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US Treasury Secretary Hopes for ‘Substantial Progress’ in China Talks

U.S. Treasury Secretary Steven Mnuchin says he hopes to makes “substantial progress” in trade talks with China, as the world’s two largest economies try to reach a resolution to their trade war.

Mnuchin and Trade Representative Robert Lighthizer are leading a U.S. delegation meeting with Chinese officials this week in Beijing.

Next week, Chinese officials will travel to Washington for another round of talks.

Washington and Beijing have held several rounds of talks this year to resolve a trade war that began in 2018 when President Donald Trump imposed punitive tariffs on $250 billion worth of Chinese imports. He has been trying to compel Beijing to change its trade practices. China retaliated with tariff increases on $110 billion of U.S. exports.

 

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Tariffs Take Toll on Farm Equipment Manufacturers

Their iconic blue-colored planters and grain cars are recognizable on many farms across the United States. They are also easily spotted in large displays, some stacked one on top of the other, in front of Kinze’s manufacturing hub along Interstate 80, where, inside buildings sprawling across a campus situated among Iowa’s corn and soybeans fields, the company’s employees work with one key component. 

“Steel is the lifeblood of Kinze,” says Richard Dix, a company senior director. “We’re a factory that’s essentially a weld house. We cut, burn, form, shape, cut, paint steel.”

WATCH: Kane Farabaugh’s video report

Steel now costs more, the result of a 25 percent tariff on the material imported from most countries, including China.

“When there is a tariff on steel it cuts rights to the core of our fundamental product construction,” says Dix.

In March of 2018, President Donald Trump imposed tariffs on aluminum and steel, with the goal of boosting U.S. production and related employment. 

While there has been a modest benefit to the domestic steel industry, Dix says increased costs are negatively impacting smaller manufacturing companies like Kinze.

“We see the bills that come in from our suppliers are higher based on those tariffs,” Dix explains. “Not just in steel but also in a lot of the electronics, rubber commodities and other agricultural parts we buy from China as well. Those tariffs take their effect on our cost structure, on the profitability for the family, through our employees, and now to our dealers and on to our customers.”

Those customers are mostly U.S. farmers who use some of Kinze’s products to put soybean and corn seeds into the ground. Soybean exports in particular are now subject to retaliatory tariffs imposed by the Chinese, one of the biggest export markets for U.S. farmers, which has sunk commodity prices and contributed to another year of overall declining income for U.S. farmers. 

​That means many are less likely to purchase the products Kinze makes.

“The market is substantially down,” says Dix. “The farmers don’t have that level of security they need to go out into the dealerships and buy that equipment. We get a one-two punch. We pay more for the product that comes into us and therefore on to the customer, and then we have a reciprocal situation where we can’t export what was advantageous to us.”

These are some of the concerns Dix explained to Iowa Republican Senator Joni Ernst, who participated in a roundtable discussion at Kinze along with farmers and others in Iowa impacted by tariffs. It was part of a “Tariffs Hurt the Heartland” event hosted by Kinze, and organized by the group Americans for Free Trade along with the Association of Equipment Manufacturers. 

Ernst says the personal stories she gathers from these meetings go a long way in helping President Donald Trump understand the impact on her constituents.

“He has a very different negotiating style,” she told VOA. “He wants to start with the worst possible scenario, and negotiate his way to a good and fair trade deal, but again sharing those stories is very important and yes it does have an impact. I think the president does listen.”

Ernst says she is encouraged by news from the Trump administration on developments in negotiations that lead her to believe the trade dispute with China, and the related tariffs, could end soon.

“When I last spoke to [U.S. Trade Representative] Robert Lighthizer, he had indicated that the deal with China is largely done, it’s just figuring out the enforcement mechanism, and that is what the United States and China are really bartering over right now.”

But Kinze’s Richard Dix says one year under tariffs has already taken a toll on the company’s operations.

“We’re not really that big, so we can say that this impact has been a seven-figure impact for us in the last year, and that’s a substantial amount of money.”

It’s an amount that Dix says, so far, hasn’t been passed on to Kinze’s customers, or the employees.

“We have not actually had any direct layoffs that are attributable to this tariff situation, but we’re all tightening our belts.”

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Kudlow: Trump Administration Eyes More Aid to Farmers if Necessary

The Trump administration is ready to provide more federal aid to farmers if required, a White House adviser said on Monday, after rolling out up to $12 billion since last year to offset agricultural losses from the trade dispute with China.

“We have allocated $12 billion, some such, to farm assistance. And we stand ready to do more if necessary,” White House economic adviser Larry Kudlow told reporters.

The U.S. Department of Agriculture had previously ruled out a new round of aid for 2019. As of March, more than $8 billion was paid out as part of last year’s program. On Monday, the department said it had extended the deadline to apply to May 17.

