Even though gasoline-powered SUVs are what people are buying now, General Motors is betting that electric vehicles will be all the rage in the not-to-distant future.

The Detroit automaker is promising two new EVs on Chevrolet Bolt underpinnings in the next 1 ½ years and more than 20 electric or hydrogen fuel cell vehicles by 2023. The company sees its entire model lineup running on electricity in the future, whether the source is a big battery or a tank full of hydrogen.

“We are far along in our plan to lead the way into that future world,” product development chief Mark Reuss said Monday at a news conference at the GM technical center north of Detroit.

The event was billed as a “sneak peak” into GM’s electric future. The company also pledged to start producing hydrogen fuel cell vehicles for commercial or military use in 2020. And it promised an increase in the number of electric fast-charging stations in the U.S., which now total 1,100 from companies and governments, taking a shot at electric competitor Tesla Inc. by saying the system would not be “walled off” from electric vehicles made by other manufacturers.

Tesla has 951 fast-charging stations globally that can only be used by Tesla owners.

The hastily called event was short on specifics, and it came just a day before the CEO of Ford Motor Co., GM’s prime competitor, was to announce its business plan that likely will include electric and autonomous vehicles as priorities.

The two new GM electrics in the immediate future likely will be SUVs or a sportier car designed to compete with Tesla’s upcoming Model 3 sedan, Reuss said. The Model 3, which is now in the early stages of production, will go hood-to-hood with the Bolt, starting around $35,000 (excluding a $7,500 federal tax credit) with a range of over 200 miles. The Bolt starts at $37,495 excluding the credit.

Behind Reuss and other executives were nine vehicles covered with tarps that the company said were among the 20 to be unveiled by 2023. GM pulled away the tarps on three of them, clay models of low-slung Buick and Cadillac SUVs and a futuristic version of the Bolt that looked like half of an airport control tower glued to the top of a car body. The rest remained covered.

The company wouldn’t allow photographs of the vehicles, and it wouldn’t say if any of the vehicles it showed were the ones coming in the next 18 months.

Reuss said the new vehicles that aren’t built on the Bolt platform will have GM’s next-generation electric architecture, which he said will be more efficient with longer range than the Bolt’s 238 miles. Through August, GM has sold 11,670 Bolts, which is less than 1 percent of GM’s total U.S. sales so far this year.

Reuss promised that the new vehicles will be profitable as people become more accustomed to the advancing technology. “We can’t just flip a switch and make the world go all-electric,” he said.
…

U.S. factory activity surged to a more than 13-year high in September amid strong gains in new orders and raw material prices, pointing to underlying strength in the economy even as Hurricanes Harvey and Irma are expected to dent growth in the third quarter.

The economic outlook was also bolstered by other data on Monday showing a rebound in construction spending in August. The acceleration in manufacturing activity and the accompanying increase in prices could harden expectations that the Federal Reserve will raise interest rates in December.

The Institute for Supply Management (ISM) said its index of national factory activity surged to a reading of 60.8 last month, the highest reading since May 2004, from 58.8 in August.

A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for about 12 percent of the U.S. economy. The ISM said Harvey and Irma had caused supply chain and pricing issues in the chemical products sector. There were also concerns about the disruptive impact of the storms in the food, beverage and tobacco products industries.

The hurricanes are expected to chop off as much as six-tenths of a percentage point from gross domestic product growth in the third quarter. Harvey, which pummeled Texas at the end of August, has undercut consumer spending and weighed on industrial production, homebuilding and home sales.

Further weakness is likely after Irma struck Florida in early September, causing widespread power cuts. Manufacturing outside the areas affected by the hurricanes remained strong in September. The ISM survey’s production sub-index rose 1.2 points to a reading of 62.2 in September.

A gauge of new orders jumped to 64.6 in September from 60.3 in August. Factories reported paying more for raw materials, with the survey’s prices paid index surging 9.5 point to 71.5, the highest reading since May 2011.

The dollar rose against the euro after the data. Prices for U.S. Treasuries were trading higher as were stocks on Wall Street.

Construction spending rises

In separate report Monday, the Commerce Department said construction spending rose 0.5 percent to $1.21 trillion. July’s construction outlays were revised sharply down to show a 1.2 percent plunge instead of the previously reported 0.6 percent drop. Construction spending increased 2.5 percent on a year-on-year basis.

The government said Harvey and Irma did not appear to have impacted the construction spending data as the responses from the Texas and Florida areas affected by the storms were “not significantly lower than normal.”

In August, spending on private residential projects increased 0.4 percent, rising for a fourth straight month.

Spending on nonresidential structures increased 0.5 percent, snapping two straight monthly declines.

In the wake of Harvey and Irma, nonresidential construction spending could fall in September. According to the Commerce Department, Texas and Florida accounted for 22 percent of U.S. private nonresidential construction spending in 2016.

Investment in nonresidential structures such as oil and gas wells has been slowing as the boost from recovering oil prices fizzles. Private construction projects spending increased 0.4 percent in August.

Outlays on public construction projects rebounded 0.7 percent in August after slumping 3.3 percent in July. Spending on state and local government construction projects increased 1.1 percent in August. Gains in September are likely to be curbed by the hurricanes.

Texas and Florida accounted for 15 percent of U.S. state-and-locally owned construction spending in 2016, according to the Commerce Department.

Federal government construction spending tumbled 4.7 percent to its lowest level since April 2007.
…

The U.S. Supreme Court on Monday refused to consider a bid by Samsung Electronics Co Ltd. to force customers who have filed proposed class-action lawsuits against the company to arbitrate their claims instead of bringing them to court.

The justices left intact a lower court’s ruling that purchasers of certain Galaxy smartphones made by the South Korean electronics company were not bound by a warranty provision that compelled arbitration of customer complaints.

Warranties with arbitration clauses have become common in consumer electronics and other industries. Courts and regulatory agencies increasingly are scrutinizing arbitration agreements that seek to limit options for resolution of future disputes.

The Samsung case involves two smartphone buyers from California who separately filed proposed class-action lawsuits in 2014 over concerns about the products’ performance and resale value.

Neither Daniel Norcia, who owned an Galaxy S4 device, nor Hoai Dang, who owned an SIII, saw the arbitration provisions when they bought the phone because the language was placed deep inside the warranty booklet and not mentioned on the box, according to their legal papers.

The agreement states that all disputes must be resolved through arbitration, and specifically rules out class actions.

Samsung tried to force the customers to arbitrate their claims, but a unanimous three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco denied the request in January. The court said Samsung did not provide proper notice of the arbitration provision and neither customer had expressly consented to be bound by it.

Appealing to the Supreme Court, Samsung noted that the 9th Circuit decided that the warranty was valid except for the arbitration provision. Samsung argued that the 9th Circuit ruling violated a U.S. law called the Federal Arbitration Act that requires arbitration agreements to be treated equally with other contracts.
…

Casinos in the world’s biggest casino hub of Macau extended a 14-month winning streak in September with revenue up 16.1 percent, priming for a bumper national holiday week, which is expected to see strong visitor traffic in the southern Chinese territory.

Macau, a former Portuguese colony and now special administrative region, is the only place in the country where casino gambling is legal.

Government data Sunday showed monthly gambling revenue was 21.4 billion patacas ($2.66 billion) in September, within analyst expectations of growth between 11-17 percent.

Two typhoons

September saw the tail end impact from two typhoons in August, which caused massive destruction and unprecedented flooding.

Many casinos shut down for several days and had problems accessing fresh water and power, but big resorts on Macau’s Las Vegas style Cotai strip were left relatively unscathed.

