Author: Uponbiz

The U.S. Trade Representative said on Thursday it has added Pinduoduo.com, China’s third-largest e-commerce platform, to its “notorious markets” list for a proliferation of counterfeit products, as the agency also called out China as a priority to watch for intellectual property rights concerns.

In its annual review of trading partners’ protection of intellectual properties rights and so-called “notorious markets,” the U.S. Trade Representative said 36 countries warranted additional bilateral engagement over these issues. The agency kept China on the list and lifted Saudi Arabia up as a priority.

The release of the report comes as the United States and China are embroiled in negotiations to end a tit-for-tat tariff battle that has roiled supply chains and cost both countries billions. The two countries are due to resume talks in Beijing next week.

USTR also kept Alibaba Group’s taobao.com on the “notorious” list, even though the parent company has “taken some steps” to curb the offer and sale of copyright infringing products, according to the report.

The agency bumped Saudi Arabia up to priority in part due to an illicit service for pirated content called BeoutQ, the report said.

Despite “extensive engagement” in Saudi Arabia by both U.S. government and private stakeholders, treatment of intellectual property rights “continued to deteriorate,” USTR said.

 
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Brent oil rose above $75 per barrel on Thursday for the first time this year as quality concerns forced the suspension of some Russian crude exports to Europe while the United States prepared to tighten sanctions on Iran.

Brent crude futures were at $75.24 by 1156 GMT, up 67 cents. They earlier hit a session high of $75.60, their strongest since Oct. 31.

U.S. West Texas Intermediate crude was at $66.14 per barrel, up 25 cents.

Poland and Germany have suspended imports of Russian crude via the Druzhba pipeline, citing poor quality. Trading sources said the Czech Republic had also halted purchases.

The pipeline can ship up to 1 million barrels per day, or 1 percent of global crude demand, with around 700,000 bpd of flows suspended, according to trading sources and Reuters calculations.

U.S. attempts to drive Iranian oil exports down to zero also boosted prices.

The United States this week said it would end all exemptions for sanctions against Iran, OPEC’s third-largest producer, demanding countries halt oil imports from Tehran from May or face punitive action from Washington.

The U.S. decision comes amid supply cuts led by the Organization of the Petroleum Exporting Countries since the start of the year aimed at propping up prices.

Still, Brian Hook, U.S. special representative for Iran and senior policy adviser to the secretary of state, said on Thursday “there is plenty of supply in the market to ease that transition and maintain stable prices.”

Consultancy Rystad Energy said Saudi Arabia and its main allies could replace lost Iranian oil.

“Saudi Arabia and several of its allies have more replacement barrels than what would be lost from Iranian exports,” said Rystad’s head of oil research, Bjoernar Tonhaugen.

“Since October 2018, Saudi Arabia, Russia, the UAE, and Iraq have cut 1.3 million bpd, which is more than enough to compensate for the additional loss,” he added.

On the supply side, U.S. crude production has risen by more than 2 million bpd since early 2018 to a record of 12.2 million bpd currently, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.

In part because of soaring domestic production, U.S. commercial crude inventories last week soared to 460.63 million barrels, their highest since October 2017, the Energy Information Administration said on Wednesday.

 
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South Korea’s economy unexpectedly shrank in the first quarter, marking its worst performance since the global financial crisis, as government spending failed to keep up the previous quarter’s strong pace and as companies slashed investment. 

The shock contraction reinforced financial market views that the central bank is likely to make a U-turn on policy, shifting to an easing stance and possibly cutting interest rates to counter declining business confidence and growing external risks.

A worse-than-expected downturn in the memory chips sector hit first quarter capital investment, while slumping exports amid the Sino-U.S. trade dispute erased gains from private consumption, the Bank of Korea said Thursday.

Gross domestic product (GDP) in the first quarter declined a seasonally adjusted 0.3 percent from the previous quarter, the worst contraction since a 3.3 percent drop in late 2008 and sliding from 1 percent growth in October-December, the Bank of Korea said Thursday.

None of the economists surveyed in a Reuters poll had expected growth to contract. The median forecast was for a rise of 0.3 percent.

Government spending

“Government spending failed to keep up the bumper boost of the fourth quarter, especially for construction investment, while a drop in business investment was worse than expected due to a downturn in the chips sector,” a BOK official said, adding there was also a strong base effect after solid fourth-quarter growth.

The grim data came a day after the Moon Jae-in government unveiled a 6.7 trillion won ($5.9 billion) supplementary budget to tackle unprecedented air pollution levels and boost weak exports.

Capital investment tumbled 10.8 percent, the worst reading since 1998, while construction investment inched down 0.1 percent, the BOK said.

Exports fall

Exports fell 2.6 percent quarter-on-quarter, a sharper drop than the 1.5 percent decline in the previous three months.

Private consumption gained by 0.1 percent because of a rise in demands for durable goods.

From a year earlier, Asia’s fourth-largest economy grew 1.8 percent in the January-March quarter, compared with 2.5 percent growth in the poll and 3.1 percent in the final quarter of 2018.
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Facebook on Wednesday blew away Wall Street profit estimates in the first quarter as it kept a lid on the costs of making its social networks safer, and set aside $3 billion to cover a settlement with U.S. regulators, calming investors who had worried about the outcome of a months-long federal probe.

Shares of the world’s biggest online social network jumped more than 10% after hours.

The U.S. Federal Trade Commission has been investigating revelations that Facebook inappropriately shared information belonging to 87 million of its users with the now-defunct British political consulting firm Cambridge Analytica.

The probe has focused on whether the sharing of data and other disputes violated a 2011 agreement with the FTC to safeguard user privacy. Facebook set aside $3 billion to cover anticipated costs associated with the settlement, but said the charges could reach as high as $5 billion.

Civil penalty

If the settlement is in that range, it would be the largest civil penalty paid to the agency, said David Vladeck, a former FTC official now at Georgetown Law School.

“Everyone expected there would be a substantial civil penalty in this case,” said Vladeck. “There’s no question that Facebook is going to have to settle this matter. Investors want this behind them.”

