YCLOAK

A closely watched survey indicates that economic growth across the 19-country eurozone struck a 6-year high in April.

Financial information company IHS Markit says Thursday that its purchasing managers’ composite output index — a broad gauge of economic activity — rose to 56.8 in April from 56.4 the previous month. The reading was at its highest level since April 2011.

Anything above 50 indicates expansion.

Chris Williamson, the firm’s chief business economist, said the survey portrays “an economy that is growing at an encouragingly robust pace and that risks are moving from the downside to a more balanced situation.” He said it’s consistent with quarterly growth of 0.7 percent.

On Wednesday, figures showed the eurozone grew by 0.5 percent in the first quarter.
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President Michel Temer’s proposal to reform Brazil’s costly social security system cleared a committee vote Wednesday, but the measure, deeply unpopular with voters, faces an uphill battle in the full Congress.

The committee voted 23-14 to approve the constitutional amendment, which would make Brazilians work longer and reduce pension benefits to plug a widening budget deficit at the root of the country’s worst recession.

Temer spokesman Alexandre Parola told reporters the vote numbers showed that “Brazilian society recognizes the urgent need for reforming the social security system.”

Presidential aides said, however, the government was not certain it had secured the two-thirds vote needed in the full chamber to approve a bill that is crucial to Temer’s efforts to recover investor confidence and restore investment and growth.

A vote in the full house planned for next week has been put back to allow the government coalition to muster the necessary 308 votes by swaying lawmakers worried about angering voters ahead of next year’s elections.

A generous system

Pension reform is a contentious issue in Brazil, which has one of the world’s most generous social security systems, allowing retirement on average at the age of 54 with almost full benefits, compared with 72 years in Mexico.

The bill sets a minimum retirement age for the first time in Brazil, at 65 for men and 62 for women.

Changes to the country’s labor laws and pension system triggered violent clashes between demonstrators and police in Brazil’s main cities Friday during the first national strike called by unions against Temer’s austerity agenda.

About 71 percent of Brazilians oppose the bill, according to a Datafolha survey Monday.

Concessions

Economists warn that the social security system is one of the main threats to Brazil’s government finances, with pension expenditures accounting for nearly half of its spending before debt payments.

Temer made concessions to ease passage of the proposal at the center of his austerity plan, raising doubts among investors about the watered-down bill’s ability to help narrow a bulging budget deficit that cost Brazil its investment-grade credit rating two years ago. Temer agreed to set a lower retirement age for women, police, teachers and rural workers and grant more generous transition rules for workers after allies balked at backing it.

Finance Minister Henrique Meirelles has said the changes will reduce the reform’s impact by 25 percent over 10 years, lowering fiscal savings to 600 billion reais ($190 billion).

Pension reform or taxes

Investors see pension reform as the only way for Brazil to shore up its finances without resorting to huge tax hikes. The Brazilian real would probably drop more than 10 percent if the scandal-plagued Congress fails to pass the bill, currency strategists estimated in a Reuters poll Wednesday.

Without the overhaul, Brazil’s aging population is expected to lift social security spending to 17.2 percent of gross domestic product by 2060, from 8.1 percent last year, according to government estimates.
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Veterans Affairs Secretary David Shulkin says his department is seeking to close perhaps more than 1,100 VA facilities nationwide as it develops plans to allow more veterans to receive medical care in the private sector.

At a House hearing Wednesday, Shulkin said the VA had identified more than 430 vacant buildings and 735 that he described as underutilized, costing the federal government $25 million a year.

He said the VA would work with Congress in prioritizing buildings for closure and was considering whether to follow a process the Pentagon had used in recent decades to decide which of its underused military bases to shutter, known as Base Realignment and Closure, or BRAC.

“Whether BRAC is a model that we should take a look, we’re beginning that discussion with members of Congress,” Shulkin told a House appropriations subcommittee. “We want to stop supporting our use of maintenance of buildings we don’t need, and we want to reinvest that in buildings we know have capital needs.”

Aging buildings

In an internal agency document obtained by The Associated Press, the VA pointed to aging buildings it was reviewing for possible closure that would cost millions of dollars to replace. It noted that about 57 percent of all VA facilities were more than 50 years old. Of the 431 VA buildings it said were vacant, most were built 90 or more years ago, according to agency data. The VA document did not specify the locations.

While President Donald Trump’s budget blueprint calls for a 6 percent increase in VA funding, Shulkin has made clear the government’s second-largest agency with nearly 370,000 employees will have to operate more efficiently and that budget increases should not be considered a given in future years. 

The department recently announced hiring restrictions on roughly 4,000 positions despite the lifting of the federal hiring freeze and also left open the possibility of “near-term” and “long-term workforce reductions.” Shulkin is also putting together a broader proposal by fall to expand the VA’s Choice program of private-sector care.

BRAC controversial

The Pentagon’s BRAC process often stirred controversy in the past as members of Congress expressed concern about the negative economic impact of shuttering military bases and vigorously opposed closures in their districts.

Rep. Jeff Fortenberry, R-Neb., a vice chair of the appropriations panel, told Shulkin that Congress was looking forward to working with the VA “constructively” on the issue in part by determining how excess VA buildings could be put to good community use, such as for fire-fighting, security or landscape maintenance.

“Don’t ever use the term BRAC because it brings up a lot of bad memories,” Fortenberry cautioned. “You automatically set yourself up for a lot of controversy.”
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African-Americans and Hispanics, the largest racial and ethnic minorities in the United States, made positive strides economically and educationally during the past year but continue to lag behind whites, a civil rights group’s annual study contends.

“The theme of this year’s State of Black America report is ‘protecting our progress,’ ” National Urban League CEO Marc Morial said.

In its study, released Tuesday, the league found the standard of living for African-Americans was 72.3 percent of that of whites, on average. For Hispanics, the equality index was a bit higher, at 78.4 percent. The index measures quality of life for blacks and Hispanics in terms of economics, health, education, social justice and civic engagement.  

Minority employment is at its highest level in almost a decade, but “any progress made towards racial equality is increasingly under threat.” Morial said. More minorities have health care at a time when efforts are underway to roll back expanding coverage, he added.

Improvements in education

The report indicated that African-Americans made gains in education, with a growing percentage of blacks staying in school and obtaining associate degrees.