Macau’s government this week will release a 15-year plan to boost tourism with key objectives including rebranding Macau into a multiday destination and managing local tourism capacity.

Typically during national holidays, Macau’s tiny peninsula and adjoining islands are inundated with swarms of visitors putting pressure on creaking infrastructure and transport. 

Casino executives have said that hotels are fully booked for the official holiday period, Oct. 1-8.
…

An official survey released Saturday said that China’s factory activity expanded in September at the fastest pace in five years, as the country’s vital manufacturing sector stepped up production to meet strong demand.

The official manufacturing purchasing managers’ index rose to 52.4 in September, up from 51.7 in the previous month and the highest level since April 2012.

The report by the Federation of Logistics & Purchasing said production, new export orders and overall new orders grew at a faster pace for the month.

“The manufacturing sector continues to maintain a steady development trend and the pace is accelerating,” said Zhao Qinghe, senior statistician at the National Bureau of Statistics, which released the data. Zhao noted that the report found both domestic and global demand have improved.

However, in a separate report, the private Caixin/Markit manufacturing PMI slipped to 51.0 from 51.6, as factories reported that production and new orders expanded at slower rates last month.

Both indexes are based on a 100-point scale with 50 dividing expansion from contraction. But the federation’s report is focused more on large, state-owned enterprises while the Caixin survey is weighted to smaller, private companies.

Another official index covering non-manufacturing activity rebounded after two months of contraction, rising to 55.4 last month from 53.4 in August. That indicates momentum is picking up again in China’s service sector.

The reports come ahead of the ruling Communist Party’s twice-a-decade congress set for next month, where top leaders will be reshuffled and authorities will outline economic policies.

Earlier this month, rating agency Standard & Poor’s downgraded China’s credit rating on government borrowing, citing rising debt levels that raise financial risks and could drag on economic growth.
…

Nearly all U.S. taxpayers say American tax law, which runs tens of thousands of pages, is an incredibly complicated, annoying mess. And there is no agreement on how to fix the problem. Republicans recently outlined a new effort they say will be clearer, fairer and helpful to the economy. Critics say the Republican plan would cut taxes for the rich and increase the U.S. debt. VOA’s Jim Randle looks at how the system is supposed to work, and what critics say is wrong.
…

Christine Lagarde, the head of the International Monetary Fund, has a message for the world’s central bankers: Don’t be Luddites.

Addressing a conference in London on Friday, Lagarde said virtual currencies, which are created and exchanged without the involvement of banks or government, could in time be embraced by countries with unstable currencies or weak domestic institutions.

“In many ways, virtual currencies might just give existing currencies and monetary policy a run for their money,” she said. “The best response by central bankers is to continue running effective monetary policy, while being open to fresh ideas and new demands, as economies evolve.”

The most high-profile of these digital currencies is bitcoin, which like others can be converted to cash when deposited into accounts at prices set in online trading. Its price has been volatile, soaring over recent years but falling sharply earlier this month on reports that China will order all bitcoin exchanges to close and one of the world’s most high-profile investment bankers said bitcoin was a fraud.

For now, Lagarde said, digital currencies are unlikely to replace traditional ones, as they are “too volatile, too risky, too energy intensive and because the underlying technologies are not yet scalable.”

High-profile hacks have also not helped, she noted. One notable failure was that of the Mt. Gox exchange in Japan in February 2014, in which about 850,000 bitcoins were lost, possibly to hackers. Following that, Japan enacted new laws to regulate bitcoins and other cryptocurrencies.

But in time, she argued, technological innovations could address some of the issues that have kept a lid on the appeal of digital currencies.

“Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays, so I think it may not be wise to dismiss virtual currencies,” Lagarde said.

Lagarde’s comments appear at odds with the views of JPMorgan Chase CEO Jamie Dimon, who this month described bitcoin as a fraud and said he’d fire any of his traders if they caught dealing in the digital currency.

In a speech laying out the potential changes wrought by financial innovations, Lagarde also said that over the next generation, “machines will almost certainly play a larger role” in helping policymakers, offering real-time forecasts, spotting bubbles, and uncovering complex financial linkages.

“As one of your fellow Londoners – Mary Poppins – might have said: bring along a pinch of imagination!”
…

The government has fined U.S. tree-trimming company a record $95 million for knowingly hiring undocumented immigrants.

U.S. prosecutors said the fine against Philadelphia-based Asplundh Tree Expert Co. was the largest criminal penalty ever imposed in an immigration case.

Prosecutors said company managers deliberately looked the other way while supervisors knowingly hired thousands of undocumented workers between 2010 and 2014.

The prosecutors said this gave Asplundh a large workforce ready to take on emergency weather-related jobs across the country, putting its competitors at an unfair disadvantage.

A federal investigation into Asplundh was opened in 2015 and the company said it had since taken a number of steps to end “the practices of the past.”

“We accept responsibility for the charges as outlined, and we apologize to our customers, associates and all other stakeholders,” company Chairman Scott Asplundh said.
…

Senegalese start-ups are testing a fledgling market for online music platforms in French-speaking West Africa, where interest in digital entertainment is growing but a lack of credit cards has prevented big players from making inroads.

Long celebrated in Europe for their contribution to “world” music – with Mali’s Salif Keita, Senegal’s Youssou N’Dour and Benin’s Angelique Kidjo household names in trendy bars – West African musicians have struggled to make money back home, where poverty is widespread and music piracy rampant.

Online music providers such as Apple’s download store iTunes and streaming service Spotify are either unavailable – no one can sign up for Spotify in Africa yet – or require a credit card or bank account, which most West Africans lack.

But smartphone use is surging and entrepreneurs say there is latent demand for platforms tailored to Francophone West Africa, whose Malian “desert blues,” Ivorian “zouglou” and Senegalese “mbalax” cross African borders but are only profitable in Europe, via download and streaming services.

“We started by saying, look, there is a void. Because digital distribution products are made in Europe or the U.S., for Europeans and Americans.” said Moustapha Diop, the founder and CEO of MusikBi, “The Music” in the local Wolof language, a download store launched in 2016.

MusikBi, like its rivals, is small and cash strapped, but with more than 10,000 users, Diop sees potential.

The company received a boost in May when Senegalese-American singer Akon bought 50 percent of it, which Diop says will allow the company to start a new marketing campaign.

MusikBi and rival JokkoText allow users to purchase songs by text message and pay with phone credit, mobile money or cash transfers. Both want to expand throughout West Africa.

Many of the new industry entrants like MusikBi and JokkoText are based in Dakar, which is an emerging tech start-up hub for Francophone West Africa, partly thanks to the fact it has enjoyed relative political and economic stability compared with most of its neighbors.

On the streaming front, Deedo, created by a Senegalese national in France and backed by French bank BPI, will launch in Senegal, Mali, Ivory Coast and France next month, and will offer similar payment options. Senegalese hip-hop group Daara J plans o start a streaming platform next year.

There is scant industry presence elsewhere in the region except in Anglophone Nigeria, Africa’s most populous nation.

Pirates to Payers

Every evening young people jog down Dakar’s streets with headphones in their ears. Most download music illegally online or buy pirated CDs and USB memory sticks in street markets.

Convincing them to pay for content is a challenge, but not an insurmountable one, analysts say.

“Experience shows that people are willing to pay for convenience,” said David Price, director of insight and analysis at London-based industry federation IFPI.

“If you give them something attractive and affordable, they stop pirating,” he said, adding that local platforms have gained followings in Latin America and India.

