the rest of the world, it’s past time for the U.S. to return to the free-trade fold.
More news below.
Alan Murray
alan.murray@fortune.com
@alansmurray
TOP NEWS
HKEX Out
Hong Kong Exchanges & Clearing has pulled its $36.6 billion bid for London Stock Exchange Group, following the acquisition target's board's rejection of the deal. LSE is now free to complete its $14.5 billion acquisition of Refinitiv Holdings, which HKEX wanted scrapped under its proposals. Wall Street Journal
SoftBank Wounds
SoftBank's recent rough patch may have lost it more than $5 billion, analysts have calculated. The Japanese conglomerate is a big backer of Uber and Slack, whose shares have performed badly, and WeWork's abortive IPO showed that company's worth to be a lot less than SoftBank hoped when plowing money into it. Bloomberg
Trump Taxes
A U.S. district judge ruled yesterday that President Trump could not block the release of his tax returns to the Manhattan district attorney—but an appeals court swiftly granted the president a temporary stay on that decision, pending a fuller consideration of the matter. Washington Post
Tackling Huawei
The U.S. does not have any telecommunications equipment company that can rival Huawei, and is now realizing the national security implications of that situation. So it is reportedly considering ways to funnel money to Nokia and Ericsson, the European companies that do rival the Chinese giant. Financial Times
AROUND THE WATER COOLER
German Manufacturing
Germany's expected economic contraction for Q3 may not be as steep as feared, judging by an unexpected boost to industrial output in August. Economists had been expecting a 0.1% drop, but got a 0.3% rise instead, thanks to the production of intermediate and capital goods. July's reading was also revised to represent a smaller drop in output than previously thought. Reuters
Brexit Debt
The U.K.'s Institute for Fiscal Studies, a think tank, has warned that a no-deal Brexit would push British debt to levels not seen in the last half-century—even if the event is "relatively benign." It is urging the government to avoid any plans to permanently cut taxes. IFS director Paul Johnson: "The government is now adrift without any effective fiscal anchor." BBC
HP's Fortunes
Fortune's Erik Sherman takes a close look at HP's decision last week to restructure and boost dividends and share buybacks. The driver seems to come largely from changes in the ink market—as one UBS analyst said, "People are going offline and buying off-brand." Fortune
Vaping Cancer
More bad news for the nascent vape industry, in the form of the first study to definitively link nicotine-vaping with cancer. The study involved mice. Lead researcher Moon-Shong Tang warned that with e-cigarettes, it is "foreseeable" that "all kinds of disease" might emerge. CNBC
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
