YCLOAK

UPDATE: Dow Jones industrials fall 500 points as investors worry about fallout from steep tariffs on steel and aluminum imports.

This is a breaking story; please check back for updates.

U.S. stocks dropped in another dizzying day of trading on Thursday as investors dissected Federal Reserve Chairman Jerome Powell’s latest testimony before Congress and the possibility of stiff tariffs on steel and aluminum imports.

Stocks were higher earlier in the day after Powell appeared to calm one of the market’s main worries when he said that he does not see inflation in workers’ wages “at a point of acceleration.” Investors have been nervous about the possibility that the Fed may get more aggressive about raising interest rates to beat down inflation.

But stocks slid in the afternoon after President Donald Trump told steel and aluminum executives that he’ll impose tariffs on imports next week.
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President Donald Trump says the United States will impose tariffs on steel and aluminum imports next week.

At a meeting Thursday with top executives from U.S. steel and aluminum companies, he announced tafiffs of 25 percent on steel products and 10 percent on aluminum.

Trump said in a Twitter post Thursday morning that “Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world.” He continued, “We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!”

 

The Trump administration has shown its desire to impose tariffs on various metal imports since last year.

Earlier this month, the Commerce Department announced that it found “the quantities and circumstances of steel and aluminum imports threaten to impair national security.”

Commerce Secretary Wilbur Ross recommended that President Trump impose a tariff of at least 53 percent on all steel imports from China and 11 other countries, and a tariff of 23.6 percent on all aluminum products from China, Hong Kong, Russia, Venezuela and Vietnam.

 

On Thursday China’s top economic advisor Liu He is scheduled to visit the White House to meet with top administration officials, including Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Trump’s chief economic advisor Gary Cohn.

A White House official speaking on condition of anonymity told Reuters that they expect a “frank exchange of views” and will focus on “the substantive issues.”

Ryan L. Hass, David M. Rubenstein Fellow at John L. Thornton China Center and the Center for East Asia Policy Studies at Brookings Institution told VOA he believes in the best case scenario, Liu’s visit will assure both sides that “they are committed to solving underlying problems in the bilateral trade relationship.”

Hass noted, “In such a scenario, both sides would agree on the problems that need to be addressed, the framework for addressing them, and the participants and timeline for concluding negotiations.”

Hass said if Liu He’s visit fails to exceed the White House’s expectations, then the probability of unilateral U.S. trade actions against China will go up. “If the U.S. takes unilateral actions, China likely will respond proportionately, and that could set off a tit-for-tat cycle leading to a trade war,” he said.
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Environmental activists in Kenya have pledged to take further legal action against Kenyan and Chinese corporations if contractors move forward with construction of a railway bridge across Nairobi National Park. The activists held a demonstration Thursday outside parliament.

About 100 activists chanted as they marched through the streets of Nairobi Thursday to demand that phase 2 of construction of the Standard Gauge Railway be rerouted around Nairobi National Park.

 

The park is a rare wildlife sanctuary located just minutes from the city center of one of Africa’s rapidly growing economic and technological hubs.

“This is a tiny park. It’s an absolute jewel to the Nairobi citizens and all of Kenya. It is crowded with guests. Everybody who comes for safari, their first stop is Nairobi National Park before they go to the Mara and all those places, and it’s a disaster if they take it away,” said Patricia Heaths.

 

The six-kilometer bridge planned to cross over the park is part of a much larger project – the SGR, a massive regional rail network largely funded by China. Kenya opened the Nairobi to Mombasa line last year. This second phase of the SGR in Kenya is set to connect Nairobi to Naivasha.

Environmentalists say the construction would affect the ecology of the park, endangering the wildlife and their natural habitats. Paul Mark from Friends of Nairobi National Park read a petition outside parliament.

 

“…The purpose of this letter is to remind you of the court orders in place which stop the Kenya Railways Corporation and any other person from construction of the Standard Gauge Railway within the Nairobi National Park,” he said.

 

In 2017, the National Environment Tribunal ordered a temporary halt to construction in the Nairobi National Park in response to a petition from environmental groups. The activists demanded the government conduct an environmental impact study. The case is still pending.