France’s Deezer has also targeted the region in partnership with mobile operator Tigo, but has not gained a large following. Deedo meanwhile plans to launch a version of its site in Pulaar, one of West Africa’s most widely spoken a languages, founder Awa Girard told Reuters.

Senegalese singer Sahad Sarr told Reuters he had sold some songs on MusikBi and was excited about Deedo, but added: “The culture here is not to buy music online. Change will be slow.”

Most of his listeners on Spotify and other platforms are Senegalese people living in Europe or North America, he said.

At Dakar’s main university, students showed Reuters the many websites they use to download music illegally.

Some said they would pay for a good service, but others were less convinced, like 22-year-old Macodou Loum. “Between two choices, free and not free, we will choose the free one,” he said.
…

What’s your dream car to drive? Saudi women are asking that question after the kingdom announced that females would be granted licenses and be allowed to drive for the first time.

An Arabic Twitter hashtag asking women what car they want to drive already had more than 22,000 responses on Thursday. Some users shared images of black matte luxury SUVs. Others teased with images of metallic candy pink-colored cars. A few shared images of cars encrusted with sparkly crystals.

Car makers see an opportunity to rev up sales in Saudi Arabia when the royal decree comes into effect next June. But any gains are likely to be gradual due to a mix of societal and economic factors. Women who need to get around already have cars driven by chauffeurs. And many women haven’t driven in years, meaning the next wave of buyers could be the young.

That didn’t keep Ford and Volkswagen from trying to make the most of the moment. They quickly released ads on Twitter congratulating Saudi women on the right to drive. Saudi Arabia had been the only country in the world to still bar women from getting behind the wheel.

American automaker Ford’s ad showed only the eyes of a woman in a rearview mirror with the words: “Welcome to the driver’s seat .” German automaker Volkwagen’s ad showed two hands on a steering wheel with intricate henna designs on the fingers with the words: “My turn.”

Checking that optimism will be the reality that many women will continue to need the approval of a man to buy a car or take on new responsibilities.

“The family has always operated on the basis of dependency so that’s a big core restructuring of the family unit,” said Madeha Aljroush, who took part in Saudi Arabia’s first campaign to push for the right to drive. In that 1990 protest, 47 women were arrested. They faced stigmatization, lost their jobs and were barred from traveling abroad for a year.

“I had no idea it was going to take like 27 years, but anyway, we need to celebrate,” Aljroush said.

That won’t entail buying a new car, though. She hasn’t driven in nearly 30 years, she says, and her two daughters still need to learn how to operate a vehicle.

Allowing women the right to drive is seen as a major milestone for women’s rights in Saudi Arabia, but also for the Saudi economy. The kingdom’s young and powerful crown prince is behind a wide-reaching plan to transform the country and wean it off its reliance on government spending from oil exports.

Allowing women to drive helps to ensure stronger female participation in the workforce and boosts household incomes. It can also save women the money they now spend on drivers and transportation.

The Saudi government says there are 1.37 million drivers in the country, with the majority from South Asian countries working as drivers for Saudi women. The drivers earn an average monthly salary of around $400, but the costs of having a driver are much higher. Families must also pay for their entry permits, residence permits, accommodation, flight tickets and recruitment.

Rebecca Lindland, an analyst for Cox Automotive in the U.S. who has studied the Saudi Arabian market, said families with the means likely already have enough vehicles because women are already being transported in them, with male drivers. Those women could simply start driving the vehicles they already own.

There are also many Saudi families who do not have the money to buy new cars.

“The idea that 15 million women are going to go out and buy a car is not realistic,” Lindland said. “We may not have incremental sales because those that are already with more freedoms already probably have access to a car.”

The industry consulting firm LMC Automotive sees only a small boost in sales next year due to the royal decree, coinciding with a small recovery in sales from a slump.

The Saudi market peaked at 685,000 new vehicles sold in 2015, falling to under 600,000 in 2016, and is forecast to finish this year at 530,000. LMC had predicted a modest recovery next year based on an improved economy and sees a little added boost from women drivers.

Although Saudi Arabia has a reputation for liking luxury goods, mainstream brands dominate the car market with a 93 percent share of sales, according to LMC. Hyundai was the top passenger car brand with a 28.6 percent share of the market, followed closely by Toyota at 28.4 percent and Kia at 8.3 percent, the company said.

There are also societal factors to consider. Even if the law allows women to drive, many will still need their fathers or husbands to buy a car.

A male guardianship system in Saudi Arabia gives men final say over women’s lives, from their ability to travel abroad to marriage. Women often are asked to have the written permission of man to rent an apartment, buy a car or open a bank account.

“If you don’t have credit, if you don’t have money, your male guardian will be the one to decide whether you buy a car or not,” Lindland said.

While car sales might rise in the long-term, ride hailing apps like Uber and local rival Careem could see revenues decline. Female passengers make up the majority of the country’s ride-hailing customers.

To celebrate Tuesday’s decree, several Saudi women posted images on social media deleting their ride sharing apps.

The two companies, however, have seen strong investments from Saudi Arabia. Last year, the Saudi government’s sovereign wealth fund invested $3.5 billion in Uber. This year, an investment firm chaired by billionaire Saudi Prince Alwaleed bin Talal invested $62 million in Dubai-based Careem.

Aljroush says the right to drive will not immediately change women’s lives, but it will change family dynamics at home and will change the economy.

“Men used to leave work to pick up the kids. The whole country was paralyzed,” she said. “It’s a restructuring of how we think, how we operate, how we move.”
…

A Supreme Court with a reconstituted conservative majority is taking on a new case with the potential to financially cripple Democratic-leaning labor unions that represent government workers. The justices deadlocked 4-4 in a similar case last year.

 

The high court agreed Thursday to again consider a free-speech challenge from workers who object to paying money to unions they don’t support.

 

The court could decide to overturn a 40-year-old Supreme Court ruling that allows public sector unions to collect fees from non-members to cover the costs of negotiating contracts for all employees.

 

The latest appeal is from a state employee in Illinois. It was filed at the Supreme Court just two months after Justice Neil Gorsuch filled the high court seat that had been vacant since Justice Antonin Scalia’s death.

 

The stakes are high. Union membership in the U.S. declined to just 10.7 percent of the workforce last year, and the ranks of private-sector unions have been especially hard hit.

 

About half of all union members now work for federal, state and local governments, and many are in states like Illinois, New York, and California that are largely Democratic and seen as friendly toward unions.

 

The Illinois case involves Mark Janus, a state employee who says Illinois law violates his free speech rights by requiring him to pay fees subsidizing a union he doesn’t support, the American Federation of State, County and Municipal Employees. About half the states have similar laws covering so-called “fair share” fees that cover bargaining costs for non-members.

 

Janus is seeking to overturn a 1977 Supreme Court case, Abood v. Detroit Board of Education, that said public workers who refuse to join a union can still be required to pay for bargaining costs, as long as the fees don’t go toward political purposes. The arrangement was supposed to prevent non-members from “free riding,” since the union has a legal duty to represent all workers.

 

A federal appeals court in Chicago rejected Janus’ claim in March. Gorsuch was confirmed in April and the appeal was filed in June.

 

The justices will hear argument in the winter.
…

Equifax Inc promised to make it easier for consumers to control access to their credit records in the wake of the company’s massive breach after the top U.S. consumer financial watchdog called on the industry to introduce such a system.

Equifax’s interim chief executive officer, Paulino do Rego Barros Jr., vowed to introduce a free service by Jan. 31 that will let consumers control access to their own credit records.

