US, China Get Closer to Trade Deal
After trading tariff blows for months, the US and China are finally discussing how to lower some taxes on each other's goods and may even remove some of the trade taxes. But this is likely to happen in stages - the first of which is due to be signed in December. Tariff rollbacks will make goods cheaper and should encourage spending by governments and companies alike, thus boosting earnings and economic growth. US stocks reached all-time highs after Beijing announced that both countries had agreed to gradually eliminate all existing tariffs as part of a 'Phase I' trade deal. They will also work together on a probe into a fentanyl smuggling operation based in China, potentially paving the way for further progress in bringing a mutual end to their trade war. The International Monetary Fund is optimistic about the partial trade deal reached while China called on the US to cancel all tariffs ahead of any final agreement.
US Fed Cuts Rates Again
The US central bank has cut interest rates again, in a bid to protect the economy from the impact of trade wars and an impending global slowdown. The Federal Reserve lowered its benchmark funds rate by 25 basis point, to a range of 1.5-1.75 per cent. It was the third cut this year as part of 'midcycle adjustment', but the Fed also indicated a pause in rate cuts from now on. The latest move came after the US economic growth slowed to an annual rate of 1.9 per cent in the most recent quarter.
Bold Bets Pull Down SoftBank
SoftBank's bold bets on WeWork, Uber and the likes are not paying off. The Japan-based conglomerate posted a $6.5 billion loss in the second quarter, the company's biggest-ever quarterly loss, according to The Wall Street Journal. SoftBank and its Vision Fund, the famously risk-loving investment arm, collectively wrote down $9.2 billion on WeWork, nearly 90 per cent of the $10.3 billion they had invested in the co-working company. The Vision Fund further wrote down its investments in more than 20 companies, including Uber. SoftBank Chairman Masayoshi Son's personal worth also took a hit and tumbled to around $13.8 billion, according to the Bloomberg Billionaires Index, after peaking at $20 billion in July this year. A contrite Son blamed his own judgement for the debacle but said, WeWork could still be salvaged. The long-term impact is not clear yet, but the outcome may require a rethink on the 'growth before profitability' strategy for funding unicorns.
Brexit Drives UK to Snap Polls
The UK's House of Commons approved a bill to send Britain back to the polls on December 12 in an attempt to break the Brexit deadlock. Britain's parliament temporarily dissolved as the move was necessary to facilitate the snap election. Although Boris Johnson hopes to win a large enough majority to get his Brexit deal through, he was under fire for choosing not to release a report on Russian interference in UK politics while MPs were still in session. The election follows the confirmation of a Brexit delay until January 31, 2020, after the EU agreed to the UK's extension request.
Walgreens Boots May Go Private
Walgreens Boots Alliance, a US-listed global drugstore chain, is in talks with private equity groups to take the company private in a $70-billion deal, as per media reports. If the deal goes through, it could be the biggest take-private buyout in history. It would also allow the retail pharmacy giant to adapt to competition from online sellers without quarterly pressure from shareholders. Led by Italian billionaire Stefano Pessina who owns 16 per cent in Walgreens, the group runs a retail and drug wholesaling business across 25 countries and has annual revenues of $137 billion.