Good morning. Andrew here. We’re taking a look at the battle over President Trump’s proposal to cap credit card interest rates at 10 percent and Wall Street’s effort to block it. A research study argues that the measure could make up to 80 percent of credit card customers unprofitable, most likely clamping down on the credit banks offer. Also: Spotify’s co-founder, Daniel Ek, is taking Neko Health, the health tech start-up he co-founded, to New York this spring, Bernhard Warner reports. And Grady McGregor examines the brewing battle between the U.S. and China over the Panama Canal, with Beijing trying to block the sale of ports servicing the canal to a group led by BlackRock. (Was this newsletter forwarded to you? Sign up here.)
The battle over credit card rates heats upPresident Trump’s demand for a 10 percent cap on credit card interest rates took banks by surprise. The lending industry is making it clear that it’s preparing for a fight. “Everything’s on the table” to block the proposal, Jeremy Barnum, the C.F.O. of JPMorgan Chase, told reporters yesterday after the bank’s earnings call. “If it were to happen, it would be very bad for consumers, very bad for the economy.” Bank of America, Citigroup and Wells Fargo report earnings today, and analysts expect similar pushback from executives at those companies, Niko Gallogly reports. The latest: Phones from Wall Street to Washington have been buzzing over concerns about the effect the proposal would have if it became law. Though Trump’s announcement, made on social media late on Friday, doesn’t equate to an act of Congress, banks are taking the possibility of legislation seriously. Executives are weighing options like offering credit cards with interest charges capped at 10 percent or offering cardholders a temporary reprieve on rates, according to Bloomberg. But since the weekend, bank leaders and lobbyists have also been reaching out to allies of Trump — including Treasury Secretary Scott Bessent — to make their case. How we got here: Trump’s demand, as well as a bipartisan bill introduced in the Senate last year, aim to address a stark reality: Credit card interest rates have been trending up over the past two decades.
The stakes are high for card issuers. A 10 percent cap could make up to 80 percent of customers unprofitable at current lending rates and credit limits, according to research by Itamar Drechsler, a finance professor at the University of Pennsylvania’s Wharton School. JPMorgan said the bank would have to cut back on the amount of credit it offers. “People will lose access to credit, like on a very, very extensive and broad basis, especially the people who need it the most, honestly,” Barnum said. The firm expects its 2026 net interest income, which includes earnings from its credit card business, to total $103 billion. Michael Miller, an analyst at Morningstar, told DealBook that “billions” of that would be at stake if the 10 percent cap became law. Banks won’t roll over easily. They’ll continue to fight in public and private, Erika Najarian, an analyst at UBS, told DealBook. They will warn borrowers that a cap would limit credit availability; privately, she said, they may offer Washington concessions, like broader credit availability for consumers and increased spending on government securities to aid with deficit financing, in exchange for dropping the proposal. “Affordability is the buzzword for the midterm election year,” Najarian said. “But this is not how you keep the consumer engine going.”
China’s trade surplus exceeds $1 trillion for the first time. The country’s surplus reached $1.19 trillion last year, up 20 percent from 2024 — though exports to the U.S. dropped 20 percent amid President Trump’s trade fight. Importers and Wall Street now await the Supreme Court’s ruling on the legality of many of Trump’s tariffs, which could come as soon as today. Netflix reportedly considers making its bid for Warner Bros. Discovery all cash. The streaming giant has discussed amending its $72 billion cash-and-stock deal for Warner Bros. Discovery’s studio and streaming businesses to win over recalcitrant shareholders at the target company amid a challenge from Paramount, Bloomberg reports. Some Warner Bros. Discovery investors have suggested that they favor Paramount’s bid because it’s all cash. Saks Global files for bankruptcy protection. The parent company of Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman began Chapter 11 proceedings yesterday, after struggling with a high debt load and lagging store sales. Saks also replaced Richard Baker, the executive who orchestrated the takeover spree that generated the heavy debt burden, with Geoffroy van Raemdonck, the former head of Neiman Marcus.
