All posts by MBusiness

Fed’s Powell, Economist Taylor, Yellen on Trump’s Federal Reserve List

President Donald Trump is considering nominating Federal Reserve Governor Jerome Powell and Stanford University economist John Taylor for the central bank’s top two jobs, in an apparent bid to reassure markets and appease conservatives hungry for change.

Under that scenario, either Powell or Taylor would take the reins from Fed Chair Janet Yellen when her term expires in early February, and the other would fill the vice chair position left vacant when Stanley Fischer retired this month.

“That is something that is under consideration, but he hasn’t ruled out a number of options. He’ll have an announcement on that soon, in the coming days,” White House spokeswoman Sarah Sanders told reporters Friday.

​Powell a centrist

Making Powell, a soft-spoken centrist who has supported Yellen’s gradual approach to raising interest rates, the next Fed chief would provide the continuity in monetary policy that investors crave.

The addition of Taylor, who has backed an overhaul of the Fed and embraced a more rigid rule-oriented monetary policy, would be a feather in the cap of conservative Republicans who feel that monetary policy has been too loose under Yellen, who was named as Fed chair by Democratic President Barack Obama and has led the central bank since February 2014.

“I think Powell might be the safer pick insofar as we know what we’re getting,” said Michael Feroli, chief U.S. economist at J.P. Morgan Chase. “He’s a guy who obviously knows the Fed culture, how the (policy-setting) committee operates, so for some of those soft skills we know he would be effective.”

Powell has embraced the Yellen Fed’s monetary policy, keeping the faith that a tighter job market will eventually push wages higher and end a lengthy period of worryingly low inflation.

Taylor has spent the last two decades refining and advocating wider use of a rule that lays out where interest rates ought to be, given certain conditions of inflation and the broader economy. His rule implies that rates should be higher than they are now.

​Yellen’s defense

Yellen, speaking at an economic conference in Washington Friday evening, mounted a strong defense of the tools the Fed has used to fight the sharp economic downturn triggered by the financial crisis and said there was a risk of another crisis in which those “unconventional policies” may be needed again.

Yellen, who Trump has indicated could still be named to another term as Fed chair, was not asked about the Fed job and did not offer any comment on the selection process.

Taylor inflexible?

Although Taylor is highly regarded within the Fed, his rule-based rate-setting position has spurred criticism that he would handcuff U.S. monetary policy.

Taylor pushed back at a meeting at the Boston Fed on Saturday, saying he favored a flexible implementation of policy rules and did not want to tie the Fed’s hands or suggest that he was motivated by a distrust of policymakers.

“I think that’s completely incorrect,” he said. “I trust policymakers; (rules) are an effort to make policy better.”

Some analysts suggest that fears that Taylor would bring an inflexible monetary policy with him to the Fed, as some Republicans in Congress hope, are likely exaggerated.

“There is some scope for disappointment if people think putting Taylor in will just lead to mechanical-based policy,” Feroli said.

Cleveland Fed President Loretta Mester, speaking with reporters Friday, seemed to agree.

“Even if you pick a rule, the rule itself would need to be modified given the structure of the economy,” she said. “But I do think being systematic, looking at the kinds of information we look at systematically over time, articulating our strategy for policy and being less discretionary is a good idea.”

Confusing signal

At the same time, there are concerns that the combination of Powell and Taylor atop the world’s most powerful central bank could send a confusing signal to markets.

It is unclear whether Trump, who has criticized Yellen’s stewardship but also said on several occasions that he preferred rates to stay low, wants to dramatically alter the Fed’s direction.

Although he appears to be tilting to Powell and Taylor, in addition to Yellen the Republican president has interviewed his top economic adviser Gary Cohn and former Fed Governor Kevin Warsh for the Fed chief position.

Turkey Bank Regulator Dismisses ‘Rumors’ After Iran Sanctions Report

Turkey’s banking regulator urged the public on Saturday to ignore rumors about financial institutions, in an apparent dismissal of a report that some Turkish banks face billions of dollars of U.S. fines over alleged violations of Iran sanctions.

“It has been brought to the public’s attention that stories, that are rumors in nature, about our banks are not based on documents or facts, and should not be heeded,” the BDDK banking regulator said in a statement, adding that Turkey’s banks were functioning well.

The Haberturk newspaper on Saturday reported that six banks potentially face substantial fines, citing senior banking sources. It did not name the banks. One bank faces a penalty in excess of $5 billion, while the rest of the fines will be lower, it said.

Asked to comment, a spokesman for the U.S. Treasury, which is responsible for U.S. sanctions regimes, said only: “Treasury doesn’t telegraph intentions or prospective actions.”

Two senior Turkish economy officials told Reuters Turkey has not received any notice from Washington about such penalties, adding that U.S. regulators would normally inform the finance ministry’s financial crimes investigation board.

U.S. authorities have hit global banks with billions of dollars in fines over violations of sanctions with Iran and other countries in recent years.

The administration of U.S. President Donald Trump last week adopted a harsh new approach to Iran by refusing to certify its compliance with a nuclear deal struck with the United States and five other powers including Britain, France and Germany under his predecessor Barack Obama.

Trump argues the deal was too lenient and has effectively left its fate up to the U.S. Congress, which might try to modify it or bring back U.S. sanctions previously imposed on Iran.

Last week, the U.S. Treasury Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker said Trump’s strategy involved placing additional sanctions on Tehran and that Washington had been “engaging our allies and partners” with the aim of denying funds to Iran’s Revolutionary Guard Corps.

The Haberturk report comes as relations between Washington and Ankara, which are NATO allies, have been strained by a series of diplomatic rows, prompting both countries to cut back issuing visas to each other’s citizens.

U.S. prosecutors last month charged a former Turkish economy minister and the ex-head of a state-owned bank with conspiring to violate Iran sanctions by illegally moving hundreds of millions of dollars through the U.S. financial system on Tehran’s behalf.

President Erdogan has dismissed the charges as politically motivated, and tantamount to an attack on the Turkish Republic.

The charges stem from the case against Reza Zarrab, a wealthy Turkish-Iranian gold trader who was arrested in the United States over sanctions evasion last year. Erdogan has said U.S. authorities had “ulterior motives” in charging Zarrab, who has pleaded not guilty.

Era Ends: Hong Kong Stock Trading Floor to Close

Hong Kong’s last remaining stock market floor traders are taking their final orders as the exchange prepares to shut its trading hall.

The bourse’s operator, Hong Kong Exchanges & Clearing, says it will close the trading hall by the end of the month and turn the space into a showcase for the city’s financial markets.

Yip Wing-keung, a trading manager at brokerage Christfund Securities, donned his red trading jacket for the last time Friday, his final day on the floor. He and the other few floor traders left have been moving out ahead of the closure.

Computerized trading

The shutdown marks the end of an era for the stock market, which symbolized the city’s ascent as an Asian finance hub. Activity on the floor, one of a few such venues left worldwide, dwindled as stock dealing became fully computerized.

“I feel sadness and regret,” said Yip, who has been a floor trader since the hall was opened in 1986 after four previous exchanges were merged. “Hong Kong is one of the world’s financial centers, but if we don’t have the stock market trading hall, it will be a little sorrowful. This is my own individual reflection.”

Yip said the floor traders resisted the closure. They sent a protest letter to the government but it was in vain.

“We wrote it but were overruled,” he said. “We can’t stop the times from changing.”