According to the report, racial disparities plague minorities in terms of social justice equality. As examples, the report noted that more blacks are jailed after being arrested than is the case with whites, and that whites posted a greater decline than blacks in their likelihood of being victims of violent crime.

The study also found a troubling rise in hate crimes committed against members of religious and racial minorities. “A nation of a great mosaic that the United States of America represents cannot tolerate hateful incidents. It is corrosive, it is divisive and it is un-American,” Morial said.

The Trump administration has proposed major budget cuts to government programs that help low-income Americans, who are disproportionately black. The civil rights organization said it would press lawmakers and private groups to invest $4 trillion over the next 10 years in job training, enhanced education programs and infrastructure projects to revitalize minority communities.
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On a trip to India, the president of Portland State University reassured prospective students they’d be safe on his campus. Purdue University sent overseas applicants a note from two mayors touting Indiana’s “friendly smiles” and hospitality. And dozens of other schools produced online videos to welcome foreign students.

As U.S. colleges face new but significant declines in applications from abroad, many are rolling out marketing efforts to combat fears of harassment and concerns that President Donald Trump’s stance on immigration reflects a United States that is becoming less welcoming to foreigners.

“Students are telling us that they don’t feel safe here in the United States. That they’re concerned about discrimination, racism,” said Katharine Johnson Suski, admissions director at Iowa State University. “This year it was a little more important to make sure that they felt comfortable with their decision.”

Drop in overseas students expected

Colleges and universities have received a financial boost in recent years from international students, who are typically charged higher tuition rates than American peers who live in state. Some schools have come to rely on revenue from foreign students, whose enrollment has climbed sharply over much of the past decade, according to federal data.

But there is evidence enrollment figures at some schools could drop next fall. Nearly half the nation’s 25 largest public universities saw undergraduate applications from abroad fall or stagnate since last year, according to data colleges provided to The Associated Press in response to public records requests. Eight schools did not provide data, while six saw gains.

International applications to the University of Arizona are down 24 percent compared with this time last year; California State University, Northridge, is down 26 percent. The University of Houston has seen a 32 percent drop, although it’s still accepting applications and its numbers will likely rise.

The U.S. Department of Education did not immediately comment.

Temple posts a ‘you are welcome here’ video

Philadelphia’s Temple University sparked a chain reaction in November when it posted an online video featuring students and staff members saying “You are welcome here” in multiple languages, set to upbeat piano music. Since then, more than 100 other schools have made similar videos and circulated them abroad. Temple, a private university, also hosted seven overseas receptions for admitted students, more than in the past.

At Iowa State University, officials are ramping up their overseas mailings to sell students on the school’s Midwestern charm. The University of Minnesota is considering a phone campaign. The University of Florida has produced videos featuring “global Gators” and is offering online video chats.

“Given the current climate, it seems like this is something which is even more important,” said Joseph Glover, provost at Florida. “Obviously we are concerned about the situation, like every other public university in the United States.”

Safety concerns are nothing new among international students, but many schools say anxieties have grown since Trump was elected. Some students have said Trump’s “America first” rhetoric and his proposal to ban immigration from six majority-Muslim nations have given them pause. Some application deadlines fell before the election, but even Trump’s campaign rhetoric cast doubts, experts say.

Kansas shooting a common subject

Students in India have been particularly alarmed, especially after a gunman shot two Indian men at a Kansas bar in March, killing one, after allegedly saying “get out of my country.”

Portland State President Wim Wiewel was in India soon after the shooting to meet prospective students, and the discussion quickly turned to safety. Wiewel and his wife reassured families that Portland is friendly to foreign visitors.

“People in America recognize that even though there are a few crazies around, it’s not like it’s open season on Indians or Muslims,” Wiewel said. “Having us talk to them totally took away their fears. But the problem, of course, is we can’t talk to everyone.”

Some government officials are trying to tackle the problem, too. Several of the videos feature cameos from state governors or congressional members. A top official from America’s embassy in India penned a newspaper column last week stressing that “U.S. colleges and universities take pride in providing safe and welcoming environments.”

Along with India, fewer applications have been coming from China and Saudi Arabia, which previously sent large numbers to American colleges. Experts say factors at play include economic turmoil in China and India, but some have blamed the downturn on a “Trump effect.”

University officials offer assurances

Officials at the University of New England say Trump’s election has complicated plans to recruit Moroccan students. At a February open house in Tangier, the election was a frequent concern.

“Several students wearing hijabs wondered whether they would be welcome in the United States, given the election of Donald Trump and the rhetoric they were hearing,” said Anouar Majid, vice president for global affairs at the private school in Portland, Maine. “We assured them that the United States is very welcoming.”

When he applied to the University of New England, 17-year-old Aymane Lamharzi Alaoui was worried about discrimination, he said. Since then, he has spoken with family members in Boston and believes Americans are more welcoming than some of Trump’s comments suggest.

“I know there’s an increase in xenophobia and racism in the past couple of months in the U.S.,” he said in an interview.  “I’m sure there are some places where I wouldn’t be very welcome, especially places in the southern United States, but I think most of the country is very tolerant.”

Loss of overseas students will hurt

For most colleges, it’s too early to know how many overseas students will enroll next fall. But many say any loss could be a blow.

At Iowa State, where applications are down 23 percent, international students bring valued diversity, said Suski, the admissions director. And there is also the revenue they provide.

 

“There will,” Suski said, “be a financial impact on our campus come this fall.”

 
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Royal Caribbean International has announced it will resume weeklong cruises from New Orleans to the Bahamas and Mexico’s Yucatan Peninsula.

News outlets report Royal Caribbean said in a news release Monday that their 2,435-passenger Vision of the Seas cruise ship will relocate in December 2018 to the Port of New Orleans after a three-year hiatus. The company announced the move as part of an overview of its 2018-2019 fleet plans.

After a two-year agreement with the Port of New Orleans ended in 2014, the Miami-based company chose to end sailings from the city. The departure came despite several years of growth for the city as a cruise hub.

The 915-foot ship will sail from Miami to Los Angeles before setting sail for New Orleans.
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Apple Inc. reported a surprise fall in iPhone sales for its second quarter on Tuesday, indicating that customers may have held back purchases in anticipation of the 10th-anniversary edition of the company’s most important product later this year.

Under pressure from shareholders to hand over more of its $250 billion-plus hoard of cash and investments, Apple boosted its capital return program by $50 billion, increased its share repurchase authorization by $35 billion and raised its quarterly dividend by 10.5 percent.