A constituency that helped carry Republican President Donald Trump to victory in 2016, U.S. farmers have been among the hardest hit from his trade policies that led to tariffs with key trading partners such as China, Canada and Mexico.

While farmers have largely remained supportive of Trump, many have called for an imminent end to the trade dispute, which propelled farm debt to the highest levels in decades and worsened the credit conditions for the rural economy.

Beijing imposed tariffs last year on imports of U.S. agricultural goods, including soybeans, grain sorghum and pork as retribution for U.S. levies. Soybean exports to China have plummeted over 90 percent and sales of U.S. soybeans elsewhere failed to make up for the loss.

Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer were scheduled to travel to Beijing on Monday for the latest negotiations in what could be the trade talks’ endgame.

Both sides have cited progress on issues including intellectual property and forced technology transfer to help end a conflict marked by tit-for-tat tariffs that have cost the world’s two largest economies billions of dollars, disrupted supply chains and rattled financial markets.

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Breaking from Tradition, Indigenous Women Lead Fight for Land Rights in Brazil

Brazil’s indigenous women have been overturning tradition to step into the spotlight and lead an international push to defend their tribal land rights, which are up against the greatest threat they have faced in years under right-wing President Jair Bolsonaro.

Brazil’s 850,000 indigenous peoples live on reservations that make up 13 percent of the territory. Bolsonaro has said they live in poverty and he wants to assimilate them by allowing development of their vast lands, currently protected by law.

The tribal leaders are fighting back — in many cases, led by women. Traditionally, indigenous cultures excluded women from leadership roles that were played by male tribal chieftains.

But that is changing, said Joenia Wapichana, who last year became the first indigenous woman elected to Brazil’s Congress and has been seeking to block Bolsonaro’s attempts to dismantle the indigenous affairs agency Funai.

“Women have advanced a lot and today there are many taking up frontline positions in the defense of indigenous rights,” said Wapichana, 45, a lawyer who was also the first indigenous woman to argue a case before Brazil’s Supreme Court.

Brazil’s top indigenous leader is Sonia Guajajara, who warned at a forum at the United Nations last Tuesday that Bolsonaro’s plans to open up reservations to mining and agriculture could devastate the Amazon, the world’s largest rainforest, which scientists say is nature’s best defense against global warming.

The next day she was back in Brasilia leading a rally of 4,000 indigenous people representing Brazil’s 305 tribes, protesting Bolsonaro’s move to put reservation land decisions under the agriculture ministry that is headed by farming interests.

“Invasions of indigenous lands have increased since Bolsonaro took office January 1 and that is due to the hate and violence in his speeches against us,” Guajajara said in an interview last week.

Speaking at a news conference, Guajajara, 45, recalled how in 1998 Bolsonaro, then a congressman, said in a newspaper interview that it was a shame the Brazilian cavalry hadn’t been “as efficient as the Americans, who exterminated the Indians.”

Last year, Bolsonaro told reporters that anthropologists had kept native Brazilians “like animals in a zoo” and they should be allowed to benefit from agriculture and mining, charging royalties. Some indigenous people support his plan to allow commercial farming on reservations, although the majority back Guajajara.

With Bolsonaro set on weakening environmental and indigenous protections and a strong farm lobby holding sway in Congress, Wapichana said her tribe decided it was time to get involved in federal politics. They collectively decided to choose her as the candidate and funded her campaign, she said.

She said her goal was at least to preserve those rights currently guaranteed by law.

“It will be hard to advance with this government that is controlled by agribusiness and the farm lobby. What they wanted was to weaken Funai so it can no longer protect us,” she said.

Rather than waiting for someone else to represent them, indigenous women were taking a stand in a way they had not before and joining together across the Amazon, said Leila Salazar-Lopez, president of Amazon Watch, a U.S.-based non-profit that works to stop deforestation and advance indigenous rights in the Amazon Basin.

“It is amazing that the women are stepping up,” she said.

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Pompeo: US-China Trade Talks Will Not Be Impacted by End of Iran Oil Waivers

VOA Mandarin service reporter Lin Feng also contributed to this report.

U.S. Secretary of State Mike Pompeo says Washington’s decision to end Iran oil waivers to China will not have a negative impact on the latest trade talks between the world’s two leading economies. 

 

“We have had lots of talks with China about this issue. I’m confident that the trade talks will continue and run their natural course,” Pompeo told an audience in Washington on Monday.

 

China is Iran’s largest oil buyer. 

 

Pompeo added the U.S. would ensure the global oil markets are adequately supplied.

