Stocks in Asia were set to trade higher at the open on Friday following days of declines this week amid U.S.-China trade confusion.
Futures pointed to a higher open for Japanese shares. The Nikkei futures contract in Chicago was at 23,065 while its counterpart in Osaka was at 23,100. That compared against the Nikkei 225’s last close at 23,038.58.
Meanwhile, shares in Australia rose in early trade as the S&P/ASX 200 gained about 0.5%.
Shares of Westpac declined more than 1% after Goldman Sachs cut its price target for the stock by 10%, according to Reuters. The lender’s stock has slipped in the past few days. Australia’s anti money-laundering and terrorism financing regulator filed for civil penalty orders against the firm, alleging its “oversight of the banking and designated services provided through its corresponding banking relationships was deficient.”
Markets have had a rocky trading week amid mixed headlines on U.S.-China trade.
The Wall Street Journal reported Thursday that Chinese Vice Premier Liu He, during a phone call thought to have been made late last week, had invited U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to Beijing to sit down for further talks.
It was not clear whether U.S. negotiators had accepted Liu’s invitation. However, the Journal’s report said that U.S. trade officials were willing to meet with their Chinese counterparts. Meanwhile, the South China Morning Post said both countries are on the “doorstep” of reaching a deal, citing a source close to the Trump administration.
The matter has been further complicated by U.S. legislation on Hong Kong, which has been rocked by months of protests. The U.S. House of Representatives passed a bill on Wednesday intended to support protesters in Hong Kong. It prompted Beijing to accuse the U.S. of interfering in domestic affairs. U.S. President Donald Trump has yet to sign the bill.
“China has called on the President to veto the bill but with unanimous Senate and House support, its highly unlikely that he will do so,” Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, wrote in an overnight note.
“They have threatened forceful measures if the bill is signed so expect to tensions to escalate when that happens,” Lien said.
Overnight on Wall Street, stocks stateside posed a three day-losing streak. The Dow Jones Industrial Average shed 54.8 points to close at 27,766.29 while the S&P 500 dipped 0.16% end its trading day at 3,103.54. Nasdaq Composite declined 0.2% to close at 8,506.21. Thursday marked the third straight day of losses for the Dow — its longest losing streak since August. The S&P 500 posted its first three-day slide since September.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.958 after dipping to levels below 97.8 earlier.
The Japanese yen traded at 108.59 per dollar after strengthening from levels above 108.9 seen earlier in the trading week. The Australian dollar changed hands at $0.6787 after declining from highs around $0.681 yesterday.
— CNBC’s Fred Imbert contributed to this report.
Sotheby’s to auction rejected Beatles’ audition tape
On New Year’s Day in 1962, a then-unknown band called The Beatles performed 15 songs for British label Decca Records. The band believed the audition would land them a recording contract.
It did not.
There is some debate as to whether Decca Records rejected The Beatles or The Beatles rejected an offer from Decca to press their records only if the band paid for it themselves. Whatever the case, The Beatles’ then manager Brian Epstein held on to a recording of the audition.
The Beatles, of course, went on to get signed (their first big hit in America was with EMI Records in 1963) and became one of the most beloved and famous bands in history.
Now, Sotheby’s London will auction the tape of the Decca audition online, estimating it will sell for 50,000 to 70,000 pounds, or about $65,000 to $90,000.
The demo includes songs like “Money,” “The Sheik of the Araby,” “September in the Rain,” “Three Cool Cats” and “Like Dreamers Do,” according to Sotheby’s. (“Money” later appeared on the album “With The Beatles” in 1963.)
Courtesy of Sotheby’s
On seven of the audition tracks Paul McCartney led vocals, and on four, John Lennon and George Harrison led together.
As Sotheby’s tells it, Decca Records didn’t take the band seriously at the audition. Sotheby’s says the label told Epstein that “guitar bands are out,” citing Epstein’s book, “A Cellarful of Noise.”
In addition to the recording, the auction will also include John Lennon’s gold tone, wire-framed sunglasses, which are expected to sell for 6,000 to 8,000 pounds or about $8,000 to $10,000.
Courtesy of Sotheby’s
The sunglasses were given to Lennon in 1966, according to Sotheby’s. On one side, there is a screw missing, and there are some minor scratches on the lenses.
The auction runs from Dec. 6 to Dec. 10.
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China should be graduated from World Bank loan program
Steven Mnuchin, U.S. Treasury secretary, speaks during a press briefing at the White House in Washington, D.C., U.S., on Monday, July 15, 2019.
Al Drago | Bloomberg | Getty Images
Treasury Secretary Steven Mnuchin on Thursday agreed that the World Bank should expel China from a supportive loan program that helps middle- and low-income nations finance government projects.
Asked by Rep. Anthony Gonzalez, R-Ohio, whether he’d support graduating Beijing from the lending program, Mnuchin replied, “I do.”
The question from Gonzalez comes as he works to pass legislation that would curb World Bank funding to China by graduating the country from its International Bank for Reconstruction and Development. A unit of the World Bank, the IBRD offers myriad financial products and loans to countries hoping to reduce poverty and promote sustainable investing.
Mnuchin added that the selection of former Treasury Undersecretary David Malpass as the World Bank’s president earlier this year gives him confidence the institution will revise its practices to make its lending more equitable.