Investors were unmoved, sending shares of the world’s most valuable listed company down 1.9 percent at $144.65 in after-hours trading.

Apple sold 50.76 million iPhones in its fiscal second quarter ended April 1, down from 51.19 million a year earlier.

Analysts on average had estimated iPhone sales of 52.27 million, according to financial data and analytics firm FactSet.

Apple Chief Financial Officer Luca Maestri argued the decline was not as bad as it looked, given the peculiarities of how phone sales are calculated.

The company reports what are called “sell-in” figures for the iPhone, a measure of how many units it sells to retailers, rather than “sell-through” figures, which measure how many phones are actually sold to consumers.

Maestri said the company reduced the volume of inventory going through its retail channel by about 1.2 million units in the quarter, meaning the company sold about 52 million phones to customers on a sell-through basis.

Despite the dip in unit sales, iPhone revenues rose 1.2 percent in the quarter, helped by a higher average selling price.

10th anniversary

Expectations are building ahead of Apple’s 10th-anniversary iPhone range this fall, with investors hoping that the launch would help bolster sales.

Apple typically launches its new iPhones in September.

A big jump in sales usually follows in the holiday quarter, before demand tapers over the next few quarters as customers hold back ahead of the next launch.

Apple’s 10th-anniversary iPhone range might sport features such as wireless charging, 3-D facial recognition and a curved display.

“There is a general softening in phone demand to contend with as well as expectations of a big upgrade, all of which softens the blow of this quarter’s miss,” said James McQuivey, a Forrester Research analyst. “If we see Apple downplaying expectations before the next upgrade cycle, it might mean that the company isn’t confident it will beat those expectations.”

The company forecast total revenue of between $43.5 billion and $45.5 billion for the current quarter, while analysts on average were expecting $45.60 billion, according to Thomson Reuters I/B/E/S.

Analysts on average expect the company to sell 42.31 million iPhones in the current quarter, according to FactSet.

For the second quarter, the company’s net income rose to $11.03 billion, or $2.10 per share, compared with $10.52 billion, or $1.90 per share, a year earlier.

Analysts on average had expected $2.02 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 4.6 percent to $52.90 billion in the quarter, compared with analysts’ average estimate of $53.02 billion.

A 17.5 percent jump in the company’s services business – which includes the App Store, Apple Music, Apple Pay and iCloud — to $7.04 billion, boosted revenue.

“We are particularly encouraged by the fact that service revenue is nowhere near as cyclical as product revenue,” Neil Saunders, Managing Director of GlobalData Retail, wrote in a note to clients.

Apple’s revenue from the Greater China region fell 14.1 percent to $10.73 billion in the quarter, as cheaper rivals in the region chipped away at sales.

Maestri said that sales of Macs and the company’s services were strong in China during the March quarter. “The performance we’re seeing in China should get better going forward this year,” he said.

Apple’s gross margin hit 38.9 percent, slightly ahead of analysts’ average expectation of 38.7 percent, despite higher prices for memory chips. The company said it expects gross margins next quarter between 37.5 percent and 38.5 percent, versus analysts’ expectation of 38.3 percent, according to FactSet.

“NAND and DRAM [memory chips] are under pressure right now in terms of some price pressure. We saw that in the March quarter and expect that to continue into the June quarter, but for all the other commodities, we see prices declining,” Maestri said.

 

 

 

 

 
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U.S. lawmakers have put the nation’s airlines on notice: Improve customer service or we will make you.

The House Transportation and Infrastructure Committee held a hearing for top airline executives to testify, and to determine how Congress might respond after a passenger was violently dragged off an overbooked United Airlines flight.

“Seize this opportunity,” committee Chairman Bill Shuster, a Pennsylvania Republican, told United CEO Oscar Munoz and other airline executives at a hearing. Otherwise, “we’re going to act and you’re not going to like it,” he said, predicting a “one-size-fits-all” solution that may serve some airlines but not all.

Munoz apologized repeatedly for the removal of David Dao, 69, who last month refused to give up his seat to make room for airline employees. The video of airport police dragging Dao from his seat went viral.

“In that moment for our customers and our company we failed, and so as CEO, at the end of the day, that is on me,” Munoz said. “This has to be a turning point.”

Munoz was joined at the hearing by United President Scott Kirby and executives from American Airlines, Southwest Airlines and Alaska Airlines.

American Airlines experienced its own public relations fiasco last month when a passenger video went viral, showing a woman on a plane in tears holding a child in her arms and another at her side after an encounter with a flight attendant over a baby stroller.

United and other airlines have announced policy changes regarding overbooked flights. Airlines have said they routinely overbook flights because a small percentage of passengers do not show up.
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Greece reached a deal with its European lenders Tuesday for more reforms in exchange for a badly needed bailout installment so Athens could avoid possible bankruptcy.

After months of often tough talks, Greek officials agreed to more pension cuts and tax increases.

The European Commission and European Central Bank will bring the deal to their finance ministers at their May 22 meeting.

Greek Prime Minister Alexis Tsipras’ leftist government says it is confident parliament will approve the new round of cuts.

Greece desperately needs about $8 billion to meet a debt payment in July or stare possible bankruptcy in the face.

International Monetary Fund official Poul Thomsen says while the IMF welcomes the deal between Greece and its eurozone lenders, the country needs debt relief and restructuring. Thomsen says the Greek debt of close to 180 percent of its gross domestic product is unsustainable.

The IMF has balked at taking part in the latest Greek bailout unless the debt is renegotiated.

Greece has been relying on international bailouts since 2010, when the outgoing conservative government badly underreported the country’s debt.

The harsh economic reforms, including cuts in social spending and tax hikes, have caused pain and chaos for many Greeks. But the bailouts have helped Greece fend off total collapse.
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President Donald Trump’s nominee to be the U.S. ambassador to China said on Tuesday he would do everything possible to address what he called China’s “unfair and illegal” sales of underpriced steel in the world market.

“I want to do everything I can to make sure that we stop the unfair and illegal activities that we’ve seen from China in the steel industry,” the nominee, Iowa’s Republican Gov. Terry Branstad, said at his U.S. Senate confirmation hearing.
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African military expenditures have finally slowed down after more than a decade of steady increases, according to a new report on global defense spending. The main reason, the report found, is a drop in oil prices.