The accrual cut the company’s net income in the first quarter to $2.43 billion, or $0.85 per share.

Excluding the $3 billion it set aside, Facebook would have earned $1.89 a share, up from $1.69 the year prior and easily beating analysts’ average estimate of $1.63 per share, according to IBES data from Refinitiv.

Total first-quarter revenue rose 26% to $14.9 billion from $12.0 billion last year, compared to analysts’ average estimate of $15.0 billion.

Shares rise 

Shares of Facebook rose 10% to $200.50 in after-hours trade, demonstrating the company’s resilience despite a series of scandals over improperly shared user data and propaganda that made it the target of political scrutiny across the globe.

The company’s shares lost a third of their value last year, after executives first warned about costs associated with its drive to improve safety and slowing growth in revenue and operating margin.

Total expenses in the first quarter were $11.8 billion, up 80% compared with a year ago. The operating margin fell to 22% from 46% a year ago, but would have been 42%  without the one-time expense.

“This is a strong report suggesting that advertisers still see value in Facebook’s platform, as they did before the controversies and scandals erupted,” said Haris Anwar, senior analyst at financial markets platform Investing.com.

Expenses will grow

Executives have forecast that expenses will grow 40% to 50%  in 2019, but say they expect the downward trend to taper off after this year as revenue from new ways of pushing ads and facilitating transactions offset the security spending.

Monthly and daily users of the main Facebook app compared to last quarter were both up 8% to 2.38 billion and 1.56 billion, respectively.

Estimates were for 2.4 billion monthly users and 1.6 billion daily users, according to Refinitiv averages.

 
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Stephen Moore, the economic commentator that U.S. President Donald Trump has said he will nominate to the Federal Reserve Board, is drawing new fire from top Democrats for his comments denigrating, among other targets, women and the Midwest.

But Republicans, whose 53 to 47 majority in the U.S. Senate gives them the final say on whether Moore’s pending nomination is confirmed, have not weighed in since news surfaced this week documenting Moore’s long history of sexist remarks, some of which he says were made jokingly.

As a Fed governor, Moore would have a say on setting interest rates for the world’s biggest economy. Some economists and Democratic lawmakers have questioned his competence, citing his support for tying policy decisions to commodity prices and his fluctuating views on rates. This week though, it is his comments about gender and geography that are drawing criticism.

“What are the implications of a society in which women earn more than men? We don’t really know, but it could be disruptive to family stability,” Moore wrote in one column in 2014.

In 2000, he opined that “women tennis pros don’t really want equal pay for equal work. They want equal pay for inferior work.” The New York Times among others has documented many other instances where he expressed similar viewpoints.

It’s just added evidence that Moore is unfit for the Fed job, vice chair of the joint economic committee Carolyn Maloney told Reuters.

“Those include his reckless tendency to politicize the Fed as well as his bizarre and sexist comments about women in sports that came to light this week,” she said.

Republicans, she said, “should also take note that Moore has said capitalism is more important than democracy. That’s a dangerous comment that further confirms my belief that Moore shouldn’t be allowed on the Fed Board.”

Maloney earlier this month sent a letter urging Republican Senator Mike Crapo and Democratic Senator Sherrod Brown to oppose Moore’s nomination. Crapo and Brown are the chair and vice chair, respectively, of the Senate banking committee, which would be Moore’s first stop in any confirmation hearings.

Senators Elizabeth Warren and Charles Schumer, both Democrats, have also publicly criticized Moore as well as businessman Herman Cain, who withdrew his name from consideration for the Fed this week amid mounting objections.

Cain said he stopped the process because he realized the job would mean a pay cut and would prevent him from pursuing his current business and speaking gigs.

The Senate banking panel’s 13 Republican members, contacted by Reuters about their views on Moore’s suitability for the Fed role after his derisive commentary about women came to light, all either did not respond or declined to comment.

But Brown on Wednesday blasted Moore for comments he made in 2014 calling cities in the Midwest, including Cincinnati, the “armpits of America.” Brown demanded an apology.

“It would be your job to carefully consider monetary and regulatory policies that support communities throughout the country” even those you apparently consider beneath you,” Brown wrote in a letter to Moore. “Based on your bias against communities across the heartland of our country, it’s clear that you lack the judgment to make important decisions in their best interest.”

 
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Boeing reported lower first-quarter profits Wednesday as the global grounding of its 737 MAX plane following two crashes hit results.

The US aerospace giant reported $2.1 billion in profits, down 13.2 percent from same period a year ago.

Revenues dipped 2.0 percent to $22.9 billion, due to a tumble in commercial plane revenues following the suspension of 737 MAX deliveries.

Boeing also withdrew its full-year profit forecast, citing uncertainty surrounding the 737 MAX.

The aerospace giant has been under scrutiny since the March 10 crash of an Ethiopian Airlines jet, which came on the heels of an October Lion Air crash. Together the crashes claimed 346 lives.

Boeing said it is “making steady progress” on a fix to the jet’s anti-stall system that is thought to be a factor in both accidents.

The company has conducted more than 135 test flights of the fix and is working with global regulators and airlines, it said in a news release.

“Across the company, we are focused on safety, returning the 737 MAX to service, and earning and re-earning the trust and confidence of customers, regulators and the flying public,” said Chief Executive Dennis Muilenburg in a press release.

The company announced earlier this month it was cutting monthly production of the 737 by about 20 percent.

Boeing shares were up 1.3 percent at $379.07 in pre-market trading.
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Vietnam this week just celebrated the fact it has survived nearly a millennium of independence from China, which previously ruled the smaller neighbor for nearly as long. Much is made of the ancient rivalry between the two sides — but there is far less attention, especially on the international stage, on areas where they both get along fairly well.

The textile and garment sector is as good an example as any of this amicable cooperation, given that China is the world’s biggest exporter in the industry, and Vietnam is the second biggest. Analysts often describe Hanoi as taking a path similar to Beijing’s, both having communist leaders who turned toward export-led market capitalism in recent decades, and in terms of selling ever more footwear, clothes and bags to the world, Vietnam is indeed following China’s actions.

