Hong Kong Siege

A two-day university siege in Hong Kong is raising fears of a bloody crackdown on hundreds of protesters who remain trapped in a campus surrounded by police. Running battles between police and protesters on Monday featured raging fires, tear gas and flaming vehicles. On Monday evening, the government warned those inside to surrender peacefully and urged others to stay away from the site as protesters pleaded for reinforcements to battle police. Although the city’s stocks finished higher Monday after losing 5.6% last week, signs of disarray were evident: The government ordered schools to remain shut for a sixth day and officials warned that they may need to scrap District Council elections scheduled for Sunday.

Powell Meets Trump

Federal Reserve Chairman Jerome Powell met with President Donald Trump and Treasury Secretary Steven Mnuchin Monday to discuss the economy, marking a second face-to-face sit-down this year amid relentless White House criticism of the U.S. central bank. Powell’s comments “were consistent with his remarks at his congressional hearings last week,” the Fed said in a statement released after the meeting at the White House, adding that the gathering was at the president’s invitation. The meeting comes amid a steady stream of criticism of the Fed by Trump, who tweeted it was a “very good & cordial meeting.”

Market Open

Asian equity futures were modestly lower early Tuesday as U.S. stocks struggled to extend gains beyond the record levels reached last week with traders looking for signs of progress in U.S.-China trade negotiations. Futures in Japan and Australia were little changed with Hong Kong contracts slipping after escalating violence in the city Monday. The dollar extended a slide after it emerged Powell and Trump discussed negative interest rates and the greenback. Oil dropped and gold gained.

IPO Rush

The Australian Securities Exchange is counting on a pipeline of at least a dozen companies to help salvage what is shaping up as the market’s worst year for initial public offerings since the global financial crisis in 2008. Lightweight wheel manufacturer Carbon Revolution and mining explorer Godolphin Resources  are among companies targeting to raise A$371 ($253 million) combined before the end of this year, according to pre-listing documents on the ASX website. The success of these listings would help ease concerns over the appetite for IPOs in Australia, where more than $1.5 billion of first-time share sales have been withdrawn this year — the most since 2008, when $2 billion of IPOs were postponed, according to data compiled by Bloomberg.

China Credit Guarantees

Local government investment arms in China — once considered one of the country’s riskiest groups of borrowers and a time bomb in a creaky financial system — have emerged as white knights of a troubled private sector, offering guarantees to loans and bonds from garment makers to construction firms. Around 2,000 of these funding platforms have offered a total of 5.9 trillion yuan ($842 billion) worth of credit guarantees to domestic firms, representing nearly a quarter of their combined net assets, said Liu Yu, an analyst from Guosheng Securities Co. These heavily-indebted entities, known as local government financial vehicles, have guaranteed nearly $1 trillion of debt, according to Guosheng. The added responsibility may prove to be unbearable as these LGFVs themselves face a giant wall of debt.

What we’ve been reading

This is what’s caught our eye over the last 24 hours.

• WeWork job cuts to begin this week.
• More fire tornadoes will hit Australia as climate change takes hold.
• Trump and Kim Jong Un are at odds ahead of a  nuclear talks deadline.
• Is Softbank’s Vision Fund the Piped Piper of unicorns?
• Johnson & Johnson’s vaginal-mesh lawsuit near judgement in Australia.
• Kylie Jenner’s  $600 million cosmetics deal.