“The sharp decreases in oil prices has affected quite a number of African countries, namely South Sudan and Angola.  This has kind of driven almost the entire regional trend,” said Nan Tian, a researcher at the Stockholm International Peace Research Institute’s (SIPRI) Arms and Military Expenditure Program, the organization that authored the report.

The SIPRI report found military spending in Africa in 2016 was down by 1.3 percent from the previous year and totaled about $37.9 billion.

Despite the drop, Africa’s military spending remains 48 percent higher than it was a decade ago.  “A few of the top spenders within these regions are generally oil economies, so the low oil prices have meant sharp cutbacks in government financing and that includes military spending,” he said.

Some of Africa’s biggest spenders in recent years have included oil-rich Angola, which has sought to modernize its air force and navy, and Algeria which has tried to preserve its stability amid the collapse of Libya and the rise of extremism in North Africa.  Both of those countries have slowed spending recently, Tian said.

Weighing spending against needs

Tian said that perhaps the most important question to ask, is whether military spending in Africa is at appropriate levels.

Ten African countries have military expenditures greater than 3 percent of their GDP. The highest are the Republic of the Congo where military expenditures totaled 7 percent of GDP in 2016, and Algeria where military spending totaled 6.7 percent of GDP.

Globally, military spending is 2.2 percent of GDP or about $227 per person.

 

“You have the security aspect also in Africa.  We have the opportunity costs,” Tian said.  “It is the poorest continent.  The question is: should this continent be spending?  Are they spending enough or are they spending too much on military based on their current income levels?  Should they rather be prioritizing other aspects of spending maybe health care, maybe education, maybe infrastructure?”

Not all African countries saw a decline in military spending.  According to the report, Botswana’s military spending grew by 40 percent, or about $152 million.  Botswana is regularly noted for having a long record of peace and good governance, and is undergoing a military modernization program.

Nigeria increased its military spending by 1.2 percent to $1.7 billion as it strives to defeat the radical Islamist group Boko Haram.  Similarly, Kenya and Mali increased military spending due to extremist threats in their regions.
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India-based technology company Infosys said Tuesday it will create 10,000 jobs in the United States, growing its American footprint at a time when it has become a political target in the U.S.

Infosys has been a big user of H1-B visas in the U.S., a program under which overseas firms, most often technology companies, move foreign workers to the United States after the overseas businesses declare they cannot find enough qualified U.S. workers. Critics of the visa program say the foreign firms have cost U.S. workers their jobs, however, because the foreign companies usually pay the temporary workers less than they would have had to pay American employees to do the same job.

As part of his “America First” pledge, President Donald Trump recently ordered government agencies to review the visa program. Trump said he wants to bring in the “best and brightest” foreign workers and reform immigration laws as they relate to work and border security. But one suggested reform – that companies paying the highest wages be granted the work visas – would directly affect Infosys.

The U.S. Citizenship and Immigration Services, which manages the visa petitions, says that about 70 percent of the 85,000 H1-B visas issued annually go to Indians, and more than half of them are working for information technology companies like Infosys, which then outsource the workers to American firms.

Infosys has been one of the biggest users of the H1-B visa program, sending more than 15,000 workers to the U.S. in the last two years, although it has trimmed its visa requests for this year. Under the program, foreign-born workers typically can be employed for three years by a sponsor company and apply to stay longer.

Infosys said it would hire the 10,000 U.S. workers over the next two years, opening four technology centers, with the first in the midwestern state of Indiana, where Vice President Mike Pence was governor before Trump tapped him as his running mate in last year’s national political campaign.

Infosys chief executive Vishal Sikka told Reuters, “The reality is, bringing in local talent and mixing that with the best of global talent in the times we are living in and the times we’re entering, is the right thing to do. It is independent of the regulations and the visas.”
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Republicans who eagerly awaited a GOP president so they could take a heavy knife to many of the regulatory requirements for banks, insurers and other financial institutions finally get their chance.

The House Financial Services Committee, led by Texas Rep. Jeb Hensarling, is slated to begin work Tuesday on legislation to largely undo the Dodd-Frank law, which Congress passed and Democratic President Barack Obama signed after the financial meltdown in 2008.

 

The GOP argues that the law hurts the economy by making it harder for consumers to get credit to buy a new house or a car, or for entrepreneurs to start or expand a small business. Hensarling has complained that banks are offering fewer credit cards and free checking accounts, while community banks report that compliance with Dodd-Frank’s regulatory burdens make it harder to provide more mortgages.

 

With Donald Trump in the White House, Republicans are counting on an ally for their effort.

 

Democrats fear that the changes would allow the kind of risky practices that crashed the economy.

 

Sen. Elizabeth Warren, D-Mass., called the bill “a 589-page insult to working families.” She told the committee that banks of all sizes are posting record profits and access to consumer credit and small business lending is at historically high levels.

 

“This bill doesn’t solve a single real problem with the economy or with our financial system, but it does make some big-time lobbyists happy,”  Warren said.

 

Hensarling’s bill would repeal about 40 provisions of Dodd-Frank, targeting the heart of the law’s restrictions on banks by offering a trade-off: Banks could qualify for most of the regulatory relief in the bill so long as they meet a strict basic requirement for building capital to cover unexpected big losses. He says the capital requirements will work as an insurance policy against a financial institution going out of business.

 

Republicans are likely to pass the measure in the House, but face significant obstacles in the Senate where leaders have emphasized their desire to find areas of agreement to enhance economic growth.

 

Hensarling also goes after the consumer protection agency that Congress established after the financial crisis, the Consumer Financial Protection Bureau, reducing its powers and making it easier for the president to remove its director.

 

Hensarling disputed Democratic Rep. Maxine Waters’ assessment that the bill is “dead-on-arrival.”

 

“I do not consider this to be an exercise in futility,” he told reporters. “I think it is important to move this bill forward, and I think at the end of the day, end of the Congress, we will see major portions of the Choice Act enacted into law.”

 

 
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The U.S. Federal Reserve is expected to hold interest rates steady at its meeting this week as it pauses to parse more economic data but may hint it is on track for an increase in June.

The central bank is scheduled to release its policy decision at 2 p.m. EDT (1800 GMT) on Wednesday at the conclusion of its two-day meeting. Fed Chair Janet Yellen is not due to hold a press conference.