 

However, Kenya Railways, a state company, and its partner, the China Road and Bridge Corporation, moved to begin construction work in the park in late February.

 

The Kenya Coalition for Wildlife Conservation and Management said in a statement Thursday that it would seek to have the contractors held in contempt.

 

Officials at Kenya’s Ministry of Transport and Kenya Railways did not respond to VOA’s requests for comment.

Marko Pruikma sits on the board of Friends of Nairobi National Park.

“Nairobi National Park is an open park, which means animals can migrate freely in and out the southern boundaries of the park. There will be a lot of noise because of construction in certain areas. You will see certain animals removed out of their particular area going to another area pushing out other animals, and they might go out of the park, causing extra human-wildlife conflict outside the park,” said Pruikma.

 

Last year, environmentalists unsuccessfully tried to stop construction of phase one of the SGR which passes through Tsavo National Park. Activists say the rail line interferes with elephant migration.

 

A total of seven possible routes were considered for phase two of the SGR, two of which did not pass through Nairobi National Park. The government said the current design was picked as the most cost-effective and technically feasible.

 

The Kenya Wildlife Service also rubber-stamped the decision to build the rail bridge over the park saying it would have minimal interference with the movement of the wildlife.
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Americans lifted their spending just 0.2 percent in January, while their incomes jumped because of last year’s tax cuts.

The Commerce Department said Thursday that the modest spending increase followed gains of 0.4 percent in December and 0.8 percent in November. Incomes rose 0.4 percent, boosted by $30 billion in tax cut-related bonuses the government estimates were paid out in January.

After-tax income jumped 0.9 percent, the most in a year, lifted by the Trump administration’s tax cuts. With consumers holding back on spending, the savings rate rose. Savings had fallen to a 12-year low in December.

 

The figures suggest Americans took a breather in January after shopping enthusiastically over the holidays. The healthy income gains will likely spur more spending in the coming months. Still, the slow start to the year indicates the economy may grow more slowly in the first three months of the year than it did in last year’s fourth quarter, when it expanded at a 2.5 percent annual rate.

 

Consumers are feeling much more optimistic about the economy, which should help lift spending. Consumer confidence jumped in February to the highest level since 2000, according to the Conference Board.

 

“With consumer confidence elevated and disposable incomes rising, we don’t expect the softness in spending to last long,” Paul Ashworth, chief U.S. economist at Capital Economics, said.

 

There were some signs of inflation pressures. A key inflation gauge that excludes the volatile food and energy categories rose 0.3 percent, the most in a year and matching January 2017’s gain. The last time core prices rose faster was in January 2007.

 

Fears of rising inflation stemming from faster economic growth and a solid job market contributed to a sharp fall in the stock market in early February.

 

Yet core prices rose just 1.5 percent in January from a year ago, the same annual gain as in December. A broader inflation measure that includes food and energy increased 1.7 percent from a year earlier, also the same as the previous month. Both figures are below the Federal Reserve’s target of 2 percent.

 

Americans spent much less on cars last month, reflecting a slowdown after consumers replaced thousands of cars in previous months that had been destroyed by hurricanes. That pulled down spending on long-lasting goods by 1.6 percent, the steepest fall since last January.

 

Adjusted for inflation, Americans’ after-tax incomes rose 0.6 percent in January, the most in five years.

 

Overall, the economy and job market are mostly healthy. The number of Americans seeking unemployment benefits fell last week to 210,000, the lowest level in 48 years, the Labor Department said Thursday. That is a sign that employers anticipate solid growth and want to hold onto their staffs.

 
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U.S. oil company Exxon Mobil says it will withdraw from its joint venture with Russia’s state-controlled Rosneft due to U.S. and European sanctions against the country.

Exxon Mobil had signed a deal with Rosneft, Russia’s biggest oil producer, in 2011 that aimed to drill in difficult terrain, like Russia’s Arctic waters. It combined Exxon’s high level of technology with Rosneft’s access to the area.

