YCLOAK

Federal Reserve Chairman Jerome Powell said Friday that the healthy U.S. economy and low inflation are allowing the central bank to take a “patient, wait-and-see approach” on interest rates.

Speaking at Stanford University, Powell said the Fed is well along in its effort to normalize Fed operations by scaling back the extraordinary efforts it employed to support the economy’s recovery from the Great Recession.

The Fed is trimming its sizable holdings of Treasury bonds and mortgage-backed securities. Officials are discussing a plan for wrapping up the efforts to reduce the central bank’s balance sheet later this year, Powell said, adding that the plan’s details should be announced soon.

The Fed’s moves to reduce its balance sheet, which hit a peak of $4.5 trillion, are being watched closely by investors.

Slimming its balance sheet

The Fed started in October 2017 reducing the balance sheet by allowing some bonds to run off as they matured. The balance sheet is now around $4 trillion but some investors have worried that the Fed could end up driving long-term interest rates higher and harming the economy by going too far in reducing its holdings.

Some analysts have projected the Fed’s balance sheet will end up being around $3.5 trillion, which would be significantly higher than the less than $1 trillion it held before the financial crisis hit in 2008.

Powell said the size of the holdings will “prove ample” to meet the Fed’s needs of supplying reserves to the banking system and he said “we could be near that level later this year.”

“As we feel our way cautiously to this goal, we will move transparently and predictably in order to minimize needless market disruption,” Powell said.

Updating procedures

The Fed is conducting a yearlong review of its procedures as part of its effort to update its operations in areas such as the way it communicates with the public, Powell said.

One area being examined is whether the Fed should consider altering its inflation target, which is currently a goal of annual price increases of 2 percent, to allow inflation to go above that goal for a time.

Powell did not specifically discuss the course of rate hikes other than to repeat the “patient” pledge the Fed began using in January to signal that it was planning a prolonged pause in hiking rates this year after boosting them four times in 2018.

Some analysts believe the Fed could leave its policy rate unchanged for the entire year and could possibly start cutting rates in 2020 if the economy slows significantly as the effects of the Trump administration tax cuts and a boost in government spending fade.

The rate hikes last year prompted strong criticism from President Donald Trump who charged that the rate increases were driving down the stock market.

In his remarks, Powell said, “We live in a time of intense scrutiny and declining trust in public institutions around the world. At the Fed, we are committed to working hard to build and sustain the public’s trust.”
…

Hiring tumbled in February, with U.S. employers adding just 20,000 jobs, the smallest monthly gain in nearly a year and a half. The slowdown in hiring, though, might have been depressed by harsh winter weather and the partial shutdown of the government.

Last month’s weak gain came after employers had added a blockbuster 311,000 jobs in January, the most in nearly a year. Over the past three months, job growth has averaged a solid 186,000, enough to lower the unemployment rate over time.

 

And despite the tepid pace of hiring in February, the government’s monthly jobs report Friday included some positive signs: Average hourly pay last month rose 3.4 percent from a year earlier _ the sharpest year-over-year increase in a decade. The unemployment rate also fell to 3.8 percent, near the lowest level in five decades, from 4 percent in January.

 

Unseasonably cold weather, which affects such industries as construction and restaurants, afflicted some areas of the country in February. And the 35-day government shutdown that ended in late January likely affected the calculation of job growth.

 

Still, the hiring pullback comes amid signs that growth is slowing because of a weaker global economy, a trade war between the United States and China and signs of caution among consumers. Those factors have led many economists to forecast weaker growth in the first three months of this year.

 

Sluggish hiring and job cuts in February were widespread across industries. Construction cut 31,000 jobs, the most in more than five years. Manufacturing added just 4,000 jobs. Retailers cut 6,100. Job growth in a category that includes mostly restaurants and hotels were unchanged last month after adding a huge 89,000 gain in January.

 

Most analysts expect businesses to keep hiring and growth to rebound in the April-June quarter. It will be harder than usual, though, to get a precise read on the economy because many data reports are still delayed by the partial shutdown of the government.

 

In the meantime, there are cautionary signs. Consumer confidence fell sharply in January, held back by the shutdown and by a steep fall in stock prices in December. And Americans spent less over the winter holidays, with consumer spending falling in December by the most in five years.

 

Home sales fell last year and price gains are slowing after the average rate on a 30-year mortgage reached nearly 5 percent last year. Sales of new homes also cratered late last year before picking up in December. And U.S. businesses have cut their orders for equipment and machinery for the past two months, a sign that they are uncertain about their customer demand.

 

The economy is forecast to be slowing to an annual growth rate of just 1 percent in the first three months of this year, down from 2.6 percent in the October-December quarter. Growth reached nearly 3 percent for all of last year, the strongest pace since 2015.

 

Still, economists expect a rebound in the April-June quarter, and there are already signs of one: Consumer confidence rose in February along with the stock market.

 

And more Americans signed contracts to buy homes in January, propelled by lower mortgage rates. Analysts have forecast that annual growth will top 2 percent next quarter.

 

 
…

U.S. President Donald Trump says he will not sign a trade deal with China unless it is a “very good deal.”

Trump made the comments Friday as he left the White House to tour tornado damage in the southern U.S. state of Alabama. The United States and China have been battling over trade tariffs since last year.

The White House is planning a summit between Trump and Chinese leader Xi Jinping in Florida later this year.

“If this isn’t a great deal, I won’t make a deal,” Trump said. Then he added: “We will do very well either way, with or without a deal.”

The trade dispute between the United States and China has begun to affect China’s economic growth.

China’s exports and imports fell significantly more than expected in the month of February, data published Friday by the country’s customs administration showed.

China’s trade surplus with the U.S. narrowed to $14.7 billion for the month, from $27.3 billion in January.

China’s February exports plummeted 20.7 percent from the same period a year prior, and imports dropped 5.2 percent from a year earlier, considerably more than expected. According to a Bloomberg News poll, the forecast was 5.0 percent and 0.6 percent respectively.   

Recent economic data reveal the difficulties China faced in the fourth quarter of 2018 as its growth rate slowed to 6.4 percent.

In January, an import barometer of prices in the industrial sector neared contraction, while manufacturing activity in February marked the worst performance in three years.

China’s government announced major tax cuts, fee reductions and a looser monetary policy to combat the economic growth slowdown.
…

Wall Street has rewarded its most patient investors handsomely over the past 10 years. Is there more to come?

The S&P 500, the U.S. market’s benchmark index, has gained about 309 percent since bottoming out at 676.53 points in March 2009 during the Great Recession, according to FactSet. The index is now 5.4 percent below its recent peak of 2,930.75 set on Sept. 20. 

 

This bull market’s lifespan, the longest on record, speaks to financial markets’ resiliency in the face of a variety of shocks, including a brutal fourth quarter of 2018.

Whether the bull keeps running hinges on whether companies can continue raking in profits, a key driver of the stock market, and whether the U.S. economy can avoid sliding into a recession. Bull markets tend to wither when fear of a recession kicks in. 

Profits are ‘oxygen’

 

“As long as corporate profits are growing, that’s usually the oxygen for further gains in the stock market,” said David Lefkowitz, senior Americas equity strategist at UBS Global Wealth Management.

Profit growth for the companies in the S&P 500 averaged 25.6 percent in the first three quarters of last year. That slipped to 13.4 percent in the fourth quarter, but still topped expectations.

