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China may be ready for a long fight with the U.S.
The latest tussles between Washington and Beijing over trade and currency appear to suggest one thing: China thinks the tensions will drag on.
China is digging in, Chao Deng and Chun Han Wong of the WSJ write, with President Xi Jinping “struggling to rejuvenate a sluggish economy.” He now “needs to appear strong, to preserve his firm grip on the political apparatus and public propaganda machine,” Jane Perlez and Alexandra Stevenson of the NYT write.
So China may try to inflict “maximum political damage,” according to Nathaniel Taplin of the WSJ. Officials appear to hope that a prolonged trade war would weaken the U.S. economy enough to derail President Trump’s re-election campaign.
The Trump administration sees things differently. “The reality is we would like to negotiate,” Larry Kudlow, the White House’s top economic adviser, told CNBC yesterday. “We’re planning for the Chinese team to come here in September. Things could change with respect to the tariffs.”
But this may now have grown beyond the U.S. and China. “Investors are coming to grips with the reality that the trade war is escalating and spreading into the global currency market,” Neil Irwin of the NYT writes.
• “Whatever happens next — and whether this turns out to be the beginning of a major turning point for the global economy or just one rough day on the markets — it is clear that the trade war is no longer confined to trade.”
More: The stock markets took a breather yesterday after it appeared that Beijing would not use the value of its currency as a continuing weapon in the trade war — at least, not immediately.
Weakening the dollar? That’s not easy
President Trump has made no secret of his frustration that the U.S. dollar has strengthened against other currencies. But whether he could really weaken it is an open question, writes Matt Phillips of the NYT.
Weaker currencies can look attractive, because they “make a country’s exports cheaper for buyers overseas, giving a country a competitive advantage.”
Governments have historically shied away from weakening their currencies, “in part because they were afraid it would also lead to an ugly bout of inflation, which was traditionally viewed as the big risk of a weak currency.”
This week, China showed that it was possible by letting the value of its renminbi slide past a symbolic 7 to the dollar mark. It’s not clear whether that was a deliberate response to the trade war.
But the U.S. doesn’t have the same levers to pull, Mr. Phillips explains:
• “It has some capacity to intervene in financial markets by using the Exchange Stabilization Fund, a vehicle under the control of the Treasury secretary, with about $100 billion of buying power.”
• “In the past, when American politicians wanted to change the value of the dollar, they had to coordinate efforts involving a number of countries.”
• “Persuading China to let its currency strengthen to help the United States is a different situation all together.”
Disney shows the costs of the streaming wars
The media giant is bigger than ever after its takeover of most of 21st Century Fox. But it still isn’t immune to the financial toll of competing against streaming services like Netflix.
The company reported a 51 percent drop in profits for its most recent quarter compared with the same period last year. That’s largely because of $553 million in losses in its streaming division, up from $168 million a year ago. And the company expects those losses to climb to $900 million in the current quarter.
Fox also weighed on its profits. Disney, which bought its rivals’ assets to bolster its own streaming services, disclosed that Fox’s business was in worse shape than expected. (It had to take a write-down on the X-Men movie “Dark Phoenix,” for example.)
But Disney hopes to compete with Netflix on price. It plans to price a bundle of streaming services — Disney Plus, ESPN Plus and Hulu — at $12.99 a month, matching what Netflix charges for its basic service. (One difference: ESPN and Hulu carry ads; Netflix doesn’t.)
Media companies have to pay big to compete in video. AT&T (which must still determine what its forthcoming HBO Max service will cost), Comcast’s NBCUniversal and others have to reckon with the costs of doing business against Netflix and Amazon.
Trump fights California over his tax returns
President Trump and Republican Party officials sued the state yesterday over a new law that requires presidential candidates to release tax returns to qualify for the state’s primary ballot, Annie Karni of the NYT reports.
California’s law is meant to force Mr. Trump to disclose his tax returns, a decades-old precedent that he broke during the 2016 campaign and shows no sign of complying with now.
The Republican National Committee called it “a naked political attack” against the president in a lawsuit that it filed yesterday. Mr. Trump and his re-election campaign argued in a separate lawsuit that states don’t have the power to “supplement” constitutional requirements for the presidency.
A previous version of the law was vetoed by the last California governor, Jerry Brown, over questions about its constitutionality.
Using tech to stop mass shootings will be tough
President Trump has called on social media companies to analyze what users do to help law enforcement prevent mass shootings. But that idea faces problems that have long bedeviled the tech industry.
• There’s the sheer volume of the data to sift through, the WSJ notes: About 4.75 billion pieces of content are shared on Facebook every day, for example.
• And there’s little time to react: People planning assaults now tend to publish material about their intentions no more than an hour before attacking.
• Artificial intelligence tools that are meant to help provide early warning signs are currently “more artificial than intelligent,” according to Alex Stamos, Facebook’s former chief security officer.
Some websites insist that free speech is sacrosanct. Jim Watkins, the owner of 8chan, the website on which the suspect in the El Paso shooting published a racist manifesto outlining his motivations, said that efforts to shut down his site were silencing free speech. “It is disturbing to me that it could be so easily shut down,” he said of 8chan.
