YCLOAK

Volkswagen’s chief executive said on Tuesday after a meeting at the White House that the German automaker was building an alliance with Ford Motor Co and might use the U.S. automaker’s plants to build cars.

VW CEO Herbert Diess said the company was also “considering building a second car plant,” adding, “We are in quite advanced negotiations and dialog with Ford Corporation to really build up a global automotive alliance, which also would strengthen the American automotive industry.”

Ford declined to provide additional details but the automakers have said previously they are talking about potential collaborations.

RBC Capital Markets analyst Joseph Spak said in a research note Tuesday that said Diess’ comments raised the chances that VW would use some of Ford’s unused capacity as part of a broader partnership. 

Spak also said that a European or Asian automaker could seek to acquire some of General Motors unused capacity. GM announced last week it plans to idle five North American plants.

“VW may have a little negotiating power as some of the GM facilities could be bought (although this could impact their broader intentions with Ford),” Spak wrote.

VW has an assembly plant in Chattanooga, Tennessee. Of the need for a new plant, Diess said the company is in “quite advanced negotiations in Tennessee but there might be other options as well.”

Diess said VW would not take an equity stake in Ford as part of its alliance. “We are building an alliance with Ford which will strengthen Ford’s position in Europe because we will share platforms,” he said. “We might use Ford capacity here in the U.S. to build cars for us.”

Diess said VW planned to talk more about the Ford alliance in January.
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Americans are consuming less coal in 2018 than at any time since Jimmy Carter’s presidency, a federal report said Tuesday, as cheap natural gas and other rival sources of energy frustrate the Trump administration’s pledges to revive the U.S. coal industry.

A report by the U.S. Energy Information Administration projected Tuesday that 2018 would see the lowest U.S. coal consumption since 1979, as well as the second-greatest number on record of coal-fired power plants shutting down.

The country’s electrical grid accounts for most of U.S. coal consumption. U.S. coal demand has been falling since 2007 in the face of competition from increasingly abundant and affordable natural gas and renewable energy, such as solar and wind power. Tougher pollution rules also have compelled some older, dirtier-burning coal plants to close rather than upgrade their equipment to trap more harmful coal emissions.

President Donald Trump has made bringing back the coal industry and abundant coal jobs a tenet of his administration. He and other Republicans frequently attacked former President Barack Obama for waging what they called a “war on coal” through increased regulations that Republicans said killed jobs and harmed the industry.

Trump’s enthusiasm for coal has helped to make Appalachian “coal country” one of Trump’s most fervent bases of support as Trump racked up big wins in West Virginia, Ohio, Kentucky and other states.

“The coal industry is back,” Trump declared at one rally in West Virginia last summer.

Federal government figures continue to show otherwise, however, as market forces inexorably tamp down coal demand.

The Energy Information Administration says coal consumption by the country’s power grid will end the year down 4 percent, and fall another 8 percent in 2019.

Coal’s continuing slump comes despite Trump policy efforts to prop up the industry. That includes scrapping Obama’s signature Clean Power Plan that would have spurred electrical suppliers to turn away from coal-fired power plants in favor of cleaner forms of energy such as natural gas.

Trump “talks tough to the coal miners to get their support, but he doesn’t deliver for them, and I don’t think that he can, because the markets are bigger than him,” said Joe Pizarchik, who directed the Office of Surface Mining Reclamation and Enforcement in the Obama administration.

Pizarchik, now a consultant on water quality and reforestation, said lower prices for natural gas and renewables will continue to drive down demand for coal, despite deregulation efforts by the Trump administration.

Ironically, the new tax law approved by the Republican-controlled Congress has encouraged coal plants to close, as utilities use a provision that allows them to accelerate depreciation costs for closing plants, he said.

Despite the continued drops in domestic coal use, 2018 has been a better year for the industry thanks to soaring exports, said Joe Aldina, director of U.S. coal analysis for S&P Global Platts.

Spokespeople for the U.S. departments of Energy and Interior did not immediately return requests for comment Tuesday.

Appearing before the National Petroleum Council in Washington on Tuesday, Energy Secretary Rick Perry devoted much of his remarks to urging development of natural gas and petrochemical industries in Appalachian coal country. “This is economic opportunity for a region” that needs it, Perry said.

National gas production in Ohio, Pennsylvania, and West Virginia has jumped from 2 percent of the nation’s total in 2008 to 27 percent last year, Perry said.
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After a month strolling the gold market in Libya’s capital, retired public servant Milud Farhat was unable to find any jewelry he could afford for his daughter’s wedding. 

 

The 60-year-old is typical of Libya’s once well-to-do middle class, impoverished by high inflation and devaluation during years of conflict in what used to be one of the Arab world’s wealthiest countries. 

 

In contrast, armed groups whose commanders cruise Tripoli’s potholed streets in luxury cars have become rich by forcing authorities to hire them and grant them cheap dollars they can change on the black market for a premium. 

 

To tackle this “war economy,” Tripoli’s internationally recognized government in September effectively devalued the exchange rate to 3.9 dinars per dollar from 1.3. 

 

That cut the black market rate from 6 to 5.2, which shoppers and traders said had slightly eased prices for food and other goods, many of which are imported. 

‘Just suffering’

 

But for Farhat, who lives on a pension of 400 dinars per month, it made little difference. The wedding of his youngest daughter, his seventh child, is coming up, and jewelry for the bride is a must in Libya. 

 

“I have been coming every day for a month hoping that [gold] prices go down,” he said. “Normal people are just suffering.” 

 

Gold prices have dipped a little to around 180 dinars ($46) an ounce since the devaluation but are still triple their level in 2014, when the dinar started diving because of volatile oil revenues, Libya’s lifeline. 

 

“The gold market is still very, very weak. Seventy-five percent of people coming are just asking,” said gold trader Abdelhamid al-Zawi, standing in front of his empty shop. 

 

Wheelbarrows 

 

Economic policies are distorted by rivalry between the Tripoli government and a parallel administration in the east that set up its own central bank in the aftermath of the NATO-backed uprising that toppled Moammar Gadhafi in 2011.  

Overall oil revenue is up: The Tripoli-based National Oil Corp. expects income from crude and oil product sales to hit $23.7 billion in 2018, a 73 percent jump from last year. 

 

But money in the banks can be scarce. Many keep cash at home because they do not trust banks or play the black market. 

 

To undermine street dealers based just behind the Tripoli central bank headquarters and gold merchants doubling as currency traders, authorities slapped a 183 percent fee on commercial hard currency deals in September, moving the rate to 3.9. 

 

They also stopped restricting credit letters for imports, which Deputy Prime Minister Ahmed Maiteeg said would help end the liquidity crisis by early 2019. 

