U.S. President Donald Trump, Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto have signed the new U.S. Mexico Canada Agreement, a deal designed to replace the North American Free Trade Agreement. White House Correspondent Patsy Widakuswara reports.
…
Markets Sweat on Lopez Obrador’s ‘True Colors’ on Eve of New Mexican Presidency
During Andres Manuel Lopez Obrador’s successful campaign for the Mexican presidency, his advisers met representatives of dozens of investment funds to allay fears about the leftist’s plans, saying he prized economic stability and wanted to attract foreign capital.
Initially, it worked.
When Lopez Obrador won office by a landslide on July 1, the peso and the stock market rose, buoyed by his conciliatory tone.
The rally continued when Mexico and the United States reached a deal to rework the NAFTA trade pact in late August.
But the mood has since changed.
Lopez Obrador, who takes office Saturday, began saying in September that Mexico was “bankrupt.” When he canceled a new $13 billion Mexico City airport on Oct. 29 on the basis of a widely-derided referendum, investors took flight.
“[Lopez Obrador] behaved quite well from the election in early July until the referendum on the airport. That was really an indication of his true colors,” said Penny Foley, portfolio manager for emerging markets and international equities groups at TCW Group Inc, which manages $198 billion in total.
Foley said the referendum prompted TCW to cut its exposure to bonds issued by state oil firm Pemex, on the grounds that under a Lopez Obrador administration the company would be driven more by politics than by profit.
“We are now slightly underweight Mexico in the dollar fund and neutral in the local currency fund,” she added.
Lopez Obrador wants to attract investment from home and abroad to fuel economic growth and drive an ambitious infrastructure agenda, including a major rail project linking Cancun to Mexico’s southeast, plus a new oil refinery.
Yet decisions such as the airport cancellation have fed investors’ concerns he could push Mexico toward a more authoritarian, arbitrary and partisan form of government.
Mexico’s S&P/BVM IPC stock index has tumbled 17 percent since the market’s post-election peak on Aug. 28, while the peso has fallen around 8 percent against the dollar.
Bond yields on Mexican 10-year sovereign debt have jumped 121 basis points, a sign investors see it as a riskier bet.
By contrast, yields on Brazil’s 10-year debt have fallen over 20 basis points since the Oct. 28 presidential election victory of Jair Bolsonaro, a far-right politician who has appointed a group of pro-market economists to his team. Mexican corporate debt markets have taken note.
Airport operator GAP, which controls terminals in a dozen cities including Tijuana and Guadalajara, canceled a planned 6 billion peso debt issuance this week.
“We decided to wait for better conditions,” GAP chief financial officer Saul Villarreal told Reuters.
Some European businesses are also in wait-and-see mode, said Alberico Peyron, a board member and former head of the Italian chamber of commerce in Mexico.
There was “no panic so far,” but a few executives had put plans on hold until the picture became clearer, he said, adding: “There are more who are worried than are optimistic.”
‘Errors’ made
After 30 years of kicking against the establishment, the veteran Lopez Obrador, a 65-year-old former mayor of Mexico City, claimed the presidency with a promise to clean up government, cut poverty and tame Mexico’s drug cartels.
Aiming to almost double economic growth to around 4 percent, Lopez Obrador wants to revive Pemex, increase pensions and spur development in the poorer south to contain illegal immigration that has strained ties with U.S. President Donald Trump.
Lopez Obrador says rooting out corruption will free up billions of dollars, while he intends to save more with pay cuts for civil servants. However, critics say the cuts could affect the quality of officials in his new administration.
Johannes Hauser, managing director of the German chamber of commerce in Mexico, told Reuters the association’s annual survey of firms, currently underway, was upbeat on Mexico.
Still, initial results suggested companies were not quite as eager to invest or create new jobs as they were a year ago. And the airport cancellation had been a shock, he said.
During their campaign outreach, some of Lopez Obrador’s advisers sought to play down the airport’s importance to markets, while others suggested it was likely to be completed.
Without providing evidence, Lopez Obrador said the project — which has been under construction since 2015 — was tainted by corruption. But more than once, Lopez Obrador had raised the possibility of turning its completion into a private concession.
Incoming Finance Minister Carlos Urzua, whose team sat down with financial heavyweights such as Bank of America, BlackRock, Credit Suisse and Morgan Stanley, told Reuters in April that foreign investors were “not very worried” about the airport.