 

Last Monday, the United States announced it was ending waivers on sanctions to countries that import Iranian oil, including China, India, Japan, South Korea and Turkey. Since the sanctions were reintroduced, Italy, Greece and Taiwan have halted their Iranian oil imports.

 

U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer are meeting with Chinese Vice Premier Liu He in Beijing on Tuesday, for the latest round of negotiations. The two sides will discuss intellectual property, forced technology transfer, non-tariff barriers, agriculture, and other issues. 

 

Vice Premier Liu will then lead a Chinese delegation to Washington for additional talks on May 8.

Washington and Beijing have held several rounds this year to resolve a trade war that began in 2018 when President Donald Trump imposed punitive tariffs on $250 billion worth of Chinese imports. He has been trying to compel Beijing to change its trade practices.  China retaliated with tariff increases on $110 billion of U.S. exports.

Positive tone

 

The U.S. and China have struck a positive tone ahead of this week’s talks in Beijing, aimed at ending the trade war, as both countries work toward an agreement.

 

“We’re doing well on trade, we’re doing well with China,” President Trump told reporters last week.

 

In Beijing, Chinese officials said that “tangible progress” has been achieved.

 

“Both sides are also maintaining communication. We believe that both sides’ trade delegations can work together, meet each other halfway and work hard to reach a mutually beneficial agreement,” Chinese Foreign Ministry spokesperson Geng Shuang said last week.

 

As the United States and China appear close to reaching a negotiated settlement over trade disputes, a group of American business and retailers has called for a “full and immediate removal of all added tariffs” on Chinese goods in a deal, saying anything less would be a “loss for the American people.”

 

Business groups from “Americans for Free Trade” have asked the Trump administration to “fully eliminate tariffs” on Chinese goods, saying tariffs are taxes that American businesses and consumers pay.

 

“Americans have paid over $21 billion in taxes due to the imposition of new tariffs,” said a letter to President Trump April 22.

 

Some experts say the administration lacks confidence in China’s enforcement of a trade deal, and predict some punitive tariffs are likely to remain.

 

“I cannot imagine China accepting a deal where all the tariffs stay in place. I don’t see how [Chinese President] Xi Jinping can take that to his people. There has to be something for China. On the other hand, I guess I will be surprised if the U.S. removed all of the tariffs because clearly, the USTR team would like to keep at least some of them in place,” David Dollar, Brookings Institution’s senior fellow, told VOA Mandarin. 

 

“The smart thing would be to remove the tariffs on all of the parts and components, and perhaps on some consumer goods. It seems likely to get that compromise,” he added.

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Scandinavian Airlines Strike in 4th Day, Affecting Thousands

A strike among pilots at Scandinavian Airlines has entered its fourth day with the carrier being forced to cancel 1,213 flights Monday and Tuesday, affecting some 110,000 passengers.

The flag carrier of Denmark, Norway and Sweden says more than 170,000 passengers have been affected since the open-ended strike started Friday.

The strike began after the collapse of pay negotiations with the SAS Pilot Group, which represents 95% of the company’s pilots in the three countries.

There is no sign of when talks might resume on a new collective bargaining agreement.

Jacob Pedersen, an analyst with Denmark’s Sydbank, says the pilots want their share of company earnings after the carrier posted a profit in the past four years following a cost saving program that started in 2012.

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More People Use Smartphone Apps to Find Flexible Gig Jobs

While many people have office jobs, working inside an office is not for everybody. And these days in the U.S. more people are turning to gig work — temporary jobs that allow them to work from home, hold multiple jobs and have flexible hours. More gig workers are now using smartphone apps to find jobs that set them free of office work. VOA’s Mykhailo Komadovsky spent time with one gig worker in Washington.

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Trump Presses Japan’s Abe to Build More Vehicles in US

U.S. President Donald Trump urged Japanese Prime Minister Shinzo Abe to have Japanese automakers produce more vehicles in the United States, according to a readout of their recent meeting provided Saturday by the U.S.

ambassador to Japan.

The two discussed recent public announcements by Japanese automakers, including Toyota Motor Corp.’s decision to invest more in U.S. plants.

“We talked about the need to see more movement in that direction, but I think the president feels very positive that we will see such movement because all the economics support that,” said Ambassador William Hagerty.

Trump has prodded Japanese automakers to add more jobs in the United States as the White House threatens to impose tariffs of up to 25 percent on imported vehicles, on the ground of national security.

Trump said Friday that it was possible that the United States and Japan could reach a new bilateral trade deal by the time he visits Tokyo in May, but he and Abe cited areas where they differ on trade.

“We want to ensure that the U.S. has trading terms with Japan that are no less favorable than any other nation,” Hagerty said in a phone call with reporters.