Most policymakers have already made plain that in contrast to previous years, the Fed feels more confident in its forecast of two more rate increases this year.

“The bar to disrupting the Fed’s plans is higher now than it was in previous years,” said Michael Gapen, chief economist at Barclays in New York in a note to clients.

The Fed is in its first tightening cycle in more than a decade. A quarter percentage point increase last December was followed two meetings later by another hike in March.

Economists polled by Reuters see little chance of a move at this week’s meeting. Investors next see an interest rate rise in June, according to Fed futures data compiled by the CME Group.

The rate-setting committee also is still waiting to see to what extent Trump administration policies on tax, spending and regulation will be able to get through Congress. A stimulus package could speed up the pace of hikes.

LIKELY TO DOWNPLAY WEAKNESS Since the last meeting economic data has been mixed. The economy grew at a sluggish 0.7 percent annual pace in the first quarter as consumer spending almost stalled.

However, a surge in business investment and the fastest wage growth in a decade suggest activity will regain momentum as the year progresses.

Jobs growth also slowed sharply in March but the unemployment rate dropped to a near 10-year low of 4.5 percent.

Economists have largely attributed the weak first-quarter reading to perennial issues with the calculation of growth during the January-March period and the pullback in hiring in March to weather effects.

“There won’t be a lot of changes to the policy statement,” said Sam Bullard, senior economist at Wells Fargo Securities. “I think they will downplay the soft first-quarter print and focus a little bit more on the labor market.”

The Fed will have two more employment growth reports to hand before its next meeting.

Policymakers are also gearing up to announce sometime this year when and how the Fed will begin shrinking its $4.5 trillion balance sheet, according to minutes from the March meeting.

An announcement this week on a concrete timeline is not expected but there could be tweaks to language in the statement to show the matter is an increasing priority for the Fed.
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Innkeepers, restaurateurs and landscapers around the U.S. say they’re struggling to find seasonal help and turning down business in some cases because the government tightened up on visas for temporary foreign workers.

At issue are H-2B visas, which are issued for seasonal, nonagricultural jobs.

The U.S. caps the number at 66,000 per fiscal year. Some workers return year after year, and Congress has allowed them to do so in the past without being counted toward the limit. No such exception was passed for 2017 after the presidential election.

Cape Cod restaurant owner Mac Hay has organized seasonal businesses to lobby Congress. He says many can’t function full time without these workers.

A government spending bill unveiled Monday would allow for more H-2B visas, but processing them would take weeks.
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Oystermen, pirates and police clashed violently more than a century ago over who could collect the Chesapeake Bay’s tasty and lucrative oysters. As the shellfish makes a comeback, a modern-day oyster war is brewing, this time between wealthy waterfront property owners and working-class fishermen.

Over the past five years, oyster production has doubled on the East Coast, driven by new farming methods, cleaner water and Americans’ growing taste for orders on the half shell. The resurgence has led to unprecedented resistance from coastal Virginians who want to maintain picturesque views from their waterfront homes and has fueled a debate over access to public waterways.

“These people can’t have it all,” said Chris Ludford, an oysterman in Virginia Beach who sells to nearby farm-to-table restaurants.  

 

Ludford said he faces fierce pushback along a Chesapeake Bay tributary from people with “a $2,000 painting in their house of some old bearded oysterman tonging oysters.

 

“But they don’t want to look out their window and see the real thing,” he said.

Views spoiled, privacy lost

 Homeowners say the growing number of oystermen — dressed in waders and often tending cages of shellfish — spoil their views and invade their privacy. Residents also worry about less access to the water and the safety of boaters and swimmers.

 

Low tides often expose oyster cages, usually accompanied by markers or warning signs that protrude from the surface. In some places, cages float.

 

“All of sudden you have people working in your backyard like it was some industrial area,” said John Korte, a retired NASA aerospace engineer in Virginia Beach who’s among residents concerned about oyster farming’s proliferation. “They may be a hundred feet away from someone’s yard.”

 

Ben Stagg, chief engineer at the Virginia Marine Resources Commission, said the state is poised to break its record of leased acreage for oyster growing. But nearly 30 percent of more than 400 new lease applications face opposition, an unprecedented number that’s led to a backlog of leases awaiting approval.

 

 “Occasionally I can resolve those by having the parties get together and adjust the area further offshore,” Stagg said. “But oftentimes, I can’t.”

Oysters make a comeback

There hasn’t been this much interest in oysters in Virginia since the early 1960s. Since then, disease and overfishing took hold and growers started to disappear.

 

Over the last few decades, breeding programs have produced more disease-resistant and faster-growing oysters. The water’s cleaner. American palettes have evolved, increasing demand.  

 

Farming techniques also changed. Traditionally, oysters are grown on the bottom of a calm and salty river or bay, then harvested with tongs or dredges that pull them onto boats.  

 

Now, fishermen are increasingly using cages to grow oysters over a two-to-three year period. The equipment keeps predators away and produces oysters with a more uniform shape and size, which restaurants prefer.

 

 But the cages are often placed in shallower water closer to shore — and people’s homes.  

 

Virginia Beach is perhaps ground zero for today’s oyster war. The state’s largest city sits at the mouth of the Chesapeake Bay. And oysters thrive in the city’s Lynnhaven River, a network of bays and creeks flowing past expensive homes. Lynnhaven oysters are well-known for their salty taste and size.

Solution is not easy to find

A state task force was formed to find compromise. It recommended giving residents more power to block nearby oyster leases. But the idea was rejected by the Virginia Marine Resources Commission, with the majority of commissioners saying state lawmakers should step in.  

 

Proposals in the Statehouse have included raising the cost of an oyster farming lease from $1.50 an acre annually to $5,000. But legislators haven’t found a solution.  

 

Conflicts also have flared up along Maryland’s Patuxent River, the coastal lagoons of Rhode Island and on Martha’s Vineyard in Massachusetts.  

 

In Delaware, a group of people who mostly own vacation homes successfully blocked potential oyster farming along their part of an inland bay.

 

“Oftentimes, affluent and new members of the community have the point of view that they own the water in front of them, which is really not true,” said Bob Rheault, executive director of the East Coast Shellfish Growers Association. “We need to win back our social license to farm.”

 

Rheault said he’s seen these battles “up and down the East Coast” — even before the crop began to double five years ago.