 

For a small and well-connected elite, money is still flowing as they keep a grip on business and oil revenues. In Tripoli’s upmarket neighborhoods, sleek stores sell international fashion brands, and new restaurants and cafes are opening. 

 

But elsewhere in the capital, building projects halted during the 2011 uprising litter the skyline and rubbish lies uncollected. Many are still queuing at banks, hoping to access their salaries, but they are unable to withdraw significant amounts. 

 

“Sometimes you get 150 dinars. What can you do with that?” said Mahdi Ali Makhfuth, another pensioner shopping for food with two sons. 

 

Authorities have also allowed citizens to bring up to $10,000 from abroad with credit cards, which Maiteeg said was bringing down the black market rate. 

 

Help for upper class

But Makhfuth dismissed the measure as benefiting the rich. 

 

“Do normal citizens have 40,000 dinars in their accounts? No,” he said, referring to the amount needed to access that maximum dollar allowance. 

 

Since a series of raids on the black market that began in September, dealers who use black plastic bags to carry dollars and wheelbarrows for devalued dinars have simply shifted into the labyrinth of the old city. 

 

And despite new central bank measures to prevent currency scams, Alaeldin Elmasallati, commissioner at Libya’s audit bureau, said they would still be possible because of a  lack of enforcement capacity. 
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President Donald Trump met with executives from three top German carmakers at the White House Tuesday as all sides hope to avoid a European trade war.

The White House says Trump “shared his vision of all automakers producing in the United States and creating a more friendly business environment.”

The statement gave no other details on the talks with executives from BMW, Daimler and Volkswagen.

But in an earlier tweet, Trump called himself “a tariff man.”

Trump had threatened to slap tariffs on imported cars, trucks, and auto parts, bringing the threat of retaliation by the European Union.

But both sides have backed down for now, agreeing to hold talks instead.

U.S. Commerce Secretary Wilbur Ross says a huge chunk of the trade deficit with Europe comes from German car imports.

Ross told CNBC television that German car factories are operating at capacity and urges the automakers to move some of their production to the U.S.
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The designer boutiques of Manhattan and Paris are feeling the chill of a Chinese economic slowdown that has hammered automakers and other industries.

It’s a rude awakening for such designer brands as Louis Vuitton and Burberry that increasingly rely on Chinese customers who spend $90 billion a year on jewelry, clothes and other high-end goods. The industry already is facing pressure to keep up as China’s big spenders, mainstays for American and European retailers, shift to buying more at the spreading networks of luxury outlets in their own country.

Last week, Tiffany & Co. showed how much well-heeled Chinese tourists matter to retailers abroad. Shares in the jeweler known for $5,000 watches and $400 silver baby spoons fell 12 percent after its CEO said they were spending less.

In Hong Kong, the top shopping destination for mainland travelers, only a dozen visitors were in Tiffany’s flagship store one afternoon last week. Many looked without buying.

“The name-brand goods are too pricey,” said Zhou Jiqing, from the neighboring mainland city of Shenzhen. “I’m waiting for the Christmas sale.”

Forecasters including Euromonitor International and Bain & Co. say Chinese customers will be the luxury industry’s main growth engine over the next decade. But this year, shoppers are skittish amid cooling economic growth, trade tension with Washington, and weak real estate and stock markets.

The spending shift could have big implications for retailers who’ve been catering to them and now will have to work even harder to get their dollars. 

“Consumers are just not as excited about spending that kind of money right now,” said Ben Cavender of China Market Research Group.

Demand for Tom Ford suits and Jimmy Choo shoes held up better than some other Chinese spending as economic activity slowed following a government clampdown on bank lending to cool a debt boom.

China’s economy, the world’s second largest, is forecast to grow by a relatively robust 6.5 percent this year, easing from 2017’s 6.7 percent. But that is propped up by higher government spending on public works construction that helps to mask weakness in other areas.

Auto sales in the global industry’s biggest market plunged 13 percent in October from a year earlier. Housing sales are so weak that some developers are cutting prices. The main Chinese stock market index is down 22 percent from a year ago.

Catering to Chinese tastes

Even before the economy cooled, the industry was under pressure from shifts in Chinese tastes and buying habits.

Luxury brands, some of them centuries old, have raced to serve China as its consumers emerged as a powerhouse market.

Brands designed watches, clothes and other goods for Chinese tastes. Hermes created its first single-country brand, Shang Xia, for China. Department stores from London to Los Angeles hired Mandarin-speaking salespeople.

Chinese traders fly home from Paris or Rome with stacks of designer bags and other goods to re-sell.

The incentive to shop abroad has eroded as major brands opened their China stores and prices fell closer to U.S. and European levels.

“Now, lots of world brands have shops in first-tier mainland cities,” said Alex Bi, who was visiting Hong Kong from the mainland city of Guangzhou. He and his sister, Jessica, were window-shopping in the bustling Kowloon district.

At the same time, Beijing has stepped up efforts to reduce reliance on trade and encourage self-sustaining economic growth based on consumer spending. Import taxes on luxury goods were cut to lure shoppers home.

Luxury spending abroad is forecast to keep rising, but not as fast as in China.

The share of spending that goes to retailers in China should rise from one-quarter of last year’s $90 billion to half of 2025’s projected total of $170 billion to $190 billion, according to a Bain report this month. Under that scenario, spending abroad would rise to $85 billion to $95 billion from $67 billion.

Cracking down on imports

Meanwhile, the customs agency is cracking down on informal imports by searching the luggage of travelers returning from Europe and other shopping destinations.

In November, a trader was sentenced to 10 years in prison for smuggling designer clothing from Hong Kong without paying the mainland’s higher import duty, according to news reports.

“This shocked the whole industry. Nobody dares to continue to act as purchasing agents,” said market researcher Li Chengdong of Donge Investment Management Co. in Beijing. “This has an immediate impact on the sales of the overseas retailers.”

Anxiety over possible terrorist attacks has prompted some Chinese to avoid Paris, London and other shopping destinations.

In the United States, retailers face pressure from China’s weak yuan, which makes prices in dollars more expensive for Chinese shoppers.

Changing travel habits

Chinese tourists are also changing the way they tour, forgoing big organized tours that involve taking buses to specific tourist sites including key shopping destinations, according to David Becker, CEO of a Brooklyn, New York-based Attract China, a Chinese travel consultancy. Instead, they’re going on their own, he said. That hurts retailers expecting big busloads of tourists at their front door.

Tighter visa restrictions under President Donald Trump also make it harder for Chinese shoppers to get to the United States, Cavender said.