Daniel Ek’s health start-up plots U.S. expansionThe nascent market for full-body diagnostic scans in the U.S. has created a stir with celebrities and influencers like Kim Kardashian who have gushed about their lifesaving potential. The sector is about to get more crowded. Neko Health, the health tech start-up founded in 2018 by Spotify’s Daniel Ek and the Swedish entrepreneur Hjalmar Nilsonne, will open for business in New York this spring, Bernhard Warner is first to report. The U.S. will be the third market, after Sweden and Britain, for Neko Health, which offers full-body diagnostic scans and is valued at roughly $1.7 billion. It may also be the most challenging. Several buzzy U.S. start-ups, including Prenuvo and Ezra, have added artificial intelligence to established diagnostic technologies — such as M.R.I. machines — to help customers screen for disease. And then there is the uniqueness of the American health care market, the world’s biggest in per capita spending. Tales of Americans grappling with health care prices can shock Europeans often accustomed to cheaper state-run medical services. Despite those challenges, Nilsonne and Ek see great potential. The two hope to capitalize on the growing segment of prevention-minded Americans who are hungry to track their biometric data. Whether through wearables like Oura rings or more intensive screenings, consumers are turning to technology to improve their health and help spot the early onset of some big killers, including cardiovascular and metabolic diseases. (Warner paid for a scan in 2024. Here’s what he found out.) “Neko was built around a simple idea: Health care works best when it helps people stay healthy, not just treat illness,” Ek, who recently stepped down as C.E.O. of Spotify, told DealBook. Demand is soaring. The company said that it was on pace to provide more than 200,000 scans worldwide this year — a roughly fourfold increase from 2024 — and that its waiting list had swelled to more than 300,000, including many Americans who signed up for a slot in Europe. Seeing that data point, Ek and Nilsonne decided to speed up their U.S. expansion plans. Nilsonne told DealBook the New York clinic would be “an entirely new health care experience,” adding that it would be “our biggest and most advanced location yet.” The company has raised about $330 million — including from Lightspeed Venture Partners, General Catalyst, Lakestar, Atomico and Prima Materia, Ek’s venture capital firm — and has gone on a hiring spree that includes doctors and nurses. Nilsonne said the plan was to expand globally. “Anything that chips away at that is probably not a great idea. And in my view, will have the reverse consequences. It’ll raise inflation expectations and probably increase rates over time.”— Jamie Dimon, the C.E.O. of JPMorgan Chase, on the Fed’s political independence and the threat it faces from the Justice Department’s criminal investigation into Jay Powell, the central bank chair. Dimon’s counterparts at Citigroup and BNY Mellon also shared their worries about attacks on Fed independence. But President Trump disagreed: “We should have lower rates,” he said. “Jamie Dimon probably wants higher rates, maybe he makes more money that way.” Beijing vs. BlackRock at the Panama Canal“This is our hemisphere,” the State Department said after President Trump’s capture of Venezuela’s president, Nicolás Maduro. Another potential target for the White House? The Panama Canal. Trump has long eyed control of the canal, and lawmakers like Senator Tim Kaine, Democrat of Virginia, are warning that it may be next on the administration’s docket. (Prediction markets are also beginning to take the possibility more seriously.) But command of the canal may not hinge on a clandestine military operation. Instead, it could come down to how a contentious deal that pits Beijing against a Wall Street giant over key port concessions is resolved, Grady McGregor reports. With Trump’s “Donroe Doctrine” for the Americas in effect, that raises an important question: Does the White House have enough leverage to force the Chinese to give ground? A recap: In March, the Hong Kong-owned conglomerate CK Hutchison Holdings announced an agreement to sell a portfolio of global port assets — including two key Panama Canal concessions — to an American consortium led by the asset management giant BlackRock for $22.8 billion. Trump hailed the deal in an address to Congress as the United States’ “reclaiming” the vital waterway. But the transaction drew sharp opposition from Beijing — reportedly including from President Xi Jinping himself — and was put in limbo by Chinese regulators. Beijing’s latest proposal, The Wall Street Journal reported, would require the state-owned shipping giant COSCO to take a majority stake in any deal in which CK Hutchison sold the assets to BlackRock. “The terms that Beijing is offering appear to keep getting worse,” Isaac Kardon, a senior fellow for China studies at the Carnegie Endowment for International Peace, told DealBook. He described the terms as a “nonstarter” for the Trump administration. BlackRock, which declined DealBook’s request for comment, reportedly also found the terms unacceptable. Beijing’s tough terms may be an effort to turn the dispute into a bargaining chip in the U.S.-Chinese trade war. Josh Lipsky, chair of international economics at the Atlantic Council, told DealBook that a deal was unlikely to be made before at least April, when Trump and Xi are expected to meet in Beijing. And then there are Panama’s objections. In July, Panama’s comptroller general filed a case with the Supreme Court of Panama seeking to nullify CK Hutchison’s 25-year port concession, signed in 2021, and to reopen the contract to outside bidders. If the court sides with the comptroller, Panama will be asserting that Beijing controls the port through CK Hutchison, a move likely to anger Beijing and be welcomed in Washington. Trump has argued that China runs the canal — despite its being legally owned and operated by Panama — and has said the United States would “take it back.” We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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