But earnings are expected to decline slightly in the first quarter and grow in the mid-single digits for the full year, according to FactSet. And the U.S. economy has been showing signs of slowing and is expected to continue to do so this year. 

 

“The risk of recession grows,” said Sam Stovall, chief investment strategist at CFRA, noting that the U.S. economy’s current expansion will become the longest in history by the end of July.

“However, we currently see no quarterly GDP declines through the fourth quarter of 2020, let alone back-to-back declines, which have been a rule of thumb for recessions,” he said.  

Meanwhile, the wild card for the market — and the economy — might be the long-running, costly trade conflict between Washington and Beijing. While reportedly on track for a resolution as early as this month, the spat continues to weigh on investors’ nerves and many companies’ plans. 

Concerns in late 2018

 

The bull market has looked very vulnerable at times during its decade-long run, most recently at the end of last year. That’s when a bevy of concerns, including rising interest rates, the trade spat, slowing global economic growth and some tepid profit forecasts, sent the S&P 500 into a skid that resulted in the index’s worst December since the Great Depression.

That slide culminated on Dec. 24, when the S&P 500 closed 19.8 percent below its all-time high. A drop of 20 percent or more would have ushered in a bear market. 

 

What we've seen and continue to see is doubts,'' said Ryan Detrick, senior market strategist at LPL.People have doubted it the whole way up.” 

 

And yet, the bull shrugged that off, too, and now the market is off to its best start to a year since 1991. 

 

It was a good-sized correction that freaked everybody out,'' Detrick said.Then the realization comes that the economy is on good footing.” 

 

The Federal Reserve put investors at ease in January when it signaled a prolonged pause in further interest rate hikes. That calmed fears that the central bank would keep raising rates at a pace that could derail the economy. 

 

One of the key questions in gauging the longevity of the bull market is the outlook for inflation and what action the Fed will take to try to manage it. 

For now, inflation remains below the 2 percent target used by the Fed to determine whether annual price increases are growing too rapidly. It was up 1.7 percent in the 12 months ended in December.

As long as inflation remains at that level, the Fed has less incentive to raise rates. 

Slower growth

 

The U.S. economy turned in a solid performance in 2018, boosted in part by tax cuts and higher government spending. But economic growth slowed to 2.6 percent in the last three months of the year from 3.4 percent in the third quarter.

Most economists envision a weaker performance for the coming months and probably years. Some expect gross domestic product to drop to a growth rate of 2 percent or less in the current January-March period. 

 

Investors have grown cautious about business conditions going forward as signs of weakness in the global economy have emerged. Uncertainty over trade has also helped cloud the outlook for company profits this year. 

 

Still, even modest company earnings growth should keep the bull market rolling. 

 

We think the bull market is still intact,'' Lefkowitz said.And at some point, we’re likely to see new all-time highs for the broad market gauges.” 
…

The International Monetary Fund on Thursday called Venezuela one of the most “complex situations” it had ever seen. 

 

IMF spokesman Gerry Rice described Venezuela and its economy as a combination of “food and nutrition crises, hyperinflation, a destabilized exchange rate, debilitating human capital and physical productive capacity, and a very complicated debt situation.” 

 

Rice said tackling this challenge would take “strong resolve” and “broad international support” from all 189 IMF members. 

 

IMF Managing Director Christine Lagarde told The Economist Radio, a podcast, that the fund would help “as soon as we are asked by the legitimate authorities of that country.” 

 

“We will open our wallet, we will put our brain to it, and we will make sure our heart is in the right place to help the poorest and most exposed people,” she added, calling the task it faced in Venezuela  “monumental.” 

 

Rice said Thursday that the IMF had yet to determine whom to recognize as the leader of Venezuela — President Nicolas Maduro or opposition leader Juan Guaido, the self-declared interim president.
…

Chinese tech giant Huawei has sued the U.S. government, arguing that legislation Congress passed last year restricting its business in the United States is “unconstitutional.” 

The case, which analysts see more as a public relations move, is the latest in an intensifying effort by the telecommunications company to fight U.S. security concerns that Huawei argues are unfair and unfounded.

In its lawsuit, Huawei argues that Section 889 of the National Defense Authorization Act violates the constitutional principles of separation of powers and due process. By singling out the company and punishing it without a trial, the company also argues that the law violates the Constitution’s the bill of attainder clause.

Section 889 bans federal agencies and their contractors from purchasing equipment and services from Huawei as well as another Chinese telecom company ZTE. President Donald Trump signed it into law last year.

“This ban is not only unlawful but also harms both Huawei and U.S. consumers,” Huawei’s rotating chairman, Guo Ping, told reporters Thursday in Shenzhen. “This section strips Huawei of its due process, violating the separation of powers principles, breaks U.S. legal traditions, and goes against the very nature of the constitution.”

Guo said that Huawei was left with no choice but to take legal action, noting that neither lawmakers nor the government had shown any proof to date to back up concerns the company is a security concern.

On Thursday, U.S. State Department deputy spokesman Robert Palladino declined to comment on the pending lawsuit, but said the government needs to be vigilant when making procurement decisions. 

“The United States advocates for secure telecom networks and supply chains that are free from suppliers subject to foreign government control or undue influence, which would pose risks of unauthorized access and malicious cyber activity,” said Palladino in response to questions posed by VOA during a briefing. 

“We believe that these risks posed by vendors subject to extrajudicial or unchecked compulsion by foreign states that do not share our values need to be weighed rigorously before making procurement decisions on these technologies,” he added.

Huawei’s chief legal officer, Song Liuping, said the company has no choice but to defend itself and try to clear its name.

“Section 889 is based on numerous false, unproven, and untested propositions. Contrary to the statutes’ premise, Huawei is not owned, controlled, or influenced by the Chinese government,” Song said.

That, however, is a central point of the debate over Huawei: how much a security threat the company is? And is it really independent from China’s authoritarian government?

That debate is heating up at a crucial time as countries across the globe are preparing to roll out next generation mobile communications networks or 5G, an area where Huawei is a global leader.

At the press conference, Huawei officials argued repeatedly that the ban would cut off Americans from its advanced technology. They also gave assurances again that the company would never install backdoors into their equipment and that it puts the security concerns of its customers first.

Some countries, including the United States, Australia, and New Zealand believe Huawei is a security threat and have already banned the company from their roll outs of next generation mobile communications networks.

Others, including Britain, Canada, and Germany, are still weighing a decision. At the same time, Huawei chief financial officer Meng Wanzhou is in Canadian custody and is facing extradition to the United States to face charges of alleged violations of U.S. sanctions on Iran.

With Huawei fighting a battle on multiple fronts, the lawsuit is as much about public relations as it is an effort to clear itself of accusations that it is a security threat.

Legal analysts said it is unlikely the case will even go to trial.

“As a PR matter, this is brilliant, the fact that we are just talking about this now, tells you this is a great PR move, as a legal matter, this is a reach, to put it charitably,” said law professor David Law      of Washington University in St. Louis and the University of Hong Kong. “I just can’t see how a federal district judge in Texas is going to let this go to trial much less hand Huawei a win.”

The case could put more pressure on the U.S. government to disclose more evidence to support its claims about the alleged security threat the company poses, according to some legal analysts. That could help Huawei in the process, said the Taiwan Bar Association’s Calvin Yang.