Now, the scrapping of the hub has raised the prospect of a messy legal dispute with investors that could cost billions of dollars — as well as cloud interest in new projects.
Some members of Lopez Obrador’s incoming government privately express deep misgivings about the decision to cancel the airport, which was based on a referendum organized by his own party in which barely 1 percent of the electorate voted.
They felt the poll, which critics lambasted as opaque and open to abuse, undermined the credibility he had built up over the years he spent campaigning against corruption and vote-rigging.
Lopez Obrador’s taste for rule by referendum, and changes to laws governing everything from banking to mining and pension funds that have been proposed by his National Regeneration Movement and the party’s allies in Congress, have further curdled sentiment.
“I’ve moved from being cautiously optimistic after the election, to being quite pessimistic now,” said Andres Rozental, a former deputy foreign minister of Mexico. “He’s not building on what he got. He’s destroying little by little what he got.”
Facing questions about the airport controversy from a panel of prominent Mexican journalists this month, Lopez Obrador was unrepentant about the referendum, saying that “errors” made were blown out of proportion by adversaries trying to hurt him.
“What I regard as most important in my life is my honesty,” he said. “We are not creating a dictatorship,” he added, repeating what is a frequent aside in his public pronouncements.
Nevertheless, Arturo Herrera, an incoming deputy finance minister, conceded this week that the transition had tested the next government, which must present its first budget by mid-December.
“What we’re all learning is that we need to be extremely careful,” he told Mexican television.
…
Indian Politicians Spar Over Dodgy Economic Data as Election Nears
It may be the world’s sixth largest, but most other things about India’s economy are up for debate.
The ruling Bharatiya Janata Party (BJP) is under fire for the release of new historical GDP figures that significantly downgraded growth during the years the opposition Congress party was in power, replacing old government estimates and those prepared by an independent committee.
The figures, released by the government’s Central Statistics Office (CSO), showed growth in the 10 years of Congress rule to 2014 averaged 6.7 percent, below an average of 7.4 percent under the current government. A previous government estimate had growth under Congress at 7.8 percent.
P. Chidambaram, a former Congress finance minister, called the release “a joke”. In response India’s current finance minister, the BJP’s Arun Jaitley, said the CSO was a credible organization.
The fallout comes at a critical time for Prime Minister Narendra Modi.
India’s economy grew a weaker-than-expected 7.1 percent in the July-September quarter, from a more than two-year high of 8.2 percent in the previous quarter, government data showed on Friday.
Modi faces a general election next year, when the performance of the economy under his pro-business administration compared with the Congress era is likely to dominate campaigning.
The spat has also alarmed India’s top statisticians, who have long faced the difficult task of estimating growth and unemployment in an economy with hundreds of millions of informal workers, and dominated its financial press and political cartoons in recent days.
“The entire episode threatens to bring disrepute to India’s statistical services,” said an editorial in Mint, one of the country’s leading business newspapers, on Friday.
A joke widely circulated on WhatsApp said the government would soon be reinterpreting the last cricket World Cup, in which India crashed out in the semi-finals, to say the country won based on a new methodology.
COMPETING INTERESTS
Unlike many major economies, India lacks an independent statistical body.
An organization called the National Statistics Commission (NSC) was formed in 2005 with that intention, though it is yet to be recognized as the official body for generating statistics.
Last year the NSC set up a committee, chaired by economist Sudipto Mundle, to come up with a new set of historical GDP figures.
Its report, published in July, showed growth averaged 8.1 percent in the decade before the BJP took power.
After the figures were cheered by the Congress, the government issued a clarification saying the report “had not yet been finalised and various alternative methods are being explored”. Shortly after, the report was pulled from the government’s website.
“The whole thing has unfortunately become very political,” said Mundle, on the battle between the two parties. “It is very troubling.”
Attempts to formalize the NSC’s role have been successively stonewalled by both Congress and the BJP, said N R Bhanumurthy, who sat on the committee chaired by Mundle.
“They have not shown much interest in making it independent from our government,” he said.
The debate over India’s true level of growth is the latest to frustrate economists looking to measure the performance of the country of 1.3 billion people.