The deal came under strain, however, after the U.S. sanctioned Russia in 2014 over the invasion of Ukraine and the Crimean Peninsula. The sanctions did not affect existing deals in the energy sector, but prohibited any business with Rosneft CEO Igor Sechin, an influential oligarch in Russia.

That created a series of hurdles for the partnership. Exxon has applied for a waiver but without success. Last year, the U.S. Treasury fined Exxon $2 million for signing new deals with Sechin in 2014. Exxon sued the U.S. government to stop the fine.

The deal has come under extra scrutiny because Rex Tillerson, the current secretary of state, was the Exxon CEO who had struck the deal and has had reportedly good personal ties with Sechin.

As America’s top diplomat, Tillerson has insisted the sanctions will stay in place until Russia reverses course in Ukraine and gives back Crimea. Still, the Russian deal on his watch raises significant questions about his ability to credibly enforce the sanctions and to persuade European countries to keep doing so.

The situation was escalated further last year, when the U.S. expanded sanctions against Russia for allegedly interfering in the U.S. presidential election.

Exxon said in a note to its earnings report late Wednesday that it had made the decision to end the partnership in late 2017.

“The corporation expects it will formally initiate the withdrawal in 2018,” at a cost of about $200 million, it said.

Rosneft said in a statement that it “will continue the independent development of these projects,” and that it supports Exxon Mobil’s eventual return, should the law allow that.

 
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A company’s value is often tied to the message it portrays to customers. But what happens when other companies try to take advantage of your brand?

Take the Philadelphia Eagles, for instance. The American football team wants to exclusively own the phrase: “Philly Special.” That was the trick play that helped them win the Super Bowl, and the Philly Special is, by far, the most talked-about play of the Super Bowl.

Watch the play here:

It is a gutsy move. In football-speak, it is a direct-snap reverse pass to quarterback Nick Foles, who usually throws the ball. But the coach gives the OK, and Foles tells his teammates the plan in the huddle.

The team lines up, Foles runs up the field. Tight end Trey Burton throws the football, and Foles catches it in the end zone for a touchdown.

“Play of the century”

Now, the phrase, ‘Philly Special,’ has turned into a city-wide phenomena. Bakeries are making Philly Special pastries. Some people are getting the words or even a sketch of the play tattooed on themselves.

And stores, like Ashley Peel’s Philadelphia Independents, cannot keep enough Philly Special T-shirts in stock.

“It’s the ‘Nick Foles play of the century,’ as I’m dubbing it from the Super Bowl,” Peel said. “It has a layout of the [specifics] from the play. We just got it in and we’re almost already sold out of it. It’s definitely moving well.”

It’s moving well, even as several entrepreneurs are competing to be awarded a trademark — in other words, exclusive rights — to the phrase.  Many of the businesses filed their own trademark applications ahead of the Eagles.

“I do have a client that’s applied for the mark, ‘Philly Special,’” said Philadelphia-based lawyer Nancy Rubner Frandsen.

She filed a trademark application on behalf of a company called Whalehead Associates. She can’t comment too much about the application without violating attorney-client privilege, but admits the phrase goes beyond a football play.

“Obviously it brings everyone together, it was our Super Bowl championship that brought it all about,” she said. “It’s got the term ‘Philly’ in it — from the trademark standpoint, it would be deemed to be descriptive. But then you combine it with the term, ‘Special,’ and it could make a very unique trademark.”

Some of the other businesses that want to trademark the term include a sandwich maker, a gift shop manufacturer … and the Philadelphia Eagles. The team was actually the last to file a trademark application. Even so, experts say, it’s likely the rights will be awarded to the Eagles.

Newsjacking

“This particular term, ideally, should belong to the Eagles,” said Dr. Jay Sinha, an associate marketing professor at Temple University in Philadelphia.

He added the phenomenon around ‘Philly Special’ is not the first time there’s been a rush to trademark a term after a big event, like the Super Bowl. And it’s even got a name: ‘newsjacking.’

“The term, newsjacking, means where a company rides or takes advantage of some event happening in current affairs and uses it for their own commercial purposes, especially for marketing in branding,” Sinha said.