“I think this is a move that carries more political weight than any litigation significance,” Yang said, adding that the company’s case was more about challenging the legitimacy of U.S. accusations. “It’s using judicial procedure to force the federal government to provide more evidence to support its allegations of so-called backdoors in Huawei’s equipment.”

Some legal analysts have noted that Huawei’s case is similar to the legal battle Russian cybersecurity firm Kaspersky lost late last year. Kaspersky challenged a ban on the use of its software on U.S. government networks. A U.S. federal appeals court ruled in the government’s favor in November.

Whether that will figure into the Huawei case if it goes to trial is too early to tell, legal analysts note.

When it comes to national security concerns, they add that courts are unlikely to probe too deeply into those questions.

VOA State Department Correspondent Nike Ching and Kenneth Schwartz contributed to this report.
…

On a recent Sunday afternoon, thousands of shoppers crowded the hallways and stores of the Citygate Outlets shopping mall in Tung Chung, one of Hong Kong’s new town developments just a short train ride from the airport.

Some visitors had recently arrived by plane, wheeling luggage with baggage claim tags, although thousands more came for short trips by bus over the newly opened 34-mile mega bridge connecting Tung Chung with Macau, another semi-autonomous Chinese city, and Zhuhai in mainland China.

Many of the bridge tourists arrive in large groups with the help of tour bus operators, like Akira Liu from Foshan in southern China, who had ferried a group of 30 across the bridge to Tung Chung for the day.

“Many of our tourists just want to cross the bridge and see the bridge, since our groups consists mostly of old people,” she said.

While Citygate Outlets has long been popular with visitors, the mall and other areas around Tung Chung became the latest political flashpoint in Hong Kong late last year as tourist numbers surged following the opening of the bridge. More than 1 million people crossed the bridge in November alone, according to figures from the Census and Statistics Department, although it fell to around 740,000 last month.

​Tourists taking over

The government has welcomed the arrival of these new visitors with open arms, but for many residents, the city seems to be suffering from the same curse as other global tourism hotspots like Edinburgh and Venice: too many visitors taking over the city.

In places like Tung Chung, a residential neighborhood of large apartment blocks once valued for its quiet, many residents were simply unprepared for the new influx, with visitors swamping spots popular with residents like pharmacies and restaurants in addition to shopping malls.

“The daily lives of Tung Chung residents have been greatly affected,” Louis Poon, a community officer with the pro-establishment political group Roundtable said via email. “They are plagued by overcrowding, littering and long queues. For example, shops are so crowded with tourists, who sit everywhere … also it is hard to even walk past the shopping center. Most public areas are taken by the tourists.”

Roundtable is not the only group that has been vocal about overcrowding. Following a number of protests and public outcry over Tung Chung, the Guangdong and Hong Kong governments have pledged to crack down on illegal tours, according to the Tourism Bureau, while new shops are being set up on one of the bridge’s artificial islands to offset demand across the border.

​Tourist dollars add up

But the government has not taken measures to curb citywide tourism, which hit 65 million visitors last year in an area roughly the size of metropolitan New York. The visitors, the vast majority of whom come from China, bring in billions in revenue, roughly $38 billion in 2017, and tourism-related activities employ around 800,000 people, according to Tourism Board figures.

Overcrowding, however, has become a constant complaint beyond Tung Chung, particularly during China’s “golden week” holidays, when most of the nation goes on vacation for a week three times a year.

During the summer months, as well, local media often carry complaints of Chinese tourists flooding beach campsites and sports programs to the irritation of locals, with many paying “tour groups” like Ctrip in the mainland for the privilege of using Hong Kong’s public facilities.

Further anti-Chinese feelings have arisen in some sectors of Hong Kong, particularly among the pro-democracy camp, for what it sees as Beijing’s political and legal encroachment on the former British colony, which was promised autonomy until 2047 when it returned to Chinese sovereignty.

Resentment at the growing tide of Chinese visitors has not gone unnoticed. Citygate shopper Benny Xu from Shanghai said while she has been regularly visiting Hong Kong for a decade, she has noticed a change in treatment in the past three years, particularly when she speaks Mandarin in lieu of the local language, Cantonese.

“Over 10 years ago, they were very warm, but now it’s a little bit changed. Some attitudes are not so good,” she said. “In the shops or restaurants and some public areas, they are not offering to speak Mandarin, they just speak Cantonese or English. If I spoke Mandarin, they are a little bit rude.”
…

Marin Mendez leaned a shoulder into his rusty Chevy Malibu rolling it forward each time the line of cars inched closer to the pump. Waiting hours to fill up, he says, is the high cost he pays for gasoline that’s nearly free in socialist Venezuela.

“You line up to get your pension, line up to buy food, line up to pump your gas,” an exasperated Mendez said after 40 minutes of waiting in the sweltering heat in Maracaibo — ironically the center of the country’s oil industry — and expecting to be there hours or days more. “I’ve had enough!”

Lines stretching a mile (1.6 kilometers) or more to fuel up have plagued this western region of Venezuela for years — despite the country’s status as holder of the world’s largest oil reserves. Now, shortages threaten to spread countrywide as supplies of petrol become even scarcer amid a raging struggle over political control of Venezuela. 

The Trump administration hit Venezuela’s state-run oil firm PDVSA with sanctions in late January in a sweeping strategy aimed at forcing President Nicolas Maduro from power in favor of opposition leader Juan Guaido. 

Doomsday predictions immediately followed — mostly fueled by Maduro’s opponents and U.S. officials — that Venezuela’s domestic gasoline supplies would last no more than a week or so. That hasn’t happened yet, but more misery is feared as expected shortages have economic implications far beyond longer gas lines, turning Venezuela’s crisis to a catastrophe.

“Crucially, it will lead to more shortages of food and basic goods,” said Diego Moya-Ocampos, a Venezuela analyst with the London-based consulting firm IHS Global Insight. 

That’s because the vast oil reserves that once made Venezuela Latin America’s wealthiest country provide the primary source of the hard currency it needs to import food and other goods. Today, its basic infrastructure — roads, power grid, water lines and oil refineries — is crumbling. Food and medicine, nearly all of it imported, are scarce and expensive as Venezuela endures the world’s highest inflation. 

Critics blame Venezuela’s collapse on the government’s two decades of self-proclaimed “socialist revolution,” which has been marred by corruption and mismanagement, first under the late Hugo Chavez and now under Maduro’s rule. 

The U.S. sanctions essentially cut PDVSA off from its Houston-based subsidiary Citgo, depriving it of $11 billion in hard currency from exports this year that U.S. officials say bankrolled Maduro’s “dictatorship.” U.S. officials have turned control of Citgo over to Guaido’s interim government, essentially expropriating the company, a strategy Venezuela’s socialist government employed for years by seizing private companies. 

Opposition leaders bent on ousting Maduro say they recognize the U.S. crackdown on the oil sector will be painful for their people, but add that the measures are necessary to keep Maduro’s government from further looting Venezuelan resources. 

Meanwhile, a defiant Maduro says the economic war led by the White House is a precursor to a military invasion to oust him from power and seize Venezuela’s vast oil wealth. Maduro tweeted a warning on Wednesday that nobody should be fooled by apparent gestures of assistance, alluding to tons of U.S. humanitarian aid he recently blocked from entering.

“The Venezuelan opposition and the U.S. government don’t want to help the country,” Maduro said. “Just the opposite. They crave our natural resources. They want to unleash ‘The Oil War’ to invade and dominate our homeland.”