India has not published its official employment survey since 2015, while a smaller quarterly survey on companies employing more than 10 workers has not been released since March while the government comes up with new methodology.
India’s large informal sector made calculating employment “almost impossible”, Bhanumurthy said, leading to a vacuum that was filled with competing political interests.
…
Rosenstein Calls for Tech Firms to Work With Law Enforcement
U.S. Deputy Attorney General Rod Rosenstein called on social media companies and technology firms Thursday to work with law enforcement to protect the public from cybercriminals.
Speaking at a symposium on online crime, Rosenstein said that “social media platforms provide unprecedented opportunities for the free exchange of ideas. But many users do not understand that the platforms allow malicious actors, including foreign government agents, to deceive them by launching vast influence operations.”
He said it was up to the companies to “place security on the same footing as novelty and convenience, and design technology accordingly.”
He warned that if the technology sector failed to do so, government would have to step in.
“I think the companies now do understand if they do not take it upon themselves to self-regulate — which is essentially the theme of my talk today — they will face the potential of government regulation,” he said.
Extortion scheme
Rosenstein’s remarks came a day after the Justice Department charged two Iranian hackers in connection with a multimillion-dollar cybercrime and extortion scheme that targeted government agencies, cities and businesses.
Rosenstein said many tech companies are willing to work with law enforcement and to prevent the use of their platforms to spread disinformation.
But he said that “some technology experts castigate colleagues who engage with law enforcement to address encryption and similar challenges. Just because people are quick to criticize you does not mean that you are doing the wrong thing.”
U.S. law enforcement officials have long been pushing tech companies to make it easier for them to access information on private devices such as cellphones and social media accounts. But most firms have resisted, citing privacy of the users.
Rosenstein said data encryption practices were a “significant detriment to public safety.”
“Improvements in the ability to investigate crime and hold perpetrators accountable must match the pace at which technology is making crimes easier to commit and more destructive,” Rosenstein said.
…
Deutsche Bank Offices Raided in Money Laundering Probe
Police raided six Deutsche Bank offices in and around Frankfurt on Thursday over money laundering allegations linked to the “Panama Papers”, the public prosecutor’s office in Germany’s financial capital said.
Investigators are looking into the activities of two unnamed Deutsche Bank employees alleged to have helped clients set up offshore firms to launder money, the prosecutor’s office said.
Around 170 police officers, prosecutors and tax inspectors searched the offices where written and electronic business documents were seized.
“Of course, we will cooperate closely with the public prosecutor’s office in Frankfurt, as it is in our interest as well to clarify the facts,” Deutsche Bank said, adding it believed it had already provided all the relevant information related to the “Panama Papers”.
The news comes as Deutsche Bank tries to repair its tattered reputation after three years of losses and a drumbeat of financial and regulatory scandals.
Christian Sewing was appointed as chief executive in April to help the bank to rebuild. He trimmed U.S. operations and reshuffled the management board but revenue has continued to slip.
Deutsche Bank shares were down more than 3 percent by 1220 GMT and have lost almost half their value this year.
Offshore links
The investigation was triggered after investigators reviewed so-called “Offshore-Leaks” and “Panama Papers”, the prosecutor said.
The “Panama Papers”, which consist of millions of documents from Panamanian law firm Mossack Fonseca, were leaked to the media in April 2016.
Several banks, including Scandinavian lenders Nordea and Handelsbanken have already been fined by regulators for violating money laundering rules as a result of the papers.
The prosecutors said they are looking at whether Deutsche Bank may have assisted clients to set up offshore companies in tax havens so that funds transferred to accounts at Deutsche Bank could skirt anti-money laundering safeguards.
In 2016 alone, over 900 customers were served by a Deutsche Bank subsidiary registered on the British Virgin Islands, generating a volume of 311 million euros, the prosecutors said.
They also said Deutsche Bank employees are alleged to have breached their duties by neglecting to report money laundering suspicions about clients and offshore companies involved in tax evasion schemes.
The investigation is separate from another money laundering scandal surrounding Danish lender Danske Bank, where Deutsche Bank is involved.
Danske is under investigation for suspicious payments totaling 200 billion euros from 2007 onwards and a source with direct knowledge of the case has told Reuters Deutsche Bank helped to process the bulk of the payments.