“China and Vietnam hold a pivotal position in the global textile market,” Chen Dapeng, president of the China National Garment Association, said at a trade conference in Ho Chi Minh City this month. “The industries of the two countries are highly complementary.”

The industries compete for customers, but they are also complementary in that Chinese factories supply much of the fabric and other inputs needed in the business, while Vietnamese factory hands are increasingly supplying the labor as costs rise in China.

“We believe many in Asia can cooperate,” said Le Tien Truong, CEO of the Vietnam National Textile and Garment Group. “We are not just taking Chinese investment, but also reforming Vietnamese suppliers.”

He and others in Vietnam speak of domestic reform because the country does not have as large and complex a network of textile suppliers and processors as in China. That is one reason the smaller country relies on the larger one as its biggest source of imported goods overall. No matter the geopolitical problems at the top, the reality is that textile firms on both sides of the border work together to turn a profit. 

On one hand, amid the trade war between the United States and China, the latter competitor has lost some of its business to Vietnam. On the other hand, it is not just foreign third parties moving factories from China to Vietnam, but also Chinese investors themselves, who deem it beneficial to relocate some of their supply chain to the south.

This month a large contingent of Chinese textile companies went scouting for Vietnamese partners in the industrial parks just outside Ho Chi Minh City.

This global shift in interest toward Vietnam has helped it to catch up to China, which is still the export leader in shoes and garments.

“We congratulate Vietnam for that big effort,” said Sun Rui Zhe, president of the China National Textile and Apparel Council.

He noted his country looks to support that effort as part of its Belt and Road Initiative, which gives loans and grants to dozens of countries, mostly for infrastructure, but also private industry, including textiles. Beijing has already financed dozens of projects in Vietnam, from coal power to ship yards to fertilizer plants.

“China has done our best to improve our relations all over the world,” Sun said.
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China is getting ready to welcome representatives from 150 nations, including senior leaders of 40 countries, to discuss its international infrastructure program at the second Belt and Road Forum, beginning Thursday and running through Saturday in Beijing.

Analysts say it is not merely a conference on infrastructure building, but an attempt by China to display its popularity and power as a political rallying force. This is significant in view of severe criticism by the United States, which has described the Belt and Road Initiative, or BRI, as China’s “vanity project.”

“It is a political show of strength. BRI has assumed the characteristics of a global public good,” said Sourabh Gupta, senior fellow at the Institute for China-America Studies in Washington. “In a sense, conceptually, it is about China slipping itself into American clothing which the U.S. itself has discarded. It is about mainstreaming China as a leader of the global development system.”

China has repeatedly denied it has a political purpose in trying to construct connectivity projects across the world. “The ‘Belt and Road Initiative’ is not a geopolitical tool but a platform for cooperation. We welcome all parties to take part in it,” Chinese State Councilor and Foreign Minister Wang Yi said at a recent press conference.

The forum is expected to see an emphasis on the importance of multilateralism and its criticism of protectionism in business and world affairs. Some observers see this as a veiled attempt by Beijing to build up world opinion against the United States.

Countering US clout

Zhiqun Zhu, chair at the department of international relations at Bucknell University in Pennsylvania, said the meeting will reflect China’s growing clout. “When the U.S. focuses on “America first” under President [Donald] Trump, China is quickly emerging as a leader in the global economy and global governance.”

Political clout comes from success in international affairs, however, and not by merely hosting political theater. Although China has achieved some success in its infrastructure program, it has faced several setbacks, with Sierra Leone, Malaysia and Myanmar canceling or scaling back previously negotiated construction deals.

“A lot of the forum will be an attempt at restoring the Belt and Road brand, which has been tarnished over the past two years,” said Jonathan Hillman, director of the Reconnecting Asia project at the Center for Strategic and International Studies in Washington.

The U.S. has said it will not send a high-level delegation to the forum. It expressed disappointment at Italy’s recent decision to join the BRI. “Secretary Pompeo has very publicly gone to every corner of the world and denigrated China’s overseas development lending and projects-based model,” Gupta said, referring to U.S. Secretary of State Mike Pompeo.

Foreign Minister Wang Yi said no country has a right to stop others from attending the forum. “All countries have the freedom to participate, but they don’t have the right to prevent other countries from taking part,” he said.

Zhiqun Zhu said instead of running a smear campaign, the U.S. should work with China to ensure that investments in BRI projects are more rule-based and transparent.

World opinion

Germany, France, Japan and Australia are expected to send mid-level officials. They have raised serious objections, saying they would like to see BRI become more transparent, environmentally sustainable and offer equal business opportunities to all participating countries.

“At the end of the day, Europe genuinely wants China to grow into the role of a ‘responsible stakeholder;’ but, responsible stakeholder-ship means that China needs to up its game and conform to prevailing international standards in its practices – be it trade, investment or development,” Gupta said.

India, China’s neighbor, is expected to stay away from the forum. It has said the BRI program violates the country’s sovereignty because some of its projects are located in Pakistan-controlled areas that India regards as its own. India was the only major country to stay away from the first meeting of the forum in 2017.

“India’s stand has increased international attention on some of the troubling aspects of the BRI plan,” said Ananth Krishnan, visiting fellow at Brookings India.

“India was the only country to publicly flag issues such as opacity and debt when the first Belt and Road Forum was held in 2017.”

Gupta at the Institute of China-America Studies thinks many of the objections raised against BRI will be sorted out in negotiations between China and different countries.

“A Chinese menu is on offer but it is not pre-set and it is not being force-fed to host countries,” he said. “It is for host countries, though, to impose themselves and set the minimum standards of project integrity – although China would do well to set a reasonably high bar in this regard of its own volition.”
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U.S. Treasury Secretary Steven Mnuchin on Tuesday failed to meet a final congressional deadline for turning over President Donald Trump’s tax returns to lawmakers, setting the stage for a possible court battle between Congress and the administration.