But politicians intend to put pressure on social media in the wake of the shootings. Democratic lawmakers called on Mr. Watkins to testify about 8chan’s efforts to clamp down on extremist content. And the House Homeland Security Committee said it would consider legislation that includes creating a national commission on social media companies and terrorism content.
More: Walmart’s C.E.O., Doug McMillon, said the company would be “thoughtful and deliberate” in its response to the shooting in its El Paso store last weekend and to the issues that have “been raised in the broader national discussion around gun violence.” And even congressional Republicans are starting to support “red flag” laws meant to help take guns away from people who pose an imminent danger.
Inside Uber’s plan to rule public transit
The ride-hailing service craves growth — and it thinks that helping people get around cities using public transit could be a solution, Kate Conger of the NYT reports.
Uber is working with cities and transit agencies in the United States, Canada, Britain and Australia “to provide tickets, to transport people with disabilities or sometimes to substitute for a town’s public transportation system entirely.” Since 2015, Uber has struck more than 20 such deals.
The idea is to become an “Amazon of transportation,” a kind of one-stop shop for car, bike, scooter, bus and train trips. “Doing so would help Uber draw more riders, especially as the company faces questions from Wall Street about whether it can make money and revive its once red-hot growth rate,” Ms. Conger writes.
Cities can tap Uber’s network of drivers “to provide rides in areas that do not have reliable bus routes. Cities often subsidize the rides so that passengers pay what amounts to a bus fare rather than a typical Uber fee. Uber generally earns a subsidy from the transit agency, a fare from the rider or both.”
Not everyone is convinced. “There are real questions about forming partnerships that may end up pushing riders away from public transportation,” Adie Tomer, a Brookings Institution policy fellow who studies infrastructure use, told the NYT. “It’s a dangerous game for transit agencies to make agreements with ride-hailing companies.”
More: A study commissioned by Uber and Lyft showed that the ride-hailing services are making urban traffic worse.
Dick Costolo, Twitter’s former C.E.O., and Adam Bain, the site’s former C.O.O., have created 01 Advisors, a start-up advisory and investment firm.
Sheila Lirio Marcelo is stepping down as C.E.O. of Care.com, after the WSJ found that the online marketplace did limited vetting of caregivers on its platform.
Julia Angwin was reinstalled as editor in chief of the tech news site The Markup.
David Rubin was elected as the next president of the Academy of Motion Picture Arts and Sciences.
Jon Huntsman Jr. resigned as U.S. ambassador to Russia amid speculation that he may run again for governor of Utah.
The speed read
• SoftBank’s second Vision Fund might not really have the $108 billion it claims. (WSJ)
• How JPMorgan Chase courted WeWork to try to win a lead role in the company’s I.P.O. (Bloomberg)
• Vivendi is near a deal to sell a 10 percent stake in Universal Music Group, the label for artists like Taylor Swift, to Tencent of China at a $33 billion valuation. (FT)
• Mastercard agreed to buy the real-time payments unit of Nets Group for $3.2 billion. (FT)
Politics and policy
• A federal judge dismissed one of two charges against Gregory Craig, a top lawyer in the Obama administration, over his legal work for the Ukrainian government. (NYT)
• The N.R.A. reportedly discussed buying a mansion near Dallas for its C.E.O., Wayne LaPierre, last year. (WaPo)
• Denials of U.S. visas to Mexicans who might use American social services have skyrocketed under the Trump administration. (Politico)
• Two top House Democrats asked the National Archives to hand over records related to Brett Kavanaugh’s tenure in the White House. (CNBC)
• British and European officials are blaming each other for the growing likelihood that Britain will leave the E.U. without an agreement. (Bloomberg)
• The opposition Labour Party ruled out a coalition government to stop a no-deal Brexit unless it could lead the effort, likely dooming the campaign. (FT)
• Britain’s counterterrorism chief said a no-deal Brexit would endanger the country’s national security. (Guardian)
• How the World Trade Organization could deal with the trade fight between Japan and South Korea. (Nikkei)
• Forty-six U.N. members, including the U.S. and China, signed an agreement meant to create an easier way of settling commercial cross-border trade disputes. (Reuters)
• More than five million people pay to use Tinder. (NYT)
• President Trump suggested, without evidence, that Google might try to rig the elections against him in 2020. (CNBC)
• Twitter said it might have used private data for ad targeting without users’ permission. (Hill)
• The messaging app Kik said that an S.E.C. lawsuit that declared its $100 million initial coin offering illegal had “repeatedly” twisted facts. (FT)
• Bitcoin’s value appears increasingly correlated with the price of gold. (Bloomberg Opinion)
• Take a peek inside Google’s design lab. (Fast Co.)
Best of the rest
• Novartis hid manipulated data while it sought approval for a $2.1 million gene therapy treatment, according to the F.D.A. (NYT)
• Large British accounting firms are getting ready to dump risky clients. (FT)
• Toni Morrison, the first African-American woman to win the Nobel Prize in Literature, died on Monday. She was 88. (NYT)
• Some big funds are slowly moving away from investments in companies that contribute to climate change. (Bloomberg)
• HSBC’s interim C.E.O. said he wanted “less process and more action” at the bank. (Bloomberg)
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