He added that Trump is planning to attend the summit of the Group of 20 industrialized nations set to take place in Osaka, Japan, in June.

Separately, Trump was optimistic trade talks with China would be successful, the ambassador said.

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Uber’s Stock Offering Terms Temper Expectations

Uber Technologies Inc., the world’s largest ride-hailing company, plans an initial public offering that values the company lower than the startup’s insiders had hoped, between $80.5 billion and $91.5 billion. 

The valuation, outlined in a regulatory filing Friday, is less than the $120 billion that investment bankers told Uber last year it could fetch, and closer to the $76 billion valuation it attained in a private fundraising round in 2018. 

This reflects the poor stock performance of its smaller rival Lyft Inc. following its IPO last month. Lyft shares ended trading Thursday down more than 20 percent from their IPO price, amid investor skepticism over its path to 

profitability. 

Lyft completed its IPO at a valuation of $24.3 billion, which corresponded to around 11 times its 2018 revenue. By comparison, the top end of Uber’s valuation target is around eight times revenue last year. 

“We believe that recent price reductions for both Uber and Lyft may be indicative of investor hesitance to invest in highly capital-intensive, deeply unprofitable and untested business models at this late stage of the economic cycle,” PitchBook analyst Asad Hussain said. 

In the filing, Uber set a target price range of $44 to $50 per share for its IPO. The company will sell 180 million shares in the offering to raise up to $9 billion, with a further 27 million sold by existing investors for as much as $1.35 billion. 

Reuters reported this month that the combined value of Uber shares sold in the IPO would be around $10 billion. 

The Uber IPO would rank as the largest in the United States since that of Chinese e-commerce giant Alibaba Group Holding Ltd. in 2014. 

Road show

The updated public filing comes as Uber begins its 10-day investor road show, in which management will pitch Uber to public markets investors. 

Uber executives kicked off the IPO road show in New York on Friday. They will host an investor presentation in London on Monday, before returning to the United States for visits to New York a second time, Boston, San Francisco and the Midwest. 

Uber expects to price the IPO on May 9 and then begin trading on the New York Stock Exchange the following day, people familiar with the matter have said. 

Of the stock being sold in the IPO by existing Uber investors, 6.86 million shares are from Uber co-founders Travis Kalanick and Garrett Camp, meaning the two men could jointly pocket $343 million if the IPO prices at the top end of its current range. 

Uber will face a host of questions from investors, including when it will turn a profit, how it will navigate the transition to autonomous vehicles, and whether its business model can support higher driver costs from minimum wage rules. 

Underscoring the company’s ability to generate revenue but also the scale of its losses, Uber reported in the filing a net loss attributable to the company for the first quarter of 2019 of around $1 billion on sales of roughly $3 billion. 

“When it comes to Uber, we believe there are still questions over the current car-sharing model, the economics of which are not immediately or obviously attractive for sustainable, long-term investment,” Mark Hargraves, head of Framlington Global Equities, wrote in a note. 

Uber also said PayPal had agreed to purchase $500 million of stock in a private placement at the price the IPO eventually settles at. The two companies also said they were extending an existing partnership to “explore future commercial payment collaborations.” 

This is similar to when Comcast Corp.’s NBCUniversal invested $500 million in Snapchat owner Snap Inc., around the time of the latter’s IPO in 2017. 

Conservative valuation

Two other IPOs this month, those of online scrapbook company Pinterest Inc. and video conferencing company Zoom Video Communications Inc., have performed much better than Lyft. 

Uber, however, has chosen to still value itself conservatively. One advantage Uber will likely seek to emphasize to investors is that it is the largest player in many of the markets in which it does business, and the fact that it operates 

around the world. 

Analysts consider building scale crucial for Uber’s business model to become profitable. 

Unlike Lyft, Uber also has a restaurant delivery business, Uber Eats, which generated $1.5 billion in revenue last year and competes with the likes of Grubhub Inc. and DoorDash.

During Uber’s IPO road show, Chief Executive Dara Khosrowshahi will be also tasked with convincing investors that he has successfully changed the company’s culture and business practices after a series of embarrassing scandals over the last two years. 

Those have included sexual harassment allegations, a massive data breach that was concealed from regulators, use of illicit software to evade authorities and allegations of bribery overseas. 

The Uber IPO is being led by Morgan Stanley, Goldman Sachs & Co. and Bank of America Merrill Lynch. 

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Foxconn Jobs, Tax Credits Could Be Renegotiated in Wisconsin 

Wisconsin Gov. Tony Evers and Foxconn Technology Group officials are talking about making changes to the contract signed in 2017 that was based on constructing a larger display screen manufacturing facility than is now proposed. 

 

But neither side is giving details. So how might the deal be changed? And what’s at stake for each side? 