Despite years of economic decline leading to Venezuela’s current crisis, residents enjoy some of the world’s cheapest gasoline — filling up a tank for less than a penny. But gas is already hard to get in Maracaibo and other cities along the Colombian border, where smugglers sneak Venezuela’s dirt-cheap fuel into the neighboring country, selling it at international prices for a quick profit. 

Ixchel Castro, a Mexico City-based analyst at the Wood Mackenzie energy research firm, said Venezuela’s domestic gasoline supply has been down by as much as 15 percent in recent years as the country’s refineries and infrastructure fail — a trend that is expected to accelerate.

PDVSA provided 160,000 barrels a day for domestic use last year, but with the U.S. sanctions and ongoing infrastructure challenges, that supply can be expected to fall to 60,000 barrels a day, she said, meeting just 38 percent of the country’s needs.

Exacerbating the problem are shortages of diluent, a critical product needed to thin Venezuela’s tar-like heavy crude so it can be piped over 100 miles (160 kilometers) from the field to be turned into gasoline. Russia has stepped in, sending two tankers of the thinner, but these supplies will last just five to 10 days, said Russ Dallen, managing partner of Caracas Capital, a brokerage company.

“It’s nothing,” he said. “It’s a drop in the bucket of what they need.”

Gasoline won’t completely dry up in Venezuela, which still has access to waning domestic production, as well as fuel in storage and shipments from India and European countries that aren’t subject to sanctions. But the fuel quality will suffer and there will be shortages, Castro said.

These are already being felt in San Cristobal near the Colombian border, where 55-year-old mechanic Gerardo Marquez said he got in line one recent Monday afternoon. On Tuesday the gas truck didn’t show up as promised, and on Wednesday he was still there after spending two nights with his car. 

Relatives did bring him food, water and a pillow, and gave him a chance to get away for bathroom breaks, he said. But he barely napped. “We’re all on guard so they don’t rob us,” he said. 

In Maracaibo, once known as the Saudi Arabia of Venezuela as a center of the country’s oil boom, residents have endured shortages for at least three years. Trucks to deliver the fuel are too few and daily power failures compound the problem, leaving gas pumps idle. Just two of Maracaibo’s 150 gas stations have generators to provide gas during rampant blackouts.

Fed up with waiting in lines, the 62-year-old Marin said he plans to start hoarding gas at home, despite the danger the explosive fuel poses to his wife, children and grandchildren. He relies on his car for his part-time job ferrying paying customers to supplement his modest $6-a-month pension checks. 

“My grandchildren don’t know what it’s like to eat a piece of meat or bit of chicken,” he said.

In the capital, Caracas, residents brace for shortages like these to finally hit them. The metropolitan area of 7 million people has so far been immune to frustrating gas lines. 

But an attendant at a PDVSA station sees them coming, recounting how a customer filled up his car then returned a few minutes later with an empty tank. He’d siphoned his tank to get around a government ban on filling up gas cans to crack down on smugglers. 

“Most Venezuelans have no idea of the magnitude of what is coming,” said Caracas taxi driver Jhaims Bastidas, waiting to fill up. “I imagine it’ll go beyond gasoline shortages to food and medicine — even worse than we have it now.”
…

Celebrity chef Mario Batali on Wednesday said he had cut ties with his U.S. restaurants after being accused of sexual harassment by multiple women.

Batali has sold his shares in the 16-restaurant operation, including Babbo and Del Posto in New York, to former partners Tanya Bastianich Manuali and her brother, Joe Bastianich, he said.

“I have reached an agreement with Joe and no longer have any stake in the restaurants we built together. I wish him the best of luck in the future,” Batali said in a statement from his representative, Risa Heller.

He is also selling his stake in the Eataly market and restaurant complex, according to a report in The New York Times, citing Eataly spokesman Chris Giglio.

Representatives for Eataly did not immediately respond to requests for comment.

The New York Police Department last year opened a criminal investigation into an accusation that Batali drugged and sexually assaulted an employee in 2005, following a CBS “60 Minutes” report on the allegations that aired in May 2018.

Batali at the time denied the report, and the NYPD closed its investigation in January without charges, according to local news media.

Batali’s charisma and culinary flair turned him into a restaurant executive, television star, author and one of the world’s most recognizable chefs. He premiered on Food Network in 1997 on the show “Molto Mario” and in 2011 helped launch “The Chew” on ABC.

He is among dozens of high-profile men who have been fired or resigned from their jobs in politics, entertainment and business after facing allegations of sexually harassing or assaulting women and men.

Before the “60 Minutes” report, online food trade publication Eater New York reported that four women, who were not identified, said the chef had touched them inappropriately in a pattern of behavior that spanned at least two decades. Three worked for the chef.

Following those allegations, ABC Television Network fired Batali in December from “The Chew.” The Food Network also canceled plans to relaunch “Molto Mario.”

In a previous statement, Batali admitted to those allegations, stating that the claims “match up with ways I have acted.” He apologized and had stepped away from the restaurant company B&B Hospitality Group, which the Bastianich family owns.

Representatives of the Bastianich family did not immediately respond to requests for comment on Wednesday.
…

U.S. officials have warned at an energy conference in Brussels that the Trump administration will take punitive action against European companies that are building the Kremlin-favored Nord Stream 2 natural gas pipeline, which will deliver energy from Russia to Germany while bypassing Ukraine.

Nord Stream 2 (NS2) will largely replace an older pipeline running through Ukraine and Poland that has the backing of the German government. But it is prompting the alarm of Central European governments, increasingly infuriated with Berlin’s dismissal of their concerns.

They object to Nord Stream 2 — which will run 1,200 kilometers from Vyborg, Russia, to Lubmin, Germany, and snake under the Baltic Sea — not only because they’ll lose lucrative transit fees from the older pipeline, but because they fear the Kremlin wants to develop NS2 largely for political reasons, not commercial ones.

Speaking at the energy conference in the Belgian capital, Nicole Gibson, deputy director of the U.S. State Department’s office for Europe, warned that if European companies resume laying pipe later this year they “risk significant sanctions.”

Declining to go into any details about the threatened sanctions, Gibson said Washington doesn’t accept that Nord Stream 2 is a done deal. “Some people say it is a fait accompli that Nord Stream 2 will be done. We don’t see it that way… We call on European leaders to make sure Nord Stream 2 is not implemented,” she said.

Ukrainian leader Petro Poroshenko has warned that NS2 would allow the Kremlin to switch off gas to Ukraine and Central Europe when it wants to blackmail its nearer neighbors without disrupting supplies to Western Europe, lessening likely push back from the more powerful European countries while it toys with weaker ones.

Her high-profile warning, upping the political stakes, comes two months after Richard Grenell, the U.S. envoy to Germany, sent letters to dozens of European construction and energy companies saying they face sanctions if they resume in the spring the laying of NS2’s concrete-coated steel pipes. Construction work was suspended in December because of winter weather.

Washington’s opposition to Nord Stream 2 has been consistent — the Obama administration also was critical.

U.S. President Donald Trump’s opposition has a harder edge, however, with officials seeing a dark political menace behind the new pipeline. They argue NS2 will undermine European security, deepen Western Europe’s dependence on Russian energy and give the Kremlin a greater opportunity to use natural-gas supplies to exert political influence and blackmail Western European governments.