Peers disappearing, too

Hong Kong’s stock exchange, Asia’s third biggest by volume, follows other global peers like Tokyo, Singapore and London that have eliminated their trading floors.

In the U.S., floor traders at the New York Stock Exchange still provide the backdrop for financial TV news reports and bell-ringing ceremonies. But Chicago and New York commodity futures trading pits, where traders used old-fashioned “open outcry” techniques, have shut in recent years as volume fell to 1 percent of the total.

Hong Kong Exchanges stopped updating stats for floor trading in 2014, when it accounted for less than 1 percent of monthly turnover.

From 900 desks to 62

In the 1980s and 1990s the hall housed more than 900 trading desks. The exchange’s most recent count showed only 62 dealing desks were leased, with about 30 traders showing up on an average day. On a visit to the hall this week, only about seven traders could be seen.

Back in its heyday, floor trading was computer-assisted but dealers still needed to talk to each other to complete transactions, either by phone or in person, depending on how far away they sat from each other, Yip said.

“If they were too far you had to use the internal phone line, but if you couldn’t get through, you had to run over to them,” he said. “So you saw lots of people running back and forth.”

These days, Yip just punches orders into his computer.

“Now it’s more comfortable” but relationships with other traders are not as good as they used to be, Yip said.

He doesn’t look forward to returning to his head office.

“It won’t be so free,” he said.

Judge Tosses $400 Million Verdict in Cancer, Talc Powder Case

A California judge on Friday threw out a $417 million verdict against Johnson & Johnson in a lawsuit by a woman who claimed she developed ovarian cancer after using its talc-based products like Johnson’s Baby Powder for feminine hygiene.

The ruling by Los Angeles Superior Court Judge Maren Nelson marked the latest setback facing women and family members who accuse J&J of not adequately warning consumers about the cancer risks of its talc-based products.

The decision followed a jury’s decision in August to hit J&J with the largest verdict to date in the litigation, awarding California resident Eva Echeverria $70 million in compensatory damages and $347 million in punitive damages.

New trial

Nelson on Friday reversed the jury verdict and granted J&J’s request for a new trial. Nelson said the August trial was underpinned by errors and insufficient evidence on both sides, culminating in excessive damages.

Mark Robinson, who represented the woman in her lawsuit, in a statement said he would file an appeal immediately.

“We will continue to fight on behalf of all women who have been impacted by this dangerous product,” he said.

J&J in a statement said it was pleased with the verdict, adding that it will continue to defend itself in additional trials.

The judge added that there also had been misconduct of the jury during the trial.

J&J said declarations by two jurors after the trial showed that three members of the 12-person jury who voted against finding the company liable were improperly excluded from determining damages.

Nearly 5,000 plaintiffs

J&J says it faces lawsuits by 4,800 plaintiffs nationally asserting talc-related claims. Many of those cases are in California, where Echeverria’s case was the first to go to trial, and in Missouri, where J&J has faced five trials.

The Missouri litigation led to four verdicts against J&J in which juries issued verdicts totaling $307 million. The company has won one trial.

But the Missouri cases, which have largely been brought by out-of-state plaintiffs, have faced jurisdictional questions after the Supreme Court issued a ruling in June that limited where personal injury lawsuits could be filed.

On Tuesday, a Missouri appellate court threw out a $72 million verdict by a jury in February 2016 to the family of a deceased Alabama woman after ruling the case should not have been tried in St. Louis.

China Set to Spend Billions on ‘One Belt One Road,’ But Some Want Focus on Poverty

Running 1,300 kilometers over the world’s highest mountain pass, the “Friendship,” or Karakoram, Highway is evidence of China’s willingness to spend big as a contributor to global development.

Costing tens of billions of dollars, the road links western China with Pakistan, part of Beijing’s “One Belt One Road” Initiative, which seeks to rekindle ancient Silk Road trade routes linking China with Europe and Africa and is a central tenet of President Xi Jinping’s leadership, said professor Steve Tsang of London’s School of Oriental and African Studies. 

“The government is committed to do whatever it can to make sure that it is successful,” Tsang said. “So a lot more money and resources will be put into it to support that.”

But figures show that since the Karakoram Highway was built, Pakistani exports to China have fallen while imports have increased, raising concern China’s new Silk Road could become a one-way street. 

WATCH: China to Spend Billions More on ‘One Belt’ Initiative, but Campaigners Want Focus on Poverty

​Address poverty

Stephen Gelb of the Overseas Development Institute says Beijing should focus its investments on global development goals.

“At the moment there’s a lot of focus on infrastructure and particularly transport, pipelines, that sort of thing, which don’t directly address poverty,” Gelb said. “And in fact there’s been in some cases some controversy about the social and environmental impacts. But I think the focus should be to address development, including poverty and related issues.”

Gliding above the choking traffic of the Ethiopian capital, Addis Ababa, the Chinese-funded tramway system opened last year at a cost of half a billion dollars. Beijing says investments like this will boost African economies, thereby alleviating poverty.

Gelb says it is also part of China’s plan to become a dominant force on the global stage.

“It was affirmed in Xi Jinping’s speech (this week to China’s Communist Party Congress),” he said, “China’s very much about these days rules-based global governance, multilateralism, globalization.” 

Visiting India this week, U.S. Secretary of State Rex Tillerson accused China of not always playing by those rules.

“China, while rising alongside India, has done so less responsibly, at times undermining the international, rules-based order,” Tillerson said.

Paying the piper

Recipient countries have welcomed Chinese investment, which sometimes comes with fewer conditions than Western aid, such as demands for democratic reform. But Tsang warns there could be a sting in the tail.

“The real issue will come when some of those countries, particularly in central Asia, have to pay back some of the loans that were acquired in the Belt and Road Initiative,” Tsang said. “And most of those countries will have problems paying back those loans.”

For now, Chinese investment continues to expand. Development campaigners say Beijing’s focus should be not only on ports and pipelines but on tackling poverty.

Philippines Faces More Transit Strikes Ahead of Year-end Reform Deadline

A mass transit strike in the Philippines this week risks more disruptive collective action unless drivers and the government settle differences over costly upgrades to an aging yet iconic vehicle fleet, analysts say.

Thousands of drivers and operators of “jeepneys” went on strike Monday and Tuesday. The government called for two days off work and school to minimize disruption for commuters. Jeepneys are distinctly Philippine vehicles that are about the size of small buses and provide most urban mass transit.

President Rodrigo Duterte wants the aging fleet replaced by January 1 to combat air pollution. But operators may lack the money for vehicle replacements. Experts say a new strike could erupt without compromise by officials, disrupting already difficult commutes in major cities such as the capital, Manila.

“They have to meet in the middle,” said Jonathan Ravelas, chief market strategist with Banco de Oro UniBank in Metro Manila. “So, it’s more of a communication problem to probably try to address both areas, making government aware of certain things. They just have to do a compromise somewhere.”

Costly demand

The drivers went on strike to draw attention to the role of their smoke-belching but colorfully decorated vehicles. Some people carried flags and placards; a few blocked roads. Smaller strikes were held last month and in February for the same cause.

The Philippine government last year approved a modernization program to replace jeepneys older than 15 years with low-polluting vehicles, such as solar-powered ones.

It has neither offered financing to the operators nor addressed a likely increase in passenger fares on newer jeepneys, said Maria Ela Atienza, political science professor at the University of the Philippines Diliman.