Barros, who was named interim CEO on Tuesday as Richard Smith stepped down from the post amid mounting criticism over the handling of the cyber attack, also apologized for providing inadequate support to consumers seeking information after the breach was disclosed on Sept. 7. He promised to add call-center representatives and bolster a breach-response website.

“I have heard the frustration and fear. I know we have to do a better job of helping you,” Barros said in a statement published in The Wall Street Journal.

Equifax announced the free credit freeze service after the Consumer Financial Protection Bureau’s (CFPB) director, Richard Cordray, told CNBC earlier in the day that the agency would beef up oversight of Equifax and its rivals.

“The old days of just doing what they want and being subject to lawsuits now and then are over,” Cordray said.

He also called for implementing a scheme of preventive credit monitoring.

“They are going to have to accept that. They are going to have to welcome it. They are going to have to be very forthcoming,” Cordray said.

The Equifax hack compromised sensitive data of up to 143 million Americans and prompted investigations by lawmakers and regulators, including the New York Department of Financial Services (DFS), which issued a subpoena to Equifax demanding more information about the breach.

Federal laws give the CFPB the power to supervise and examine large credit-reporting firms to ensure the quality of information they provide. In January, the CFPB fined TransUnion and Equifax $5.5 million in total for deceiving customers about the usefulness and cost of their credit scores.

Cordray called for expanded powers to cover data security to prevent breaches and suggested placing monitors inside credit reporting firms, borrowing a tactic from the regulatory regime for banks.

The CFPB is working with the Federal Trade Commission and New York’s DFS on a new regulatory framework, Cordray said. He also called for Congress to tighten oversight of the industry.

TransUnion said in a statement that it had “long been subject to regulatory oversight from state and federal regulators including the CFPB.”

Experian did not respond to requests for comment.
…

Saudi Arabia’s decision to lift its ban on women driving cars may help to restore sales growth in an auto market dented by the economic fallout from weak oil prices, handing an opportunity to importers of luxury cars and sport utility vehicles.

Carmakers joined governments in welcoming the order by Saudi Arabia’s King Salman that new rules allowing women to drive be drawn up within 30 days and implemented by June 2018, removing a stain on the country’s international image.

“Congratulations to all Saudi women who will now be able to drive,” Nissan said in a Twitter post depicting a license plate bearing the registration “2018 GRL.” BMW, whose X5 SUV is the group’s Middle East top-seller, also saluted the move.

 

WATCH: Activists: Driving Augurs Further Expansion of Saudi Women’s Rights

Midrange brands dominate the Saudi market, with Toyota, Hyundai-Kia and Nissan together commanding a 71 percent share of sales.

Market had shrunk

That market has shrunk by about a quarter from a peak of 858,000 light vehicles in 2015 to an expected 644,000 this year, reflecting the broader economic slowdown. But the rule change adds almost 9 million potential drivers, including 2.7 million resident non-Saudi women, Merrill Lynch has calculated.

“We expect demand to rise again on news that women will be allowed to drive,” said a senior executive at Jeddah-based auto distributor Naghi Motors, whose brand portfolio includes BMW, Mini, Hyundai, Rolls Royce and Jaguar Land Rover models.

The arrival of women drivers could lift Saudi car sales by 15-20 percent annually, leading forecaster LMC Automotive predicts, as the kingdom’s “car density” of 220 vehicles per 1,000 adults rises to about 300 in 2025, closing the gap with the neighboring United Arab Emirates.

A middle- to upper-class Saudi family typically has two vehicles, one driven by the man of the house and a second car in which a full-time chauffeur transports his wife and children.

The rule change could spell bad news for some of the 1.3 million men employed as chauffeurs in the kingdom, including a large share of its migrant workforce, while boosting upscale car sales as households upgrade for their new drivers.

Entire market likely to benefit

“The move to allow women to drive is set to benefit the entire market,” LMC analyst David Oakley said. “But we might expect to see a disproportionately positive impact on super-premium brands.”

Luxury brands including Lamborghini and Bentley are about to launch SUVs, a vehicle category that has proved popular among women and accounts for more than 1 in 5 cars sold in Saudi Arabia.

Welcoming the announcement, British-based Aston Martin said it was well timed for the arrival of the James Bond-associated sports car maker’s DBX model, due in 2019.

“The SUV crossover boom across all segments has been powered by women,” spokesman Simon Sproule said.
…

President Donald Trump said on Wednesday a foreign leader told him at the United Nations last week that the country would soon announce plans to build or expand five automobile industry factories in the United States.

“I just left the United Nations last week and I was told by one of the most powerful leaders of the world that they are going to be announcing in the not too distant future five major factories in the United States, between increasing and new, five,” Trump said in a speech on tax reform in Indianapolis.

He added the factories were in the automotive industry.

He did not name the country. The White House did not immediately respond to a request for comment.

Automakers in Japan and Germany have both announced investments in the United States this year, with companies coming under pressure from Trump’s bid to curb imports and hire more workers to build cars and trucks in the country.

Investments to expand U.S. vehicle production capacity also reflect intensified competition for market share in the world’s most profitable vehicle market. In August, Toyota Motor Corp said it would build a $1.6 billion U.S. assembly plant with Mazda Motor Corp.

Toyota also said this week it was investing nearly $375 million in five U.S. manufacturing plants to support U.S. production of hybrid powertrains.

Last week, German automaker Daimler AG said it would spend $1 billion to expand its Mercedes Benz operations near Tuscaloosa, Alabama, to produce batteries and electric sport utility vehicles and create more than 600 jobs.

Rival German luxury automaker BMW AG said in June it would expand its U.S. factory in South Carolina, adding 1,000 jobs. And last month, Volkswagen AG’s brand president Herbert Diess said the company expected to bring electric SUV production to the United States and could add production at its Tennessee plant.
…

The South American trade bloc Mercosur could seek trade deals with Canada, Australia and New Zealand this year, an Argentine official said Wednesday, as largest members Brazil and Argentina seek to open their economies.

Mercosur, which also includes Uruguay and Paraguay, is working with the European Union to finalize the political framework for a trade deal this year, at a time when the United States under President Donald Trump has been shying away from trade.

“There is a possibility that Mercosur starts negotiations with Canada, Australia and New Zealand this year,” Argentine Commerce Secretary Miguel Braun said at the Thomson Reuters Economic and Business forum in Buenos Aires.

“Integrating ourselves with these countries takes us in the direction we want to go,” he said, pointing to developed economies with high salaries. Argentina alone is seeking a trade agreement with Mexico, and Braun said it was also working on a trade agreement with Chile that would “deepen what we already have.”

Chilean President Michelle Bachelet said in New York last week that Santiago was finishing a trade liberalization agreement with Buenos Aires to boost trade and open opportunities for investors.
…

Weather extremes and air pollution from burning fossil fuels cost the United States $240 billion a year in the past decade, according to a report Wednesday that urged President Donald Trump to do more to combat climate change.

This year is likely to be the most expensive on record, with an estimated $300 billion in losses from Hurricanes Harvey, Irma and Maria and a spate of wildfires in Western states in the past two months, it said.

“The evidence is undeniable: The more fossil fuels we burn, the faster the climate continues to change,” leading scientists wrote in the study published by the nonprofit Universal Ecological Fund.

Costs to human health from air pollution caused by fossil fuels averaged $188 billion a year over the past decade, it estimated, while losses from weather extremes such as droughts, heat waves and floods averaged $52 billion.

Trump could curb the $240 billion cost, equivalent to 1.2 percent of U.S. gross domestic product, by revising his plans to promote the U.S. coal industry and to pull out of the 195-nation Paris climate agreement, it said.