Nord Stream 2, which will be owned by the Kremlin-directed energy giant Gazprom, would double the capacity of Russian gas delivered to Germany, the European Union’s most powerful economy. NS2 will cost billions of dollars to build. Russia currently supplies more than one-third of the natural gas Europe uses, though with demand increasing, that could reach closer to 50 percent next decade, forecast energy industry experts.

Last July, during his visit to the annual summit of NATO allies in Brussels, President Trump expressed his frustration with German Chancellor Angela Merkel over the Russia-to-Germany undersea pipeline, saying, “We’re supposed to protect you from Russia, but Germany is making pipeline deals with Russia. You tell me if that’s appropriate. Explain that.”

But Merkel has dug in amid pressure from Germany businesses, which say NS2 will slash their energy costs. The German Chancellor also appears to be distancing herself from a promise she made last year to Central European leaders when she acknowledged for the first time allies’ geopolitical concerns, saying NS2 could proceed only if Ukraine’s role as a transit country for Russian gas also was protected.

Germany, along with NS2 transit countries Finland, Sweden and Denmark, counter-argue the pipeline will increase Europe’s energy security by avoiding potential cutoffs from the more politically volatile Ukrainian route. Washington believes the pipeline also is a Russian bid to hurt Ukraine economically by stripping it of gas transit fees.

Ukrainian officials estimate their losses from Nord Stream 2 will be high, running at about $2.5 billion a year.

“When Nord Stream 2 is finished this year, there will be no need to use the Ukrainian gas transit system,” Yuriy Vitrenko, managing director of Ukraine’s Naftogaz, a state-owned oil and gas company, told the Brussels conference. “Ukraine will lose approximately 4 percent of GDP,” he added.

Kremlin officials say Washington wants to stop NS2 because U.S. energy giants are hoping to export surplus shale gas to Europe as liquified natural gas (LNG). U.S. officials have made no secret of their hopes that American energy firms will be able to profit from a halt to NS2, but say that isn’t the major reason for their objections to the pipeline.

U.S. officials’ alarm about NS2 is echoed by European security officials. NATO’s former head, Anders Fogh Rasmussen, has described Nord Stream 2 as a “geopolitical mistake” for the EU, saying it would make a mockery of EU sanctions on Russia for its 2014 annexation of Crimea.
…

In Zimbabwe, the high cost of bread is forcing citizens to look for alternatives to this basic commodity as food shortages and soaring prices continue to worsen. Columbus Mavhunga reports for VOA from Harare.
…

Leaders of Mexico’s agricultural sector are urging “mirror measures” on U.S. farm imports in politically sensitive products such as yellow corn and poultry, in an effort they argue would counter decades of subsidized imports from the United States.

The three-month-old government of President Andres Manuel Lopez Obrador is currently working on an updated list of products imported from its northern neighbor on which to possibly apply a second round of tariffs in response to U.S. measures imposed on Mexican steel and aluminum by the Trump administration last year.

Last June, Mexico imposed tariffs of between 15 and 25 percent on steel products and other U.S. goods, in retaliation for the tariffs applied on the Mexican metals imports that Trump imposed citing national security concerns.

Mexico’s Deputy Minister for Foreign Trade Luz Maria de la Mora told Reuters last week that Mexico is reviewing the list of U.S. products to which former President Enrique Peña Nieto applied reprisals. She said a new list would be set by the end of April if the United States has not withdrawn tariffs on Mexican steel and aluminum before then.

“Yes, there is the lobby, and yes we agree that a mirror policy applies,” Bosco de la Vega, head of Mexico’s National Farm Council, told reporters on Tuesday when asked if Mexican farmers are pushing to include specific U.S. grains, chicken and beef products in the new list.

“The Mexican government knows that the U.S. agricultural sector is what hurts the United States’ government the most,” said de la Vega, pointedly noting that American farmers constitute “President Donald’s hard-core base.”

He said Mexican grains farmers have been “the big losers” during decades of liberalized agricultural trade with the United States.

Lopez Obrador, who took office in December, has pledged to make Mexico self-sufficient in key farm products in which U.S. imports have grown dramatically over the past couple decades, including yellow corn, used mostly by Mexico’s livestock sector.

De la Vega comments largely echo those of senior Lopez Obrador agricultural officials.

“Over the past 25 years, the government allowed corn, wheat, sorghum, soy, milk and other products to be imported below production costs,” said Victor Suarez, a deputy agricultural minister.

Suarez added the long-standing policy of previous Mexican governments to allow heavily subsidized U.S. farm products has not yielded lower prices for consumers and should be replaced by a more protectionist policy.
…

It is Friday morning, and the southeastern fringe of Kibera slum comes alive as teams of women and youngsters converge on the edge of the Nairobi dam.

There, on its northern perimeter, some rake and pile garbage for collection while others plant saplings on cleared terrain.

Known as riparian land, the area they are planting is the strip adjacent to the dam that can absorb flooding. Under Kenyan law, this is public land and it may not be built on.

Their work might look like simple civic pride, but something more is going on: This is a message to developers who might want this unused land for themselves.

“Nairobi dam’s riparian land is not for grabbing,” said Yohana Gikaara, the founder of Kibera 7 Kids, a non-profit that works with young people in the slum.

Forty years ago, this shore was underwater and safe from land-grabbers, he said. At that time, the dam was a popular recreation site for residents of Kenya’s capital.

But years of siltation due to human encroachment and the dumping of waste saw the waters recede. Over that time the dam’s main water source — the Motoine River — was choked by garbage, leaving it just a thread of slimy effluent.

Today, of the original 88 acres the dam once occupied, only a chunk of water about half the size of a football pitch remains, said Gikaara.

Given that land near the dam is worth about 80 million Kenyan shillings ($800,000) an acre, the attractions for developers are clear.

Kibera residents like Gikaara fear the 30 acres of riparian land, and perhaps even the remainder of the dam itself, could disappear thanks to the booming property development industry.

“No one knows when [developers] strike,” he said. “You wake up one morning and find earth-movers in the neighborhood, and that is when you know you or your neighbor will soon be homeless.”

​Wrecking ball

Apartment blocks sprung up in 2014 on the dam’s southeastern flank and, in 2017, greenhouses began popping up too. That prompted non-profits in Kibera to raise the alarm.

Last year, the National Environment Management Authority (NEMA) ordered the apartments to be demolished — because, said David Ong’are, the government body’s director in charge of compliance and enforcement, they had been built illegally on riparian land.

Any building near a water body must be between six and 30 meters from the high-water mark, depending on the type of water course, he said.

“The buildings that have breached this threshold at the Nairobi dam are going to be demolished,” Ong’are told Reuters in an interview, adding that some developers had filed court cases in an effort to halt that.

On’gare said more than 4,000 buildings built on riparian land in Nairobi had been earmarked for demolition to date.

One prominent site demolished last year was the South End Mall, which NEMA ordered flattened after ruling it had been built over a section of the Moitone River’s course, he said.

Pollution solutions

In January, Gikaara worked with lobby groups to oppose plans by a parliamentary committee to fill in the rest of the dam — ostensibly as a way to deal with the issue of pollution.

But, said local resident James Makusa, that was simply a ruse cloaked in the name of rehabilitating the dam.

“The real motive is to prepare the ground for property development,” said Makusa, who makes a living by scooping sediment from the Motoine River and selling it to construction sites.