Chinese tourist arrivals in the United States fell 20 percent from a year earlier to 880,000 in the three months ending in September, according to an estimate by the China Outbound Tourism Research Institute in Hamburg, Germany. The number going to France rose 20.7 percent to 664,800 and those bound for Italy rose 18.9 percent to 850,000.

“If people previously were going to the U.S. to buy an American luxury brand, that’s not their first choice anymore,” Cavender said. “They would rather go to Japan, New Zealand or someplace in Europe where the process is easier.”

Becker says he’s been working with several clients, including designer stores on New York’s Madison Avenue and Brookfield Place, on how to better cater to the Chinese. That includes allowing Chinese customers to use their preferred mobile payments systems, such as Alipay or WeChat.

He says he has heard there’s been some weakening in sales to Chinese tourists in the past three months because of the economy. But he says the political tensions between China and the U.S. haven’t been a factor — yet.

“When your confidence in the economy is off, whether it’s here in the United States or in the China, you’re going to cut back on your overall spending,” he said.  
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The World Bank will give equal weight to curbing emissions and helping poor countries deal with the “disastrous effects” of a warming world as it steps up investments to tackle climate change in the first half of the 2020s, it said on Monday.

The bank and its two sister organizations plan to double their investments in climate action to about $200 billion from 2021-2025, with a boost in support for efforts to adapt to higher temperatures, wilder weather and rising seas.

The latest figures on international climate funding for developing nations show barely a quarter has been going to adaptation, with the bulk backing clean energy adoption and more efficient energy use, aimed at cutting planet-warming emissions.

“We live in a new normal in which disasters are more severe and more frequent,” World Bank CEO Kristalina Georgieva told the Thomson Reuters Foundation at U.N. climate talks in Poland.

“We have to prioritize adaptation everywhere, but especially in the most vulnerable parts of the world,” she said, pointing to the Horn of Africa and the Sahel, coastal regions and small island states.

Of the $100 billion the World Bank plans to make available in the five years from mid-2020, half would go to adaptation measures, it said.

Those include building more robust homes, schools and infrastructure, preparing farmers for climate shifts, managing water wisely and protecting people’s incomes through social safety nets, Georgieva added.

The World Bank said the money would also improve weather forecasts, and provide early warning and climate information services for 250 million people in 30 developing countries.

“Climate change is an existential threat to the world’s poorest and most vulnerable. These new targets demonstrate how seriously we are taking this issue,” World Bank Group President Jim Yong Kim said in a statement.

From 2014-2018, the World Bank spent nearly $21 billion on adaptation, which accounted for just over 40 percent of the climate benefits generated by the institution’s funding overall.

Former U.N. Secretary-General Ban Ki-moon said the bank’s pledge to use half its climate finance to find solutions to deal with changing weather patterns was “important.”

“Climate change is already having a disastrous impact on people right around the world and we are nearing the point of no return,” said Ban. “So we must take bold action to adapt to the reality of the threat facing us all.”

A recently launched Global Commission on Adaptation, which Ban chairs with Georgieva and Microsoft co-founder Bill Gates, aims to put political muscle behind efforts to keep people safer in a hotter world.

The remaining $100 billion in promised World Bank Group funding will come from the International Finance Corporation (IFC), which works with the private sector, and the Multilateral Investment Guarantee Agency, as well as private capital the group raises.

“There are literally trillions of dollars of opportunities for the private sector to invest in projects that will help save the planet,” said IFC chief Philippe Le Houérou.

The IFC will identify opportunities, use tools to make investments less risky, and attract private-sector cash in areas including renewable energy, green buildings, clean transport in cities and urban waste management, he added.

Marshall Islands President Hilda Heine said her low-lying Pacific island state was struggling with fiercer storms and increasing seawater flooding that is contaminating fresh water with salt.

The new World Bank funds would “help to build resilience, make us safer, and improve lives,” she said.

“Global action needs to accelerate before it is too late,” she added.

The “Big Shift Global” coalition of aid agencies and climate justice campaigners said the World Bank Group’s new commitment signaled that developing countries should receive far more support to tackle climate change.

But it overlooked “the desperate need to radically scale up financing for off-grid renewable energy” to help the poorest gain access to electricity, they added.
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White House economic adviser Larry Kudlow said on Monday the Trump administration wants to end subsidies for electric cars and other items, including renewable energy sources.

Asked about plans after General Motors announced U.S. plant closings and layoffs last week, Kudlow pointed to the $2,500-to-$7,500 tax credit for consumers who buy plug-in electric vehicles, including those made by GM, under federal law.

“As a matter of our policy, we want to end all of those subsidies,” Kudlow said. “And by the way, other subsidies that were imposed during the Obama administration, we are ending, whether it’s for renewables and so forth.”

Asked about a timeline, he said: “It’s just all going to end in the near future. I don’t know whether it will end in 2020 or 2021.”

The tax credits are capped by Congress at 200,000 vehicles per manufacturer, after which the subsidy phases out. GM has said it expects to hit the threshold by the end of 2018, which means under the current law, its tax credit scheme would end in 2020. Tesla said in July it had hit the threshold.

Other automakers may not hit the cap for several years.

Experts say the White House cannot change the cap unilaterally. U.S. President Donald Trump last week threatened to eliminate subsidies for GM in retaliation for the company’s decision.

Kudlow made clear any changes in subsidies would not just affect GM.

“I think legally you just can’t,” he said.

Democrats will take control of the U.S. House in January and are unlikely to agree to end subsidies for electric cars and many have been pushing for additional incentives.

Tesla and GM have lobbied Congress for months to lift the cap on electric vehicles or make other changes, but face an uphill battle make changes before the current Congress expires.

In October, Senator Dean Heller proposed lifting the current cap on electric vehicles eligible for tax credits but phase out the credit for the entire industry in 2022. Two other senators in September proposed lifting the per manufacturer credit and extending the benefit for 10 years.

Also in October, Senator John Barrasso a Republican who chairs the Senate Environment and Public Works Committee, proposed legislation to end the EV tax credit entirely.
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Federal Reserve Chairman Jerome Powell said Monday that despite solid economic progress, the country still faces a number of challenges ranging from slow wage-growth for lower-income workers to sluggish productivity and an aging population.

 

Powell said in remarks at a Fed award ceremony that these challenges remain even though unemployment is near five-decade low and the financial system has been bolstered since the 2008 financial crisis.

 

While there have been recent gains in wage growth, Powell said that wages for lower-income workers have grown quite slowly over the past few decades.

 

He also noted that a decadeslong decline in economic mobility has made it more difficult for lower-income Americans to move up the economic ladder.

 

In his remarks, Powell praised the work of the Fed’s community development staff and former Fed Chair Janet Yellen, who put a special emphasis on efforts to help disadvantaged communities during her 16 years at the Fed, including the last four as Fed chair.