 

Here are five areas to watch as talks continue, based on interviews with people familiar with the Foxconn deal and others like it: 

 

Jobs: It makes sense that Foxconn would want to open up the deal because it appears unlikely to meet the original jobs targets, said Bob O’Brien, president of U.S.-based Display Supply Chain Consultants, which tracks the global flat-panel industry. 

 

Foxconn already came up well short of its first-year target of 260 jobs, costing it $9.5 million in tax credits. This year’s jobs goal has doubled to 520, and the 2020 goal — when Foxconn says production will begin — is nearly 2,000 jobs. 

 

Starting in 2027, it must have at least 10,400 workers to qualify. 

 

It makes sense that Foxconn would want to renegotiate to lower the threshold to qualify, O’Brien said. 

 

The current contract awards Foxconn up to $1.5 billion in tax credits if it hires 13,000 people by 2023 making an average salary of $53,875.  

  

Alan Yeung, Foxconn’s leader for strategy in the U.S., this week suggested there’s no way to predict whether Foxconn will meet the jobs target. 

 

“Who has the crystal ball to predict if 13,000 jobs will be created by the year 2032? Esp in April `19,” he tweeted. Yeung later told reporters Foxconn remained committed to hiring 13,000 people. 

 

“We’re not changing the deal … especially the 13,000 jobs,” he said.    

​Size of factory: Foxconn could get another $1.35 billion in tax credits if it spends $9 billion on capital investments, primarily building construction and the purchasing of machinery and equipment.  

  

The original contract has Foxconn building what’s called a Generation 10.5 facility. But Foxconn now plans to build a Generation 6 plant, which will make smaller display screens for cellphones and other devices. 

 

Opponents have said that wording referring to a Generation 10.5 plant puts the entire contract in jeopardy if Foxconn builds a different-sized factory. 

 

But Evers, in an interview, discounted that concern. 

 

“I think that we’re past that point and I don’t think anybody would have ever called them out and say we’re going to negate this deal because of that,” Evers said. 

 

Level of credits: While Foxconn may want to  lower minimum job-creation numbers to get credits, the state may want to make the benefits less generous. 

 

The credits for job creation and capital investment are much richer than for most economic development projects, a point that critics repeatedly point to as a fault with the contract.  

  

Foxconn is currently eligible for a 15% capital investment credit for expenditures on land and buildings, more than the typical 10%. It’s eligible for a 17% credit on wages, more than double the usual 7%.  

  

Wisconsin went with the larger incentive payments because of the enormous promised scale of the project, which was projected to have massive ripple effects across the state’s economy. President Donald Trump heralded it as the “eighth wonder of the world” and said it was a sign of a resurgence in American manufacturing. 

 

But with the scale of the project reduced, and hiring numbers in question, there will be pressure on the state to lower its commitment. 

 

Changes in leadership: The project has been in flux almost from the moment it began. The election of Foxconn critic Evers as governor, followed by the announcement earlier this month that Foxconn CEO Terry Gou plans to run for president of Taiwan, has added uncertainty. 

 

Gou was personally involved in the Wisconsin deal, traveling to the state multiple times to negotiate with then-Gov. Scott Walker and his administration and meet with Trump.  

  

There are more changes to come. In September, Evers will be able to appoint a new leader to the Wisconsin Economic Development Corp., which wrote the contract.  

  

New requirements: Renegotiating the contract would give Evers a chance to insert new environmental safeguards, but those would come at a cost that Foxconn would surely want to mitigate elsewhere. Evers could also attempt to put in place new requirements forcing Foxconn to do business with Wisconsin companies and hire workers from the state. The state may also want to include protections for local communities, which have already spent about $190 million on the project, O’Brien said. 

 

“To me it’s a partnership and we’re going to be working together to solve it,” Evers said. “I suppose at some point in time we might not agree and then it becomes somewhat of a negotiation. But I truly believe that the changes that are made will be reasonable to all sides. Of course, you go in knowing it might not be.”

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Amazon Aims to Bring One-day Delivery to Prime Members Around Globe

Amazon.com Inc plans to deliver packages to members of its loyalty club Prime in just one day, instead of two days, part of a spending ramp-up that might curb future profits after a blockbuster first quarter.

Shares rose as much as 2% in after-hours trade on Thursday on the faster shipping announcement for customers around the globe and as Amazon’s first-quarter profit trounced estimates thanks to soaring demand for its cloud and ad services. Amazon will spend $800 million in the second quarter on the goal.

 The announcement adds pressure to rivals Walmart Inc and others already racing to keep pace with the speed and benefits of Amazon’s Prime program.

Amazon’s first-quarter net income more than doubled to $3.6 billion, while analysts were only expecting $2.4 billion, according to IBES data from Refinitiv.