“It seems like the government is already set to implement the phase-out of the jeepneys by January of next year,” Atienza said. “So it appears to disregard the livelihood of a mass of jeepney drivers who will lose their jobs. They won’t [have] money to pay for the new units, so many of them will be jobless.”

A political camp called Piston Partylist is speaking out for drivers’ interests in the legislature, adding a political element to the dispute. Experts expect more strikes over the next two months unless drivers reach a deal with the government.

Cultural icon

Jeepneys emerged after U.S. colonization of the Philippines ended in 1946. In much of the country, passengers can hail them from any roadside. They pay according to distance traveled, sometimes as little as 14 cents (seven pesos). Passengers normally sit on two long benches facing each other in a pickup truck-style bed covered with a roof. Passengers help one another pass fares up to the driver and pass back any change.

Operators often paint the vehicles in their own style and name them after women or religious figures, making the vehicles a hallmark of Philippine culture.

In Philippine cities, jeepneys provide most of the local mass transit because of the lack of bus systems or wide-reaching commuter rail networks.

Reaching a compromise on vehicle replacement could be tough in today’s political climate, said Christian de Guzman, vice president and senior credit officer with Moody’s in Singapore. He cites a “heightened level of noise” and “confrontational politics” since Duterte took office in June last year.

“If you go to social media, there’s certainly a great degree of polarization that has happened over a fairly short amount of time,” de Guzman said. “Since Duterte has come in, there’s this ‘with-us-or-against-us’ type of mentality.”

Threat of more strikes

The strike earlier this week “barely affected the riding public,” the presidential office said on its website.

But repeated transit strikes or a prolonged one would eat away at commerce if people face trouble getting to work, analysts say. Low-paid commuters would also need to pay more for taxis or ride-sharing apps.

Participants in major events such as the Association of Southeast Asian Nations leadership summit scheduled for Nov. 10 to 14 in Manila use private cars, leading to little disruption. If the summit coincides with a strike, delegates will find relatively little traffic in the typically gridlocked city.

“It’s sad to say, but if you ask me, traffic was tolerable,” Ravelas said, recounting the strike this week. “It just highlights the main problem, which is too many vehicles.”

High Schoolers Experience What it is Like to be Professionals

When the new school year started in September, 16-year-old Aelina Pogosian couldn’t wait to tell her friends about the most interesting part of her summer vacation: her RISE internship, working three weeks in the biology lab at Montgomery College.

“A lot of the materials and machinery we used is not given at most high schools, which is really important for me to learn how to use these things,” she said. “And I got to learn a lot at the same time I was able to have a lot of fun. And I met some new people.”

Among those new people was Jennifer Sengbusch, instructional lab coordinator, who worked closely with Aelina.

“At first, working in the lab I had to go over safety rules with her to avoid any injury to herself,” Sengbusch said. “We also went through working with chemicals, making solutions, doing calculations. Then we progressed into doing more complicated things as measuring protein concentrations and doing DNA tests.”

And the internship wasn’t all inside a lab, it also included some animal husbandry experience with the lab’s snakes and tortoises.

Real interesting experiences

Aelina is one of more than 400 students from all of Montgomery County’s 25 high schools who took part in the RISE program in its first year. RISE stands for Real Interesting Summer Experience, and those experiences were offered at construction companies, police stations, marketing firms, fire stations and more. More than 140 businesses, government agencies and nonprofits offered to host the students for the paid internships.

Local activist Will Jawando founded the program and says it has two main goals.

“The first goal is to expose our students to career opportunities early on so they can inform their education or training after high school,” he said.

The second is boosting the local economy.

“We said there are 30,000 middle-skill-level jobs here in Montgomery County that are not filled,” Jawando said. “So how do we also expose them to that there are jobs here in the county that they could be doing in a year or two that pay well and are on career track? So it was also an economic development tool. So it not only benefits the students, but hopefully it benefits the county and the region, if they stay here, they become productive citizens and as taxpayers.”

Local government support

The program received partial funding from the Montgomery County Council. Councilman Craig Rice helped secure the money.

“All the time in government, there are always so many needs and so many things that are important, whether it’s our roads or our infrastructure, all the different types of programs that we provide as government, but it is really important to make sure that we’re providing for our future generation,” Rice said.

He stressed that providing high school students with real life career opportunities was a priority.

“It’s really something that if we’re going to be serious about being globally competitive, we’re going to be serious about providing a number of different options for our children, we’ve got to make sure that we put our money where our mouth is,” Rice added.

Active, curious and dedicated

Jennifer Sengbusch says RISE gave her a chance to work with high school students who may soon be applying to attend Montgomery College. She found them curious and eager to learn.

“I think high school students are more inquisitive” than college students, she observed, “the high school students really ask a lot of great questions.”

She was also pleased to find Aelina, engaged and prompt.

“I didn’t realize that she was arriving an hour early just so she would be on time, that she would be sitting on the end of the hallway and I glanced over and said, ‘What are you doing here?’ She said ‘I just didn’t want to be late.’”

After a successful start this summer, RISE participants and organizers hope the program will expand next year and inspire surrounding counties to offer similar Real Interesting Summer Experiences.

Last Holden Rolls Off Factory Line in Australia

The last mass-produced car designed and built in Australia rolled off General Motors Co.’s production line in the industrial city of Adelaide on Friday as the nation reluctantly bid farewell to its auto manufacturing industry.

GM Holden Ltd., an Australian subsidiary of the U.S. automotive giant, built its last car almost 70 years after it created Australia’s first, the FX Holden, in 1948.

Since then, an array of carmakers including Ford, Toyota, Nissan, Mitsubishi, Chrysler and Leyland have built and closed manufacturing plants in Australia.

Clocking out for last time

After the last gleaming red Holden VF Commodore, a six-cylinder rear-wheel drive sedan, left the plant in the Adelaide suburb of Elizabeth that had grown over decades to provide its workforce, 955 factory workers will clock off the last time

“It’s pretty tragic really that we’ve let go probably one of the best cars around the world,” an auto painter who identified himself as Kane told reporters.

The 36-year-old was worked at Holden for 17 years and starts a new job with an air conditioner manufacturer Monday. But he knows many other former Holden employees won’t find jobs so quickly.

Dozens of Holden enthusiasts gathered outside the factory, bringing with them generations of Holdens dating back to favored FJ models that were built between 1953 and 1956.

South Australia state Premier Jay Weatherill said car manufacturing was seminal to the state’s industrial know-how.

“It has provided the backbone for our manufacturing capability in this state,” Weatherill told reporters. “It’s given us … the capacity to imagine ourselves as an advanced manufacturing state.”

​Iconic Australian brand

Holden is an iconic Australian brand and has been a source of national pride for generations.

The V8 Holden Commodore has sold in the United States since 2013 as the Chevrolet SS.

The brand will survive although Holdens will all now be imported from GM plants around the globe.

Holden retains design and engineering teams, a global design studio, a local testing ground, 1,000 employees and a 200-strong national dealer network.

The brand that became known as “Australia’s own car,” accounted for more than half the new cars registered in Australia by 1958.

The reasons behind the demise of Australian auto manufacturing are numerous.

The first Holden cars were built in an era of high Australian tariffs and preferential trade with former colonial master Britain, which encouraged global carmakers to set up local factories to increase market share.

Australian import tariffs have since tumbled through bilateral free trade deals with car manufacturing countries like the United States, Japan, China, South Korea, Thailand and Malaysia.