 

Powell did not discuss the Fed’s current interest-rate policies in his appearance.

 

The central bank has raised rates three times this year and is expected to boost rates for a fourth time at its Dec. 18-19. Powell sent the stock market surging last week when he signaled that the Fed may decide to slow the pace of rate hikes next year.

 

Investors had been hoping to learn more about Powell’s current thinking in testimony he was scheduled to deliver Wednesday before the congressional Joint Economic Committee. However, that appearance was canceled because of the government closure for the funeral of former President George H.W. Bush.

 

Both Powell and Fed board member Lael Brainard praised the work that Yellen did to help disadvantaged communities.

 

“Chair Yellen was attentive to low- and moderate-income communities, recognizing that Americans on the most precarious rungs of the ladder often feel the impacts of a downturn soonest and the longest,” Brainard said.

 

Both officials spoke at a ceremony honoring Yellen’s work with the presentation of a newly established Janet L. Yellen Award for Excellence in Community Development.

 

This year’s award, which goes to a Fed staffer who has excelled in work to help disadvantaged communities, was presented to Ariel Cisneros of the Federal Reserve Bank of Kansas City.
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China and the United States have agreed to put tariffs on hold and give negotiations a chance. But the short 90-day period the two have to finish negotiations, which includes major holidays both in Washington and Beijing, will require quick steps, analysts say.

 

China’s pledges to purchase what the White House calls “substantial” amounts of agricultural, energy, industrial and other products are relatively straightforward. What will be more difficult are the other items that Washington said the two agreed on.

 

Those include the pledge to immediately begin negotiations on structural changes such as forced technology transfers, intellectual property protection, non-tariff barriers, cyber theft, services and agriculture.

Raymond Yeung, a senior economist of Greater China at the Australia and New Zealand Banking Group said that despite the tariff truce, resolving the differences between the two countries and making progress would not be easy.

“Markets should not be too happy too early,” he said. “If you look at the White House statement there is still a lot of structural issues that the Chinese have to fulfill for the U.S. not to increase the tariffs.”

Even so, Asian stocks rallied on Monday on news that the U.S. President Donald Trump and Chinese President Xi Jinping had agreed to not impose any new tariffs for the time being. Soybeans climbed to their highest price a bushel in nearly six months.

Liao Qun, chief economist at China Citic Bank International said it was clear that both governments want to talk and work out their differences and that is a positive thing.

“But this is merely a cease-fire,” he said. “There’s still uncertainty that the trade war could be back on in three months.”

Both Yeung and Liao said the key lies in what Beijing may be able to do to turn around its Made in China 2025 Initiative. Both analysts do not believe that the industrial policy, which aims to close up huge gaps between the Chinese economy and advanced industrial nations and cut the country’s reliance on foreign technology, will be reversed.

But some tweaks are possible, Liao said.

“In principle, China won’t back down [on its Made in China 2025 plan]. But there is still room for negotiation on some aspects. Or maybe China can make concessions in other areas in exchange for keeping the plan intact,” Liao said.

Made in China 2025 is a 10-year campaign that Beijing has launched to help vault itself up the technology value chain. Many foreign countries and investors worry the plan will only exacerbate existing problems such as forced technology transfers in exchange for market access, alleged intellectual property theft and market protectionism.

The Made in China 2025 plan outlines 10 key sectors in which China seeks advances, including information technology; robotics; medicine and medical devices; and high-tech ships and ocean engineering equipment.

Clearly, the message that both countries were trying to convey in the wake of the meeting was different. To get a sense of those differences, one only needs to look at the statements made by both sides in the wake of the meetings

“Despite that both sides are claiming that it was a success if you look at the White House statement they don’t even put trade up as the first item,” Yeung said. China’s Xinhua news agency did not even mention the 90-day period. That tariffs on $200 billion in Chinese goods could still be raised from 10 percent to 25 percent in 90 days if the two fail to reach a deal.

Not only that, but Chinese state media has been largely silent about other details, such as those touching on Made in China 2025 or the specifics of the trade dispute outlined in the White House statement.

An opinion piece in the communist party-backed Global Times said the meeting had given both sides an opportunity to make concrete strides.

The article mentioned the agricultural products that China had agreed to purchase, citing the White House statement, but said little about the other agreements made.

Interestingly, the article did note that White House trade policy adviser Peter Navarro’s attendance at the meeting in Buenos Aries “was not necessarily a bad thing.”

The article suggested that Navarro’s attendance perhaps shows the deal had the support from what the article said was “trade hawks.” Navarro is seen as one of the more hardline members of President Trump’s team when it comes to economic issues with China.

An editorial in the China Daily, which has had very little detail on what the two presidents agreed on, said that while the “positive and constructive consensus” had helped to clear the air and create some breathing space for more “rational thinking,” “lasting improvement is still dependent on the sincerity of the U.S. to engage in equal-footed consultations with China.”

 
…

Asia stocks rallied Monday on the news that the United States and China, the world’s two largest economies, would not impose any new tariffs during a 90-day grace period, during which the two sides are to negotiate a detailed agreement.

In early trading Monday China’s main market index (the Shanghai Composite) jumped 2.7 percent and the Hang Seng in Hong Kong added 2.8 percent. 

Japan’s Nikkei 225 index climbed 1.4 percent. 

The U.S. pre market indexes – Dow and S&P futures contracts – were 1.9 percent and 1.8 percent higher respectively, indicating a strong start on Wall Street once the New York Stock Exchange opens at 9:30 a.m. Eastern Standard time.

The U.S. and China had agreed to a small truce in their escalating trade war after a meeting between presidents Donald Trump and Xi Jinping following the G-20 summit. 

Trump, speaking to reporters on Air Force One after the plane departed Argentina, said his agreement made over dinner with Xi, will go down “as one of the largest deals ever made. … And it’ll have an incredibly positive impact on farming, meaning agriculture, industrial products, computers — every type of product.”

“China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40 percent,” Trump said on Twitter late Sunday.

​Monday China’s ministry of foreign affairs said the Chinese and U.S. presidents had agreed to work towards removing all tariffs.

Trump agreed that he will leave the tariffs on $200 billion worth of Chinese products at the 10 percent rate, and not raise it to 25 percent, for now, as he has threatened to do come January 1, according to a White House statement. 

“China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial and other product from the United States to reduce the trade imbalance between our two countries,” said White House Press Secretary Sarah Sanders. “China has agreed to start purchasing agricultural product from our farmers immediately.”

Trump and Xi also “agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture,” according to the White House statement. “Both parties agree that they will endeavor to have this transaction completed within the next 90 days. If at the end of this period of time, the parties are unable to reach an agreement, the 10 percent tariffs will be raised to 25 percent.”