The outcome, which was widely expected, could prompt House Ways and Means Committee Chairman Richard Neal to subpoena Trump’s tax records as the opening salvo to a legal fight that may ultimately have to be settled by the U.S. Supreme Court.

Neal set a final 5 p.m. EDT (2100 GMT) deadline for the Internal Revenue Service and Treasury to provide six years of Trump’s individual and business tax records. But the deadline passed without the panel receiving the documents.

After the deadline lapsed, Mnuchin released a letter to Neal in which he pledged to make “a final decision” on whether to provide Trump’s tax records by May 6. It was the second time the administration has missed a House deadline for the tax returns since Neal requested them on April 3.

“Secretary Mnuchin notified me that once again, the IRS will miss the deadline for my … request. I plan to consult with counsel about my next steps,” Neal said in a statement.

In his letter, Mnuchin said he was still consulting with the Justice Department about Neal’s request, which he termed “unprecedented.”

“The department cannot act upon your request unless and until it is determined to be consistent with the law,” the Treasury secretary told Neal.

‘Not Up to the President’

Earlier on Tuesday, the White House said Trump was unlikely to hand over his tax returns. “As I understand it, the president’s pretty clear: Once he’s out of audit, he’ll think about doing it, but he’s not inclined to do so at this time,” White House spokesman Hogan Gidley told Fox News in an interview.

“This is not up to the president. We did not ask him,” said a Democratic committee aide, who cited a law saying the Treasury secretary “shall furnish” taxpayer data upon request from an authorized lawmaker.

Neal informed IRS Commissioner Charles Rettig earlier this month that failure to comply with the deadline would be viewed as a denial.

Legal experts said House Democrats could vote to hold Mnuchin or Rettig in contempt of Congress if they ignored a subpoena, as a pretext to suing in federal court to obtain Trump’s returns. Experts say administration officials could ultimately risk financial penalties and even jail time by defying the committee.

As Ways and Means chairman, Neal is the only lawmaker in the House of Representatives authorized to request taxpayer information under federal law. Democrats say they are confident of succeeding in any legal fight over Trump’s tax returns.

“The law is on our side. The law is clearer than crystal. They have no choice: they must abide by (it),” Representative Bill Pascrell, who has been leading the Democratic push for Trump’s tax records, said in a statement to Reuters.

Democrats want Trump’s returns as part of their investigations of possible conflicts of interest posed by his continued ownership of extensive business interests, even as he serves the public as president.

Republicans have condemned the request as a political “fishing expedition” by Democrats.

Despite the law’s clarity, Democrats have long acknowledged that the effort would likely result in a legal battle that could end up with the U.S. Supreme Court.

“If the IRS does not comply with the request, it is likely that Chairman Neal will subpoena the returns,” Representative Judy Chu, a Democratic member of the Ways and Means Committee, told Reuters.

“If they do not comply with that (subpoena), a legal battle will begin to defend the right of oversight in Congress,” she said.

Trump broke with a decades-old precedent by refusing to release his tax returns as a presidential candidate in 2016 or since being elected, saying he could not do so while his taxes were being audited.

But his former personal lawyer, Michael Cohen, told a House panel in February that he does not believe Trump’s taxes are under audit. Cohen said the president feared that releasing his returns could lead to an audit and IRS tax penalties.
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A top White House economic adviser said on Tuesday the United States and China were making progress in trade negotiations and he was “cautiously optimistic” about the prospects for striking a deal.

Speaking at a luncheon at the National Press Club, National Economic Council Director Larry Kudlow said the two nations still had issues to address and were discussing a “visitation exchange” as part of their ongoing talks.

“We’re not there yet, but we’ve made a heck of a lot of progress,” Kudlow said in response to questions from reporters.

“We’ve come further and deeper, broader, larger-scale than anything in the history of U.S.-China trade.”

“We’ve gotten closer and we’re still working on the issues, so-called structural issues, technology transfers,” Kudlow added. “Ownership enforcement is absolutely crucial. Lowering

barriers to buy and sell agriculture and industrial commodities. It’s all on the table.”

Washington and Beijing have engaged in a tit-for-tat trade war that has seen both countries imposing tariffs on billions of dollars’ worth of each others’ imports.

The United States is seeking structural changes in China’s economy, from reducing industrial subsidies to halting forced technology transfers by U.S. companies seeking to enter the Chinese market.
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The Justice Department on Tuesday announced indictments against two Chinese nationals accused of working together to steal trade secrets from General Electric.

Xiaoqing Zheng pleaded not guilty Tuesday in U.S. federal court in Albany, New York.

Co-defendant Zhaoxi Zhang is believed to be in China.

Both are charged with economic espionage and stealing trade secrets. Zheng is also charged with lying to FBI investigators.

“The indictment alleges a textbook example of the Chinese government’s strategy to rob American companies of their intellectual property and to replicate their products in Chinese factories, enabling Chinese companies to replace the American company first in the Chinese market and later worldwide,” U.S. Assistant Attorney General John Demers said.

He said the United States will not stand by and watch the world’s second-largest economy commit “state-sponsored theft.”

Zheng was an engineer at General Electric’s power and water plant in Schenectady, New York.

U.S. prosecutors allege he stole multiple electronic files describing designs and engineering of GE gas and steam turbines and emailed them to Zhang. The indictments accuse the pair of using the stolen information to profit from their business interests in two Chinese companies — Liaoning Tianyi Aviation Technology and Nanjing Tianyi Avi Tech.

Prosecutors say the two defendants knew their activities would benefit the Chinese government.

If convicted, Zheng and Zhang could spend 25 years in prison and be fined more than $5 million. Zheng could also face an additional five years and a $250,000 fine for allegedly lying to the FBI.
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Stock investors had to go on a harrowing round trip over the last seven months, but the market may be in a healthier place after it.

The S&P 500 index of big U.S. stocks is back to a record high, closing above 2,930 on Tuesday for the first time since Sept. 20. On the way, though, it took investors on a terrifying plunge of nearly 20%, amid worries that the economy would tip into recession. After hitting bottom in December, stocks took off on a nearly mirror-image rally .