The Holden workers’ union blames a lack of government support through subsidies for GM’s decision to end manufacturing.

There had been debate about whether the 7 billion Australian dollars ($5.5 billion) that the government spent on the car industry in subsidies since 2001 was worth the jobs that it created.

“We’re not just losing a car, we’re not just losing an industrial capability. We’re losing an icon and that is a tragedy,” Labor lawmaker Nick Champion, who represents the Holden factory region, told reporters Thursday.

Workers at iPhone Supplier in China Protest Unpaid Bonuses

Hundreds of workers streamed through dark streets, blocking an entrance to an Apple iPhone supplier’s factory in eastern China to protest unpaid bonuses and factory reassignments, two witnesses and China Labor Watch, a New York based non-profit group, said Thursday.

The protest Wednesday night at Jabil Inc.’s Green Point factory in Wuxi city prompted Apple to launch an investigation and vow to redress the payment discrepancies. “We are requiring Jabil to send a comprehensive employee survey to ascertain where gaps exist in payment and they must create an action plan that ensures all employees are paid for the promised bonus immediately,” Apple said Thursday in an email to China Labor Watch.

The incident highlights the complexity of overseeing global supply chains that can involve hundreds of manufacturers and subcontractors, as well as third-party labor brokers — and their subcontractors — that are tasked with recruiting workers for those factories. Companies differ in the amount of responsibility they are willing to take on. Apple stepped up oversight and disclosure following a spate of negative reports about worker suicides and injuries at suppliers.

After Tim Cook took over as chief executive, in 2011, Apple began publicly identifying top suppliers. It also publishes annual audits detailing labor and human rights performance throughout its global web of suppliers. Apple said it did comprehensive audits of 705 sites last year and documented significant improvements in compliance with its supplier code of conduct.

“About 600 workers went protesting for failing to get their bonus,” a worker who asked that only his family name, Zhang, be published for fear of retribution, said Thursday. He said that like many of his colleagues, he was promised a bonus of up to 7,000 yuan ($1,056) if he stayed for 45 days when he signed up for the job through a labor broker. “It has already been over three months but I still haven’t got the money,” he said.

Tu Changli, a security guard at Jabil’s Green Point factory, said a labor broker promised him 2,000 yuan ($302) if he stayed for two months. “I didn’t get it at all,” he said. He also said he saw hundreds of workers protesting. The company he said he works for, Wu Tai Security Co., declined comment.

A spokeswoman for U.S.-based Jabil, Lydia Huang, disputed those accounts, saying only 20 to 40 employees were actually protesting and the rest were night-shift workers trying to enter the factory. “As long as they can present evidence of promises by brokers we will help them to get paid,” she said.

Jabil, in a statement late Thursday, said it was “committed to ensuring every employee is paid fairly and on time.”

Tensions had been running high at Jabil’s Green Point factory. Tu, the security guard, said he saw a worker talked down from the edge of a rooftop in late September. And Zhang said that on Sept. 30, he saw a security guard hit a worker with a wooden stick so hard the stick broke.

Apple in its email to China Labor Watch said both incidents had to do with disputes with security guards, not underpayment, and added that it was working with Jabil “to make sure their security guards are properly trained to avoid and de-escalate situations.”

The current iPhone 8 and iPhone 8 plus had a 2 percent share of the iOS device market nearly a month after their launch, significantly lagging the 5 percent share grabbed by the iPhone 7 and iPhone 7 plus at a similar point last year, according to Localytics, a mobile engagement platform that analyzes iPhone adoption rates. Analysts attribute iPhone 8 sluggishness to the pending release of the iPhone X.

 

Missouri Proposes Innovation Corridor for Amazon’s 2nd Home

Missouri officials were submitting a bid Thursday for Amazon’s second headquarters that would involve an innovation corridor between Kansas City and St. Louis rather than a single location in one of the state’s major metropolitan areas.

 

That’s proposal is in addition to individual applications submitted by Kansas City and St. Louis, two of a number of North American metropolitan areas vying to become the company’s second home. Amazon in September opened the search for a second headquarters and promised to spend more than $5 billion on the site. The Seattle-based company says it would bring up to 50,000 jobs.

 

Missouri Chief Operating Officer Drew Erdmann said the state’s bid could be aided if it succeeds in landing a high-speed Hyperloop track connecting the cities.

 

 

US Unemployment Claims Fall to 222,000, Lowest in 44 Years

The number of Americans collecting unemployment benefits fell last week to the lowest level since Richard Nixon was president.

THE NUMBERS: The Labor Department said Thursday that claims for jobless aid dropped by 22,000 to 222,000, fewest since March 1973. The less volatile four-week average slid by 9,500 to 248,250, lowest since late August.

 

The overall number of Americans collecting unemployment checks dropped to 1.89 million, lowest since December 1973 and down nearly 9 percent from a year ago.

 

THE TAKEAWAY: Unemployment claims are a proxy for layoffs. The low level suggests that employers are confident enough in the economy to hold onto workers.

 

The unemployment rate last month hit a 16-year low 4.2 percent. Employers cut 33,000 jobs in September — the first monthly drop in nearly seven years — but only because Hurricanes Harvey and Irma rattled the economies of Texas and Florida; hiring is expected to bounce back.

 

KEY DRIVERS: The economic impact of Harvey and Irma is fading; claims dropped in Texas and Florida as more people returned to work. But the Labor Department said that Hurricanes Irma and Maria have disrupted the ability of people to file claims in Puerto Rico and the Virgin Islands.

 

 

Dow closes above 23,000 for first time; IBM soars

The Dow Jones Industrial Average closed above 23,000 for the first time on Wednesday, driven by a jump in IBM after it hinted at a return to revenue growth.

The Dow hit 22,000 on Aug. 2, only 54 trading days earlier and roughly half the time it took the index to move from 21,000 to 22,000. This marks the fourth time this year the Dow has reached a 1,000-point milestone.

“Retail investors continue to pour into the marketplace, and with each headline about a new record, and especially round numbers like that, people tend to feel like they’re missing out and you kind of suck more people into the market,” said Ian Winer, head of equities at Wedbush Securities in Los Angeles.

“Ultimately, the only way you’re going to top is by getting everybody all in. And we’re getting close.”

Investors globally pulled $33.7 billion from U.S. equity funds during the third quarter, according to Thomson Reuters’ Lipper research unit. The funds are on course to post net outflows for the full year.

Shares of IBM, which beat expectations on revenue, jumped 8.9 percent and accounted for about 90 points of the day’s 160 point-gain in the blue-chip index.

Solid earnings, stronger economic growth and hopes that President Donald Trump may be able to make progress on tax cuts have helped the market rally this year.

The S&P 500 and Nasdaq also hit record closing highs.

The Dow Jones Industrial Average rose 160.16 points, or 0.7 percent, to end at 23,157.6, the S&P 500 gained 1.9 points, or 0.07 percent, to 2,561.26 and the Nasdaq Composite added 0.56 point, or 0.01 percent, to 6,624.22.

“Today the catalyst is clearly IBM … which appears to have turned the corner. It gave the Dow the boost to stay over 23,000,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

The Dow had briefly surpassed the all-time peak on Tuesday but closed just shy of it.

The financial index jumped 0.6 percent, led by bank stocks recovering from recent post-earnings losses. Bullish calls by brokerages helped to support the bank shares.

Bank shares had run up ahead of recent results, which resulted in some selling following the news, Krosby said.