A Deutsche Bank executive director has said the lender played only a secondary role as a so-called correspondent bank to Danske Bank, limiting what it needed to know about the people behind the transactions.
Under scrutiny
Weaknesses in Deutsche Bank’s controls that aim to prevent money laundering have caught the attention of regulators on both sides of the Atlantic. The bank has publicly said that it agreed it needed to improve its processes to properly identify clients.
In September, Germany’s financial watchdog – BaFin – ordered Deutsche Bank to do more to prevent money laundering and “terrorist financing,” and appointed KPMG as third party to assess progress.
In August, Reuters reported that Deutsche Bank had uncovered further shortcomings in its ability to fully identify clients and the source of their wealth.
Last year, Deutsche Bank was fined nearly $700 million for allowing money laundering through artificial trades between Moscow, London and New York. An investigation by the U.S.
Department of Justice is still ongoing.
Deutsche Bank has been under pressure after annual losses, and it agreed to pay a $7.2 billion settlement with U.S. authorities last year over its sale of toxic mortgage securities in the run-up to the 2008 financial crisis.
Trump Studying New Auto Tariffs After GM Restructuring
U.S. President Donald Trump said Wednesday that new auto tariffs were “being studied now,” asserting they could prevent job cuts such as the U.S. layoffs and plant closures that General Motors Co. announced this week.
Trump said on Twitter that the 25 percent tariff placed on imported pickup trucks and commercial vans from markets outside North America in the 1960s had long boosted U.S. vehicle production.
“If we did that with cars coming in, many more cars would be built here,” Trump said, “and G.M. would not be closing their plants in Ohio, Michigan & Maryland.”
The United States has a 2.5 percent tariff on imported cars and sport utility vehicles from markets outside North America and South Korea. The new North American trade deal exempts the first 2.6 million SUVs and passenger cars built in Mexico and Canada from new tariffs.
Several automakers said privately on Wednesday that they feared GM’s action could prompt Trump to act faster than expected on new tariffs.
GM did not directly comment on Trump’s tweets but reiterated that it was committed to investing in the United States. On Monday, the company said it would shutter five North American plants, stop building six low-selling passenger cars in North America and cut up to 15,000 jobs. The company has no plans to shift production of those vehicles to other markets.
The administration has for months been considering imposing dramatic new tariffs on imported vehicles.
The U.S. Commerce Department has circulated draft recommendations to the White House on its investigation into whether to impose tariffs of up to 25 percent on imported cars and parts on national security grounds, Reuters reported earlier this month.
“The President has great power on this issue – Because of the G.M. event, it is being studied now!” Trump said.
Shock to industry
The prospect of tariffs of 25 percent on imported autos and parts has sent shock waves through the auto industry, with both U.S. and foreign-brand producers lobbying against it and warning that national security tariffs on EU and Japanese vehicles could dramatically raise the price of many vehicles.
Trump has also harshly criticized GM for building cars in China. The United States slapped an additional 25 percent tariff on Chinese-made vehicles earlier this year, prompting China to retaliate.
China currently imposes a 40 percent tariff on U.S. automobiles, while the United States has a 27.5 percent tariff on Chinese vehicles.
U.S. Trade Representative Robert Lighthizer said in a statement on Wednesday that he “will examine all available tools to equalize the tariffs applied to automobiles.”
Additional tariffs on Chinese-made vehicles and parts would have a limited impact, said Kristin Dziczek, an economist at the Center for Automotive Research. She noted only a small number of vehicles were exported from China to the United States annually.
The White House previously pledged not to move forward with imposing national security tariffs on the European Union or Japan while it was making constructive progress in trade talks.
Trump wants the EU and Japan to buy more American-made vehicles. He wants the EU and Japan to make trade concessions, including lowering the EU’s 10 percent tariff on imported vehicles and cutting nontariff barriers.
The White House in recent weeks has reached out to the chief executives of German automakers, including Daimler AG, MW AG and Volkswagen AG about meeting to discuss the status of auto trade.
…
Stocks Leap as Fed Chief Hints Interest Rate Increases May Taper Off
Federal Reserve Chair Jerome Powell boosted U.S. stock markets on Wednesday when he said interest rates were “just below” estimates of a level that neither brakes nor boosts a healthy economy. Many took his comments as a signal that the Fed’s three-year tightening cycle is ending.