Even though the S&P 500 is back at the same level, analysts say many of the market’s vital signs look different today than in late September.

Worries about a possible recession have dimmed, in large part because of a change in stance by the Federal Reserve. That has many investors predicting more gains for the market this go-around, despite risks still hanging over stocks, such as the still simmering global trade war and slower growth for economies and corporate profits around the world.

Here’s a look at some of the changes for the market, and one big similarity, between then and now:

AN EASIER FEDERAL RESERVE

This is the biggest difference by far, investors say.

Last autumn, the Federal Reserve was deep into its plan to gradually raise interest rates, after having kept them pinned at nearly zero for years. Higher rates would slow the economy, but it would also reduce the risk of higher inflation and the job market was in much better shape than in the aftermath of the Great Recession. When the S&P 500 set its record on Sept. 20, the Fed was a week away from raising its key short-term rate by a quarter of a percentage point for the seventh time in eight quarters.

But those and other moves by the Fed raised worries along Wall Street that the central bank was moving too fast and could push the economy into recession.

“I was feeling very cautious on the market last fall because you were seeing a lot of straws in the wind that the Fed was too tight,” said Margie Patel, senior portfolio manager at Wells Fargo Asset Management. “Even though rates were low, you could see housing and autos looking weak, and in the stock market, every now and then, you’d see a sector of the stock market plunge for really no reason.”

In December, the Fed raised rates again and said another two increases may come in 2019. But officials changed their outlook early this year, following the plunge in stock prices, and officials pledged to be patient in raising rates. Then, in March, the central bank said it may not raise rates at all in 2019.

The easier tone sent the yield on the 10-year Treasury’s yield, which affects rates for mortgages and other loans, down to 2.57% from 3.07% in late September. That’s a boost for the economy, as well as for stock prices.

“Recession, I think it’s off the radar now,” Patel said.

BOTTOMING GROWTH EXPECTATIONS

Companies are in the middle of telling investors how much profit they made during the first three months of 2019, and analysts have prepped for disappointment. Wall Street is forecasting a drop of more than 3% for S&P 500 companies, the first decline in nearly three years.

That’s a concern for investors because stock prices tend to track profits over the long term. But analysts expect growth to return and accelerate as the year progresses. After hitting bottom in the first quarter, analysts expect S&P 500 profit growth to ramp back up to 8.5% in the fourth quarter thanks to stronger than expected revenues.

Economic data has been improving around the world, which is raising optimism.

When the S&P 500 set its record last fall, dueling import taxes by the United States and China threatened global growth, higher mortgage rates were hurting home sales and the initial October jobs report hinted at slower hiring.

Now, U.S.-China trade tensions have dialed down, even if underlying conflicts are unresolved. Mortgage rates have fallen, home sales have recovered somewhat and the labor market has been solid, on average.

The economy still appears on course for slower economic growth this year than the roughly 3% pace achieved in 2018, with economists outside of the Trump administration generally pegging the annual gain at closer to 2%. But investors see a much lower risk of recession in 2019.

A LESS EXPENSIVE MARKET, THOUGH STILL NOT CHEAP

Stock prices may be back to where they were in September, but they don’t look quite as expensive by some measures of value.

One of the main ways that analysts measure the value of a stock is to measure its price against the company’s earnings. In September, the S&P 500 was trading at 20.6 times its earnings per share over the prior 12 months. That was well above its average of 16.3 over the prior 15 years.

Today, the S&P 500 is still trading above its long-term average, but not by as much: It’s closer to 18.7.

STILL HESITANT INVESTORS

When interest rates are low for a long time, the concern is that it will inflate a bubble. Two decades ago, investors piled into dot-com stocks and pushed them to prices that markets now see as ludicrous. In the middle of the last decade, it was housing prices that soared too high, too fast.

So far, at least, investors are still hesitant to pile into stocks. This is actually a reason the market may be primed for more gains, some analysts say.

Investors have pulled more money out of U.S. stock funds in the last few months than they’ve put in, according to the Investment Company Institute. If those skeptical investors come back to stocks, it could provide a further lift.

Of course, many risks still remain for markets, and few analysts are predicting the S&P 500 to continue rising in a straight line, as it has for much of 2019. Negotiations on the U.S.-China trade war are still ongoing. Low interest rates have encouraged U.S. companies to gorge themselves on debt, and some ideas percolating in Washington, such as universal health care, could drag down corporate profits.

Still, many investors are feeling better about the market’s health this go-around, most of all because the easier Fed has helped diminish threat of recession.

“This 2,900 is better than the 2,900 we had a few months ago,” said Steve Chiavarone, equity strategist at Federated investors.
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Chinese tech giant Tencent Holdings has invested in Argentine mobile banking service Uala, which also counts George Soros and Point72 Ventures LLC among its investors, the start-up’s founder said.

Uala founder Pierpaolo Barbieri said the company planned to collaborate with the Chinese social media-to-gaming giant to further develop its app. He declined to disclose the amount of Tencent’s investment.

Tencent, one of Asia’s most valuable listed companies, announced last year it would boost investments in a number of “key areas” including digital payment, where its service jostles with rival Alipay, backed by Alibaba Group Holding Ltd.

Tencent’s own messenger-to-payment app WeChat now has more than 1 billion users in China and has launched in-app services that compete with Apple and Google apps.

“We are proud of their interest in Uala and look forward to collaborating on new products and services. This investment will allow us to grow even faster with our product roadmap,” Barbieri said in an email to Reuters.

Argentine startups face regulatory hurdles in South America’s second largest economy, but the country has spawned some of the region’s most successful tech startups, including U.S.-listed online marketplace MercadoLibre and Internet travel agent Despegar.com.

The country, which has a large unbanked population, is also seeing a boom in digital finance from start-ups like Uala to a new wave of online banks competing with more traditional lenders.
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Every month, when his respiratory medicine runs out, Dionysis Assimakopoulos heads to the most unlikely pharmacy in Athens.