Investors await news on Trump’s decision on the Federal Reserve chair position. The White House said Wednesday Trump will announce his decision in the “coming days.”

Abbott rose 1.3 percent after the company’s profit beat estimates on strong sales in its medical devices business.

After the bell, shares of eBay fell 4 percent following its results.

Advancing issues outnumbered declining ones on the NYSE by a 1.09-to-1 ratio; on Nasdaq, a 1.32-to-1 ratio favored advancers. About 5.6 billion shares changed hands on U.S. exchanges, below the 5.9 billion daily average for the past 20 trading days, according to Thomson Reuters data.

 

A Lifeline for Millions in Somalia, Money Remittance Industry Seeks More Support

Every month, Fatma Ahmed sends $200 of the earnings she makes in London to her family in Somalia.

“It’s for daily life. For rent, for buying grocery things, to live over there. Because actually in Somalia, that much we do not have,” she said.

Remittances from overseas diaspora constitute a vital part of the economy of many developing nations, none more so than Somalia, where the inflows add up to more than foreign aid and investment combined. However, analysts warn that the industry is poorly understood by regulators and banks, putting the welfare of millions of people at risk.

The two million Somalis living overseas send an estimated $1.3 billion back home every year. With no formal banking system in Somalia, most of the diaspora use remittance services.

Technology makes that possible, says Abdirashid Duale, CEO of Dahabshiil, one of Africa’s biggest remittance services.

“Now, it is so instant, where we have the latest technology, with the internet, secure channels that we can use to send money back home,” Duale said. “Or we use mobiles … smartphones, technology where it will help us to deliver money quickly, but less costly. Technology is supporting us also with the compliance issue.”

Remittance companies rely on global banks to route the money, and those banks must comply with regulations on money laundering and the financing of crime and terrorism.

Citing those concerns, many banks have chosen to withdraw from the market. Such a move is unnecessary, says remittance industry expert Laura Hammond of London’s School of Oriental and African Studies.

“Very often, it is not based on any kind of empirical evidence that shows that money is going into the wrong hands,” Hammond said. “The fear is just there is a conflict in Somalia, there’s the al-Shabab movement. And so there is a problem in a sense, a real precarious nature of the Somali remittance industry.”

The industry received a high-profile boost last month as the Bill & Melinda Gates Foundation donated $1 million using the remittance firm Dahabshiil, along with mobile phone companies Somtel and eDahab, with the money transferred “live” to 1,000 families suffering the drought in Somalia.

The technology is moving fast. However, the cooperation of the global banking system remains key, and the remittance industry wants regulators to do more to support this lifeline. 

A Lifeline for Millions in Somalia, Money Remittance Industry Seeks Support

Remittances from overseas diaspora constitute a vital part of the economy of many developing nations, none more so than Somalia, where the inflows add up to more than foreign aid and investment combined. But analysts warn the industry is poorly understood by regulators and banks — and its precarious nature puts the welfare of millions of people at risk. Henry Ridgwell reports.

Significant Differences Remain After 4th Round of NAFTA talks End in Washington

Trade ministers from the United States, Canada and Mexico wrapped up a contentious fourth round of talks this week, aimed at modernizing the North American Free Trade Agreement. But the Trump administration’s proposals to reshape NAFTA have some trade analysts wondering if the 23-year-old trade pact can survive. Mil Arcega has more.

TV Analyst and New York Deli Owner: An Immigrant’s Pursuit of a Dream

For the last year, the deli that Egyptian-American Hatem El-Gamasy owns in Queens, New York has been the backdrop to on-air discussions on U.S. foreign policy and Middle Eastern affairs that are broadcast in Egypt. But when Egyptian broadcasters caught wind of his daytime job, the calls suddenly stopped. But VOA’s Ramon Taylor reports that El-Gamasy’s dream to achieve journalistic success carries on.

In Harvey-hit County, Some in GOP Newly Confront the Climate

The church was empty, except for the piano too heavy for one man to move. It had been 21 days since the greatest storm Wayne Christopher had ever seen dumped a year’s worth of rain on his town, drowning this church where he was baptized, met his high school sweetheart and later married her.

 

He had piled the ruined pews out on the curb, next to water-logged hymnals and molding Sunday school lesson plans and chunks of drywall that used to be a mural of Noah’s Ark. Now he tilted his head up to take in the mountain of rubble, and Christopher, an evangelical Christian and a conservative Republican, considered what caused this destruction: that the violent act of nature had been made worse by acts of man.

 

“I think the Lord put us over the care of his creation, and when we pollute like we do, destroy the land, there’s consequences to that,” he said. “It might not catch up with us just right now, but it’s gonna catch up. Like a wound that needs to be healed.”

 

Jefferson County, Texas, is among the low-lying coastal areas of America that could lose the most as the ice caps melt and the seas warm and rise. At the same time, it is more economically dependent on the petroleum industry and its emissions-spewing refineries than any other place in the U.S. Residents seemed to choose between the two last November, abandoning a four-decade-old pattern of voting Democratic in presidential elections to support Donald Trump.

 

Then came Hurricane Harvey. Now some conservatives here are newly confronting some of the most polarizing questions in American political discourse: What role do humans play in global warming and the worsening of storms like Harvey? And what should they expect their leaders — including the climate-skeptic president they helped elect — to do about the problem now?

Answers are hard to come by in a place where refineries stand like cityscapes. Nearly 5,000 people work in the petroleum industry. Some have described the chemical stink in the air as “the smell of money” — it means paychecks, paid mortgages and meals.

 

Christopher, like most people in Jefferson County, believed that global warming was real before the storm hit. Post-Harvey, surrounded by debris stretching for block after block, he thinks the president’s outright rejection of the scientific consensus is no longer good enough.

 

But how do you help the climate without hurting those who depend on climate-polluting industries?

 

“It’s a Catch-22 kind of thing,” he said. “Do you want to build your economy, or do you want to save the world?”

 


 

“Steroids for storms” is how Andrew Dessler explains the role global warming plays in extreme weather. Climate change didn’t create Hurricane Harvey or Irma or Maria. But Dessler, a professor of atmospheric sciences at Texas A&M University, and most scientists agree that warming and rising seas likely amplify storms that form naturally, feeding more water and more intensity as they plow toward land.

 

“It will be 60 inches of rain this time, maybe 80 inches next time,” Dessler said of Harvey’s record-setting rainfall for any single storm in U.S. history.

As a private citizen and candidate, Trump often referred to climate change as a hoax, and since taking office he and his administration have worked aggressively to undo policies designed to mitigate the damage. He announced his intention to pull out of the Paris climate agreement, a global accord of 195 nations to reduce carbon emissions, and his administration has dismantled environmental regulations and erased climate change data from government websites. This month, his Environmental Protection Agency administrator promised to kill an effort to limit carbon emissions from coal-fired plants.

 

Anthony Leiserowitz, a Yale University researcher, traces the politicization of the climate to 1997, when then-Democratic Vice President Al Gore brokered a commitment on the world stage to reduce greenhouse gases. The political parties have cleaved further apart ever since, and climate change denial reached a fever pitch as the Tea Party remade the GOP during President Barack Obama’s first term.

 

Americans tend to view the issue through their already established red-versus-blue lens, Leiserowitz said. But while there are fractions on each extreme, the majority still fall somewhere along a scale in the middle.