WATCH: Steve Herman’s video report

​At the dinner, Xi also agreed to designate fentanyl as a controlled substance, meaning that people selling the powerful opioid to the United States will be subject to China’s maximum penalty under the law.

The White House is calling the Chinese president’s decision a “wonderful humanitarian gesture.”
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Energy experts are urging Africa to use more of its gas reserves to fuel economic development. The group gathered in Washington to discuss the role of natural gas in helping to meet the continent’s electricity, health and environmental goals. The meeting coincides with the release of a report funded by Africa 50, which includes the Africa Development Bank, two African central Banks and 27 African countries. VOA Correspondent Mariama Diallo has more.
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China’s president on Sunday signed new trade deals with Argentina as the Asian giant expands its growing role in Latin American economies.

Presidents Mauricio Macri of Argentina and Xi Jinping of China announced the more than 30 agriculture and investment deals during a state visit following the Group of 20 summit of leaders in Buenos Aires. The deals include an agreement to export Argentine cherries to China and an expansion of a currency swap.

China is among Argentina’s top export markets, especially for agricultural commodities that are the engine of its economy. It is also one of Argentina’s biggest lenders, financing about $18.2 billion in infrastructure and other projects, according to the Inter-American Dialogue, a Washington-based think tank.

“China’s development benefits Argentina, our region and the world,” Macri said during a ceremony at the presidential residence in the outskirts of the Argentine capital.

“We have complementary countries. There are few countries in the world that can buy so many of the high-quality products that we’re capable of making,” Macri said.

The visit comes after U.S. officials said they had reached a 90-day truce in the trade dispute with China that has rattled financial markets and imperiled global economic growth. That announcement followed a Saturday dinner meeting between Xi and President Donald Trump.

Argentina also granted Xi the top honor awarded to foreign politicians, and the Argentine polo association gave the Chinese leader a polo horse. The South American country is home to the world’s top polo players, and Macri said that he wants the sport to make a comeback in China.

Photos released by Argentina’s presidency showed a smiling Xi petting the pony with one hand and holding the reins with the other.

Macri also put a red polo helmet emblazoned with China’s flag on Xi’s head.

Xi congratulated Macri on a successful summit and said that both nations believe that the G-20 spirit of solidarity must prevail in “the firm defense of multilateralism and free trade to build an open global economy and foment the world’s prosperity and stability.”

Xi will go on to visit Panama, which has been negotiating a free-trade deal with China after shifting its diplomatic recognition to Beijing from Taiwan last year, a move that led to complaints from U.S. officials.

 
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U.S. President Donald Trump has returned home from the Group of 20 meeting of the world’s top economies. After the curtain came down on the summit, the spotlight lingered on the leaders of the two top economies. As VOA’s White House bureau chief Steve Herman reports from Buenos Aires, in the end a truce was achieved in the escalating battle of tariffs between the United States and China.
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The data stolen from the Marriott hotel empire in a massive breach is so rich and specific it could be used for espionage, identity theft, reputation attacks and even home burglaries, security experts say.

Hackers stole data on as many as 500 million guests of former Starwood chain properties over four years including credit card and passport numbers, birthdates, phone numbers and hotel arrival and departure dates.

It is one of the biggest data breaches on record. By comparison, last year’s Equifax hack affected more than 145 million people. A Target breach in 2013 affected more than 41 million payment card accounts and exposed contact information for more than 60 million customers.

Especially sensitive data

But the target here — hotels where high-stakes business deals, romantic trysts and espionage are daily currency — makes the data gathered especially sensitive.

Jesse Varsalone, a University of Maryland cybersecurity expert, said the affected reservation system could be extremely enticing to nation-state spies interested in the travels of military and senior government officials.

“There are just so many things you can extrapolate from people staying at hotels,” Varsalone said.

And because the data included reservations for future stays, along with home addresses, burglars could learn when someone wouldn’t be home, said Scott Grissom of LegalShield, a provider of legal services.

Starwood brand hotels

The affected hotel brands were operated by Starwood before it was acquired by Marriott in 2016. They include W Hotels, St. Regis, Sheraton, Westin, Element, Aloft, The Luxury Collection, Le Meridien and Four Points. Starwood-branded timeshare properties were also affected. None of the Marriott-branded chains were threatened.

Email notifications for those who may have been affected begin rolling out Friday and the full scope of the breach was not immediately clear.

Marriott was trying to determine if the purloined records included duplicates, such as a single person staying multiple times.

Breach undetected for a while

Security analysts were especially alarmed to learn of the breach’s undetected longevity. Marriott said it first detected it Sept. 8 but was unable to determine until last week what data had possibly been exposed because the thieves used encryption to remove it in order to avoid detection.

Marriott said it did not yet know how many credit card numbers might have been stolen. A spokeswoman said Saturday that it was not yet able to respond to questions such as whether the intrusion and data theft was committed by a single or multiple groups.

Cybersecurity expert Andrei Barysevich of Recorded Future said Saturday he believed the breach was financially motivated.

The cybercrime gang expert in credit card theft such as the eastern European group known as Fin7 could be a suspect, he said, noting that a dark web credit card vendor recently announced that 2.6 million cards stolen from an unnamed hotel chain would soon be available to the online criminal underworld.

“We will have to wait until an official forensic report, although, Marriott may never share their findings openly,” he said.

Marriott said the stolen credit card information was encrypted but the hackers may have obtained the “two components needed to decrypt the payment card numbers.” It said it cannot “rule out the possibility that both were taken.”

Privacy laws

For as many as two-thirds of those affected, the exposed data could include mailing addresses, phone numbers, email addresses and passport numbers. Also dates of birth, gender, reservation dates, arrival and departure times and Starwood Preferred Guest account information.

The breach of personal information could put Marriott in violation of new European privacy laws, as guests included European travelers.

Marriott set up a website and call center for customers who believe they are at risk.

The FBI said anyone contacted by Marriott should “take steps to monitor and safeguard their personally identifiable information and report any suspected instances of identity theft to the FBI’s Internet Crime Complaint Center at www.ic3.gov.”

Passport numbers have previously been part of a hack, though it’s not common. They were among records on 9.4 million passengers of Hong Kong-based airline Cathay Pacific obtained in a breach announced in October.

Combined with names, addresses and other personal information, passport numbers are a greater concern than stolen credit card numbers because thieves could use them to open fraudulent accounts, said analyst Ted Rossman of CreditCards.com.

Hotels long a source of information

The data purloining highlights just how dangerous hotels can be for people worried about their privacy.