“We are not saying that all [weather extremes] are due to human activity, but these are the sorts of events that seem to be increasing in intensity,” co-author Robert Watson, a former head of the U.N. panel of climate scientists, told Reuters.

Higher ocean temperatures, for instance, mean more moisture in the air that can fuel hurricanes.

Events on the rise

And, in a sign of increasing risks, there were 92 extreme weather events that caused damage exceeding $1 billion in the United States in the decade ending in 2016, compared with 38 in the 1990s and 21 in the 1980s.

The combined cost of extreme weather and pollution from fossil fuels would climb to $360 billion a year in the next decade, the study said. Trump’s pro-coal policies could mean more air pollution, reversing recent improvements in air quality.

Last month, the U.S. Environmental Protection Agency accused scientists who linked record extreme rainfall from Tropical Storm Harvey to man-made climate change as trying to “politicize an ongoing tragedy.”

Wednesday’s study has been in the works for months, said co-author James McCarthy, professor of oceanography at Harvard University. He said there was widening evidence that a shift from fossil fuels made economic sense.

“Why is Iowa, why is Oklahoma, why is Kansas, why is Texas investing in wind energy? Not because they are interested in sea level rise or ocean temperatures but because it’s economically sensible,” he told Reuters.
…

Switzerland is the world’s most competitive economy for a ninth straight year, the Geneva-based World Economic Forum said on Wednesday.

Since suffering a rare blip in 2008, when it was nudged into second place by the United States, the Swiss economy has maintained an efficient but unshakeable grip on the top spot in the WEF annual ranking.

WEF economist Thierry Geiger said Switzerland had a virtuous circle of infrastructure, institutions and education, but at the heart of its success was the way it created and used talent.

“That is really the secret of Switzerland, this ability to innovate, supported by a whole range of enabling factors,” he said.

However, after almost a decade at the top, Switzerland is at risk from complacency and populism. The ageing population could undermine the innovation miracle by shutting the door to foreign talent in one of the referendums that make Swiss law, he said.

“We see a proliferation of such referendums on everything, some of them are kind of dangerous, they could really endanger and jeopardize Switzerland’s prosperity,” Geiger said.

The World Economic Forum, the same organization that runs the Davos meeting of global powerbrokers each January, bases its rankings on a dozen drivers of competitiveness and a survey of business leaders.

“Global competitiveness will be more and more defined by the innovative capacity of a country,” Klaus Schwab, WEF founder and executive chairman, said in a statement.

Besides Switzerland, the top 10 remained the same as a year ago, although there was some shuffling of the order. The United States climbed over Singapore into second place, and Hong Kong jumped three places to sixth, leapfrogging Japan in ninth spot Britain slipped one place to eighth.

Britain has not yet dropped in the rankings because of its Brexit negotiations with the European Union but it is expected to do so, the WEF said.

China inched up one place to 27th, well ahead of 38th-ranked Russia and India, which was in 40th position.

The wooden spoon went to Yemen, a poor country further devastated by civil war, economic collapse, cholera and near-famine conditions, which was in 137th place.

Full List of Top 30 countries:

1. Switzerland

2. United States

3. Singapore

4. Netherlands

5. Germany

6. Hong Kong

7. Sweden

8. United Kingdom

9. Japan

10. Finland

11. Norway

12. Denmark

13. New Zealand

14. Canada

15. Taiwan

16. Israel

17. United Arab Emirates

18. Austria

19. Luxembourg

20. Belgium

21. Australia

22. France

23. Malaysia

24. Ireland

25. Qatar

26. South Korea

27. China

28. Iceland

29. Estonia

30. Saudi Arabia
…

The Commerce Department slapped duties of nearly 220 percent on Canada’s Bombardier C Series aircraft Tuesday in a victory for Boeing that is likely to raise tensions between the United States and its allies Canada and Britain.

Commerce ruled that Montreal-based Bombardier used unfair government subsidies to sell jets at artificially low prices in the U.S.

“The U.S. values its relationships with Canada, but even our closest allies must play by the rules,” Commerce Secretary Wilbur Ross said.

Canada ‘strongly disagrees’

Canada responded by saying it “strongly disagrees” with the U.S. move.

“This is clearly aimed at eliminating Bombardier’s C Series aircraft from the U.S. market,” said Chrystia Freeland, Canada’s minister of foreign affairs.

 

Bombardier, meanwhile, called the decision “absurd … U.S. trade laws were never intended to be used in this manner, and Boeing is seeking to use a skewed process to stifle competition.”

In April, Boeing charged that Bombardier had received at least $3 billion in subsidies from the governments of Britain, Canada and the province of Quebec. The Chicago-based aircraft manufacturer asked the Commerce Department and the U.S. International Trade Commission to investigate the alleged “predatory pricing.”

Specifically, Boeing said that Bombardier last year sold Delta Air Lines 75 CS100 aircraft for less than it cost to build them.

 

“Subsidies enabled Bombardier to dump its product into the U.S. market, harming aerospace workers in the United States and throughout Boeing’s global supply chain,” Boeing said Tuesday.

Boeing upset with Delta deal

 

But Delta has said Boeing didn’t even make the 100-seat jets it needed.

“Boeing has no American-made product to offer because it canceled production of its only aircraft in this size range — the 717 — more than 10 years ago,” Delta said in a statement Tuesday.

President Donald Trump campaigned on a promise to get tough on trade. He has repeatedly criticized Canada, saying it unfairly blocks U.S. dairy products and subsidizes its softwood lumber industry. Trump also has threatened to pull out of the North American Free Trade Agreement if he can’t negotiate a better version with Canada and Mexico.

Boeing’s complaint against Bombardier drew a backlash even before Tuesday’s decision. Canadian Prime Minister Justin Trudeau threatened this month to stop doing business with Boeing, which is in talks to sell Canada 18 Super Hornet jet fighters. British Prime Minister Theresa May has discussed the case with Trump. Her concern: Bombardier employs more than 4,000 workers in Northern Ireland.

Connecticut lawmakers concerned

Connecticut Democratic Sens. Richard Blumenthal and Christopher Murphy last week wrote a letter urging U.S. government officials to “refrain from taking action that will endanger the many jobs in Connecticut that depend upon Bombardier.” Engines for the C Series aircraft are made by Pratt & Whitney, based in East Hartford, Connecticut.

Commerce’s findings Tuesday aren’t the end of the matter. The department is expected to announce its findings in another case against Bombardier early next month. Then the International Trade Commission — an independent federal agency that rules on trade cases — will decide early next year whether to uphold Commerce’s duties.

Bombardier could appeal any sanctions to a U.S. court or to a dispute-resolution panel created under NAFTA. The Canadian government could also take the case to the World Trade Organization in Geneva.

 
…

It is not quite going back to the horse, even if the bicycle was the first contraption to replace beasts as a means of personal transport.

This is a new two-wheeled animal, though, that millions of consumers in Beijing, Taipei, Singapore and cities across Asia are renting via phone apps to cover the last mile of journeys, leaving cars and motorcycles at home, and forgoing taxis.

The two-year bike-share boom has put over 16 million bikes in China alone, according to its Ministry of Transport, with more than 100 million riders registered, eating into car use and gasoline demand growth already expected to stagnate by 2025.

“I often use bike-sharing services because it’s very convenient. I can find it anywhere and will not worry about losing the bike,” said life-long Beijing native Wei Zhang, 36, who uses a shared bike several times a week on her commute, riding 5 km or more.