Second-quarter operating income will be as much as $3.6 billion, but analysts had been expecting $4.2 billion, according to FactSet.

 Chief Financial Officer Brian Olsavsky said Amazon was still reaping rewards from prior years of hiring and investments in warehouses and other infrastructure.

“We’re banking the efficiencies of prior investments, continued into Q1,” he said on a call with reporters. “There’ll be times when we have to invest ahead to build out warehouse capacity, but right now we are on a nice path where we are getting the most out of the capacity we have.”

Olsavsky also said earlier that the company would spend more later this year to roll out more benefits to international Prime members.

Investments mean lower profits

The news marks a familiar refrain for the world’s largest online retailer. For years, Amazon has made expensive bets on new technology and programs, like its $13.7 billion purchase of Whole Foods Market in 2017 to become a player in the U.S. grocery business.

 Amazon’s investments had long meant lower profit. However, its steady, often successful marches into new industries have been lucrative to shareholders, including its founder Jeff Bezos, who had become the richest man in the world.

 The luster of these bets still shined brightly on Thursday. The company’s loyal customer base has drawn merchants to sell and increasingly advertise through its site in exchange for fees, helping Amazon transform from a largely low-margin retail business to a more and more lucrative marketplace.

Revenue from seller services jumped 20% to $11.1 billion in the first quarter, while ad and other sales surged 34%  to $2.7 billion, the company said.

Meanwhile, Amazon’s cloud unit kept growing as more enterprises moved data and computing operations to the technology company’s servers. Sales for Amazon Web Services (AWS) rose 41% to $7.7 billion in the first quarter.

More hiring, spending to come

Some analysts noted that these growth figures, while impressive, were lower than what Amazon had posted in prior quarters.

“Amazon delivered slower growth in all key segments,“ (AWS, advertising and e-commerce) “but margins skyrocketed, seemingly driven by less aggressive investment,” said Atlantic Equities analyst James Cordwell.

Amazon suggested that spending indeed was on the way, and with that smaller growth in profit.

‘Lord of the Rings’ prequel

The company has been building warehouses around the world to ensure its edge in delivering goods to customers the fastest. It is spending more on video, from live sports to a planned prequel series to “The Lord of the Rings,” to draw more people to log on to its website, watch, and while they are there, buy socks. Hiring will pick up from the 12 percent increase Amazon posted in the past 12 months, Olsavsky said.

And the company is delving into even less familiar terrain.

It recently announced investments in self-driving and electric car companies, teasing how it thinks these high-tech, capital-intensive businesses could pay dividends potentially in the form of autonomous deliveries in the long run. Amazon has not described in detail its thinking behind the bets.

In China, where the company had long struggled to compete with Alibaba Group Holding Ltd, Amazon said this month it would close warehouses and its domestic marketplace in July. There were silver linings for investors, however.

Amazon’s Olsavsky said the company saw no material impact in India from actions the company took to comply with new regulations there affecting foreign investment in the e-commerce sector, something Amazon had voiced concern about in the past.

Prime signups on rise in India

Prime member signups in India, one of Amazon’s most important growth markets, continue to be rising the fastest in the company’s history.

Bezos, who many regard as a management guru, also settled his closely watched divorce such that he will retain full voting control of his family’s stock, sparing Amazon a boardroom battle. However, his fortune, which has been the largest of any married couple in the world, will be divided.

The company forecast net sales of between $59.5 billion and $63.5 billion for the second quarter, the midpoint of which was below analysts’ average estimate of $62.37 billion, according to IBES data from Refinitiv.

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US Adds Chinese e-commerce Site to ‘Notorious’ List for IP Protection

The U.S. Trade Representative said on Thursday it has added Pinduoduo.com, China’s third-largest e-commerce platform, to its “notorious markets” list for a proliferation of counterfeit products, as the agency also called out China as a priority to watch for intellectual property rights concerns.

In its annual review of trading partners’ protection of intellectual properties rights and so-called “notorious markets,” the U.S. Trade Representative said 36 countries warranted additional bilateral engagement over these issues. The agency kept China on the list and lifted Saudi Arabia up as a priority.

The release of the report comes as the United States and China are embroiled in negotiations to end a tit-for-tat tariff battle that has roiled supply chains and cost both countries billions. The two countries are due to resume talks in Beijing next week.

USTR also kept Alibaba Group’s taobao.com on the “notorious” list, even though the parent company has “taken some steps” to curb the offer and sale of copyright infringing products, according to the report.

The agency bumped Saudi Arabia up to priority in part due to an illicit service for pirated content called BeoutQ, the report said.