Makusa views his job of clearing the river of sediment as a form of environmental conservation — a better way to rehabilitate the dam, and preferable to filling it with soil.

Mary Najoli, who heads the Shikanisha Akili Women’s Group, suggested another use that would protect the land. Her group, whose name translates as “using your imagination,” makes beadwork from recycled waste collected in Kibera.

But like many others in informal settlements, they lack a permanent venue from where to sell their wares.

“We would like to be allocated [a small area of] the dam’s land as a place where we can display and sell our beadwork. In return, we will ensure that the environment is clean and watch out for illegal encroachment,” she said.

​That might happen, said local MP Nixon Korir, whose constituency includes the dam.

However, he said, the process of reclaiming the land must be finished first: that includes clearing waste and ensuring the planted trees can sustain themselves.

Korir said the reclamation process, which started last year, was designed to benefit Kibera’s residents.

“The rehabilitated riparian land will be turned into a tourism site that can bring revenue and create employment,” he said.

Brighter future?

Juliette Biao Koudenoukpo, the director of the Africa office at the United Nations Environment Program (UNEP), said Kibera residents were best-suited to keep Nairobi dam clean and safe.

“The people do not have any other alternative but staying where they are and caring for the dam because there is need to restore life here in Kibera through restoration of this dam and its ecosystem,” she said.

She blamed Kibera’s waste problem on poor urban planning, which meant open spaces had become dumping grounds — including the dam’s shores.

Meantime, some view the issue of pollution as a silver lining — among them is Ian Araka of the Foundation of Hope youth group, which combines garbage collection in Kibera with art, drama, traditional dance and poetry.

His 60-strong group has partnered with ASTICOM K Ltd., a social enterprise that is building a recycling factory in Kibera. He said the aim is to supply solid waste collected from the slum to the factory on a contractual basis.

Some will be collected from the dam’s riparian land, and there are plans to recycle polluted water for use by small businesses in the slum, such as car washes and sanitation services, he said.

“This project is going to unite and equip us with a voice to not only be able to chase land-grabbers away, but also invite developers to do something constructive with us,” Araka said.
…

The corporation behind a Florida detention camp for migrant children is abandoning its plans to go public as controversy grows around policies that lock up children crossing the Mexico border.

The chairman of Caliburn International Corp., Thomas J. Campbell, sent a letter Tuesday to the Securities and Exchange Commission saying it no longer wishes to conduct a public offering.

The Virginia-based company said in a press release the reason was “variability in the equity markets,” adding that business continues to grow. Previous filings cited risks of “negative publicity” as something that could affect share price.

Federal lawmakers toured the center last month and said it had a “prison-like feel,” vowing to change a policy they say still separates families.

The government announced in December that the facility was expanding from 1,350 to 2,350 beds.
…

The global travel industry is likely to expand by 4 percent in 2019 despite slowing economic growth in key areas such China and Europe, but a no-deal Brexit could wipe out 700,000 travel-related jobs, a top industry association said on Tuesday.

The travel and tourism sector grew 3.9 percent to $8.8 trillion in 2018, accounting for 10.5 percent of global gross domestic product, and outpacing global GDP growth of 3.2 percent, Gloria Guevara, president and chief executive of the World Travel & Tourism Council (WTTC), told Reuters.

Based on data from 185 countries, the group forecasts steady growth of 4 percent this year, given continued demand from China, the second largest travel and tourism market behind the United States, and other countries in Asia.

“Every crisis impacts the numbers, but this sector is very resilient,” Guevara said, noting that expansion in the travel and tourism sector traditionally outpaced global GDP growth.

Britain and the United States were two of few countries in which travel and tourism underperformed economic growth, she said, citing uncertainty about Britain’s departure from the European Union and what she called the “non-welcoming message” being sent out by U.S. President Donald Trump.

Travel and tourism’s contribution to Britain’s gross domestic product grew by just 1 percent in 2018, while overall GDP expanded 1.4 percent. The sector accounted for $311 billion in GDP in 2018, or about 11 percent of overall GDP.

If Britain leaves the EU without an agreement, it could lose 300,000 jobs, with an additional 400,000 jobs likely to disappear elsewhere in Europe, she said.

A rebound would depend “on how soon they can fix the situation,” she said, noting such a development would also keep Britain from benefiting fully from the expected creation of over 100 million jobs in the sector over the next 12 years.

In the United States, travel and tourism as a percentage of GDP grew 2.2 percent last year, while the overall economy expanded 2.9 percent, the association reported.

It said the travel and tourism sectors in Turkey, China, India, Thailand and France reported the highest growth rates in 2018, with Turkey reporting growth of 15 percent as it continued to recover from a sharp downturn after the 2016 failed coup.
…

India has downplayed the impact of U.S. plans to end New Delhi’s preferential trade status that allows duty free access to products worth $ 5.6 billion.

 

Saying that India has not assured the United States that it will provide “equitable and reasonable access” to its markets, U.S. President Donald Trump has directed the U.S. Trade Representative’s office to remove India from a program that grants it preferential trade treatment. 

 

In 2017, India was the biggest beneficiary of the Generalized System of Preferences (GSP), which lowers duties on exports from about 120 developing countries.   

 

While the preferential tariffs give India duty free access to exports worth $5.6 billion, Indian commerce secretary Anup Wadhawan told reporters in New Delhi that the actual benefits add upto $190 million. He called them “minimal and moderate.”

 

He said that India has no plans to impose retaliatory tariffs on U.S. goods.

Despite their fast-growing political and security ties, trade tensions have been brewing between the two countries over the past year as American businesses complain of protectionist hurdles in one of the world’s fastest growing markets.

 

India, “has implemented a wide array of trade barriers that create serious negative effects on United States commerce,” a statement from the U.S. Trade Representative office said.

 

President Trump has called India a “high tariff” country and repeatedly complained of high levies imposed by India on exports such as imported whiskey and Harley-Davidson motorcycles.

 

Indian officials refute that. “Our tariffs are very comparable to the more liberal developing economies, they are comparable to and even developed economies,” Wadhawan told reporters. “We have some tariff peaks. So you can’t pick up one or two items and believe that our entire tariff structure is high.”

 

The U.S. Trade Representative’s Office has said that India’s removal from the GSP would not take effect for at least 60 days. 

Indian exports that enjoyed preferential tariffs include automobile parts, chemicals, precious metal jewelry and certain raw materials.

 

Trade experts in New Delhi agree that the overall impact of the U.S. withdrawal of preferential tariffs is not significant, but warn that much of the hit will be taken by sectors that create employment in a country that desperately needs more jobs.

 

“The products where the GSP impact is more are the labor intensive sectors such as handicrafts, agriculture and marine products,” according to Ajai Sahai, the head of the Federation of Indian Export Organizations. He points out that it comes at a time when Indian exports are grappling with a slowdown.

 

Contentious areas

There are other contentious areas in the trade relationship between the two countries. The United States has been leaning on India to reduce the trade surplus of about $23 billion out of the total bilateral trade of $126 billion. In New Delhi, officials point out that the deficit has been declining and say the gap will be further reduced as India increases its energy and defense purchases – India has begun importing shale oil from the United States and military equipment sales have been rising.

 

Indian price controls on medical devices, restrictions on agricultural imports and recent policies that are disrupting the business model of online retail giants such as Amazon have also irked Washington.

