The current fiscal battle raging in Washington, and the looming threat of a government shutdown on Tuesday, is causing greater unease than past political disputes and may rattle markets when they open on Monday, Nathaniel Popper reports in DealBook. Stocks in Japan closed down 2.06 percent, while major markets in Europe were down about 1 percent at midday. Stock index futures in the United States are pointing to a lower opening on Monday.
The chief fear for investors is that a government shutdown would set the stage for a more consequential fight over the debt ceiling. Without an agreement to raise the borrowing limit by mid-October, the government will not be able to issue more bonds and could default on its outstanding borrowing, Mr. Popper writes. “The threat of a default, however remote, seems to be on the table now,†said Gregory R. Valliere, the chief political strategist at the Potomac Research Group.
A number of analysts are arguing that a shutdown â€" which is seen as relatively benign from the perspective of the broader economy â€" might actually reduce the risk of a more damaging default. Alec Phillips, a Goldman Sachs economist, said on Friday that a shutdown could “ease passage of a debt-limit increase†because House Republicans could lose their bargaining leverage. The Republicans “are going to be more resistant to raising the debt ceiling if they feel they didn’t even stand and fight†on the shutdown issue, Ezra Klein and Evan Soltas argue in The Washington Post.
Still, the prospect of the first government shutdown in 17 years would be the latest dispiriting development for a public that is already deeply unhappy with Congress, The New York Times writes. “With a temporary shutdown appearing inevitable without a last-ditch compromise, the battle on Sunday became as much about blaming the other side as searching for a solution.â€
S.E.C. TAKES ON MARK CUBAN IN INSIDER CASE  | Mark Cuban, no stranger to a fight, is sparring with the federal government. The Securities and Exchange Commission’s insider trading trial against the billionaire opens in a federal courtroom in Dallas on Monday, the culmination of a five-year battle, DealBook’s Ben Protess reports. “Mr. Cuban’s star power, coupled with the S.E.C.’s renewed ambition for taking cases to court, underpins the importance of this trial.â€
“For Mr. Cuban, who has a net worth pegged at $2.5 billion, the courtroom fight is not about the money,†Mr. Protess writes. “If found liable, he faces a fine of about $2 million. Having doled out about that much in fines to the National Basketball Association, Mr. Cuban is instead fighting to clear his name and dress down an agency that accused him of trading on confidential information when dumping his stake in an Internet company.â€
GAME MAKER BEHIND CANDY CRUSH SEEKS I.P.O.  | The British game maker King, which created Candy Crush Saga, has its eye set on becoming a top technology initial public offering across the Atlantic Ocean from its home country, DealBook’s Michael J. de la Merced reports. The company has filed for an I.P.O. in the United States, according to people briefed on the matter, in what promises to be one of the biggest debuts by a gaming company in over a year. The company has retained Bank of America Merrill Lynch, Credit Suisse and JPMorgan Chase to lead the offering, according to the people.
“King may still have to overcome skepticism about the last gaming company to make a highly public offering, Zynga,†Mr. de la Merced writes. “After its much-ballyhooed market debut in December 2011, Zynga has struggled amid declining popularity, employee layoffs and costly missteps like the nearly $200 million purchase of OMGPOP, a game maker that the company has since shut down.â€
For another closely watched technology company, the I.P.O. process is said to be moving forward. After filing confidentially for an I.P.O., Twitter may make those documents public this week, according to Quartz and The Wall Street Journal.
ON THE AGENDA Â |Â The chairman of Toyota, Takeshi Uchiyamada, speaks at the Economic Club of Washington at 8:10 a.m. Steve Case, the AOL co-founder, is on CNBC at 7 a.m. Alexandra Lebenthal, head of the financial firm Lebenthal & Company, is on CNBC at 10 a.m. Without a deal in Washington, the government is scheduled to shut down at midnight.