Analysts can’t keep up with bike numbers, let alone estimate how much gasoline consumption growth has dropped off due to the rapid rise in bike-sharing. But it is clear from industry estimates, government reports and a Reuters survey that bike services are resulting in fewer trips by motor vehicles.

“Bike-sharing has been crazy since late last year. … The general belief is that [it] boosts the utilization of public transport as shared bikes help to complete the journey,” said Harry Liu, downstream consultant with IHS Markit.

Even before the number of bike-share units began growing by multiples, analysts had already been saying greater fuel efficiency in autos and the rising use of electric cars meant gasoline’s big growth story was over.

China’s gasoline demand growth is expected to slow to nearly 4 percent this year, compared with 6.5 percent growth last year, said Sri Paravaikkarasu, head of East of Suez oil at FGE.

And Chinese demand for gasoline is expected to peak as early as 2025, according to state-owned China National Petroleum Corp.

“There used to be long queues of taxis waiting for customers outside train stations, but I don’t see them anymore,” said a Beijing analyst, who took part in a Reuters survey of bike-share users and wanted to be known only by her surname Wang.

Just in the past month, Chinese bike-sharing startup Mobike introduced its services in Kuala Lumpur, Malaysia, and Bangkok, Thailand, as well as in U.S. capital Washington, D.C. Mobike, which launched in April 2016, and China-owned rival Ofo have attracted combined funding of more than $2 billion from venture capital and private equity firms that include Temasek Holdings, Tencent Holdings, DST Global and Ant Financial.

Ofo — which has more than 10 million bikes globally to Mobike’s 7 million — says it is on track to increase its global bike units to 20 million over the next three months.

The investments “demonstrate investors’ confidence in the global bike-sharing industry,” said Lawrence Cao, head of Asia Pacific business for Ofo.

Consultancy Roland Berger said the “unforeseeable” amounts of venture capital put into bike schemes made it almost impossible to estimate the growth potential of bike operators, particularly in China, over the last two years.

Taiwan, where the government backs a bike-sharing scheme, is aiming to have bikes account for a 12 percent share in trips to work by 2020, up from about 5 percent now.

The Taipei city government is expanding bike-sharing program Youbike — which uses docking stations — to have a bike station within a 10-minute walk of every citizen by 2018.

Singapore-owned Obike and U.S.-based VBikes — both free-range systems — are also operating in Taiwan.

Four wheels bad

A survey done by Mobike of 100,000 customers across 36 cities in China found that car trips among the respondents had more than halved since its service was introduced.

A report from the Transport Commission of Shenzhen, one of China’s richest cities, said more than 500,000 bike-share units there had replaced nearly 10 percent of travel by private car or 13 percent of gasoline consumption.

Bike-sharing could pose a risk to gasoline consumption “if a stronger state push to reduce carbon intensity and improve air quality translates to more drivers replacing shorter-distance driving with bike rides,” said Peter Lee, an oil and gas analyst at BMI research.

Chinese growth of passenger car sales, which grew an average annual rate of 10.1 percent over 2011 to 2016, is expected to slow to 2.5 percent over the next five years, said BMI’s Lee.

Still, mismanagement of bike numbers and misuse of some bicycles may attract legislation that could curb their use. New shared bikes were recently banned in some areas in the Chinese cities of Wuhan, Shanghai and Guangzhou, because of bicycles being discarded in public spaces.
…

Despite concerns about low inflation in the United States, the head of the U.S. central bank says raising interest rates gradually would be the most appropriate policy stance for the Federal Reserve.

“It would be imprudent to keep monetary policy on hold until inflation is back to two percent,” Fed Chair Janet Yellen said Tuesday, while speaking to the National Association for Business Economists (NABE) in Cleveland, Ohio.

Inflation, a sustained increase in the price of goods and services, has remained consistently below the Fed’s target rate of 2 percent. But even with uncertainty about the possible reasons for the low rate of inflation — from misjudging the strength of the labor market to the impact of foreign competition on the global supply chain — Yellen said the Fed “should be wary of moving too gradually.”

The Federal Reserve has kept its benchmark lending rate near record lows since the 2008 financial crisis to stimulate the U.S. economy. It has raised its interest rate three times since last December. The federal funds rate, the interest rate the central bank charges banks on overnight loans, currently sits in a range between one and one-and-one-quarter percent.

Ellen Zentner, chief economist at Morgan Stanley, says her biggest takeaway from the Cleveland speech was Yellen’s confidence that “a strong U.S. labor market would ultimately drive inflation closer to the Fed’s two percent goal over the next few years.”

Equity markets, which have benefited from low borrowing costs, anticipate a fourth rate hike in December, and possibly three more next year. Starting next month, the Fed says it will begin the process of “unwinding,” or selling off, the massive holdings of bonds and securities it has acquired since 2008.

But Yellen’s longer-term goals may be subject to change. Her four-year term as the nation’s top banker ends in February. President Donald Trump has not said whether he plans to re-appoint Yellen or overhaul the central bank’s seven-member board of governors.

Zentner believes there is a 60 percent chance Yellen will be named to serve a second term. “The longer the president waits, the greater the probability that Yellen will be re-appointed,” the bank economist said.  

Yellen spoke in Cleveland as the Conference Board released a survey that showed consumer confidence declined in September. The global business research group reported consumers’ views about the strength of the U.S. labor market have weakened and home sales have dropped to an eight-month low due to Hurricanes Harvey and Irma in the states of Texas and Florida. 
…

Mexican officials are tallying up the economic losses of the magnitude 7.1 earthquake that caused widespread damage in the capital, as the number of buildings that may need to be pulled down or need major repairs rose to 500.

 

The death toll in the quake rose to 333, with 194 of those deaths in Mexico City. Authorities pledged a return to normality, but many streets in the capital were still blocked by construction equipment and recovery teams looking to extract the last remaining bodies from the rubble. Mayor Miguel Angel Mancera said 40 to 50 people are still considered missing.

 

The city government announced a plan of reconstruction loans and aid for apartment dwellers who lost their homes or who may lose them as teetering buildings are pulled down.

 

But for city businesses like the downtown restaurant Guapa Papa, the result is already all too clear.

 

Sitting in the entrance of his restaurant Monday, surrounded by caution tape, Antonio Luna said: “This is a bust. It’s already closed due to structural damage to the building.”

 

He had to let go the three dozen employees at the 1950s-themed restaurant and is just trying to salvage whatever furniture and equipment wasn’t damaged.

 

“In the end the company let everyone go because it couldn’t continue having expenses,” Luna said.

 

Mancera said that the city, in alliance with private developers, would handle repairs on buildings that needed touch-ups or minor structural work to be habitable. He offered low-interest loans to apartment owners whose buildings would have to be demolished and rebuilt.

However, it is unclear to what extent the city can force owners to demolish buildings. Some that were damaged in the 1985 are still standing, in part because court challenges can stretch on for years.

 

Moody’s Investors Service said in a report Monday that the Sept. 19 earthquake that caused damage and deaths in the capital and nearby states “has the potential to be one of Mexico’s costliest natural catastrophes.”

 

Alfredo Coutino, Latin America director for Moody’s Analytics, said they were still collecting data on losses, but a preliminary estimate was that the earthquake could knock 0.1 to 0.3 percentage point off growth in Mexico’s gross domestic product in the third and fourth quarters.

 

For the full year, the impact on gross domestic product should be about 0.1 percentage point. “The impact on the year’s growth will be small, particularly considering that the reconstruction work will compensate for some of the total loss in activity during the fourth quarter,” Coutino said.