 

A new Associated Press-NORC Center for Public Affairs Research poll finds that 63 percent of Americans think climate change is happening and that the government should address it, and that two-thirds of Americans disapprove of the way Trump is handling the issue. Most Americans also think weather disasters are getting more severe, and believe global warming is a factor.

 

As the downpour from Hurricane Harvey stretched into its second day, with no end in sight, Joe Evans watched from the window of his home in the Jefferson County seat of Beaumont, and an unexpected sense of guilt overcame him: “What have we been doing to the planet for all of these years?”

Evans, a Republican, once ran unsuccessfully for local office. He ignored climate change, as he thought Republicans were supposed to do, but Harvey’s deluge left him wondering why. When he was young, discussions of the ozone layer were uncontroversial; now they’re likely to end in pitched political debate.

 

“I think it’s one of those games that politicians play with us,” he said, “to once again make us choose a side.”

 

Evans voted for Trump, but he’s frustrated with what he describes as the “conservative echo chamber” that dismisses climate change instead of trying to find a way to apply conservative principles to simultaneously saving the Earth and the economy. Even today, some Republicans in the county complain about Gore and the hypocrisy they see in elite liberals who jet around the world, carbon emissions trailing behind them, to push climate policies on blue-collar workers trying to keep refinery jobs so they can feed their families.

 

Evans isn’t sure if the disastrous run of weather will cause climate change to become a bigger priority for residents here, or if as memories fade talk of this issue will, too.

 

“I haven’t put so much thought into it that I want to go mobilize a bunch of people and march on Washington,” he said. “But it made me think enough about it that I won’t actively take part in denying it. We can’t do that anymore.”

 


 

Most in Texas didn’t believe climate change existed when Katharine Hayhoe, a climate scientist at Texas Tech University, began evangelizing about the issue years ago. Now studies estimate that 69 percent of Texans believe that the climate is changing, and 52 percent believe that has been caused by human activity. Most resistance she hears now is not with the science itself but over proposed solutions that mean government intrusion and regulation.

Jefferson County’s refineries produce 10 percent of the gasoline in the United States, 20 percent of diesel and half of the fuel used to fly commercial planes, said County Judge Jeff Branick, a Democrat who voted for Trump and then switched his party affiliation to Republican, in part because of his disagreement with the Democratic Party’s climate policies.

 

Branick doesn’t deny that climate change exists, but he calls himself a cheerleader for the petroleum industry and believes environmental policies are “job killers.”

 

John Sterman, a professor at MIT Sloan School of Management, said addressing climate change will invariably lead to gradual job losses in the fossil fuels industry. But communities have lost a dominant industry before, and those able to diversify can prosper. Jefferson County could look to the renewable energy industry, with jobs that require many of the skills refinery workers have, he said. Texas already produces more wind power than any other state.

 

Angela Lopez’s husband works in a refinery, so she understands the worry of the economic cost of addressing global warming. But her county is nicknamed “cancer alley” for its high levels of disease that residents have long attributed to living in the shadow of one of the largest concentrations of refineries in the world.

 

“It’s our livelihood, but it’s killing us,” Lopez said, standing in what used to be her dining room. Now her house in Beaumont is down to the studs. As Harvey’s floodwaters rose, she tried to save what she could. She piled the dresser drawers on the bed and perched the leather couch up on the coffee table. It did no good. The water didn’t stop until it reached the eaves, and the Lopezes lost everything they own.

 

Just about all of her relatives are conservatives, and indeed the political divides in the county run deep: Even as most of the communities along the Gulf Coast turned red years ago, Jefferson County clung to its Democratic roots. The county is ethnically diverse — 41 percent white, 34 percent black and 20 percent Hispanic — with a historically strong union workforce. Trump won Jefferson by just 419 votes.

 

“To come up with real solutions, you have to be honest with yourself about what causes something to happen,” Lopez said. “It’s not just because some storm came, it was bad and unprecedented. It was unprecedented for a reason, so we have to acknowledge that and start working toward being better. And part of that conversation should be climate change.”

On a porch outside another ruined house nearby, two neighbors who both lost everything to Harvey started having that conversation.

 

Gene Jones, a truck driver who didn’t vote, asked Wilton Johnson, a Trump supporter, if he thought climate change intensified the storm.

 

“I don’t think so, no,” Johnson said.

 

“You don’t? You don’t think about the chemical plants and the hot weather? You don’t think that has anything to do with it?”

 

“I can understand people believing that,” Johnson replied. But he blames natural weather cycles for upending their lives so completely.

 

Jones now lives in a camper in his driveway; Johnson’s father has been sleeping in a recliner in his yard to ward off looters.

 

Johnson feels like he’s gone through the stages of grief. At first, as he fled his home, he denied how devastating the storm might be. Then he got angry, when he realized nothing could be saved — not the family photos or the 100-year-old Bible that fell apart in his hands. He grew depressed and now, finally, he thinks he’s come to accept this new reality as something that just happened because nature is not always kind, and never has been.

 

And he remains unshaken in his support for Trump’s environmental agenda.

 

“We need to be responsible human beings to the Earth, but at the same time we shouldn’t sacrifice the financial freedoms,” he said. “What good is a great environment if we’re poor and living like cavemen? And vice versa, I understand the other side of that: What’s great about living in luxury when you can’t go outside?

 

“I just don’t think we should look at two storms and say, ‘We’re ruining the Earth! Shut the plants down!'”

 


 

When Wayne Christopher was a boy in Jefferson County, it got so hot he remembers frying eggs on the sidewalk. It has always been hot here, and there have always been hurricanes.

 

But it seems to him that something is different now. There is a palpable intensity in the air, in the haze that hangs over the interstate. The region has warmed about two degrees in his lifetime, according to the National Oceanic and Atmospheric Administration, and annual rainfall has increased by about 7 inches on average. Christopher counts the number of times a beach road he’s driven on all his life has had to be rebuilt because the ocean overtook it.

 

“The sea keeps moving in — water rising, land disappearing or eroding or whatever you want to call it — it’s happening,” said Christopher, who is 66 now and retired after toiling more than 40 years for the railroad. “I think Mother Nature can come back, but there’s a point to where, if we just keep on and keep on, I don’t know if she can come back.”

 

He thinks the president he helped put in office should do something: take the threat seriously, research before he talks or tweets, not dismiss established science as a hoax because acknowledging it’s real would mean acknowledging that something must be done.

 

But like many others here, Christopher is not pushing to stick with the Paris climate agreement or other global coalitions because he’s not sure it’s fair that the United States should invest in clean energy when other countries that pollute might not. He worries that could cause more job losses to overseas factories, put a squeeze on the middle class and forfeit a slice of American sovereignty.

 

His wife, who also supported Trump, cocked her head as she thought about that sentiment.

 

“I can see the pros, I can see the cons,” Polly Christopher said. “But if you were to simplify it to your children, and they say, ‘Well, everybody else is doing it, if I do it what difference is it going to make?’ you would just get on them and say, ‘You’ve got to do the right thing. Right is right, and wrong’s wrong.'”

 

For weeks, the couple have been gutting Memorial Baptist Church, a place they consider their home. The congregation dwindled over time to about 45, mostly older people, and it was so hard to make ends meet the church canceled a $19,000-a-year flood insurance policy just two months before Harvey hit. Now it could cost some $1 million to rebuild, meaning the church may never be rebuilt at all.