 

The new e-commerce policy was announced in December on demands from tens of thousands of retail traders who complain of losing business to online companies. The traders form a core support base for Prime Minister Narendra Modi’s Bharatiya Janata Party, which is gearing up for a general election expected to be announced shortly.

 

India is not the only country facing an end to preferential market access — the United States has announced that it will also end Turkey’s preferential trade status, saying it no longer qualifies as it is “sufficiently economically developed.”

 
…

Treasury Secretary Steven Mnuchin informed Congress on Monday that he will stop making payments into two government retirement funds now that the debt limit has gone back into effect.

In a letter to congressional leaders, Mnuchin said that he would stop making investments into a civil service retirement fund and a postal service retirement fund.

These are among the actions that Mnuchin is allowed to take to keep from exceeding the debt limit, which went back into effect on Saturday at a level of $22 trillion.

The debt limit had been suspended for a year under a 2018 budget deal. The Congressional Budget Office estimates that Mnuchin likely has enough maneuvering room to avoid a catastrophic default on the national debt until around September.

The U.S. government has never missed a debt payment although budget battle between then-President Barack Obama and Republicans in 2011 pushed approval of an increase in the debt limit so close to a default that the Standard and Poor’s rating agency downgraded a portion of the country’s credit rating for the first time in history.

The Congressional Budget Office said in a report that issuing new securities for the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund pushed the debt up by $3 billion each month. Mnuchin said both funds would be made whole once Congress approves an increase in the debt limit.

“I respectfully urge Congress to protect the full faith and credit of the United States by acting to increase the statutory debt limit as soon as possible,” Mnuchin said in his letter.
…

Venezuelan opposition leader Juan Guaido named Harvard University economist Ricardo Hausmann as the country’s representative to the Inter-American Development Bank (IDB), Guaido’s envoy to the United States, Carlos Vecchio, wrote in a tweet on Monday.

Guaido, who calls socialist President Nicolas Maduro a usurper after Maduro won re-election in a May 2018 vote widely seen as fraudulent, invoked the constitution to assume an interim presidency in January. He has been recognized as the OPEC nation’s legitimate leader by most Western countries, including the United States.

Hausmann, an economics professor at Harvard’s Kennedy School of Government, served as Venezuela’s planning minister and as a member of the board of the country’s central bank in the 1990s.

He has also served as the country’s governor for the IDB and World Bank, and was the IDB’s chief economist for several years.

Venezuela’s current IDB governor is Oswaldo Javier Perez Cuevas, an official in the country’s finance ministry, according to the IDB’s website. The Washington-based multilateral lender invests in infrastructure and other development projects throughout Latin America and the Caribbean.

Neither Hausmann nor a spokesman for the IDB immediately responded to a request for comment. A source close to the Venezuelan opposition said Hausmann’s appointment still had to be confirmed by the country’s National Assembly, which is currently led by Guaido.
…

A U.S. judge on Monday acquitted a former top foreign exchange trader at Barclays Plc accused of illegally trading ahead of an $8 billion transaction for Hewlett-Packard, without letting the case go to a jury.

The acquittal of Robert Bogucki, who led Barclays’ foreign exchange trading desk in New York, by U.S. District Judge Charles Breyer in San Francisco sets back federal efforts to hold senior bankers and traders criminally responsible for suspected misconduct.

It also marks a rare instance of such a case being tossed out immediately after the prosecution presented its case at trial, because the evidence was too weak to support a conviction. Bogucki’s trial began on Feb. 21.

A spokesman for U.S. Attorney David Anderson in San Francisco said that office was reviewing Breyer’s decision.

“We are so very pleased that the court recognized Mr. Bogucki’s innocence and affirmed that the government’s attempt to rewrite the rules years after the fact runs counter to core constitutional principles of due process,” Sean Hecker, a lawyer for Bogucki, said in a statement.

Bogucki was charged with “front-running” a 2011 transaction involving the sale of 6 billion pounds of cable options linked to HP’s purchase of British software company Autonomy Corp.

Prosecutors accused Bogucki of trying to push down the options’ price, enabling Barclays to profit at HP’s expense.

An indictment quoted Bogucki warning a trader not to let “some loose lipped market monger” tell HP what they were doing, and the trader discussing their plan to “spank the market.”

Breyer, however, said no reasonable jury could find that Bogucki owed HP a duty of trust and confidence.

He also said the relationship between Barclays and HP, industry practice and other factors necessitated an acquittal.

“The government has pursued a criminal prosecution on the basis of conduct that violated no clear rule or regulation, was not prohibited by the agreements between the parties, and indeed was consistent with the parties’ understanding of the arms-length relationship in which they operated,” Breyer wrote.

“The court cannot permit this case to go to the jury on such a basis,” he added.

Though such banks as Barclays, Citigroup Inc., JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc have pleaded guilty in connection with foreign exchange markets, few individuals have been held criminally liable.

Last October, a Manhattan federal jury found three former currency traders from Barclays, Citigroup and JPMorgan not guilty of scheming to rig benchmark exchange rates.

The case is U.S. v. Bogucki, U.S. District Court, Northern District of California, No. 18-cr-00021.
…

The S&P 500 and the Dow Jones industrial average snapped a three-day run of losses on Friday as optimism about the prospects for a U.S.-China trade agreement countered downbeat U.S. and China manufacturing data. 

The Nasdaq, meanwhile, marked its longest streak of weekly gains since late 1999. 

Following President Donald Trump’s announcement last weekend of a delay in higher tariffs on Chinese imports, Bloomberg reported late Thursday that a summit between Trump and his Chinese counterpart, Xi Jinping, to sign a final trade deal could happen as soon as mid-March.

“The optimism over trade resolution is outweighing the weakening economic data,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, N.C. 

A private survey showed China’s factory activity contracted for a third straight month in February, though at a slower pace, indicating a marginal improvement in domestic demand as a flurry of policy stimulus kicked in from late last year. 

ISM data also showed U.S. manufacturing activity for February dropped to its lowest since November 2016, and the University of Michigan survey showed consumer sentiment fell short of expectations in the month. 

Detrick said that while the data were weak, investors hoped a U.S.-China trade deal would improve global growth prospects. 

The Dow Jones industrial average rose 110.32 points, or 0.43 percent, to 26,026.32; the S&P 500 gained 19.2 points, or 0.69 percent, to 2,803.69; and the Nasdaq Composite added 62.82 points, or 0.83 percent, to 7,595.35. 

Good sign

Friday marked the first close above 2,800 for the S&P since Nov. 8. Nate Thooft, global head of asset allocation for Manulife Asset Management in Boston, said technical investors would see a close above that level “as a good omen.” 

The index closed 4.2 percent under its September record closing high. It has risen 11.8 percent so far this year, bolstered by trade hopes and the Federal Reserve’s cautious stance on interest rates. 

For the week, the S&P rose 0.4 percent while the Dow fell 0.02 percent and the Nasdaq rose 0.9 percent. 

Of the 11 major S&P 500 sectors, eight were gainers on the day. The health care sector rose 1.4 percent, providing the biggest boost and supported by gains in companies including health insurer UnitedHealth Group which bounced back after falling for much of the week. 

The consumer discretionary sector rose 0.9 percent, with the biggest lift from Amazon.com. 

Foot Locker shares rose 5.9 percent after the retailer beat quarterly same-store sales estimates and helped drive a 1.9 percent gain in shares of Nike Inc., the second-biggest boost to the sector. 