 

Money is expected to pour into the economy as Mexico City and the federal government tap their disaster funds. As of June, the city’s disaster fund stood at 9.4 billion pesos (more than $500 million), making it slightly larger than the national fund, according to a Moody’s Investors Services report.

 

Of course, the national fund also has to deal with recovery from the even stronger Sept. 7 quake that has been blamed for nearly 100 deaths, mostly in the southern states of Oaxaca and Chiapas.

 

There will be months of work ahead from demolition to repairs and reconstruction.

 

Mexico City Mayor Miguel Angel Mancera said that 500 “red level” buildings would either have to be demolished or receive major structural reinforcement. An additional 1,300 are reparable, and about 10,000 buildings inspected so far were found to be habitable.

At least 38 buildings, including apartments and office buildings, collapsed during the earthquake.

 

Mexico’s education ministry also has 1.8 million pesos (about $100,000) to spend on school repairs. In Mexico City alone, only 676 of the city’s 9,000 schools had been inspected and cleared to resume classes, Education Secretary Aurelio Nuno said Monday.

 

AIR Worldwide, a Boston-based catastrophe modeling consultant, provided a wide range for industry-insured losses, but noted they would be only a small part of the total economic losses. It put the insured losses at between 13 billion pesos ($725 million) and 36.7 billion pesos ($2 billion).

 

A graceful traffic roundabout encircled by restaurants, cafes and shops is now a sprawling expanse of medical tents, piles of food and other relief supplies, and stacks of building materials. While relief work went on outside Monday, men were busily wrapping furniture in foam and plastic inside the Antiguo Arte Europeo store.

 

Stone panels on the building’s facade appeared cracked or were altogether missing. Saleswoman Luisa Zuniga said the owners were waiting for civil defense inspectors to certify there was no structural damage to the building before reopening to the public.

 

Meanwhile, they were moving furniture that could still be sold to their other branches.

 

“Then we’ll see how long it takes to fix everything,” she said. “It is important to get back to work.”

 

Edgar Novoa, a fitness trainer, went back to his job Monday after working as a volunteer following the earthquake. Around midday, he stopped his bicycle at a cleared foundation where a building of several stories had stood near his home.

 

He knelt and prayed while others left flowers and candles at the site.

 

The government has said that nine foreigners, including five from Taiwan, died in the quake. One of the buildings that collapsed in the quake housed a business listed as Asia Jenny Importaciones, SA de CV. A South Korean man was also confirmed dead.

 

A Panamanian woman died, as did one man from Spain and one from Argentina.
…

The United States has imposed sanctions on eight North Korean banks and 26 bank executives amid escalating tensions with Pyongyang over its nuclear program.

“This further advances our strategy to fully isolate North Korea in order to achieve our broader objectives of a peaceful and denuclearized Korean Peninsula,” U.S. Treasury Secretary Steven Mnuchin said Tuesday in a statement.

Last week, President Donald Trump signed an executive order calling for new economic sanctions against individuals and businesses that finance trade with Pyongyang’s reclusive communist regime and fund its weapons development.

U.S. Defense Secretary Jim Mattis emphasized Tuesday that the U.S. sought a peaceful resolution to escalating tensions with North Korea, despite the regime’s claim that a tweet Monday by Trump was tantamount to a declaration of war.

In New Delhi for talks with Indian officials about strengthening U.S.-India ties, Mattis said that while the U.S. military presence on the Korean Peninsula was necessary to deter North Korea’s threats, it also supported diplomatic efforts to resolve the conflict peacefully.

“And that is our goal, to solve this diplomatically, and I believe President Trump has been pretty clear on this issue,” Mattis said, following a meeting with India’s defense minister.

Hope for diplomacy

Secretary of State Rex Tillerson on Tuesday also stressed that the U.S. would “continue to pursue our diplomatic efforts and hope that’s the way we’ll solve this”

On Monday, Trump commented on Twitter that if North Korea carried out its threats, Kim Jong Un’s regime “won’t be around much longer.”

Speaking to reporters near U.N. headquarters in New York, North Korean Foreign Minister Ri Yong Ho said, “Given the fact that this comes from someone who is currently holding the seat of the United States presidency, this is clearly a declaration of war.”

The world should clearly remember, he added, that “it was the U.S. who first declared war on our country.”

White House press secretary Sarah Huckabee Sanders called Ri’s characterization of the tweet “absurd.”

“We’ve not declared war on North Korea,” she said.

Although North Korea has declared “war” many times in the past, now “we’ve entered a bona fide crisis,” Van Jackson, senior lecturer in international relations at Victoria University in Wellington, New Zealand, told VOA.

“Even if we’re not in a war right now, we seem to be doing everything in our power to make one happen by actions and statements that make deterrence more likely to fail,” said Jackson, a former director for Korea policy and a defense strategy adviser at the U.S. Defense Department.

Threat to bombers

Ri warned that his country might shoot down U.S. strategic bombers, even if they were not in North Korean airspace. According to South Korea’s Yonhap news agency Tuesday, Lee Cheol-woo, the chief of the National Assembly’s intelligence committee, said Pyongyang was spotted readjusting the position of its warplanes and boosting its defensive capabilities along its east coast.

A fighter jet from North Korea in 1969 shot down an unarmed U.S. Navy reconnaissance plane, outside North Korean territorial airspace in the Sea of Japan, killing 30 sailors and one marine on board.

Speaking at a security conference on Monday, Trump’s national security adviser, H.R. McMaster, said the United States hoped to avoid war with North Korea, “but what we can’t do is discount that possibility.”

The Army lieutenant general added that the U.S. had thought through several different ways the problem with North Korea could be resolved, and “some are uglier than others.”

However, McMaster, told the conference, hosted by the Institute for the Study of War, that “there’s not a precision strike that solves the problem.”

One peaceful solution, according to McMaster, would be for Pyongyang to give access to inspectors from the International Atomic Energy Agency. But any diplomatic negotiations, McMaster said, would “have to happen under conditions that are different from previous talks.” He said, however, he was not going to come up with a list of preconditions.

Beijing’s role

Some analysts see the path to talks still running through Beijing, which recently moved to cut banking ties between China and North Korea, shut off the supply of liquefied natural gas to the North Koreans and stop imports of their textiles.

“I think that the Chinese are sending a signal to the North that they are skating on thin ice,” said T.J. Pempel, a political science professor at the University of California at Berkeley.

The North Korean foreign minister threatened on Saturday that his country could conduct an atmospheric hydrogen bomb test over the Pacific Ocean.

Mattis responded Monday that if North Korea carried out its threat, “this would be a shocking display of irresponsibility toward global health, toward stability, toward nonproliferation.”

U.S. Air Force B-1B Lancer bombers from Guam escorted by F-16 fighter jets from a U.S. base in Japan on Saturday flew in international airspace over waters east of North Korea.

The Pentagon said the show of force, meant to display some of the military options available to Trump, was “the farthest north of the demilitarized zone any U.S. fighter or bomber aircraft have flown off North Korea’s coast in the 21st century.”

VOA’s William Gallo contributed to this report from New Delhi.
…

Federal Reserve Chair Janet Yellen acknowledged Tuesday that the Fed is puzzled by the persistence of unusually low inflation and that it might have to adjust the timing of its interest rate policies accordingly.

Speaking to a conference of economists, Yellen touched upon key questions the Fed is confronting as it tries to determine why inflation has remained chronically below its inflation target of 2 percent annually. The Fed chair said officials still expect the forces keeping inflation low to fade eventually. But she conceded that the Fed may need to adjust its assumptions.

