A moment of truth for a trade deal

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A U.S.-China trade deal is in the balance at the G-20

As world leaders gathered in Osaka, Japan, today to kick off the latest Group of 20 summit meeting, there’s one topic at the front of everyone’s mind: trade.

Why? The trade war between the U.S. and China is becoming a major drag on the global economy.

All eyes are on a pivotal meeting between President Trump and President Xi Jinping of China, who are scheduled to spend time with each other tomorrow morning, Ana Swanson and Keith Bradsher of the NYT report.

• “While both leaders appear open to a truce, they have hardened their positions ahead of the talks.”
• “Neither leader wants to be seen as capitulating or agreeing to concessions that could give them less leverage once trade talks resume.”
• The Trump administration wants China to agree to terms discussed in the spring. But Beijing has insisted that a deal must include new conditions, like a lifting of tough sanctions on Huawei. (Here’s how the Huawei conversation could play out.)
• But even if the two reach a temporary cease-fire, “the meeting seems unlikely to produce the kind of transformative deal that Mr. Trump once promised,” Ms. Swanson and Mr. Bradsher write.

Expect other trade news, too. Mr. Trump has said that we can expect the announcement of “very big” deals with India and Japan, though he didn’t elaborate.

More: On the first day of the meeting, Mr. Trump lightheartedly told President Vladimir Putin of Russia, “Don’t meddle in the election.”

Democrats remained split in second round of 2020 debates

Anyone hoping for consensus on where Democratic presidential contenders stand on economic issues will be disappointed by last night’s debates, as candidates were divided on whether to tack left or to the center.

• The senators Bernie Sanders, Kamala Harris and Kirsten Gillibrand veered left, saying they would support replacing private health insurance with some version of a Medicare-for-all plan.
• Joe Biden stayed ideologically moderate, playing up his ability to work with Republicans on issues like taxes.
• John Hickenlooper, the former governor of Colorado, said, “If we don’t clearly define that we are not socialists, the Republicans are going to come at us every way they can and call us socialist.”
• One wild-card candidate, Andrew Yang, focused on the benefits of universal basic income and the threat of automation to the U.S. economy.

Mr. Biden was the main target of last night’s debate, with Ms. Harris scoring the biggest blow when she criticized his work with segregationists and former opposition to school busing (in the 1970s).

Big banks were surprisingly spared major criticism. The phrase “Wall Street” was uttered fewer than a half-dozen times, by Bloomberg News’s count. Charles Myers, a former vice chairman of the investment bank Evercore, said, “It’s a very tired argument to beat up on banks this many years after the crisis.”

Jony Ive is leaving Apple

Apple’s chief design officer — and one of the most influential executives in the history of the Silicon Valley giant — is stepping down, Cade Metz of the NYT reports.

Mr. Ive will depart later this year to start his own design company called LoveFrom, Apple said yesterday. He plans to continue working on product development for the company.

The departure was predictable. Mr. Ive “has been leaving Apple for years,” Bloomberg notes. After the Apple Watch made its debut in 2015, Mr. Ive shed responsibilities, and his oversight of the company’s design team eventually was “reduced to coming to headquarters as little as twice a week,” according to unnamed sources.

People are worried about what’s next. Mr. Ive shaped the look and feel of many iconic Apple products, including the iPhone. Investors clearly feel that, without him at the design helm, the company might struggle: Its stock fell 1 percent in after-hours trading, erasing $9 billion from its market cap.

But this might be what Apple actually needs. It was “time for Apple and the rest of the technology sector to move past the cult of the designer” that Mr. Ive represented, Shira Ovide of Bloomberg Opinion writes. As pervasive computing in our homes and cars becomes more important than smartphones, she writes, “The future of Apple and the technology industry will be shaped by software and other technologies that don’t have to look beautiful.”

Stress tests? Most banks didn’t break a sweat ?

Wall Street’s biggest banks passed an annual review of their financial strength, the Fed announced yesterday. That means they’re allowed to share some of their wealth with investors.

Regulators tested the biggest banks for financial resilience against problems like a severe economic downturn or a sudden shock to global markets. The tests are required by the Dodd-Frank financial regulations passed in the wake of the 2008 financial crisis.

This year, nearly all of the 18 banks examined passed. Some only squeaked by — JPMorgan Chase had to adjust its capital-payouts plan, and Deutsche Bank was ordered to keep making changes to its operations — but they largely got clean bills of health.

There was just one exception: Credit Suisse. Regulators found “weaknesses” in the Swiss bank’s plan to measure potential losses, and limited how much it could pay out to shareholders until that is fixed.

Big banks announced large new stock repurchases and dividends within minutes of the Fed’s announcement. Share prices in those firms shot up, as investors anticipated getting a cut of their record profits.

But skeptics say this year’s exams were too lenient. Regulations rolled out under the Trump administration relaxed banking rules, including how many firms would be subjected to stress tests. (Thirty-five were scrutinized in last year’s checks.)

The world’s top-performing stock market? Russia’s

Russian stocks are generating some of the highest returns of 2019, as investors get over the shock of last year’s sanctions, Matt Phillips of the NYT reports.