 

 “The industry was there before the waterfront mansions were built,” Rheault added. “But it hasn’t been there for this generation.”

 

Ludford, who also works as a Virginia Beach firefighter, is relatively new to the business. He and other relatives started growing oysters in 2010 after leaving the crab industry.

Is zoning the answer?

On a recent morning, Ludford sorted through cages as he stood in the Lynnhaven River, hundreds of yards from the nearest home.  

 

He dragged cages into view as grass shrimp wriggled on the shells. He and two helpers retrieved more than 500 oysters, which he sold at 75 cents apiece to three restaurants — totaling about $375.

“Really, people haven’t seen an oysterman behind their houses in 50 to 60 years,” Ludford said.

 

Steven Corneliussen, who owns a waterfront home in Poquoson, Virginia, said he’s among a group that successfully protested new leases along his corner of the Chesapeake. He said waterways should be subject to zoning, like land.     

 

“That water out in front of me doesn’t belong to me,” he said. “But it doesn’t belong to them, either.” 
…

With the U.S. economy on solid footing and unemployment at a near-decade low, the Federal Reserve remains in the midst of a campaign to gradually raise interest rates from ultra-lows. But this week, it’s all but sure to take a pause.

The Fed is widely expected to keep its key short-term rate unchanged after having raised it in March for the second time in three months. Most analysts foresee the Fed raising its key rate again at least twice more before year’s end, a testament to the durability of the U.S. economic recovery and a more stable global picture.

 

One reason for the Fed to stand pat this week is that even though the job market has shown steady strength, the economy itself is still growing in fits and starts. On Friday, the government estimated that the economy, as gauged by the gross domestic product, grew at a tepid 0.7 percent annual rate in the January-March quarter. It was the poorest quarterly performance in three years.

 

Though some temporary factors probably held back growth last quarter and may have overstated the weakness, the poor showing underscored that key pockets of the economy — consumer spending and manufacturing, for example — remain sluggish. On Monday, the government said U.S. consumer spending stalled in March for a second straight month. And the Institute for Supply Management reported a drop in factory activity.

 

“Given all the uncertainties they still face and especially with growth coming in so weak, the less the Fed says at this meeting, the better,” said Diane Swonk, chief economist at DS Economics.

 

Most economists have expressed optimism that the economy is strengthening in the current April-June quarter, fueled by job growth, higher consumer confidence and stock-market records. Many think that annualized growth could accelerate to around 3 percent and that the Fed will feel more confident to resume raising rates at its June meeting.

 

“The Fed will probably say in their statement that they expect the economy to rebound in the second quarter,” said Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University.

 

It isn’t just the Fed’s short-term rate — a benchmark for other borrowing costs throughout the economy — that will likely occupy attention at this week’s meeting. Officials will also likely discuss how and when to start paring their extraordinary large $4.5 trillion portfolio of Treasurys and mortgage bonds. The Fed amassed its portfolio — commonly called its balance sheet — in the years after the financial crisis erupted in 2008, when it bought long-term bonds to help keep mortgage and other borrowing rates low and support a frail economy. At the time, the Fed had already cut its short-term rate to a record low.

 

The balance sheet is now about five times its size before the financial crisis hit. The Fed stopped buying new bonds in 2014 but has kept its balance sheet high by reinvesting the proceeds of maturing bonds. The Fed’s thinking has been that reducing the balance sheet could send long-term rates up and work against its goals of fortifying the economy.

 

Now, as the Fed becomes more watchful about inflation pressures, the time is nearing when it will need to shrink its balance sheet, a process that could have the effect of raising some borrowing rates, at least modestly. The Fed jolted investors when it released the minutes of its March meeting, which showed that most officials thought that process “would likely be appropriate later this year.” This was sooner than many investors expected.

 

Could the Fed clarify its timetable for paring its balance sheet in the statement it will issue when its policy meeting ends Wednesday? It may decide against doing so, given that this meeting won’t be accompanied by a news conference with Chair Janet Yellen to explain any shifts in the Fed’s policy or thinking.

 

Mark Zandi, chief economist at Moody’s Analytics, said the more likely signal the Fed could send is to reinforce the markets’ view that it intends to raise its short-term rate again next month.

 

“I expect two more rate hikes — one in June and then one in September,” Zandi said. “Then I expect the Fed to begin allowing its balance sheet to run off.”

 

Some Fed officials have suggested that they would prefer not to be raising the short-term rate at the same time that they are beginning to reduce their balance sheet. Giving investors too much to digest at once risks unsettling financial markets. In 2013, the Fed triggered a brief storm in bond markets when then-Chairman Ben Bernanke raised the possibility that the Fed would start tapering its bond purchases later that year, catching investors by surprise.

 

“They learned their lesson with the taper tantrum of 2013 that they need to give the markets plenty of warning of changes in their bond policies,” Sohn said.

 

Some analysts say they think the Fed will reveal nothing this week about its timetable for reducing its balance sheet, in part because the policy committee has yet to reach a consensus on when or how to do so.

 

“I have a feeling we are going to get much less information than we want,” Swonk said. “The Fed wants to move slowly, but they don’t have a consensus yet on how to proceed.”

 
…

A United Nations economic and social report released Monday warns Asia’s positive economic outlook “faces significant risk” from rising trade protectionism, especially concerns over U.S. trade policy with key partners such as China.

The U.N.’s Economic and Social Commission for Asia and the Pacific (UNESCAP) survey is largely positive for the region, which now accounts for some 30 percent of total global output. If sustained, the survey said this could reach 50 percent by 2050.

For more than 70 years, Asia’s export-led growth has helped lift millions out of poverty with such target markets as the U.S. and Europe.

But in more recent years the economies have come to rely more on domestic demand given the “prolonged weakness in external demand and global trade,” the survey said.

Regional growth is forecast by the U.N. economists at close to 5 percent, with China — a cornerstone of the region’s economies — expanding at 6.5 percent in 2017, and India growing by 7.1 percent.

China’s economic conditions are seen as ‘stable’ with rebalancing, restructuring and deleveraging [debt] leading to “new normal growth trends.” Russia, buoyed by higher oil prices, is also forecast to show positive growth in 2017.

But the general positive outlook is being overshadowed by concerns of trade protectionism impacting employment and economic growth.

“The most significant risk to the broadly positive economic outlook is rising trade protectionism,” the survey said.

