Facebook Inc 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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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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Greece’s budget performance in 2018 was better than expected following some revenue-boosting measures by the government.

According to the country’s statistical agency, Greece recorded a primary budget surplus, which excludes the cost of servicing the country’s vast public debt, of 4.4 percent of its annual output. That’s ahead of government projections of 4.1 percent.

The agency also said Tuesday that the country’s debt mountain rose to 181 percent of GDP in 2018, from 176 percent in 2017.

Greece’s debt dynamics have been shaken by a debt crisis that led to a deep recession and forced Athens in 2010 to seek a massive international bailout. In exchange for the loans, successive governments implemented strict austerity measures.

Though Greece ended its bailout era last summer, it still has to post surpluses for years to come.

 
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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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