Amid derelict stadiums dating from the 2004 Athens Olympic Games, the volunteer-staffed social pharmacy of Hellinikon has handed out free medicine to hundreds of poverty-stricken patients, keeping some of them out of death’s reach.

“My wife and I have been unemployed for over two years. We need about 150 euros for medicine every month,” says Assimakopoulos, a former baker.

Established at the height of the crisis in 2011, the pharmacy runs on donated medicine and disposables. Some 40,000 people have brought medicine, many from abroad, says on-duty pharmacist Dimitis Palakas.

Another patient waiting in line is Achilleas Papadopoulos, a retired tenor. His pension of 700 euros is not enough to cover the antibiotics he has come for.

During nearly a decade of cuts imposed as Greece struggled to avert national bankruptcy, public education and health were among the sectors hit the hardest as the country lost a quarter of its national output.

Amid sweeping layoffs, wage cuts and tax hikes, many could not maintain their social insurance contributions and were pushed out of state-provided health support.

“Only 11 percent of Greeks can currently afford private insurance giving full health coverage,” says Grigoris Sarafianos, head of the association of private Greek health clinics.

According to the national statistics service, Greeks paid 34.3 percent of their medical expenses out of their own pocket in 2016.

The crisis exposed “huge state shortages,” says Petros Boteas, a member of the Hellinikon health team, which serves over 500 patients every month.

“There are fewer doctors and hospital staff. Money for medicine has been cut. There is a long waiting list for doctor’s appointments…we had a cancer patient given an appointment in three months,” he told AFP.

To avoid a long wait — especially in an emergency — many are forced to seek private healthcare, regardless of the cost. There are currently over 120 private clinics in the country.

‘Go to a better school’

A similar scenario casts its shadow over education.

When Aspasia Apostolou’s son was 11 years old and finishing Greek public primary school, his class teacher did something unexpected.

“He told us our son is bright and that he should be in a better school,” reminisces Apostolou, a 44-year-old lawyer.

According to the government, public funding for education fell by about 36 percent during the crisis.

Thousands of trained staff including teachers and doctors emigrated — part of an exodus of some 350,000 people — or opted to retire.

A recent study by the London School of Economics found 75 percent of Greek crisis emigrants hold university degrees.

The OECD in a 2017 study — prepared at Greece’s request — said austerity cuts had “a major impact on the demands on the Greek education system, and on those working within it.”

It said that in 2015, there were approximately 25,000 posts vacant for teachers in primary and secondary education schools.

Apostolou now pays 5,800 euros ($6,500) a year in tuition fees at a private school where her son can be assured of a well-structured curriculum.

“At our old school, the children usually come home early. So many school hours are lost because of teacher shortages during the year,” she says.

“There is no evaluation, no reward for effort in a public school. You wallow in mediocrity.”

Between 2011 and 2014, the state cut education wages and expenses by 24 percent, the OECD study said.

While school books are provided by the state free of charge, the cuts continue to impact other essential resources including computers and petrol for heating.

It’s not uncommon for schools to be shut down for lack of heating. The last instance was in February at the Athens school complex where Prime Minister Alexis Tsipras himself was a pupil.

In public schools, much now relies on private initiative and personal goodwill, what Greeks call ‘filotimo’, says Athanassia, a veteran public school teacher.

“I’ve worked in schools where the principal or teachers or parents paid out of their own pocket for essentials…or discreetly brought food to needy families,” says Athanassia, who has worked in 20 public schools as teachers are shared out to plug staffing gaps.

“Whatever works is based on filotimo,” she adds. “If funding were better, it would be totally different.”

According to the Greek statistics agency, around 12 percent of the country is near the poverty level.

In response, Tsipras’ government in 2016 began a program giving out free school meals at hundreds of schools in poorer regions.

Similarly, the government allowed access to public hospitals to long-term jobless with Greeks without health insurance.

“It’s a step forward, but inequalities persist,” says Petros at the Elliniko clinic.

“Without health insurance, securing a public hospital appointment might take six months, even for critical examinations,” he adds.
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Samsung said Monday it was delaying the launch of its folding smartphone after trouble with handsets sent to reviewers.

Some reviewers who got their hands on the Galaxy Fold early reported problems with screens breaking.

Samsung said it decided to put off this week’s planned release of the Fold after some reviews “showed us how the device needs further improvements.”

The South Korean consumer electronics giant planned to announce a new release date for the Galaxy Fold in the coming weeks.

Initial analysis of reported problems with Galaxy Fold screens showed they could be “associated with impact on the top and bottom exposed areas of the hinge,” Samsung said.

There was also an instance where unspecified “substances” were found inside a Galaxy Fold smartphone with a troubled display, according to the company.

“We will take measures to strengthen the display protection,” Samsung said.

“We will also enhance the guidance on care and use of the display including the protective layer.”

A handful of U.S.-based reporters were given the flagship Galaxy Fold phones, priced at $1,980, ahead of the model’s official release, and they reported screen issues within days of using the devices.

Samsung spent nearly eight years developing the Galaxy Fold, which is part of the leading smartphone maker’s strategy to propel growth with groundbreaking gadgets.

The company essentially gave reviewers a “beta product” without enough information, such as not to peel off a protective coating meant to be permanent, according to independent technology analyst Rob Enderle.

“It was all avoidable for a company the size of Samsung,” Enderle said.

The failure of a “halo product” meant to showcase innovation and quality could tarnish the brand and send buyers to rivals.

“If a halo product fails, people don’t trust that you build quality stuff,” Enderle said.

“It can do incredible damage. And Huawei is moving up like a rocket, so this could be good for Huawei.”

Surviving life

Creative Strategies analyst Carolina Milanesi told AFP that a Galaxy Fold she reviewed worked fine, performing even in sometimes messy situations that arise in everyday life.

She wondered if some problems with smartphones reviewed were due to dust, moisture or other material getting into handsets through small openings at the tops and bottoms of hinges.

“If stuff gets in there, it can make its way under the screen,” Milanesi said.

“There seems to be a kind of real-life test that maybe didn’t occur.”