“Hotels have long been important government sources of local information for tracking foreigners: reservation systems and loyalty programs took the surveillance global and made it easier for us to give up our privacy,” said Colin Bastable, CEO of Lucy Security.

Intelligence agencies including the U.S. National Security are well plugged into the global travel industry “by fair means or foul,” he said, nongovernment cybercriminals now have the same hacking tools.

“Consumers have become collateral damage,” he said. “And we are all consumers.” He advises providing hotels with as little information as possible when making reservations and checking in.

Last year, the cybersecurity firm FireEye highlighted an effort in which Russian state agents allegedly tried to infiltrate the reservation systems of hotels in Europe and the Middle East.

21 million Starwood program members

When its acquisition by Marriott was first announced in 2015, Starwood had 21 million people in its loyalty program. The company manages more than 6,700 properties across the globe, most in North America.

Marriott, based in Bethesda, Maryland, said in a regulatory filing that it was too early to say what financial impact the breach might have on the company. It said it has cyber insurance and is working with its carriers to assess coverage.

Elected officials were quick to call for action.

The New York attorney general opened an investigation.

Virginia Sen. Mark Warner said the U.S. needs laws that limit the data companies can collect on customers and ensure that companies account for security costs rather than making consumers “shoulder the burden and harms resulting from these lapses.”
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A U.S. judge in California has granted preliminary approval of a $48 million settlement for investors who said Volkswagen AG made false and misleading statements about its excess diesel emissions. 

Lawyers for the investors, who include police and other municipal pension funds, had estimated that the maximum they could have recovered was $147 million. But Judge Charles Breyer said the settlement agreed to in August appeared “fair, adequate and reasonable.” 

VW, in a statement, said Friday that the “proposed settlement agreement eliminates the uncertainty and considerable costs of protracted litigation in the United States and is in the best interests of the company.” The ruling was issued late Wednesday. 

Buybacks

In total, Volkswagen has agreed to pay more than $25 billion in the United States for claims from owners, environmental regulators, states and dealers, and has offered to buy back about 500,000 polluting U.S. vehicles. The buybacks will continue through 2019. 

The German automaker admitted in September 2015 to secretly installing software in nearly 500,000 U.S. cars to cheat government exhaust emissions tests. The vehicles had emitted up to 40 times the legally allowable pollutants. 

In 2017, VW also pleaded guilty of fraud, obstruction of justice and falsifying statements in a U.S. court. Under the plea deal, the automaker agreed to sweeping reforms, new audits and oversight by an independent monitor for three years. 

Federal prosecutors in Detroit unsealed criminal charges in May against former VW Chief Executive Officer Martin Winterkorn, who remains in Germany. Two other former VW executives have pleaded guilty in the investigation and are in prison. 

In total, nine people have been charged in the United States. 

Breyer set a date for a fairness hearing to allow further comment on the August settlement for May 10, after which a final ruling will be issued. 
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The leaders of Canada, Mexico and the United States signed a new North American trade deal Friday. Justin Trudeau, Enrique Pena Nieto and Donald Trump inked the deal in Argentina, ahead of the opening of the G-20 summit.

It will, however, take a while for the agreement to take effect as lawmakers from all three countries have to approve the scheme, officially known as the US-Mexico-Canada Agreement, or USMCA.

The pact underpins $1.2 billion in annual trade among the three countries.

It replaces NAFTA, a pact that Trump had roundly criticized in his 2016 presidential campaign, terming it the worst trade deal in history and blaming NAFTA for the loss of American manufacturing jobs since it went into effect in 1994. 

Trump called the deal a “model agreement that changes the trade landscape forever” at a news conference with his North American counterparts in Buenos Aires, Argentina, ahead of the G-20 conference.

When the three countries agreed on the USMCA deal earlier this year, the U.S. leader said, “This landmark agreement will send cash and jobs pouring into the United States and into North America.” 

Joshua Meltzer, a senior Fellow at the Brookings Institution, told VOA at that time that the deal was not that much different from NAFTA.

“I wouldn’t say it’s a vastly different deal at all.” Meltzer said. “It’s an agreement that’s over 20 years old and so it clearly needed to be updated.I think certainly it reduces a level of anxiety about how the administration was going to square its rhetoric on trade with an actual trade deal. We certainly see some increased protectionism in some areas, particularly in the auto sector.But overall it’s an update of a trade agreement, it’s comprehensive, and it’s largely good for improving integration between the three economies.” 
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World leaders are preparing for a potentially fiery G20 summit starting Friday in Buenos Aires. As Henry Ridgwell reports, the two-day meeting is being held against the backdrop of a spiraling trade war that has set the global economy on edge, plus a series of dangerous security flashpoints from Ukraine to the Middle East to the South China Sea.
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U.S. President Donald Trump has challenged car giant GM’s decision to close five plants across the United States and Canada just weeks before the holidays. GM says changing car habits are to blame for the closings, which impact thousands of workers across North America. VOA’s Katherine Gypson reports from the GM plant in Ohio, where workers say they feel left behind by the global marketplace.
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Police raided six Deutsche Bank offices in and around Frankfurt on Thursday over money laundering allegations linked to the “Panama Papers”, the public prosecutor’s office in Germany’s financial capital said.

Investigators are looking into the activities of two unnamed Deutsche Bank employees alleged to have helped clients set up offshore firms to launder money, the prosecutor’s office said.

Around 170 police officers, prosecutors and tax inspectors searched the offices where written and electronic business documents were seized.

“Of course, we will cooperate closely with the public prosecutor’s office in Frankfurt, as it is in our interest as well to clarify the facts,” Deutsche Bank said, adding it believed it had already provided all the relevant information related to the “Panama Papers”.

The news comes as Deutsche Bank tries to repair its tattered reputation after three years of losses and a drumbeat of financial and regulatory scandals.

Christian Sewing was appointed as chief executive in April to help the bank to rebuild. He trimmed U.S. operations and reshuffled the management board but revenue has continued to slip.

Deutsche Bank shares were down more than 3 percent by 1220 GMT and have lost almost half their value this year.

Offshore links

The investigation was triggered after investigators reviewed so-called “Offshore-Leaks” and “Panama Papers”, the prosecutor said.

The “Panama Papers”, which consist of millions of documents from Panamanian law firm Mossack Fonseca, were leaked to the media in April 2016.

Several banks, including Scandinavian lenders Nordea and Handelsbanken have already been fined by regulators for violating money laundering rules as a result of the papers.

The prosecutors said they are looking at whether Deutsche Bank may have assisted clients to set up offshore companies in tax havens so that funds transferred to accounts at Deutsche Bank could skirt anti-money laundering safeguards.

In 2016 alone, over 900 customers were served by a Deutsche Bank subsidiary registered on the British Virgin Islands, generating a volume of 311 million euros, the prosecutors said.