For example, think of famous movie lines, like: ‘May the force be with you,’ from “Stars Wars.” When sequels are released, other companies often try to take advantage of the film’s popularity for marketing purposes, like an ice cream shop that posts a sign reading, ‘May the swirl be with you.’

“If there’s anything which is relevant in popular culture as well as the news, companies like to ride on it,” Sinah said.

In this case, it likely will be several months before the U.S. Patent Office announces who will be awarded the rights to the now famous phrase. By then, though, another Super Bowl will be approaching and the excitement of the Philly Special could be fading.
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Dick’s Sporting Goods, one of the largest sports retailers in the U.S., will immediately end the sale of assault-style rifles in its stores and stop selling guns of any type to anyone under age 21.

The company made the announcement Wednesday, precisely two weeks after a school shooting in Parkland, Florida.

“We deeply believe that this country’s most precious gift is our children. They are our future. We must keep them safe. Beginning today, DICK’S Sporting Goods is committed to the following: http://d.sg/RTC,” the company said in a post on Twitter.

“We need to make a statement,” chairman and CEO Edward Stack said in an interview Wednesday on CNN. “We don’t want to be part of this story any longer.”

Stack said the Florida shooting suspect, 19-year-old Nikolas Cruz, legally purchased an AR-15 assault rifle from Dick’s in November, but it was not the one used to kill 14 students and 3 staff members at Marjory Stoneman Douglas High School.

Stack, who said he remains a strong advocate of the U.S. Constitution’s Second Amendment, asserted the nation’s gun laws do not prevent dangerous people from buying guns and that lawmakers must act to strengthen those laws.

The executive called on elected officials to ban assault-style firearms, high-capacity magazines and “bump stocks,” which are devices that enable semi-automatic rifles to fire hundreds of rounds per minute. Stack also proposed raising the minimum age to buy guns to 21.

He said Dick’s, which also stopped selling high-capacity magazines, is prepared for any backlash but will not change its policies on gun sales. “We’re comfortable with our decision,” he said, adding that Dick’s will continue to sell an array of hunting and sport firearms.

The announcement is one of the strongest positions taken by a major U.S. corporation since the massacre, which has reignited the national gun debate and sparked a wave of gun-control rallies across the country.

More than a dozen U.S. corporations have ended partnerships with the National Rifle Association since the mass shooting, including Delta Airlines and United Continental Holdings, Inc., which owns United Airlines.

NRA ties

Other companies that have cut ties with the NRA include Avis, Best Western International, Enterprise Rent-a-Car, Metlife, the Hertz Corporation, and Wyndham Worldwide Corporation.

The NRA is one of the country’s most powerful lobbying groups for gun rights and claims 5 million members. In the 2016 elections, the NRA gave $54 million in political donations, much of that during the presidential race.

It is not unusual for some members of Congress to have individually received hundreds of thousands of dollars — even millions — from the NRA. While some Democrats are also recipients of NRA financial support, the top benefactors are currently members of the Republican Party.

NRA reaction

Last week, NRA Executive Vice President Wayne LaPierre told the Conservative Political Action Conference outside Washington that those advocating for stricter gun control were exploiting the Florida shooting.

Gun control advocates have noted that many teenagers in America can legally purchase assault rifles before they’re eligible to vote or drink alcohol. Twenty-eight of the 50 states have no minimum age requirement for owning a rifle.

Another giant U.S. retail seller of guns, Walmart, Inc., stopped selling AR-15 rifles and other semi-automatic weapons in 2015.
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Growth in China’s manufacturing sector in February cooled to the weakest in more than 11/2 years, raising concerns of a sharper-than-expected slowdown in the world’s second biggest economy this year as regulators tighten the screws on financial risks.

The weakness was driven by disruption to business activity by the Lunar New Year holidays and curbs to factory output from tougher pollution rules, but there are worries of a bigger loss in momentum.

“Although a recovery looks possible in the short-run as the anti-pollution campaign winds down, the risk is still that the economy fares worse this year than is generally expected,” said Julian Evans-Pritchard, senior China Economist at Capital Economics.

Index raises concern

The official Purchasing Managers’ Index (PMI) released Wednesday fell to 50.3 in February, from 51.3 in January. But it remained above the 50-point mark that separates growth from contraction on a monthly basis, the 19th straight month of expansion.