Testing folding phones in a lab is a much different scenario than challenging them “in the wild” where they need to endure pockets, handbags, greasy food, spilled coffee and more, the analyst noted.

Samsung may also need to do more to convey how folding screens warrant more careful handling than stiff displays that have been improved over generations of smartphones.

Milanesi did not expect a slight delay in the launch of the Galaxy Fold to be a major setback for Samsung, saying that the model was unlikely to be a big driver of sales given its price and that services or apps are still being adapted to the new type of smartphone.

Samsung smartphones tuned to work with super-speedy fifth-generation telecommunications networks are more important to the company’s bottom line on the near horizon, according to the analyst.

“It is still early days for 5G, but that is the product that is going to make a difference for Samsung this year,” Milanesi said.

Samsung is the world’s biggest smartphone maker, and earlier this month launched the 5G version of its top-end Galaxy S10 device.

Adding to Samsung woes

Despite the recent announcements about its new high-end devices, Samsung has warned of a more than 60 percent plunge in first-quarter operating profit in the face of weakening markets.

The firm is also no stranger to device issues.

Its reputation suffered a major blow after a damaging worldwide recall of its Galaxy Note 7 devices over exploding batteries in 2016, which cost the firm billions of dollars and shattered its global brand image.

Samsung originally planned to release the Galaxy Fold as scheduled on April 26.

While Samsung’s device was not the first folding handset, the smartphone giant was expected to help spark demand and potentially revive a sector that has been struggling for new innovations.

Other folding devices have been introduced by startup Royole and by Chinese-based Huawei.

Samsung Electronics is the flagship subsidiary of Samsung Group, by far the biggest of the family-controlled conglomerates that dominate business in the world’s 11th-largest economy, and it is crucial to South Korea’s economic health.

The company has enjoyed record profits in recent years despite a series of setbacks, including the jailing of its de facto chief.
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Argentine President Mauricio Macri rode to power in 2015 promising to bolster the farming sector and cut back taxes that had stymied exports. The country’s backbone industry welcomed him with open arms after years of export controls aimed at keeping domestic prices low.

The powerful sector is now cooling on the center-right president, frustrated by revived export tariffs and sky-high borrowing rates that have bruised smaller farmers, a concern for Macri ahead of national elections later in the year.

Argentina’s farming sector, which brings in more than half of the export dollars in South America’s second-biggest economy, is a key barometer for Macri, who has sold himself as a champion of business and industry, none more so than the country’s huge soy, wheat and corn farms.

“We publicly supported the administration in the last elections [mid-terms in 2017] as we believed they were managing the policies farmers needed,” said Carlos Iannizzotto, president of the Confederación Intercooperativa Agropecuaria, one of the country’s four major farming bodies. “Today we cannot do the same.”

Reuters spoke to the leaders at all four associations, who collectively make up the influential “Mesa de Enlace” or liaison committee. They cited Macri’s backtracking on cutting taxes on exports and the high cost of credit with interest rates above 60 percent.

The farm lobbies do not directly sway the votes of a huge proportion of voters, analysts and pollsters cautioned, but said that their weakening support was a sharp warning sign for Macri ahead of the October election, which is expected to be closely fought.

Dardo Chiesa, president of a second lobby, the Confederaciones Rurales Argentinas, said farmers had become “disappointed” with Macri’s performance on the economy, with a tumbling peso and inflation running at over 50 percent.

“The first issue in terms of voting this year is the economy, and the reality is that the government’s economic management has not satisfied the sector,” he told Reuters.

‘I wanted change’

Everything had started so well. 

After Macri’s election in 2015 he eliminated export taxes on corn and wheat and lowered those for soy; he also got rid of limits on corn and wheat exports — gaining cheers from farmers.

However, an acute financial crisis last year forced Macri to take a $56.3 billion lifeline from the International Monetary Fund (IMF), in return pledging to balance the country’s deficit — including restarting taxes on exports.

In addition, to deal with inflation and protect the peso currency, the government has hiked interest rates to almost 70 percent, choking off the ability of farmers and other small businesses to obtain funds to expand and buy equipment.

Sales of combine harvesters, tractors and seeding machines plummeted last year, government data showed.

“I voted for Macri because I wanted a change, but Macri has really let us down,” Carlos Boffini, who runs a 400-hectare farm in Colón, in the province of Buenos Aires, told Reuters.

“[Macri] spoke about how the export taxes were unfair. Yet here they are again. He was going to get rid of a lot of things and he did not get rid of anything.”

To be sure, not all farmers are turning away from Macri, who is still viewed by many as the most business-friendly candidate.

Daniel Pelegrina, head of Sociedad Rural Argentina, which generally represents larger farming groups, stopped short of giving his direct support for the president but said the government’s policies were roughly in the right direction.

“Argentina needs to be reintegrated and active globally, it needs to have an export-oriented economy,” he said, adding that there is, however, a need to review the high taxes.

If not Macri, then who?

Macri is facing a split field in the elections that start in October before a potential run-off if there is no clear winner.

Likely rivals include ex-President Cristina Fernandez de Kirchner, whose populist and interventionist policies made her deeply unpopular with farmers. More moderate members of the Peronist opposition include former economy minister Roberto Lavagna and former congressman Sergio Massa.

Carlos Achetone, president of the Federación Agraria Argentina (FAA), the last of the four main agricultural bodies, said many farmers were looking beyond Macri if there was a “third alternative with substance.”

Analysts and farmers, however, said if the election ended up being between Macri and Fernandez — as many polls expect if she runs — then farmers would have little choice about how to vote.

“There is a consensus of not returning to populism. Argentina cannot return to populism,” said Chiesa, referring to Fernandez’s administration which had introduced export quotas on grains and meat to keep domestic prices low for consumers.

Farmer Boffini agreed, adding the sector’s general dislike of the former leader could well be Macri’s saving grace.

“Do you know what Macri’s advantage is? It’s that we don’t like Cristina and so if Cristina shows up and there are no other options, we will simply vote for Macri so that Cristina does not get in,” he said.
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Amazon and Walmart on Thursday kicked off a two-year government pilot program allowing low-income shoppers on government food assistance in New York to shop and pay for their groceries online for the first time. 