They also said Deutsche Bank employees are alleged to have breached their duties by neglecting to report money laundering suspicions about clients and offshore companies involved in tax evasion schemes.

The investigation is separate from another money laundering scandal surrounding Danish lender Danske Bank, where Deutsche Bank is involved.

Danske is under investigation for suspicious payments totaling 200 billion euros from 2007 onwards and a source with direct knowledge of the case has told Reuters Deutsche Bank helped to process the bulk of the payments.

A Deutsche Bank executive director has said the lender played only a secondary role as a so-called correspondent bank to Danske Bank, limiting what it needed to know about the people behind the transactions.

Under scrutiny

Weaknesses in Deutsche Bank’s controls that aim to prevent money laundering have caught the attention of regulators on both sides of the Atlantic. The bank has publicly said that it agreed it needed to improve its processes to properly identify clients.

In September, Germany’s financial watchdog – BaFin – ordered Deutsche Bank to do more to prevent money laundering and “terrorist financing,” and appointed KPMG as third party to assess progress.

In August, Reuters reported that Deutsche Bank had uncovered further shortcomings in its ability to fully identify clients and the source of their wealth.

Last year, Deutsche Bank was fined nearly $700 million for allowing money laundering through artificial trades between Moscow, London and New York. An investigation by the U.S.

Department of Justice is still ongoing.

Deutsche Bank has been under pressure after annual losses, and it agreed to pay a $7.2 billion settlement with U.S. authorities last year over its sale of toxic mortgage securities in the run-up to the 2008 financial crisis.

 
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U.S. President Donald Trump said Wednesday that new auto tariffs were “being studied now,” asserting they could prevent job cuts such as the U.S. layoffs and plant closures that General Motors Co. announced this week. 

 

Trump said on Twitter that the 25 percent tariff placed on imported pickup trucks and commercial vans from markets outside North America in the 1960s had long boosted U.S. vehicle production. 

 

“If we did that with cars coming in, many more cars would be built here,” Trump said, “and G.M. would not be closing their plants in Ohio, Michigan & Maryland.” 

 

The United States has a 2.5 percent tariff on imported cars and sport utility vehicles from markets outside North America and South Korea. The new North American trade deal exempts the first 2.6 million SUVs and passenger cars built in Mexico and Canada from new tariffs. 

 

Several automakers said privately on Wednesday that they feared GM’s action could prompt Trump to act faster than expected on new tariffs. 

 

GM did not directly comment on Trump’s tweets but reiterated that it was committed to investing in the United States. On Monday, the company said it would shutter five North American plants, stop building six low-selling passenger cars in North America and cut up to 15,000 jobs. The company has no plans to shift production of those vehicles to other markets. 

 

The administration has for months been considering imposing dramatic new tariffs on imported vehicles. 

 

The U.S. Commerce Department has circulated draft recommendations to the White House on its investigation into whether to impose tariffs of up to 25 percent on imported cars and parts on national security grounds, Reuters reported earlier this month. 

 

“The President has great power on this issue – Because of the G.M. event, it is being studied now!” Trump said. 

 

Shock to industry

The prospect of tariffs of 25 percent on imported autos and parts has sent shock waves through the auto industry, with both U.S. and foreign-brand producers lobbying against it and warning that national security tariffs on EU and Japanese vehicles could dramatically raise the price of many vehicles. 

 

Trump has also harshly criticized GM for building cars in China. The United States slapped an additional 25 percent tariff on Chinese-made vehicles earlier this year, prompting China to retaliate. 

 

China currently imposes a 40 percent tariff on U.S. automobiles, while the United States has a 27.5 percent tariff on Chinese vehicles. 

 

U.S. Trade Representative Robert Lighthizer said in a statement on Wednesday that he “will examine all available tools to equalize the tariffs applied to automobiles.” 

 

Additional tariffs on Chinese-made vehicles and parts would have a limited impact, said Kristin Dziczek, an economist at the Center for Automotive Research. She noted only a small number of vehicles were exported from China to the United States annually. 

 

The White House previously pledged not to move forward with imposing national security tariffs on the European Union or Japan while it was making constructive progress in trade talks. 

 

Trump wants the EU and Japan to buy more American-made vehicles. He wants the EU and Japan to make trade concessions, including lowering the EU’s 10 percent tariff on imported vehicles and cutting nontariff barriers. 

 

The White House in recent weeks has reached out to the chief executives of German automakers, including Daimler AG, MW AG and Volkswagen AG about meeting to discuss the status of auto trade.  
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Federal Reserve Chair Jerome Powell boosted U.S. stock markets on Wednesday when he said interest rates were “just below” estimates of a level that neither brakes nor boosts a healthy economy. Many took his comments as a signal that the Fed’s three-year tightening cycle is ending. 

The S&P 500 and Dow posted their biggest percentage gains in eight months, while the Nasdaq saw its largest advance in just over a month following Powell’s speech to the Economic Club of New York. 

Powell said that while “there was a great deal to like” about U.S. prospects, “our gradual pace of raising interest rates has been an exercise in balancing risks.” 

Earlier in the day, in its first-ever financial stability report, the Fed cautioned that trade tensions, Brexit and troubled emerging markets could rock a U.S. financial system where asset prices are “elevated.” 

‘Close to neutral’

“[Powell is] now acknowledging he’s close to neutral, which suggests maybe not quite as many rate hikes in the future as investors believed,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago. “It’s certainly a change of language and welcome news to investors.” 

The U.S. Commerce Department affirmed that U.S. GDP grew in the third quarter at a 3.5 percent annual rate, but the goods trade deficit widened, consumer spending was revised lower and sales of new homes tumbled, suggesting clouds are gathering over what is now the second-longest economic expansion on record. 

The Dow Jones industrial average rose 617.7 points, or 2.5 percent, to 25,366.43, the S&P 500 gained 61.61 points, or 2.30 percent, to 2,743.78 and the Nasdaq Composite added 208.89 points, or 2.95 percent, to 7,291.59. 

Of the 11 major sectors in the S&P 500, all but utilities were positive. Technology and consumer discretionary were the biggest percentage gainers, each up more than 3 percent. 

The S&P 500 Automobile & Components index was up 1.4 percent after President Donald Trump said he was studying new auto tariffs in the wake of General Motors Co.’s announcement that it would close plants and cut its workforce. 

Humana cuts forecast

Health insurer Humana Inc. cut its 2019 forecast for Medicare drug plan enrollment but upped its estimated enrollment in the company’s Medicare Advantage plan. Its stock ended the session up 6.2 percent. 