 

So when Christopher’s granddaughter came by to help, found the piano in the otherwise empty sanctuary, sat down and started to play, he was overcome with a sense of grief.

 

“In my head I was thinking the whole time, this could be the last time that piano is played inside the auditorium,” he said. Then she started to sing: “Amazing grace, how sweet the sound …”

 

“It did something to me,” he said.

 

Both he and his wife believe President Trump has a responsibility to look at the destruction Harvey left them with and act accordingly.

 

“He’s got a business mind. Whatever it takes to make money, that’s what he’s going to do to make America great again,” Christopher said, and that’s why he voted for Trump. “But it does make me wonder if he looks at global warming as a real harm. Because you can make all the money in the world here. But if you don’t have a world, what good is it going to do you?”

Populism Again Casts Shadow Over Booming Eurozone Economy

For months, the outlook for the eurozone economy has brightened thanks to a series of electoral defeats for populist parties in key states like France. Now, following votes in Germany and Austria and the uncertainty over the Spanish region of Catalonia, concerns are growing again about the potential impact of euroskeptic politics.

The euro has edged lower in recent weeks despite data showing that the eurozone economy is enjoying one of its strongest periods of growth since the global financial crisis exploded a decade ago. On Monday, it was down 0.3 percent at $1.1785, having been above $1.20 at the end of August for the first time in two years.

 

One of the reasons relates to the electoral success of populist forces, first in Germany in late-September when the anti-immigration Alternative for Germany received almost 13 percent of the vote and won representation into the country’s parliament for the first time. Though the center-right Christian Democrats came out on top, the authority of Chancellor Angela Merkel was somewhat undermined by AfD’s relative success and she has still to forge a new coalition.

 

The populist tide was further evidenced in Sunday’s Austrian election, which saw the right-wing Freedom Party come second with around 27 percent of the vote — enough to possibly become part of a government led by the People’s Party and its 31-year-old leader, Sebastian Kurz.

 

The impact of a coalition involving a party that has sought to downplay the country’s Nazi past could hinder efforts to further integrate the economies of the 19 countries that use the euro, as advocated for by new French President Emmanuel Macron.

 

“Even though Austria is highly integrated and depends on the eurozone’s structure and openness, a new Austrian government will make the eurozone’s life harder, trying to push through self-interests,” ING economist Inga Fechner said.

 

Also of potential concern to the unity of the eurozone is the uncertainty surrounding Catalonia following its disputed independence referendum earlier this month. On Monday, there was still a lack of clarity as to whether the region’s leader, Carles Puigdemont, has declared independence following the vote that Madrid has deemed illegal.

 

The Spanish government of Prime Minister Mariano Rajoy has repeatedly said it’s not willing to negotiate with Puigdemont if independence is on the table, or accept any form of international mediation. The government has threatened to activate Article 155 of Spain’s Constitution, which could see Madrid take temporary control of some parts of Catalonia’s self-government.

 

All these signs of populism come at a time when the European economy is enjoying one of its most sustained upswings for a decade. A run of economic indicators have shown that the recovery, especially among those countries that use the euro currency, has been gaining momentum through 2017. The recovery, which has also seen unemployment come off highs, has prompted speculation that the European Central Bank will start to ease back on some of its emergency stimulus measures in the coming months.

 

Many economists ascribe the improving economic backdrop to the defeat of populist politicians earlier this year, notably in France where National Front leader Marine Le Pen lost overwhelmingly in the presidential runoff against Macron. Her defeat come a few weeks after Geert Wilders’ anti-Islam Freedom Party fared worse than anticipated in Dutch elections.

 

At the start of this year, the rise of populism was considered by many economists as the gravest cloud hanging over Europe’s economic future, especially as worries over Greece had abated. The Brexit vote in Britain in the summer of 2016 had shown how vulnerable the region could be to populist movements. The great fear for those overseeing the euro currency is that a party may come into government seeking to get out of the single currency and revert to the country’s original currency.

 

What’s occurred in the past few weeks is evidence that those populist forces are not done yet.

 

Simon Derrick, chief currency strategist at BNY Mellon, said “it would make sense for the euro to weaken if concerns about populism in the eurozone re-emerged.”

 

The next potential worry is Italy, where elections have to be held by May 2018. The country has for years grown more slowly than other developed economies and there are concerns that a party seeking to blame the country’s problems on the euro could make headway in the elections, potentially triggering more volatility for a currency that’s spent years dodging crises. In August, former premier Silvio Berlusconi floated the idea of a parallel currency being introduced in Italy.

 

 

IMF: Global Economy Healthy, Still Needs Low Interest Rates

The world economy is the healthiest it’s been in years but could still use a little help from low-interest rates and higher government spending from countries that can afford it, the International Monetary Fund says. 

 

“There was a strong consensus that the global outlook is strengthening,” said Agustin Carstens, governor of the Bank of Mexico and outgoing chair of the IMF’s policy committee. “This does not mean we are declaring victory just yet.” 

 

The 189-member IMF and its sister agency, the World Bank, wrapped up three days of meetings Saturday. 

Broad recovery, risks

The IMF expects the global economy to grow 3.6 percent this year, up from 3.2 percent in 2016. And three-quarters of the global economy is growing, making this the broadest recovery in a decade. 

 

But IMF and World Bank officials pointed to risks that could derail global growth. Geopolitical risks are rising, including a confrontation between the United States and North Korea over Pyongyang’s nuclear weapons program. The income gap between rich and poor is growing, fueling political discontent with the free trade and global cooperation that the IMF and World Bank promote. 

 

So in a communique Saturday, the IMF’s policy committee called on world central banks to protect the fragile global recovery by keeping interest rates down in countries where inflation is too low and economies are performing below potential. 

 

IMF officials have also urged some countries with healthy finances, such as Germany and South Korea, to make investments that will spur growth. 

 

IMF Managing Director Christine Lagarde appealed to countries to enact reforms that will make their economies more efficient and spread prosperity to those who have been left behind. Specifically, Lagarde argued that countries could improve their economies and reduce inequality by putting more women to work, improving their access to credit and narrowing their pay gap with men. 

On Saturday, Ivanka Trump, the president’s daughter and a White House adviser, appeared with World Bank President Jim Yong Kim to launch a World Bank initiative to support women entrepreneurs. The World Bank fund has raised $350 million, which is designed to allow the World Bank to deploy at least $1 billion in capital to finance women-owned businesses. 

 

Ivanka Trump told the audience that she wanted to “spend a lot of time offering any value that I can as a mentor.” 

 

Adjusting to Trump

The World Bank and IMF delegates are still adjusting to the Trump administration, which is skeptical of international organizations and contemptuous of free trade agreements. This week, the United States pulled out of UNESCO, the United Nations’ cultural agency. It is has balked at providing additional capital to the World Bank unless the anti-poverty agency rethinks the way it distributes loans. It has scrapped an Asia-Pacific trade deal and is threatening to pull out of the North American Free Trade Agreement with Canada and Mexico. 

 

Treasury Secretary Steven Mnuchin said he carried in his pocket a list of all the G-20 nations and the size of the trade balances the United States has with each of those nations. With most of the G-20 countries, the United States is running a trade deficit.

 

In a speech Saturday to the IMF policy group, Mnuchin said he wanted to see the IMF be a more “forceful advocate” for strong global growth by taking a harder look at countries that abuse world trade rules. 