In noting the persistence of low inflation, Yellen suggested that the Fed will take care not to raise rates too quickly. But she also said the central bank should avoid raising rates too slowly. Moving too gradually, she suggested, might eventually force the Fed to have to accelerate rate hikes and thereby elevate the risk of a recession.

Most analysts expect the central bank to raise rates in December, for a third time this year, in a reflection of economic improvement. But the Fed has said its rate hikes will depend on incoming data.

In her speech in Cleveland to the annual conference of the National Association for Business Economics, Yellen went further than she has before in suggesting that the Fed could be mistaken in the assumptions it is making about inflation.

“My colleagues and I may have misjudged the strength of the labor market, the degree to which longer-run inflation expectations are consistent with our inflation objective or even the fundamental forces driving inflation,” Yellen said.

The Fed seeks to control interest rates to promote maximum employment and stable prices, which it defines as annual price increases of 2 percent. While the Fed has met its goal on employment, with the jobless rate at 4.4 percent, near a 16-year low, it has continued to miss its inflation target.

Chronically low inflation can depress economic growth because consumers typically delay purchases when they think prices will stay the same or even decline.

Inflation, which was nearing the 2 percent goal at the start of the year, has since then fallen further behind and is now rising at an annual rate of just 1.4 percent.

Yellen has previously attributed the miss on inflation this year to temporary factors, including a price war among mobile phone companies. She and other Fed officials have predicted that inflation would soon begin rising toward the Fed’s 2 percent inflation target, helped by tight labor markets that will drive up wage gains.

In her remarks Tuesday, Yellen said this outcome of a rebound in inflation is still likely. But she said the central bank needed to remain alert to the possibility that other forces not clearly understood might continue to keep inflation lower than the Fed’s 2 percent goal.

The Fed chair cautioned that if the central bank moved too slowly in raising rates, it could inadvertently allow the economy to become overheated and thus have to raise rates so quickly in the future that it could push the country into a recession.

“It would be imprudent to keep monetary policy on hold until inflation is back to 2 percent,” Yellen said.

During a question-and-answer session, Yellen said the Fed would be “looking at inflation very carefully” to determine the timing of upcoming rate hikes. But she said the data is likely to be difficult to assess, in part because of the effects of the recent devastating hurricanes, which have forced up gasoline prices.

Yellen’s remarks came a week after Fed officials left their benchmark rate unchanged but announced that they would start gradually shrinking their huge portfolio of Treasury and mortgage bonds. Those holdings had grown from purchases the Fed made over the past nine years to try to lower long-term borrowing rates and help the U.S. economy recover from the worst downturn since the 1930s.

The Fed did retain a forecast showing that officials expect to boost rates three times this year. So far, they have increased their benchmark lending rate twice, in March and June, leaving it at a still-low range of 1 percent to 1.25 percent.

Last week, the Fed said the reductions in its bond holdings would begin in October by initially allowing a modest $10 billion in maturing bonds to roll off the $4.5 trillion balance sheet each month.

Asked about how long-term loan rates might respond to reductions in the Fed’s bond portfolio, Yellen cited a study that estimated that the increase in its bond holdings had lowered such rates by about 1 percentage point.

But she said the reduction in the holdings wouldn’t likely raise rates by as much as a percentage point given that the Fed intended to keep the size of its balance sheet significantly higher than it was before the financial crisis. She said any upward pressure on rates would likely be gradual and take place over several years.

Crutsinger reported from Washington, Kang from Cleveland.
…

Hackers breached the U.S. Securities and Exchange Commission’s computer system last year by taking advantage of companies that used authentic financial data when they were testing the agency’s corporate filing system, according to sources familiar with the matter.

The Federal Bureau of Investigation and the U.S. Secret Service have since launched an investigation into a 2016 hack into the SEC’S EDGAR system, several of those people said.

The sources spoke anonymously because it is not a public investigation.

The SEC’s EDGAR system is a crucial network used by companies to file earnings reports and other material information.

Spokesmen for the FBI, the Secret Service and the SEC all declined to comment, saying they could neither confirm nor deny the existence of an investigation.

The breach occurred in October 2016 and was detected that same month. The attack appeared to have been routed through a server in Eastern Europe, according to an internal government memo describing the incident, which was seen by Reuters.

There was no evidence at the time that data had been improperly retrieved, according to one source familiar with the matter, and the issue was handled internally by the SEC’s Office of Information Technology.

Only after the SEC’s Enforcement Division detected a pattern of suspicious trading ahead of company public disclosures did officials go back to the agency’s technology staff and ask if some companies were using authentic data when they were testing the EDGAR system, one of the people said.

The person said that “not many companies” had submitted real
data that is believed to have been hacked.

The test process is for people to submit test filings to ensure that they format correctly and don’t have submission errors,” the person said.

“They normally use that right before they file their normal reports. They are supposed to use dummy data,” the person said. “However, it is still supposed to be protected the same way in case they do something stupid. A couple companies did, and it wasn’t protected properly.”

SEC chair to confirm probe

SEC Chairman Jay Clayton will confirm the enforcement division’s ongoing investigation when he testifies Tuesday before the Senate Banking Committee, according to prepared testimony reviewed by Reuters.

He has also asked the SEC’s Office of Inspector General to investigate the intrusion itself, the scope of non-public information that was stolen and how the SEC responded to the incident, which he said was properly reported to the Department of Homeland Security’s Computer Emergency Readiness Team.

The FBI’s investigation, which is being led out of New Jersey, is focusing specifically on the trading activity in connection with the breach, according to several sources.

One possibility the FBI is considering is that the SEC breach was connected to a group of hackers that intercepted electronic corporate press releases in a previous case which the FBI in New Jersey helped investigate, several of the sources said.

In that case, federal prosecutors in the New York borough of Brooklyn and New Jersey, as well as the SEC, charged an alliance of stock traders and suspected computer hackers based in the United States and Ukraine.

Clayton, who was installed as chairman in May, only learned of the 2016 breach in August through the enforcement investigation. SEC Commissioners Kara Stein and Mike Piwowar, who are the only other two sitting members of the agency at the moment, also only learned of it recently.

Some SEC enforcement attorneys not involved in the matter learned about it when they read it in the newspaper, sources said.

The delay in disclosing the hack and the months-long gap between uncovering it and discovering the potential insider trading are particularly embarrassing for an agency that has pushed companies to bolster their cyber capabilities and which investigates companies for failing to disclose breaches to investors faster.

While no company has ever been charged for flawed disclosures, the SEC has previously brought charges against brokerage firms over poor cyber security practices.

The SEC has experienced other cyber incidents in recent months.

Between October 2016 and April 2017, the SEC documented a variety of various cyber security incidents, according to one source familiar with the matter.

Reuters was not immediately able to ascertain the nature of all of the incidents, though the source said several involved EDGAR.

In one other case that was not related to EDGAR, a server being set up for SEC use had not been updated to fix known vulnerabilities, one person familiar with the matter said.

The SEC detected unauthorized communications from it. The FBI watched the traffic, which was early signaling or “beaconing” rather than the export of important information, and the hole was closed. In that case, the signal from the beacon was sent to a server in Ukraine, the person added.

The SEC has been criticized for its cyber defenses. The U.S. Department of Homeland Security detected 5 “critical” vulnerabilities that needed to be fixed when it scanned a sample of the agency’s computers and devices the week of January 23.

Reporting by Sarah N. Lynch in Washington and Joseph Menn in San Francisco; Editing by Leslie Adler
…