The drop may raise some concerns for China’s leaders as they prepare for the start of the National People’s Congress (NPC) next week where Beijing will unveil its economic targets for this year.

Globally, solid demand has kept many export-reliant economies humming over the past year or so, though a move toward tighter policy in advanced nations could cut into growth this year.

The latest PMI’s subindex of new export orders fell to 49.0, the lowest in at least a year, as the yuan currency appreciated against the dollar.

Chen Zhongtao, an official with China Logistics Information Center (CLIC), said that “13.6 percent of firms reported concerns over the appreciating Chinese currency and greater currency fluctuations,” the highest number of companies to do so since March 2017.

CLIC said in a statement that export sluggishness is expected to continue this year as steel firms are more reluctant to ship goods in the face of rising global protectionism.

Lunar New Year effect

The index for output stood at 50.7, down from 53.5 in January as the Lunar New Year holidays disrupted factory activities, the statistics bureau said. Total new orders also expanded much slower in February.

Raw material input prices fell for the second consecutive month to the lowest since July 2017, indicating cost pressure from price rises on manufacturing firms is easing.

“I think besides the Lunar New Year factor, the stricter pollution measures in the north before the National People’s Congress might have weighed on activities as well,” said Betty Wang, Senior China Economist at ANZ.

Wang expects momentum to pick up in the months ahead as the pollution crackdown tapers off.

Still, there are signs that China may continue with the pollution crackdown, with top steelmaking city of Tangshan proposing new restrictions on production once the current curbs expire in March.

The weeklong Lunar New Year holidays, which fell in February this year but January in 2017, tend to distort data early in the year.

Many factories and offices start to scale back operations ahead of time before shutting for the entire holiday or longer, while some manufacturers front-load shipments or replenish inventories ahead of the break.

Moderating growth in 2018

Boosted by government infrastructure spending, a resilient property market and unexpected strength in exports, China’s manufacturing and industrial firms helped the economy post better-than-expected growth of 6.9 percent in 2017.

A sister survey showed activity in China’s service sector slowed to lowest since October last year in February. The official non-manufacturing Purchasing Managers’ Index (PMI) fell to 54.4 from 55.3 in January.

The services sector accounts for more than half of China’s economy, with rising wages giving Chinese consumers more spending clout.

Chinese policymakers are counting on growth in services and consumption to rebalance their economic growth model from its heavy reliance on investment and exports.

Economists polled by Reuters expected China’s economic growth will moderate to around 6.5 percent this year as the property market cools and as authorities press ahead with a clamp down on riskier financial activity that is driving up borrowing costs.

Analysts and financial markets are widely expecting the government to announce a 2018 growth target of around 6.5 percent at the NPC, the same as last year.

A composite PMI covering both the manufacturing and services activity stood at 52.9 in February, down from January’s reading of 54.6.

“Looking ahead, we think growth is likely to fall short of expectations this year, with many underestimating the headwinds from slower credit growth and a cooling property sector,” Capital Economics’ Evans-Pritchard said.
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The U.S. Commerce Department on Tuesday recommended raising import duties on Chinese-made aluminum foil it said is being sold at unfairly low prices due to improper subsidies to producers.

 

The ruling was praised by the Aluminum Association, a trade group that pressed the case and said cheap imports were threatening thousands of jobs.

 

Beijing faces complaints from the United States, European Union and other trading partners that a flood of Chinese aluminum, steel and other exports are being sold at unfairly low prices, threatening jobs abroad.

 

The Commerce Department said it concluded Chinese exporters were selling aluminum foil at 49 to 106 percent below fair value and were receiving unfair subsidies of 17 to 81 percent of the goods’ value.

 

Importers will have to post cash bonds to pay potentially higher duties while the recommendation goes to the U.S. International Trade Commission for a final decision, said a Commerce statement.

 

China’s Ministry of Commerce complained Washington was harming Chinese exporters and said Beijing was ready to take unspecified “necessary measures” to defend its interests.

 

Beijing has accused Trump’s government of disrupting global trade regulation by taking action under U.S. law instead of through the World Trade Organization.