Despite “extensive engagement” in Saudi Arabia by both U.S. government and private stakeholders, treatment of intellectual property rights “continued to deteriorate,” USTR said.

 

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Brent Oil Hits $75 For First Time in 2019 as Russian Exports Cut

Brent oil rose above $75 per barrel on Thursday for the first time this year as quality concerns forced the suspension of some Russian crude exports to Europe while the United States prepared to tighten sanctions on Iran.

Brent crude futures were at $75.24 by 1156 GMT, up 67 cents. They earlier hit a session high of $75.60, their strongest since Oct. 31.

U.S. West Texas Intermediate crude was at $66.14 per barrel, up 25 cents.

Poland and Germany have suspended imports of Russian crude via the Druzhba pipeline, citing poor quality. Trading sources said the Czech Republic had also halted purchases.

The pipeline can ship up to 1 million barrels per day, or 1 percent of global crude demand, with around 700,000 bpd of flows suspended, according to trading sources and Reuters calculations.

U.S. attempts to drive Iranian oil exports down to zero also boosted prices.

The United States this week said it would end all exemptions for sanctions against Iran, OPEC’s third-largest producer, demanding countries halt oil imports from Tehran from May or face punitive action from Washington.

The U.S. decision comes amid supply cuts led by the Organization of the Petroleum Exporting Countries since the start of the year aimed at propping up prices.

Still, Brian Hook, U.S. special representative for Iran and senior policy adviser to the secretary of state, said on Thursday “there is plenty of supply in the market to ease that transition and maintain stable prices.”

Consultancy Rystad Energy said Saudi Arabia and its main allies could replace lost Iranian oil.

“Saudi Arabia and several of its allies have more replacement barrels than what would be lost from Iranian exports,” said Rystad’s head of oil research, Bjoernar Tonhaugen.

“Since October 2018, Saudi Arabia, Russia, the UAE, and Iraq have cut 1.3 million bpd, which is more than enough to compensate for the additional loss,” he added.

On the supply side, U.S. crude production has risen by more than 2 million bpd since early 2018 to a record of 12.2 million bpd currently, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.

In part because of soaring domestic production, U.S. commercial crude inventories last week soared to 460.63 million barrels, their highest since October 2017, the Energy Information Administration said on Wednesday.

 

 

 

 

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South Korean Economy Shrinks Unexpectedly in 1st Quarter

South Korea’s economy unexpectedly shrank in the first quarter, marking its worst performance since the global financial crisis, as government spending failed to keep up the previous quarter’s strong pace and as companies slashed investment. 

The shock contraction reinforced financial market views that the central bank is likely to make a U-turn on policy, shifting to an easing stance and possibly cutting interest rates to counter declining business confidence and growing external risks.

A worse-than-expected downturn in the memory chips sector hit first quarter capital investment, while slumping exports amid the Sino-U.S. trade dispute erased gains from private consumption, the Bank of Korea said Thursday.

Gross domestic product (GDP) in the first quarter declined a seasonally adjusted 0.3 percent from the previous quarter, the worst contraction since a 3.3 percent drop in late 2008 and sliding from 1 percent growth in October-December, the Bank of Korea said Thursday.

None of the economists surveyed in a Reuters poll had expected growth to contract. The median forecast was for a rise of 0.3 percent.

Government spending

“Government spending failed to keep up the bumper boost of the fourth quarter, especially for construction investment, while a drop in business investment was worse than expected due to a downturn in the chips sector,” a BOK official said, adding there was also a strong base effect after solid fourth-quarter growth.

The grim data came a day after the Moon Jae-in government unveiled a 6.7 trillion won ($5.9 billion) supplementary budget to tackle unprecedented air pollution levels and boost weak exports.

Capital investment tumbled 10.8 percent, the worst reading since 1998, while construction investment inched down 0.1 percent, the BOK said.

Exports fall

Exports fell 2.6 percent quarter-on-quarter, a sharper drop than the 1.5 percent decline in the previous three months.

Private consumption gained by 0.1 percent because of a rise in demands for durable goods.

From a year earlier, Asia’s fourth-largest economy grew 1.8 percent in the January-March quarter, compared with 2.5 percent growth in the poll and 3.1 percent in the final quarter of 2018.

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Facebook Beats Profit Estimates, Sets Aside $3B for Privacy Penalty


Facebook on Wednesday blew away Wall Street profit estimates in the first quarter as it kept a lid on the costs of making its social networks safer, and set aside $3 billion to cover a settlement with U.S. regulators, calming investors who had worried about the outcome of a months-long federal probe.

Shares of the world’s biggest online social network jumped more than 10% after hours.

The U.S. Federal Trade Commission has been investigating revelations that Facebook inappropriately shared information belonging to 87 million of its users with the now-defunct British political consulting firm Cambridge Analytica.