Salesforce.com Inc. beat analysts’ earnings estimates and forecast better-than-expected 2020 revenue, sending its shares up 10.3 percent. Other cloud software makers rose on the news, with the ISE Cloud Index gaining 3.5 percent. 

Microsoft Corp briefly surpassed Apple Inc. in market cap but Apple took back its lead by closing. Nevertheless, Microsoft closed 4.0 percent higher as it benefited from optimism regarding demand for cloud computing services. 

Among losers, Tiffany & Co. shares dropped 11.8 percent after the luxury retailer missed quarterly sales estimates on slowing Chinese demand. 

Advancing issues outnumbered declining ones on the NYSE by a 3.95-to-1 ratio; on Nasdaq, a 3.58-to-1 ratio favored advancers. 

The S&P 500 posted 17 new 52-week highs and six new lows; the Nasdaq Composite recorded 37 new highs and 129 new lows. 

Volume on U.S. exchanges was 8.04 billion shares, compared with the 7.82 billion-share average over the last 20 trading days. 
…

U.S. President Donald Trump touted the use of U.S. tariffs on foreign small trucks Wednesday, saying their placement on other foreign vehicles would have prevented the closure of several General Motors plants and the loss of thousands of coveted manufacturing jobs.

Trump noted on Twitter that brisk U.S. small truck sales in the country are due to a 25-percent tariff on small truck imports.

The president reiterated on Twitter that “countries that send us cars have taken advantage of the U.S. for decades.” Trump added he has “great power on this issue,” which he said “is being studied now.”

Trump has threatened to eliminate all federal subsidies to GM in response to the company’s planned closure of five plants and the elimination of 14,000 jobs in North America. Questions remain, though, about whether Trump has the authority to act against the automaker without congressional approval.

Federal tax credits of up to $7,500 are available to those who buy GM electric vehicles. Killing the subsidies may have little financial impact on GM because it is on the cusp of reaching its subsidy limit.

Many of the jobs would be eliminated in Midwestern U.S. states, a region where Trump has long promised a manufacturing rebirth.

GM, which said it has invested more than $22 billion in U.S. operations since it came out of bankruptcy in 2009, has tried to appease the Trump administration while justifying its decisions.

“We appreciate the actions this administration has taken on behalf of industry to improve the overall competitiveness of U.S. manufacturing,” GM said in a statement Tuesday.

Before GM can shutter factories next year in Michigan, Ohio and Ontario, Canada, it must reach agreement with the United Auto Workers union. The union has vowed to fight the closures legally and in collective bargaining.

GM’s restructuring reflects changes in buying trends in North America, prompting vehicle manufacturers to shift away from cars and toward SUVs and trucks.

 

 

 

 

 
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U.S. Federal Reserve Chair Jerome Powell said on Wednesday that while there was “a great deal to like” about U.S. prospects, the Fed’s gradual interest rate hikes are meant to balance risks as it tries to keep the economy on track.

“We know that things often turn out to be quite different from even the most careful forecasts,” Powell said in a speech that comes in the wake of last week’s volatile market selloff. “Our gradual pace of raising interest rates has been an exercise in balancing risks.”

Powell offered few clues on how much longer the U.S. central bank would raise interest rates in the face of a slowdown overseas and market volatility at home. Instead he highlighted a new financial stability report the Fed published earlier on Wednesday.

“My own assessment is that, while risks are above normal in some areas and below normal in others, overall financial stability vulnerabilities are at a moderate level,” he said at an Economic Club of New York luncheon.
…

An airport worker drops by Warsaw’s newest Ikea store during her lunch break to finish up plans for a home refurbishment. Around her, people drift in and out of the shop, placing small houseware items in big yellow bags as cafe tables fill up with people just stopping in for lunch.

The store is not one of Ikea’s out-of-the-way, maze-like warehouses that require a car to visit, but a shop like any other in a city center shopping mall. The Swedish retailing giant plans to open 30 such smaller stores in major cities around the world as part of a broader transformation to adapt to changing consumer habits.

Compared with just a decade ago, shoppers are more likely to be living in urban areas and not have a car, and often want a nearby location to look at goods like furniture in person before ordering things online.

“I like the idea because you can come any time,” said 29-year-old Angelika Singh, the airport worker, as she finalized an order for a new kitchen. “Mostly when you go to Ikea you need to have a whole day free, or at least half a day free, because it’s far.”

Warsaw’s store is located on two floors covering nearly 5,000 square meters (54,000 square feet), about one-fourth of a traditional big-box store. Similar stores have also opened in major cities like London and Madrid and more are expected, with one due next year in Paris, among other locations.

Shoppers can buy cushions, curtains and other home items. They can design the layout of bedrooms and kitchens at computer stations. But those hoping to buy a bookcase or bed will not find them stocked in a large warehouse, though they can order them at kiosks and have them delivered to their homes.

As such, it offers a very different shopping experience from the usual visit to one of the large warehouse stores.

“Ikea’s been doing pretty much the same for 70 years. It’s been a cash-and-carry company, and it still is for the majority of its sales,” said Andreas Flygare, the project manager for the Warsaw store. Now, he explained, the company must adapt to a consumer environment that has changed dramatically in the last 10 years.

“You have companies like Amazon and Uber that are raising the bar for what is expected. Because if you can have same-day delivery, or an Uber is two minutes away, it influences other companies, like Ikea,” he said in a recent interview in the store’s cafe. “It can be a quite tough environment. Everything is changing so fast.”

While Ikea is still profitable, its earnings have recently been growing more slowly than expected.

Thomas Slide, senior retail analyst at the market research firm Mintel, described it as a rational response to a “global trend towards urban living and a rebirth of the cities.”

“While Ikea used to be able to build its big blue warehouses on the edge of towns and cities and expect shoppers to come to them, now it has recognized it needs to be more flexible in its approach and take the Ikea experience to them, through digital channels and smaller stores closer to where people live and work,” Slide said.

Ikea isn’t the first to embrace such an approach. In the U.S., retailer Target has rolled out smaller stores to broaden its reach. French hardware store Leroy Merlin has done the same, as have Kingfisher-owned DIY store B&Q and sofa retailer DFS in Britain.

“While Ikea may not be on the cutting edge of this trend, it’s an important strategy to prepare the business for the future,” Slide said. “The challenge will be adding extra services through additional channels while also maintaining profitability.”

Chen Yu Ting, a 25-year-old from Taiwan who studies medicine in Warsaw, said it used to take him 40 minutes by bus to visit one of the large Ikea stores outside the city. But he is a short walk to the new store, and after an initial trip to buy pillows and bed sheets he now returns often for lunch, which is priced right for his budget.

“It’s more convenient, and now I just come here to eat,” he said.

His only complaint? The store doesn’t stock frozen meatballs.
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