Surging Russian share prices and a buoyant ruble have “generated some of the best investment returns on earth in 2019,” Mr. Phillips writes. “In dollar terms, Russian stocks are up more than 28 percent (and more if you factor in dividends). The S&P 500, by contrast, is up more than 16 percent.”

“There are fundamental economic reasons for the Russian rally, most notably the rebounding price of crude oil, a cornerstone of the country’s economy.”

But it also reflects “investors’ growing confidence that the United States government isn’t going to take further actions that would imperil Russia’s economy,” particularly after the Treasury Department lifted sanctions on several Russian companies in January and potential punishments stalled in Congress.

“That has left investors to dwell on the fundamentals: a Russian market where stocks appeared dirt cheap after last year’s sell-off, especially in light of the more than 45 percent rise in global oil prices earlier this year.”

Evernote, and the forgotten side of Silicon Valley

The tech world is celebrating the multibillion-dollar I.P.O.s of companies like Uber, Lyft and Pinterest. But there are plenty of also-ran “unicorns” — like the note-taking app Evernote — in Silicon Valley that are now just limping along, Erin Griffith of the NYT writes.

• “In Silicon Valley, the idea that most start-ups won’t make it to a splashy public offering or acquisition is not just understood, but embraced,” Ms. Griffith writes. “‘Fail fast, fail often’ is one of the region’s earliest and best-recognized catchphrases.”
• “But Evernote’s struggles illustrate a harsher truth: For many start-ups of a certain size, failure rarely happens abruptly.”
• Since 2015, according to CB Insights, more than 40 unicorns have had “down rounds” or “down exits” — that is, investments or sales at reduced valuations. Among them: the name-that-song app Shazam and Jessica Alba’s consumer-goods producer, Honest Company.
• Evernote once branched out into recipe apps, branded Moleskine notebooks and even socks.
• But growth slowed; an attempt to create a business product failed; and competition grew. “When we were a movement, we weren’t a business,” Evernote’s current C.E.O., Ian Small, told Ms. Griffith.

Revolving door

Scott Gottlieb, the former head of the F.D.A., has joined Pfizer’s board of directors.

Ford plans to cut 12,000 jobs in Europe and shut down five plants.

The speed read

Deals

• Blackstone and the Danish family that controls Lego are reportedly poised to buy Merlin Entertainments, the owner of Legoland and Madame Tussauds, for 6 billion pounds, or $7.6 billion. (FT)
• The Howard Hughes Corporation, a real estate developer, has reportedly hired the investment bank Centerview Partners to help it consider selling itself. (CNBC)
• The RealReal, a secondhand fashion marketplace, priced its I.P.O. last night at $20 a share, above expectations. (NYT)
• How betting on tech made Chase Coleman of the $30 billion hedge fund Tiger Global a billionaire. (Bloomberg)
• Japan plans to overhaul its M.&A. rules ahead of an expected wave of management buyouts in its corporate sector. (FT)
• The auction of the bankrupt metal producer British Steel has reportedly drawn 10 potential bidders. (FT)

Politics and policy

• The Trump administration may bypass Congress to introduce a break on capital gains taxes that would mostly benefit the wealthy. (Bloomberg)
• Economists are starting to worry about the U.S. jobs market. (Axios)
• The House passed the Senate’s $4.6 billion border-funding bill after Democrats were unable to agree on stronger protections for children detained at the border. (NYT)
• The Supreme Court rejected federal limits on partisan gerrymandering and the Trump administration’s stated rationale for adding a citizenship question to the 2020 census. (NYT)
• President Vladimir Putin of Russia declared that liberalism has “become obsolete.” (FT)

Trade

• How President Trump’s trade war may have caused irreparable damage to the American semiconductor industry. (NYT)
• The chip maker A.M.D. engineered its financial turnaround through a deal with Chinese partners that, experts say, has helped Beijing in the supercomputer wars — something U.S. officials are now trying to reverse. (WSJ)

Tech

• Twitter will now hide — but not take down — messages from major political figures who break the company’s rules for harassment or abuse. (NYT)
• Senior Trump administration officials have reportedly discussed banning tech companies from using encryption that is unbreakable by law enforcement. (Politico)
• Bitcoin’s sugar rush is over: After almost hitting $14,000 on Wednesday, it is now back down to where it was five days ago. (Bloomberg)
• Somerville, Mass., became the second city in the U.S. to forbid its agencies and departments from using facial recognition software. And a big maker of police body cameras, Axon, just banned the technology from its products, too. (Vice, NYT Op-Ed)
• Is e-sports a bubble? (Axios)

Best of the rest

• Boeing reportedly needs up to three months to fix the latest problem with the 737 Max, which means the jets may not be back in the air until the end of the year. (Bloomberg, WSJ)
• California regulators are considering penalties against PG&E over the 2017 wildfires in Northern California. (Reuters)
• As coal use declines, the next climate battleground is natural gas. (NYT)
• Why paying $1,000 a year in credit card fees might not be totally insane. (Wirecutter)

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