Good morning. Andrew here. Lots of news this a.m. We dive into the latest in the U.S.-China trade battle, and JPMorgan Chase just announced a huge new financial commitment in the U.S. I also spoke to Stan Druckenmiller by phone about the U.S.’s $20 billion bailout of Argentina’s economy. Some critics conjectured that Treasury Secretary Scott Bessent did this to rescue the investments of his friends on Wall Street. One of the people who was reported to have been a big holder of Argentina’s debt was Druckenmiller, who worked with him at George Soros’s investment firm. That speculation was wrong, Druckenmiller told me. He had been a large holder of Argentina’s debt — past tense — in the spring and the summer, as indicated in a regulatory filing. But he told me that he sold out of his position before the U.S. government injected money, and therefore wasn’t a beneficiary of the rescue. Indeed, he said that unfortunately for him, he sold the very last part of his stake just before the announcement. “While I did not have a position in Argentina when the Treasury currency intervention was announced, I am rooting for Milei as a beacon of capitalism and think his success is absolutely in America’s interest,” Druckenmiller told me, referring to President Javier Milei of Argentina. (Was this newsletter forwarded to you? Sign up here.)
Trade troubleS&P 500 futures, crypto and oil prices have all rebounded this morning as investors again pin their hopes on Washington and Beijing dialing back trade tensions. That is a stark reversal from Friday’s sell-off after President Trump spooked markets by threatening to impose steep tariffs on China, apparently in retaliation for Beijing erecting new trade barriers on exports of rare earth materials and magnets. The latest: Trump tried to calm nerves yesterday, writing “Don’t worry about China, it will all be fine!” on social media. He added that President Xi Jinping of China “doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!” China isn’t backing down: The country’s Commerce Ministry defended last week’s announcement of global export bans on rare earths, a move that could seriously hobble automakers, military contractors and Big Tech. A Chinese ministry spokesperson said yesterday that “we are not afraid” of a trade war with the U.S. The Hang Seng Index in Hong Kong fell, as did the dollar. And traders continued to pile into gold, which has soared as the trade war has escalated. Are these just hard-nosed negotiating tactics? Investors appear to be making that bet today, even as a November deadline for bruising tit-for-tat tariffs looms. It’s unclear if Trump will back down. Following through on his latest threat could mean that levies on China soar to roughly 130 percent, which could hammer vulnerable Chinese manufacturers. Or is this a sign of decoupling? Markets will be closely watching discussions over the rare earth trade. China dominates the global flow of these vital materials, giving it potential leverage for better terms for high-end U.S.-made artificial intelligence chips. “This battle is shaping up as rare earths versus A.I. chips,” Jim Reid, a Deutsche Bank strategist, wrote in a research note this morning. Soybeans are another potential area of leverage for Beijing. China’s pullback from the U.S. market has hit American farmers hard. At the same time, it imported a record amount of soybeans last month — with farmers in Brazil and in Argentina appearing to benefit from the shift. The trade uncertainty is weighing on investors’ minds. Markets had soared to records on the hopes that countries would negotiate down Trump’s tariffs, in effect limiting the hit to growth and corporate profits. The latest escalation shows “these tensions will probably be a recurring theme in the years ahead as both sides compete on the global stage for dominance,” Reid wrote.