Winemaker Vows to Rebuild After Losing Battle With Wildfire

Throughout Northern California, where wildfires have raged for almost a week, killing at least 36 people and destroying about 6,000 buildings, residents are taking stock of what they have and what they have lost.

Many are feeling lucky to have survived with their lives. The fire’s path of destruction lacked rhyme or reason, destroying an entire winery in one case but leaving patio furniture outside the tasting room untouched.

Pierre Birebent, who has been a winemaker at the Signorello Estate for the past 20 years, said he feels lucky.

WATCH: Winemakers Vow to Rebuild Destroyed Winery

When the fire came to his winery on the Silverado Trail, the main artery of Napa’s Wine Country, Birebent grabbed a hose and tried to fight the flames himself. One of the winery’s owners, who was in the residence above the winery, had fled after alerting the staff to the fire.

Birebent lost the battle to save the winery, the tasting room, an office and the residence. 

“It was like fighting a giant,” he said.

​Damage unknown

It’s too early to know the extent of the damage to Northern California’s wine industry. Fires still burn around the hillsides, and pickers hurry to get the grapes off the vine before they are damaged by smoke, a condition known as “smoke taint.”

At Signorello, employees reported for work Friday, their first chance to see the damage.

Ray Signorello, the winery proprietor, went into Napa to rent temporary office space. He planned to keep the business going and rebuild.

“We can continue somewhat business as usual,” Signorello said.

“Our house is gone,” said Jo Dayoan, allocation director at the winery. “Our soul is not. We are family.”

Much to be thankful for

For Birebent, there are many things to be thankful for, among them, the 30-year-old vineyards, which didn’t burn.

“This is very important because it takes five years to plant the vineyard to get the first crop,” Birebent said.

Also spared by the fire was a warehouse where Signorello stored its 2016 vintage, as well as the last of the 2017 cabernet sauvignon grapes, which had been harvested just days before the fire and sat fermenting in 14 tanks at the edge of the parking lot.

But whether the wine inside the tanks is drinkable remains to be seen. Workers cleared leaves and ash from the outside of the tanks.

The wine from each of the tanks will be tasted and tested at a laboratory. The tanks hold 80 percent of the winery’s 2017 reds, which Birebent said was worth millions.

“It was so hot, we don’t know if the wine is still good or no,” he said.

As they take stock of the damage, the winemaker and the staff here are thinking about rebuilding, even as others continue to face wildfire dangers. The winery workers say they are lucky even as they stand in its ruins.

Are NAFTA’s Days Numbered?

Recent comments by U.S. President Donald Trump have raised fears that NAFTA, the 2-decades-old trade pact between Canada, the U.S. and Mexico, may be on its last legs. Proponents of NAFTA warn that scrapping the three-nation deal could cause economic shocks around the globe. But others say that’s just a case of corporate fear mongering. Mil Arcega has more.

Global Economy: Growth Gathering Momentum, but Where’s the Inflation?

The euro zone economy may be building up an impressive head of steam that shows no signs of cooling, but what policymakers at the European Central Bank really want – higher inflation – is still largely absent.

Industrial output in the bloc rose faster than anyone polled by Reuters expected in August, according to data on Thursday which followed a slew of forecast-beating releases and after the International Monetary Fund upgraded its outlook for global growth.

“Although the industrial sector only accounts for a quarter of GDP it has been the euro zone’s most cyclical sector historically, and so is an important indicator of the economy’s wider health,” said Christian Jaccarini at CEBR.

“With the economy gathering momentum, the European Central Bank should feel confident about starting to taper its asset purchase program at the beginning of next year.”

The economy is performing stronger than at any time since the global financial crisis so speculation the ECB will soon begin scaling back its massive stimulus program has been rife.

Policymakers at the Bank will announce on Oct. 26 a six-month extension to its asset purchase program but will cut how much it buys each month to 40 billion euros from January, a September Reuters poll predicted.  

Five people with direct knowledge of discussions told Reuters the ECB is homing in on extending its stimulus for nine months at the next meeting while scaling it back.

Yet the ECB’s key focus is inflation and numbers due on Tuesday will probably confirm prices only rose 1.5 percent in September on a year ago, still a lot weaker than the just below 2 percent rate-setters would like.

According to Reuters polls taken throughout 2017, which have been correct about how low it would remain this year, inflation won’t hit that ECB target for years.

“There is likely to be only a limited pick-up in inflationary pressures, meaning that interest rate hikes can be kept on hold until 2019 – later than markets seem to expect,” economists at Capital Economics wrote.

British dilemma

Across the Atlantic, U.S. Federal Reserve policymakers have already begun tightening but had a prolonged debate about the prospects of a pickup in inflation and slowing the path of future interest rate rises if it did not, according to minutes of the central bank’s last policy meeting.

“Many participants expressed concern that the low inflation readings this year might reflect… the influence of developments that could prove more persistent, and it was noted that some patience in removing policy accommodation while assessing trends in inflation was warranted,” the Fed said in the minutes.

Britain, however, has the opposite problem.

Since the vote in June 2016 to leave the European Union, the pound has lost around 13 percent of its value against the dollar, driving up the costs of imports and caused inflation to run well above the 2 percent the Bank of England would like it at.

In the referendum’s aftermath the Bank cut 25 basis points from borrowing costs, taking them to a record low 0.25 percent, hoping to stave off a predicted economic meltdown after the leave vote.

That meltdown never happened and Britain’s economy was one of the best performers last year although growth has since slowed sharply.

Still, at its November meeting the BoE will raise interest rates for the first time in a decade, according to economists in a recent Reuters poll taken after a barrage of hawkish rhetoric from BoE policymakers. However, most of them also said raising rates now would be a policy mistake.  

“On the strength of the MPC’s rhetoric and current market expectations, we continue to look for a November hike. But this assumes no significant downside surprises in the inflation and wage data next week,” said Allan Monks at JPMorgan.

“If the MPC is minded to back out of tightening in November – in response to the data or the Brexit process – we would expect at least some hint of this in any commentary between now and the next meeting on Nov. 2.”

Britain’s economy shows little sign of breaking out of its lethargy and it is “extraordinary” the BoE is considering raising interest rates, the British Chambers of Commerce said on Friday.

“We’d caution against an earlier than required tightening in monetary policy, which could hit both business and consumer confidence and weaken overall UK growth,” said Suren Thiru, BCC head of economics.

Divorce talks have this week ended in deadlock over a British refusal to clarify how much it will pay on leaving, EU negotiator Michel Barnier said on Thursday.

But EU leaders could hand beleaguered British Prime Minister Theresa May an olive branch in Brexit negotiations next week by launching their own internal preparations for a transition to a new relationship with Britain, giving her some hope.

 

China’s Imports From North Korea Fall Nearly 38 Percent in September

China’s imports from North Korea fell 37.9 percent in September from a year earlier, marking the seventh consecutive month of decline, the customs office said Friday.

China-U.S. ties have been strained by President Donald Trump’s criticism of China’s trade practices and by demands that Beijing do more to pressure North Korea over Pyongyan’s nuclear and missile programmes.

China’s exports to North Korea in September dropped 6.7 percent from a year ago, a spokesman for the General Administration of Customs told a briefing, adding no seafood imports from North Korea were recorded last month.

China’s imports from North Korea fell 16.7 percent on-year to $1.48 billion in Jannuary-September, while exports to North Korea rose 20.9 percent to $2.55 billion in the same period.

That created a trade surplus with North Korea at $1.07 billion in the first nine months of this year.