Gap Inc. surged 16 percent, making it the biggest percentage gainer in the S&P, after it said it would separate its better-performing Old Navy brand and close about 230 Gap stores. 

The energy sector rose 1.8 percent despite a decline in oil prices. 

A U.S. Commerce Department report showed inflation pressures remaining tame, which along with slowing domestic and global economic growth gave more credence to the Federal Reserve’s “patient” stance toward raising interest rates further this year. 

Advancing issues outnumbered declining ones on the NYSE by a 1.79-to-1 ratio; on Nasdaq, a 1.86-to-1 ratio favored advancers. 

The S&P 500 posted 54 new 52-week highs and no new lows; the Nasdaq Composite recorded 92 new highs and 29 new lows. 

Volume on U.S. exchanges was 7.95 billion shares, compared with the 7.27 billion average for the last 20 trading days. 
…

U.S. consumer spending tumbled 0.5 percent in December, the biggest decline in nine years, as the holiday shopping season ended in disappointment. Meanwhile, incomes rose sharply in December but edged down in January.

The fall in consumer spending followed sizable gains of 0.7 percent in October and 0.6 percent in November, the Commerce Department reported Friday. December’s result means that spending for the quarter decelerated significantly, a primary factor in the slowing of overall economy in the final three months of the year. Gross domestic product recorded a growth rate of 2.6 percent after a 3.4 percent gain in the third quarter.

Incomes jumped 1 percent in December, though slipped 0.1 percent in January. The government did not release spending data for January because of delays stemming from the government shutdown.

The big fall in spending reflected sizable declines in purchases of durable goods such as autos, as well as nondurable goods such as clothing during the all-important holiday shopping season. The result shows that consumer spending, which accounts for 70 percent of economic growth, was showing significant weakness heading into the current quarter.

Many economists believe that GDP growth will slow further during the current January-March period, with some expecting GDP to drop to a growth rate of 2 percent or lower.

Inflation, as measured by a gauge preferred by the Federal Reserve, was up 1.7 percent for the past 12 months ending in December. That’s the slowest 12-month pace since a similar 12-month gain for the period ending in October 2017 and is below the Fed’s 2 percent target for annual price increases.

Federal Reserve Chairman Jerome Powell told Congress this week that with a number of economic risks facing the country and with inflation so low, the central bank intends to be “patient” in deciding when to change interest rates again.

The move to a prolonged pause in further rate hikes, which the Fed had announced at its January meeting, has cheered financial markets which had been worried that the central bank, which hiked its benchmark rate four times last year, could move rates up too quickly, raising the risks of an economic downturn.

The spending and income report showed that the saving rate jumped to 7.6 percent of after-tax income in December, compared to 6.1 percent in November. That was the highest saving rate since January 2016.
…

Oregon Gov. Kate Brown signed the nation’s first statewide mandatory rent control measure on Thursday, giving a victory to housing advocates who say spiraling rent costs in the economically booming state have fueled widespread homelessness and housing insecurity.  

  

Brown, a Democrat, said the legislation will provide “some immediate relief to Oregonians struggling to keep up with rising rents and a tight rental market.” 

 

Landlords are now limited to increases once per year that cannot exceed 7 percent plus the change in the consumer price index, which is used to calculate inflation. 

 

The law prohibits them from serving no-cause evictions after a tenant’s first year of occupancy, a provision designed to protect those who are living paycheck to paycheck and who affordable housing advocates say are often most vulnerable to sudden rent hikes and abrupt lease terminations. 

 

New York has a statewide rent control law, but cities can choose whether to participate. California restricts the ability of cities to impose rent control. Last November, voters defeated a ballot initiative that would have overturned that law. 

Emergency measure

 

The Oregon law takes effect immediately. Democrats who control the Legislature say the state’s housing crisis justified passing the bill as an emergency measure. 

 

In hearings for the bill passed, tenants testified that they have struggled to keep up with skyrocketing rents, with many said they’ve been forced from their homes. Kori Sparks, a resident of the fast-growing city of Bend, said she relies on disability and has “to deal with the stress of losing an accessible home on short notice.” 

 

She said rent control will protect vulnerable people from “a predatory system where profit comes before people and denies them of a basic human right.”  

  

Builders in Oregon have not been able to construct enough houses and apartments to meet the demands of the thousands of people moving to the state for jobs and, in some cases, for a lower cost of living. Many people move to the state from California. 

 

A state report estimated that a renter would need to work 77 hours a week at minimum wage to afford a two-bedroom apartment. One in three renters in Oregon pays more than 50 percent of his or her income for rent, far higher than the congressionally set definition of housing affordability, which suggests setting aside 30 percent toward rent.   

  

In the Portland metropolitan area, rent began to plateau in 2017 after four consecutive years of rent hikes averaging 5 percent or more. The average rental unit costs about $1,400 a month, according to data released by the city.  

Many are homeless

  

Oregon is also suffering from a lack of affordable housing and has one of the highest rates of homelessness in the country. 

 

Landlords and developers argued that rent control would make the housing crisis worse, saying investors will now be less willing to build or maintain properties.  

  

“History has shown that rent control exacerbates shortages, makes it harder for apartment owners to make upgrades and disproportionately benefits higher-income households,” said Doug Bibby, president of the National Multifamily Housing Council, a national association representing apartment building owners. 

 

The governor acknowledged that rent control alone isn’t enough, and that the state needs an “all hands on deck” solution. Brown has proposed a $400 million investment in affordable housing solutions in her two-year budget proposal. 

 

“It will take much more to ensure that every Oregonian, in communities large and small, has access to housing choices that allow them and their families to thrive,” she said. 
…

Tesla says it is now taking orders for the long-awaited $35,000 Model 3, will close stores and move to online orders.

Tesla says it is now taking orders for the long-awaited $35,000 Model 3, a car for the masses that is essential for the company to survive.

The company says to reach the lower price, it’s shifting all sales worldwide from stores to online only. Some high-traffic stores, however, will remain open.

The company will offer the standard base model, which can go 220 miles (350 kilometers) per charge. It also will offer a $37,000 version with a premium interior that accelerates faster and can go 240 miles (385 kilometers) per charge.

Tesla started taking orders for the Model 3 in March of 2016, but until now hasn’t been able to cut costs enough to sell them for $35,000 and make a profit.

The cheapest one that could be ordered until Thursday started at $42,900.

 

 
…

Gap Inc. said Thursday that it would separate its Old Navy brand into a publicly traded company in order to focus on its struggling namesake apparel business, sending its shares up 18 percent. 

Old Navy has had a better success than the Gap brand in recent years as a wide range of budget apparel has made it more appealing to a broader base of consumers. 

“It’s clear that Old Navy’s business model and customers have increasingly diverged from our specialty brands over time,” Gap’s Chairman Robert Fisher said. 

The company also said it planned to close 230 Gap specialty stores over the next two years. 

Gap’s overall same-store sales fell 1 percent in the fourth quarter ended Feb. 2, compared with analysts’ average estimate of a 0.3 percent rise, according to IBES data from Refinitiv. 

Gap, Athleta, Banana Republic and the remaining brands will be part of a yet-to-be-named company. The separation is expected to be completed by 2020, Gap said. 

The company’s shares were up 17.7 percent at $29.89 in extended trading.
…