It noted recent shifts in U.S. policies concerning trade, currency and immigration along with negotiations over Britain’s exit from the European Union, “have increased global policy uncertainty and could have negative impacts on the region, including for China’s goods exports and India’s services exports.”

US new stance

U.S. President Donald Trump adopted an aggressive stance over China’s trade and currency policies ahead of the U.S. presidential election. But Trump has recently toned down his comments as Washington has looked to Beijing to back measures to curb North Korea’s development of nuclear weapons.

Shamshad Akhtar, UNESCAP executive secretary, said the debate over protectionism and “distrust of globalization” needs to be addressed.

“The region now accounts for nearly one-third of the world output. Yet there is growing distrust of globalization and emerging protectionist tendencies that have created global uncertainty,” she said.

“If not addressed, [it] has implications for growth prospects in [the] Asia and Pacific region that has traditionally been dependent on its exports for jobs and prosperity,” Akhtar said.

The UNESCAP said growing global trade has led to wide-ranging regional economic benefits over decades. But the debate is being challenged by opposition to globalization, especially in the U.S. and Europe.

But Akhtar said it was difficult to “arrest globalization because of labor mobility, capital mobility and so on, [that] have been instituted now for years”.

“So I want to be rightly understood that distrust [of globalization] is really [a] public and politicians’ gimmick more than anything else — but of course we have to take appropriate policies,” she said.

The U.N. survey said projections show if trade protectionism and global uncertainty increase, growth for major developing countries could be lower by up to 1.2 percentage points.

The survey noted while the Asia Pacific region remains “the engine of global growth,” expansion was insufficient in the face of several challenges.

The commission pointed to rising income inequalities, with the expansion of decent employment also a challenge.

The region was also “falling behind the rest of the world in terms of social protection, financing and coverage” in contrast to levels of spending in developed economies.

Environment

Environmental damage was a key concern in the face of rapid economic expansion over several decades, with growth coming at a steep environmental cost.

“On average developing Asia–Pacific economies use twice as many resources per dollar of GDP as the rest of the world. Environmental degradation and carbon emissions not captured in GDP [growth data] undermine the sustainability of economies,” the survey said.

The survey called for improved governance and accountability, seen as a measure for improved economic outcomes.

Countries, it said, that perform better on governance measures, focusing on the rule of law, regulations and control corruption and government effectiveness also “tend to mobilize and spend their fiscal resources efficiently and effectively.”
…

A mysterious decline in two of the most popular fishing worms is depriving fishermen of their favorite bait and threatening the livelihood of Maine’s so-called “wormers.” VOA’s Faith Lapidus reports.
…

Protesters in the United States and around the world have marked International Workers Day, May Day, with rallies and demonstrations that turned violent in displays of anger against authoritarianism and right-wing politics from France to Turkey.

WATCH: Luis Ramirez video report on protests

 

May Day is traditionally a day of protest, and this one was no exception. Police fired tear gas on demonstrators rallying in Istanbul’s Taksim Square, the scene of past bloody May Day crackdowns.  

 

Tensions in Turkey have been high after President Recep Tayyip Erdogan narrowly won a referendum last month giving him sweeping new powers.

 

Police arrested more than 200 people Monday.

Moscow parade

Things were more jovial in Russia, on what turned out to be beautiful spring day with more than 100,000 marching in Moscow.

 “This shows people’s unity when so many people gather. This is the day of labor, peace and the weather is so beautiful. And we can see the people’s feelings by the smiles on their faces,” said Yuri, a march participant in Moscow.

The spirit was in sharp contrast to Saturday, when thousands of Russians lined up to present their grievances in letters at government offices. Organizers of the mass protest said police arrested demonstrators in cities across Russia, including 120 people in St. Petersburg.  

 

French election campaigning

France, which is still under a state of emergency and with elections less than a week away, was on high alert. The government deployed 9,000 police in various parts of the country to keep supporters of the two main candidates, centrist Emmanuel Macron and nationalist Marine Le Pen, apart.

 Le Pen, who wants to curb immigration by Muslims, get France out of the EU, and bring back jobs for French factory workers, led a rally outside Paris, where she called Macron “the candidate of the caviar Left.”  

 

Macron also campaigned Monday, but his supporters were generally not visible among the May Day demonstrators.   

 

Thousands, including labor union activists, marched in central Paris, many of them protesting Le Pen.

“We have to block Marine Le Pen, we all agree about that, and we have to do it while stopping further increases in the vote and percentage of Marine Le Pen which would cost us in the future,” said Jean-Claude Mailly, leader of Force Ouvrière, one of France’s main labor union conglomerations.

Demonstrators in Paris threw firebombs and clashed with police.

 

With elections so near and the issues so divisive, the battle lines could not be clearer on this day of protest.

In the U.S., May Day’s rallying point has shifted from workers to immigrants.  Tens of thousands of people are expected to mark the day from New York to Los Angeles to protest against President Donald Trump’s focus on boosting deportations.  Organizations have called for immigrant strikes in some cities to show Americans what a day without immigrants would look like.  

 
…

Once they acclimate to their new environment, overcoming language, social and cultural barriers, refugees in the U.S. often thrive. Some translate their experiences into assets that are valuable to their new community, as did Parvin and Yadollah Jamalreza. VOA’s June Soh visited their popular tailoring shop in Charlottesville, Virginia.
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Growth in China’s manufacturing sector slowed in April, official data showed Sunday, pointing to an unsteady recovery in the world’s second-largest economy. 

 

The monthly purchasing managers’ index by the Chinese Federation of Logistics and Purchasing fell to 51.2 in April, lower than the 51.8 recorded in March. 

 

The index is based on a 100-point scale on which numbers above 50 indicate expansion.

 

National Bureau of Statistics statistician Zhao Qinghe said in the release that April’s figure was affected by sluggish growth in market demand and supply, and slower expansion in imports and exports.

 

April’s index still represented a ninth consecutive month of expansion. 

 

China saw its slowest growth in nearly three decades in 2016. China’s huge manufacturing sector is seen as an important indicator for the wider Chinese economy. It has cooled gradually over the past six years as Beijing tries to pivot it away from heavy reliance on export-based manufacturing and investment toward consumer spending.

 

The official full-year economic growth target for 2017 is 6.5 percent. 
…

His birthplace in a small village outside Mumbai, India, in a home with no running water or electricity, is a far cry from the technology-filled cubicles Pete Tapaskar has come to know well as an information technology (IT) worker.