 

“China will take necessary measures to defend its interests in response to the wrong practice of the United States,” said a Commerce Ministry official, Wang Hejun, in a statement.

 

The Trump administration earlier raised duties on Chinese-made washing machines, solar modules and some aluminum and steel products to offset what it said were improper subsidies.

 

The American Chamber of Commerce in China says Chinese officials have warned of possible unspecified retaliation if Washington took excessive steps in trade disputes.
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The chairman of the U.S. House Transportation and Infrastructure Committee said Tuesday that there was not enough support in Congress to move forward with a plan backed by President Donald Trump to privatize the air traffic control system.

Republican Representative Bill Shuster of Pennsylvania said in a statement that the “air traffic control reform provisions did not reach the obvious level of support needed to pass Congress.”

But Shuster vowed to work with the Senate to move forward with legislation to reauthorize the Federal Aviation Administration, which expires at the end of March. Without authorization, the FAA would not be able to collect aviation taxes, and many of its employees would have to be laid off.

In June, Trump unveiled a plan to privatize air traffic control, saying it would modernize the system and lower flying costs.

Democrats contended it would hand control of a key asset to special interests and big airlines, and some Republicans opposed it.

On Tuesday, the Aircraft Owners and Pilots Association, nearly 250 general aviation organizations, state and local aviation officials, labor unions, consumer groups and airports said they had sent a letter to congressional leaders vowing to oppose any effort to privatize air traffic control.

United Airlines, Hawaiian Airlines, American Airlines and Southwest Airlines, all represented by the Airlines for America lobbying group, backed the plan.

Under the proposal, air traffic control would be spun off from the FAA and put under the oversight of a nonprofit corporation.

The FAA spends nearly $10 billion a year on air traffic control funded largely through passenger user fees, and has spent more than $7.5 billion on next-generation air traffic control reforms in recent years.

Trump has said current air traffic reform efforts have failed and were a “total waste of money.”

Opponents said the U.S. system is so large that privatization would not save money, would drive up ticket costs and could create a national security risk. Opponents also said technology upgrades would be sidetracked while the private entity was set up, potentially adding years to awarding contracts.
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Three of President Donald Trump’s senior economic aides are expected to meet this week with a top Chinese economic official to discuss trade disputes between the United States and China.

White House spokeswoman Sarah Huckabee Sanders told Reuters that Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Trump’s economic adviser, Gary Cohn, are expected to meet Chinese economic adviser Liu He in Washington.

The talks are likely to cover a range of differences including intellectual property and steel.

Trump has long called for a more balanced trade relationship with China and threatened to impose a big “fine” against China to protect American intellectual property. U.S. officials said Trump has been discussing imposing a global tariff on imports of steel from China, the world’s largest steel producer, and other countries.

The talks with Liu may help determine the trajectory of the U.S.-Chinese trade relationship, which Trump believes is heavily tilted in favor of China.

A senior U.S. official said there was skepticism on the U.S. side that a trade breakthrough could be achieved any time soon.

“We’re trying to treat this with an open mind. But the Chinese don’t really want to make a deal. They like the status quo,” the official said.

There was no plan for Trump himself to meet Liu, but officials did not rule it out if progress was being made.

Liu, a Harvard-trained economist and trusted confidant of Chinese President Xi Jinping, has emerged as the front-runner to be the next governor of China’s central bank, according to sources with knowledge of the situation. Liu is the top adviser to Xi on economic policy and is also expected to become vice premier overseeing the Chinese economy.

Steel

A source close to the White House said Trump had expressed interest in imposing a tariff on steel imports of at least 24 percent. The White House said no final decision had been made.

The Commerce Department on Feb. 16 recommended that Trump impose stiff curbs on steel imports from China and other countries and offered the president several options ranging from global and country-specific tariffs to broad import quotas.

A blanket tariff on steel would cover every steel and aluminum product entering the American market from China.

China has expressed concerns over excessive protectionism in the U.S. steel sector and urged restraint. It has also said it will oppose any “unfair and unreasonable” trade measures by countries such as the United States.
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