ShopRite will join the two retailers on the program early next week, said the U.S. Department of Agriculture, which oversees the Supplemental Nutrition Assistance Program, or SNAP. 

The USDA has long required customers using electronic benefits transfer, or EBT, to pay for their purchases at the actual time and place of sale. So the move marks the first time SNAP customers can pay for their groceries online.

ShopRite and Amazon are providing the service to the New York City area, and Walmart is providing the service online in upstate New York locations. The agency said the pilot will eventually expand to other areas of New York as well as Alabama, Iowa, Maryland, Nebraska, New Jersey, Oregon and Washington.

Purchase food, but not delivery

The pilot program will test both online ordering and payment. SNAP participants will be able to use their benefits to purchase eligible food items but will not be able to use SNAP to pay for service or delivery charges, the agency said. 

People who receive SNAP benefits should have the opportunity to shop for food the same way more and more Americans shop for food — by ordering and paying for groceries online,'' said USDA Secretary Sonny Perdue.As technology advances, it is important for SNAP to advance, too, so we can ensure the same shopping options are available for both non-SNAP and SNAP recipients.” 

Perdue said he will be monitoring how the pilot program increases food access and customer service, specifically for those who have trouble visiting physical stores.  

Roughly 38 million individuals receive food stamps in the U.S., according to the USDA. Nearly $52 billion, or 82% of all food stamp dollars, were spent at big box stores and grocery chains in 2017, according to the most recent USDA data. 

The 2014 Farm Bill authorized the USDA to conduct and evaluate a pilot program for online purchasing prior to national implementation. The USDA says the move was intended to ensure online transactions are processed safely and securely. 

Seattle-based Amazon said those who qualify don’t need to be Prime members to buy groceries with their benefits. They’ll get free access to its AmazonFresh service, which delivers meat, dairy and fresh produce to shoppers’ doorsteps. And they’ll also be able to use Prime Pantry, which delivers packaged goods like cereal and canned food.

Qualifying amounts

However, they’ll need to spend over a certain amount to qualify for free shipping: $50 at AmazonFresh and $25 at Amazon.com. The online shopping giant launched a website, amazon.com/snap, where people can check if they qualify. Amazon said it’s working with the USDA to expand service to other parts of New York state. 

Amazon.com Inc. was on the initial list for the government pilot program, and Bentonville, Ark.-based Walmart Inc. made the list later. The world’s largest retailer, however, in late 2017 had started allowing customers in limited locations to order items through its online grocery pickup service and then pay for it in person at the stores. 

Access to convenience and to quality, fresh groceries shouldn't be dictated by how you pay,'' Walmart said.This pilot program is a great step forward, and we are eager to expand this to customers in other states where we already have a great online grocery.” 

Walmart said that nearly 300 locations with grocery pickup in the states will be part of the USDA government program. 
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The National Enquirer is being sold to the former head of the airport newsstand company Hudson News following a rocky year in which the tabloid was accused of burying stories that could have hurt Donald Trump’s 2016 presidential campaign. 

Tabloid owner American Media said Thursday that it plans to sell the supermarket weekly to James Cohen. Financial terms were not immediately disclosed for the deal, which included two other American Media tabloids, the Globe and National Examiner.  

American Media said last week that it wanted to get out of the tabloid business to focus on its other operations, which includes its teen brand and broadcast platforms.

Non-prosecution agreement

Federal prosecutors in Manhattan agreed last year not to prosecute American Media in exchange for the company’s cooperation in a campaign finance investigation. That probe eventually led to a three-year prison term for Trump’s former personal lawyer Michael Cohen for campaign violations among other charges.

American Media admitted it had paid $150,000 to keep former Playboy model Karen McDougal quiet about an alleged affair with Trump to help his campaign. Trump has denied an affair.  

The sale would end a longtime relationship between the Enquirer and Trump. Under the aegis of American Media CEO David Pecker, the tabloid has for years buried potentially embarrassing stories about Trump and other favored celebrities by buying the rights to them and never publishing in a practice called “catch and kill.” 

The Associated Press reported last year that Pecker kept a safe in the Enquirer’s office that held documents on buried stories, including those involving Trump. 

Whether James Cohen has any allegiances to Trump is not clear. While he was a registered Republican as late as 2017, according to Nexis records, he has given to both Republicans and Democrats. That included $17,300 in 2016 to an arm of the Democratic National Committee and $2,500 to the Republican National Committee in 2012.

News of the sale comes two months after Amazon chief Jeff Bezos publicly accused the Enquirer of trying to blackmail him by threatening to publish explicit photos of him. 

An American Media attorney denied the charge, but it threatened potentially big legal costs by upending American Media’s non-prosecution agreement in the hush money case. The AP reported that federal prosecutors were looking into whether the publisher violated terms of the deal, which included a promise not to break any laws in the future.

Heavy debt load

The Bezos accusation comes at a difficult time for American Media. It has financed several recent acquisitions with borrowed money and has been struggling under a heavy debt load. American Media said the Cohen deal would help reduce the amount it needs to pay back, leaving it with $355 million in debt. 

The Washington Post, which earlier reported the sale, said Cohen will pay $100 million in the deal.

Cohen’s family had run a magazine and newspaper distributor for decades before his father branched into newsstand stores in 1980s, starting with a single one at LaGuardia Airport. Before he died in 2012, the father had opened more than 600 stores. 

After the death, James Cohen’s niece alleged her uncle had cheated her out of her inheritance. She lost the case. 

The family sold a majority stake in the chain about a decade ago. The business is now owned by Dufry, an operator of duty-free stores in which James Cohen is a major shareholder. 

Cohen still owns a magazine and newspaper distributor called Hudson News Distributors. In addition, he runs a real estate developer and a publishing company, which owns Gallerie, an art and design magazine. 

Cohen has reportedly been involved in American Media deals before. The New York Times reports that, in 2011, Cohen invested in the company’s American edition of OK!, a British tabloid. 
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