Tapaskar’s journey from India to the United States through Canada came courtesy of an H1B immigrant visa.

“H1B has been a great contributor for the innovation of America,” Tapaskar told VOA.

Now an American citizen who lives in suburban Chicago, Tapaskar has spent the past 15 years working for the IT company ProSoft as a manager in their immigration program.

Lengthy process

Most of the people Tapaskar has hired have come from India, but he said hiring those workers has not always been ideal.

“It would be cheaper for us to hire Americans where they are available,” he said, “because bringing them from outside, we have to go through the lengthy H1B process and then wait for (a) longer time, and by that time, demand would have changed.”

But Tapaskar says there aren’t enough Americans with experience to fill the jobs.

“We are not able to employ Americans fast enough into the job market to meet the challenges,” he said.

1.4 million jobs unfilled

Richard Burke is CEO of Chicago-based Envoy Global, which sells services to U.S. companies looking to hire foreign workers.

“The U.S. Department of Labor has said 1.4 million unfilled software development — software development alone — 1.4 million unfilled jobs by 2020. So the skills gap is real,” Burke said.

“Envoy helps companies with their visa and immigration needs,” he told VOA from his desk situated in the same workspace as many of his employees. “What we do is help companies bring talented foreign nationals into the country, we help companies deploy their own employees overseas to pursue opportunity, and we provide software that makes reporting and compliance much easier.”

Burke said the skills gap that drives the demand for foreign workers exists because not enough Americans are receiving education or training in high demand jobs in science, technology, engineering and mathematics, also called STEM fields, and many foreign students educated in the U.S. aren’t staying to work.

“Every year American universities graduate over 300,000 foreign nationals with STEM degrees. We don’t give them any opportunities to stay,” he said. “So what is the wisdom of a policy when we know we have a skills gap, when we know we are graduating the best and brightest — 300,000 — and sending them home to compete with us.”

Review process

During a recent visit to Wisconsin, President Donald Trump announced he was signing an Executive Order reviewing the H1B visa process. About 85,000 workers come to the United States annually through the program, far fewer than the number of jobs U.S.-based companies say they need experienced technology workers to fill.

Burke hopes the review will lead to an increase in the number of visas issued, to fill the skills gap before the jobs flee the U.S.

“Work is mobile,” Burke said. “Companies are telling us and they are saying to one another, ‘If I can’t get the work done here, I’ll just move it overseas.’”

Which is what happened to Tapaskar, the IT worker.

His employer, ProSoft, was sold to another company, which outsourced his specific job to India, Tapaskar said.

After 15 years, he’s starting over with a new company and works to help other IT workers as the president of the American Small and Medium IT Employers Association (ASMITEA).

Hope for review

Tapaskar said he supports Trump’s Executive Order, hoping it helps curb any misuse of the program. But he doesn’t want to see those visas only going to companies offering the highest salaries.

“It should be made available for all the sectors,” he told VOA. “(It) should be linked with training programs. America really lacks the training infrastructure at the moment.”

This year, U.S. Immigration officials report almost 200,000 petitions were filed for the 85,000 available H1B visas during the lottery period that ended in April.
…

President Donald Trump will spend his 100th day in office talking tough on trade in one of the states that delivered his unlikely win.

 

The president is expected to sign an executive order Saturday that will direct his Commerce Department and the U.S. Trade Representative to perform a comprehensive study of the nation’s trade agreements to determine whether America is being treated fairly by its trading partners and the 164-nation World Trade Organization.

It’s one of two executive orders the president will sign at a shovel factory in Pennsylvania’s Cumberland County, the kind of place that propelled his surprise victory.

Rally in Pennsylvania 

The last week has been a frenzy of activity at the White House as Trump and his team have tried to rack up accomplishments and make good on campaign promises before reaching the symbolic 100-day mark. In addition to the visit to the Ames tool factory, which has been manufacturing shovels since 1774, the president will hold one of his signature campaign rallies in Harrisburg to cap the occasion.

 

It’s a return to fundamentals for a president who has, in recent days, sounded wistful reflecting on his term so far.

 

Earlier this week, Trump announced his intention to work to renegotiate the North American Free Trade Agreement. He also said he would begin renegotiating a free trade deal with South Korea, with which the U.S. has a significant trade deficit.

Trade discussed every day

 

“There isn’t a day that goes by that the president doesn’t discuss some aspect of trade,” Commerce Secretary Wilbur Ross said at the White House Friday.

 

The executive orders signed Saturday will mark Trump’s 31st and 32nd since taking office, the most of any president in his first 100 days since World War II. It’s a jarring disconnect from Trump’s rhetoric during the campaign, when he railed against his predecessor’s use of the tool, which has the benefit of not needing congressional sign-off.

The more significant of the two orders will give the Commerce Department and the U.S. Trade Representative 180 days to identify violations and abuses under the country’s trade agreements and recommend solutions.

World Trade Organization outdated 

Ross said the WTO, the Geneva-based arbiter of world trade rules, is bureaucratic and outdated and needs an overhaul. Ross downplayed the possibility that the United States would consider leaving the organization but didn’t rule it out. 

“As any multilateral organization, there’s always the potential for modifying the rules,” he said.

 

The administration argues that unfair competition with China and other trade partners has wiped out millions of U.S. factory jobs. Ross said dissatisfaction with trade policy is one reason voters turned to Trump.

 

“They’re fed up with having their jobs go offshore. They’re fed up with some of the destructive practices,” he said. “So in effect, the country said in this last election: It’s about time to fix these things. And the president heard that message.”

 

Trump, who campaigned on a vow to crack down on China and other trading partners, has announced several other moves on trade in recent weeks. He ordered the Commerce Department to study the causes of the United States’ massive trade deficit in goods, $734 billion last year, $347 billion with China alone. The administration is also imposing duties on Canadian softwood timber and is investigating whether steel and aluminum imports pose a threat to national security.

 

Ross said Friday that the WTO is too narrowly focused on limiting traditional tariffs — taxes on imports — and does little to counter less conventional barriers to trade or to police violations of intellectual property rights.

 

Trump has pushed a model of “reciprocal trade” agreements in which the U.S. would raise or lower tariffs on a country’s imports depending on how that country treats the U.S.
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