BREAKING BUFFETT  | Warren E. Buffett has not been particularly active on Twitter since opening an account in May. But the billionaire investor emerged on Sunday in honor of the final episode of AMC’s “Breaking Bad.†The Twitter account posted a photograph of Mr. Buffett made to look like Walter White, the science teacher turned drug lord who is the show’s main character. “Not even the Oracle knows what will happen tonight,†the tweet read, with the tag, “#waltsuccessor.â€
Schwarzman Reflects on BlackRock Sale, With Regret  | Stephen A. Schwarzman, the chief executive of the Blackstone Group, said in an interview on Bloomberg Radio that his decision 19 years ago to sell a unit that became BlackRock, the world’s biggest money manager, was “a heroic mistake.†He continued: “We all stumble on and have some success. But it’s a humbling experience to see what you don’t do right.†BLOOMBERG NEWS
Former Xstrata Chief in New Mining Venture  | The trading house Noble Group and the American private equity firm TPG Capital will each invest $500 million in a private mining venture led by Mick Davis, the former Xstrata chief executive who lost out in the Glencore takeover. DealBook »
In Sale of Washington Post, Several Prospective Buyers  | Before deciding to sell The Washington Post to Jeffrey P. Bezos, Donald E. Graham and his advisers “approached Robert Allbritton, owner of Politico and whose family once owned the Washington Star; Michael R. Bloomberg, who some people believed would want a daily print outlet in addition to his economic-driven subscriber news and data service; David Rubenstein, co-founder of the Carlyle Group and a major Washington philanthropist; and Eric Schmidt, who was chief executive of Google for 10 years,†The Post reports. WASHINGTON POST
The Rise and Fall of BlackBerry  | President Obama and Queen Elizabeth have been among BlackBerry’s fans. Now, with the company struggling, the smartphones may become relics. NEW YORK TIMES
Hand-Wringing Among Lovers of BlackBerry’s Keyboard  | It appears that BlackBerry could soon be leaving the business of making smartphones, “leaving fewer options for a vocal minority still committed to phones with its once popular physical keyboard,†The New York Times reports. NEW YORK TIMES
J.C. Penney’s Troubling Stock Sale  | Capital misallocation is a new bad sign for the struggling retailer, Robert Cyran of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS
Issuance of a Loan Product Returns to Pre-Crisis Level  | Sales of packaged corporate loan products, known as collateralized loan obligations, “have reached a fresh post-crisis record as investors clamor for higher returns from the structured financial products,†The Financial Times reports. FINANCIAL TIMES
Former Bear Stearns Chief Questions JPMorgan’s Mortgage Deal  | Alan D. Schwartz, formerly chief of Bear Stearns when it collapsed in 2008 and was absorbed by JPMorgan Chase, told Andrew Ross Sorkin that a proposed $11 billion settlement with the Justice Department “doesn’t feel like it makes sense, but it makes good headlines.†DealBook »
R.B.S. to Sell Stake in Bank Branch Network  | The Royal Bank of Scotland agreed on Friday to sell a stake in its branch network for £600 million, or $966 million, to a consortium of investors led by Corsair Capital and Centrebridge Partners. DealBook »
Citigroup Is Approved for China Free-Trade Zone  | After receiving regulatory approval for its Chinese unit, Citigroup would be “among the first foreign banks to target business†in Shanghai’s new free-trade zone, The Wall Street Journal reports. WALL STREET JOURNAL
What We Resist Persists  | Acknowledging uncomfortable feelings can be viewed as self-indulgent, but unspoken tensions can take a toll in the workplace, Tony Schwartz writes in the Life@Work column. DealBook »
AXA to Spin Out Its Private Equity Business  | AXA Private Equity, a $32 billion private equity business, “will announce early this week that it has spun out of the French insurer in a management-led buyout that creates a stand-alone European heavyweight,†The Financial Times reports. FINANCIAL TIMES
Firm Backed by TPG Plans $1 Billion Fund for Asia  | The Northstar Group, a private equity firm backed by TPG Capital, “is seeking to raise around $1 billion in a new fund to invest in Southeast Asia’s fast-growing economies,†Reuters reports, citing unidentified people familiar with the matter. REUTERS
Falcone Funds Sell Harbinger Shares to Leucadia  | Three funds run by Philip Falcone’s Harbinger Capital Partners sold $158 million of Harbinger Group shares to the Leucadia National Corporation, as the investment firm moves to liquidate assets after a deal with regulators, Bloomberg News reports. BLOOMBERG NEWS
A Hedge Fund Investor on Twitter  | Sahm Adrangi, the 32-year-old founder of Kerrisdale Capital, is the “hedge-fund world’s first full-on social-media-savvy investor,†New York magazine’s Kevin Roose reports. NEW YORK
Counting Down to Twitter’s Public I.P.O. Filing  | Twitter, which has filed confidentially for an initial public offering, intends to make the I.P.O. documents public this week, Quartz reports, citing an unidentified person familiar with the plan. QUARTZ
Tumblr’s Path to a Sale to Yahoo  | “Anyone paying attention to Tumblr’s burn rate should have been expecting an exit,†Molly Young writes in New York magazine. NEW YORK
Wall Street Money Behind a Start-Up’s Loans  | The investors making loans on the peer-to-peer lending platform Lending Club “are increasingly hedge funds, or high-net-worth brokerage clients, or other pools of money highly redolent of the Wall Street of old,†Felix Salmon writes in New York magazine. NEW YORK
Revolution Ventures Closes a $200 Million Fund  |Â
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In Europe, Bank Overhaul May Be Delayed  | “If all goes as planned, by November European political leaders will anoint the central bank as supreme bank enforcer of the euro zone, with the power to separate healthy banks from the walking dead that are sucking the life from the region’s economy,†The New York Times writes. “But even before the central bank has received the legal authority for its new role, questions are being raised about whether Germany and perhaps other countries could postpone critical parts of the European banking overhaul for political reasons.†NEW YORK TIMES
Judges Take a Harsher Tone With Banks  | “District court judges are not generally known as flamethrowers, but some seem to be losing patience with the banks,†Gretchen Morgenson writes in the Fair Game column in The New York Times. NEW YORK TIMES
Fed and Investors Fail to Communicate  | A number of economists agreed that Ben S. Bernanke and the Federal Reserve bore at least some responsibility for the market’s confusion after the central bank’s announcement that it would not immediately begin tapering its asset purchases, James B. Stewart writes in the Common Sense column in The New York Times. NEW YORK TIMES
In China, Real Estate Mogul Is Sentenced to Prison  | The enterprising banker Gong Aiai, who was accused of amassing high-end properties by forging or illegally purchasing documents, was sentenced on Sunday to three years in prison, according to the state-run Xinhua news service, The New York Times reports. NEW YORK TIMES