The government shutdown is expected to hit more of the economy. Civilian government workers will miss their first paychecks on Wednesday, which would most likely lead to reduced consumer spending. Senator Susan Collins, Republican of Maine, criticized Russ Vought, the White House budget director, over the Trump administration’s move to start federal layoffs. Warner Bros. Discovery is said to have rejected a takeover bid from Paramount. Warner Bros. Discovery rebuffed an offer of about $20 a share, according to Bloomberg. Paramount’s new owner, David Ellison, has suggested publicly that the media industry needs further consolidation; CNBC previously reported that his company may take its bid public to put more pressure on Warner Bros. Discovery. Analysts expect a bumper earnings season for Wall Street banks. Giant lenders are forecast to report more than $9 billion in investment-banking revenue for the third quarter when they begin disclosing results this week, thanks to improvements in deal making and trading. U.S. banks may also benefit from deregulation by the Trump administration, which could free up some $140 billion in capital, according to a report by the consulting firm Alvarez & Marsal. JPMorgan’s big U.S. investment pushSince President Trump’s re-election, a wide range of companies have announced plans to invest billions in the U.S., often drawing praise from the president. JPMorgan Chase, the nation’s biggest bank, joined those ranks this morning when it announced its own huge plan to steer money into the American economy. The news: JPMorgan said that it will “facilitate, finance and invest” about $1.5 trillion over the next decade via what it’s calling its Security and Resiliency Initiative. The bank is focusing on companies of different sizes — from mid-market businesses to corporate giants — across four main areas:
The plan includes up to $10 billion in direct equity and venture capital investments by the bank in a group of mostly American companies. The initiative will draw from the firm’s corporate and investment banking teams, asset management, and its own technology investments. JPMorgan said it would hire more bankers and investment professionals, and will create an advisory council to help steer its strategy. Worth noting: JPMorgan had already planned to direct or finance about $1 trillion to help clients in those areas, meaning that the plan represents an increase of a still-sizable $500 billion. JPMorgan isn’t the only company doing this. Even before Trump’s second term began, the Japanese tech investor SoftBank pledged to invest $100 billion in the country. In August, Apple said it would invest an additional $100 billion in the U.S., for a total of $600 billion in commitments. And Pfizer said last month it would invest $70 billion in R.&D. and other capital projects. Critics of such plans have questioned how many of these corporate mega-promises will be fulfilled, and said they appear tailored in part to win points with Trump. Jefferies’s First Brands defenseThe bankruptcy filing of First Brands, the midsize auto parts maker, has continued to have an outsized hit on global financial giants. One of them, the Wall Street bank Jefferies, is seeking to quell investor fears about the damage it took from the manufacturer’s troubles. Any losses Jefferies takes from First Brands “can be readily absorbed” and the manufacturer’s collapse doesn’t threaten its own financial stability, the bank said in a statement yesterday. The lender has already said one of its asset-management units could lose about $715 million. “We believe there has been an impact on our equity market value and credit perception that is meaningfully overdone, and we expect this to correct soon as the facts and range of outcomes are better understood,” Rich Handler and Brian Friedman, the bank’s co-C.E.O.s, wrote in the statement. Jefferies listed its resources, including $10.5 billion in total equity, $8.5 billion in tangible equity and $11.5 billion in cash. It also recently expanded a partnership with Sumitomo Mitsui of Japan that includes $2.5 billion in new and expanded credit lines. Handler and Friedman denied that the bank earned undisclosed fees from providing financing to First Brands, via its Point Bonita asset-management unit. They added that “nobody at Jefferies was aware of fraudulent activity at First Brands.” Has Jefferies succeeded in calming investors? Shares in the bank are up 2.5 percent in premarket trading, though they remain down 22 percent over the past month. Handler and Friedman could face more questions at the bank’s annual investor meeting on Thursday.
“What about the political questions? Too spicy?”— Marc Benioff, Salesforce’s C.E.O., to a P.R. adviser at the end of an interview with The Times’s Heather Knight. Benioff, one of the biggest donors to San Francisco causes and a backer Hillary Clinton in 2016, had just said he “fully” supported President Trump and believed National Guard troops should be sent to the city. (Local officials sharply rebuked Benioff’s comments.) Nobel breakthroughsJust in: The Nobel Memorial Prize in Economic Sciences was awarded to Joel Mokyr of Northwestern University, Philippe Aghion of INSEAD and the London School of Economics, and Peter Howitt of Brown University, for their work on innovation and growth. Last week’s winner in chemistry is already creating buzz in the green economy. The technology recognized this year, a molecular sponge called metal-organic frameworks, or MOFs, may finally make the nascent field of carbon capture economically viable. Carbon capture has caught the attention of the fossil fuel industry and the green tech sector, with the promise of extracting planet-warming pollutants from the air. Companies building carbon capture technologies have since 2018 raised billions from major investors, including Bill Gates, Jeff Bezos and Elon Musk. But the industry has struggled to scale up, trapping just 0.1 percent of global CO2 emissions, according to the World Resource Institute. One of the biggest challenges is cost. Many existing solutions use carbon-trapping solvents, which require large amounts of energy to strip out the carbon once it’s trapped. MOF-based systems, however, use filters that trap carbon that can be blown off with low-pressure steam, and can be built as modular structures, keys for scaling. Ben Hernandez, C.E.O. of Numat, a MOF-based carbon capture start-up that has received funding from Aramco Ventures, told DealBook that he expects big oil and gas players to bolster their investment in metal-organic frameworks as a way to offset emissions. Could President Trump stifle that? The administration recently rescinded $8 billion in funding for energy projects (including about $50 million for carbon removal technology), granted under the Biden administration. But the recently passed One Big Beautiful Bill Act increased tax credits for carbon capture.. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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