This is something “Malpass worked on with the World Bank when he worked for me. This was his No. 1 issue in reforms,” Mnuchin assured Gonzalez from Capitol Hill. “Our executive board member has objected to the program, and I think that gets read in and ultimately that will be on the World Bank’s website.”
“We don’t have veto power over every single loan or veto power over a specific statement,” he added. But “we have veto power over capital allocations and in other issues.”
Tension has developed as China is lending billions of dollars of its own to developing countries under opaque terms as part of its “Belt and Road” initiative to build infrastructure. That practice has angered many U.S. politicians, who view China not only as an economic rival but as a geopolitical threat as it broadens its presence overseas.
“What’s happening is basically the U.S. and other countries are indirectly funding China’s ‘Belt and Road’ ambitions, which used to further their geopolitical goals,” said Clete Willems, a partner at Akin Gump and a former White House trade advisor.
“China claims that it wants to be seen as an equal to the U.S. in the global economy. If that’s the case, it needs to step up and be treated in the same way as the U.S.,” Willems added. “It can no longer be considered a developing country.”
The bank has historically defended its lending practices as a way to give assistance to needy countries so that nations can share knowledge globally and collaborate on international projects. CNBC reached out to the World Bank for comment.
But according to Gonzalez, the threshold for graduation from the IBRD program currently stands at a gross national income per capita level of $6,975, which China exceeded in 2016. The congressman introduced the “Accountability for World Bank Loans to China Act” on Nov. 13 and has since found support from some of Wall Street’s top investors, including Hayman Capital’s Kyle Bass.
Gonzalez, who also serves on the House Financial Services Committee, reiterated to CNBC on Thursday that China should no longer receive low-rate help that is, in theory, reserved for “middle-income and creditworthy low-income countries.”
“What they have done internationally — not just in the U.S. — is basically forced people to make a trade and say: ‘If you want access to our markets, which are enormous, you have to play by our rules,'” the congressman said in an interview with CNBC.
And one of those wayward China-supported rules is that other countries at the World Bank must allow Beijing to remain in the institution as a nation that is allowed to draw loans, he said.
“To me, it makes no sense whatsoever why the U.S. taxpayer should be backing subsidized, discounted rates to the Chinese government so that they can continue their development model, which is unbelievably oppressive but also damaging to our economy and our country,” he added.
SoftBank Vision Fund 2 in talks to invest $150 million in Honor
SoftBank Group Corp. Chairman and CEO Masayoshi Son speaks during a press conference on May 9, 2018 in Tokyo, Japan.
Tomohiro Ohsumi | Getty Images
SoftBank‘s Vision Fund 2 has held talks to invest about $150 million in home health-care company Honor, according to people familiar with the matter.
While the Honor investment hasn’t been approved by the Vision Fund’s investment committee yet, it marks one of the first known potential bets for the massive new fund. There are a number of Vision Fund 2 investments in the works, including some which have already been approved by the investment committee, said two of the people, who asked not to be named because the discussions are private. None of the investments will be publicly disclosed until the fund concludes its fundraising, the people said.
SoftBank founder and CEO Masayoshi Son has told Vision Fund partners scouting deals that he wants slow the pace of new investments and focus on companies that have a clearer path to profitability for his second Vision Fund. The change was precipitated by the public market’s negative reaction to money-losing investments from the first Vision Fund, including Uber and WeWork, the latter of which SoftBank has now acquired to stave off potential bankruptcy. SoftBank reported its first quarterly loss in 14 years last month, a result of an $8.9 billion quarterly loss at the Vision Fund.
SoftBank said in July it planned to raise $108 billion for Vision Fund 2 with investments from companies and sovereign wealth funds including Apple, Foxconn, Microsoft, National Investment Corporation of National Bank of Kazakhstan, and major participants from Taiwan. Not all of the stated contributors are still planning on investing in Vision Fund 2, according to a person familiar with the matter, but SoftBank is still focused on raising about $100 billion or more for the fund, the person said.
“Fundraising is progressing as expected as investors assess potential commitments to Vision Fund 2,” said a Vision Fund spokesperson, who declined to comment on the Honor acquisition specifically.
Other investors in Vision Fund 2 are likely to include Abu Dhabi state fund Mubadala and Saudi Arabia’s Public Investment Fund, though neither is expected to contribute as much as they did to SoftBank’s first Vision Fund, the person said. Mubadala committed $15 billion and Saudi’s PIF committed $45 billion to Vision Fund 1. SoftBank is expected to be the largest equity investor in Vision Fund 2, just as it was in Vision Fund 1, the person said.
“Vision Fund 2 is going to be launched as scheduled,” Son said last month.
SoftBank’s first Vision Fund, which raised $100 billion, is no longer committing capital to new deals and plans to use its remaining funds for follow-on investments, people familiar with the matter told CNBC in October.
Honor connects in-home caregivers, seniors and their families via online tools. Founder Seth Sternberg moved into the health space after selling Meebo, a messaging service he co-founded, to Google for a reported $100 million in 2012.
The home care space has received a wave of financing from investors looking to capitalize on an industry that hasn’t seen major upgrades in technology. Some companies have stumbled, including HomeHero, which announced a pivot to its business in a blog post entitled “There’s no magic in venture backed homecare.”
Honor has already raised more than $100 million in capital and has more than 600 employees, according to LinkedIn. The company focuses on partnerships with existing, independently owned home care providers, including taking on more of their technical operations, such as caregiver onboarding and training tools.
An Honor spokesperson declined to comment.
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