The probe has focused on whether the sharing of data and other disputes violated a 2011 agreement with the FTC to safeguard user privacy. Facebook set aside $3 billion to cover anticipated costs associated with the settlement, but said the charges could reach as high as $5 billion.

Civil penalty

If the settlement is in that range, it would be the largest civil penalty paid to the agency, said David Vladeck, a former FTC official now at Georgetown Law School.

“Everyone expected there would be a substantial civil penalty in this case,” said Vladeck. “There’s no question that Facebook is going to have to settle this matter. Investors want this behind them.”

The accrual cut the company’s net income in the first quarter to $2.43 billion, or $0.85 per share.

Excluding the $3 billion it set aside, Facebook would have earned $1.89 a share, up from $1.69 the year prior and easily beating analysts’ average estimate of $1.63 per share, according to IBES data from Refinitiv.

Total first-quarter revenue rose 26% to $14.9 billion from $12.0 billion last year, compared to analysts’ average estimate of $15.0 billion.

Shares rise 

Shares of Facebook rose 10% to $200.50 in after-hours trade, demonstrating the company’s resilience despite a series of scandals over improperly shared user data and propaganda that made it the target of political scrutiny across the globe.

The company’s shares lost a third of their value last year, after executives first warned about costs associated with its drive to improve safety and slowing growth in revenue and operating margin.

Total expenses in the first quarter were $11.8 billion, up 80% compared with a year ago. The operating margin fell to 22% from 46% a year ago, but would have been 42%  without the one-time expense.

“This is a strong report suggesting that advertisers still see value in Facebook’s platform, as they did before the controversies and scandals erupted,” said Haris Anwar, senior analyst at financial markets platform Investing.com.

Expenses will grow

Executives have forecast that expenses will grow 40% to 50%  in 2019, but say they expect the downward trend to taper off after this year as revenue from new ways of pushing ads and facilitating transactions offset the security spending.

Monthly and daily users of the main Facebook app compared to last quarter were both up 8% to 2.38 billion and 1.56 billion, respectively.

Estimates were for 2.4 billion monthly users and 1.6 billion daily users, according to Refinitiv averages.

 

 

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Microsoft Surges Toward Trillion-Dollar Value as Profits Rise

Microsoft said profits climbed in the past quarter on its cloud and business services as the U.S. technology giant saw its market value close in on the trillion-dollar mark.

Profits in the quarter to March 31 rose 19 percent to $8.8 billion on revenues of $30.8 billion, an increase of 14 percent from the same period a year earlier.

Microsoft shares gained some 3% in after-hours trade, pushing it closer to $1 trillion in value. 

It ended the session Wednesday with a market valuation of some $960 million, just behind Apple but ahead of Amazon.

In the fiscal third quarter, Microsoft showed its reliance on cloud computing and other business services which now drive its earnings, in contrast to its earlier days when it focused on consumer PC software.

“Leading organizations of every size in every industry trust the Microsoft cloud,” chief executive Satya Nadella said in a statement.

Commercial cloud revenue rose 41% from a year ago to $9.6 billion, which now makes up nearly a third of sales, Microsoft said.

Some $10.2 billion in revenue came from the “productivity and business services” unit which includes its Office software suite for both consumers and enterprises, and the LinkedIn professional social network.

The “more personal computing” unit which includes its Windows software, Surface devices and gaming operations generated $10.6 billion in the quarter.

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Boeing Reports Lower Profits Amid 737 MAX Crisis

Boeing reported lower first-quarter profits Wednesday as the global grounding of its 737 MAX plane following two crashes hit results.

The US aerospace giant reported $2.1 billion in profits, down 13.2 percent from same period a year ago.

Revenues dipped 2.0 percent to $22.9 billion, due to a tumble in commercial plane revenues following the suspension of 737 MAX deliveries.

Boeing also withdrew its full-year profit forecast, citing uncertainty surrounding the 737 MAX.

The aerospace giant has been under scrutiny since the March 10 crash of an Ethiopian Airlines jet, which came on the heels of an October Lion Air crash. Together the crashes claimed 346 lives.

Boeing said it is “making steady progress” on a fix to the jet’s anti-stall system that is thought to be a factor in both accidents.

The company has conducted more than 135 test flights of the fix and is working with global regulators and airlines, it said in a news release.

“Across the company, we are focused on safety, returning the 737 MAX to service, and earning and re-earning the trust and confidence of customers, regulators and the flying public,” said Chief Executive Dennis Muilenburg in a press release.

The company announced earlier this month it was cutting monthly production of the 737 by about 20 percent.

Boeing shares were up 1.3 percent at $379.07 in pre-market trading.