The S&P 500 and Dow posted their biggest percentage gains in eight months, while the Nasdaq saw its largest advance in just over a month following Powell’s speech to the Economic Club of New York.
Powell said that while “there was a great deal to like” about U.S. prospects, “our gradual pace of raising interest rates has been an exercise in balancing risks.”
Earlier in the day, in its first-ever financial stability report, the Fed cautioned that trade tensions, Brexit and troubled emerging markets could rock a U.S. financial system where asset prices are “elevated.”
‘Close to neutral’
“[Powell is] now acknowledging he’s close to neutral, which suggests maybe not quite as many rate hikes in the future as investors believed,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago. “It’s certainly a change of language and welcome news to investors.”
The U.S. Commerce Department affirmed that U.S. GDP grew in the third quarter at a 3.5 percent annual rate, but the goods trade deficit widened, consumer spending was revised lower and sales of new homes tumbled, suggesting clouds are gathering over what is now the second-longest economic expansion on record.
The Dow Jones industrial average rose 617.7 points, or 2.5 percent, to 25,366.43, the S&P 500 gained 61.61 points, or 2.30 percent, to 2,743.78 and the Nasdaq Composite added 208.89 points, or 2.95 percent, to 7,291.59.
Of the 11 major sectors in the S&P 500, all but utilities were positive. Technology and consumer discretionary were the biggest percentage gainers, each up more than 3 percent.
The S&P 500 Automobile & Components index was up 1.4 percent after President Donald Trump said he was studying new auto tariffs in the wake of General Motors Co.’s announcement that it would close plants and cut its workforce.
Humana cuts forecast
Health insurer Humana Inc. cut its 2019 forecast for Medicare drug plan enrollment but upped its estimated enrollment in the company’s Medicare Advantage plan. Its stock ended the session up 6.2 percent.
Salesforce.com Inc. beat analysts’ earnings estimates and forecast better-than-expected 2020 revenue, sending its shares up 10.3 percent. Other cloud software makers rose on the news, with the ISE Cloud Index gaining 3.5 percent.
Microsoft Corp briefly surpassed Apple Inc. in market cap but Apple took back its lead by closing. Nevertheless, Microsoft closed 4.0 percent higher as it benefited from optimism regarding demand for cloud computing services.
Among losers, Tiffany & Co. shares dropped 11.8 percent after the luxury retailer missed quarterly sales estimates on slowing Chinese demand.
Advancing issues outnumbered declining ones on the NYSE by a 3.95-to-1 ratio; on Nasdaq, a 3.58-to-1 ratio favored advancers.
The S&P 500 posted 17 new 52-week highs and six new lows; the Nasdaq Composite recorded 37 new highs and 129 new lows.
Volume on U.S. exchanges was 8.04 billion shares, compared with the 7.82 billion-share average over the last 20 trading days.
…
Trump: US Tariffs on More Foreign Vehicles Would Have Prevented GM Plant Closures
U.S. President Donald Trump touted the use of U.S. tariffs on foreign small trucks Wednesday, saying their placement on other foreign vehicles would have prevented the closure of several General Motors plants and the loss of thousands of coveted manufacturing jobs.
Trump noted on Twitter that brisk U.S. small truck sales in the country are due to a 25-percent tariff on small truck imports.
The president reiterated on Twitter that “countries that send us cars have taken advantage of the U.S. for decades.” Trump added he has “great power on this issue,” which he said “is being studied now.”
Trump has threatened to eliminate all federal subsidies to GM in response to the company’s planned closure of five plants and the elimination of 14,000 jobs in North America. Questions remain, though, about whether Trump has the authority to act against the automaker without congressional approval.
Federal tax credits of up to $7,500 are available to those who buy GM electric vehicles. Killing the subsidies may have little financial impact on GM because it is on the cusp of reaching its subsidy limit.
Many of the jobs would be eliminated in Midwestern U.S. states, a region where Trump has long promised a manufacturing rebirth.
GM, which said it has invested more than $22 billion in U.S. operations since it came out of bankruptcy in 2009, has tried to appease the Trump administration while justifying its decisions.
“We appreciate the actions this administration has taken on behalf of industry to improve the overall competitiveness of U.S. manufacturing,” GM said in a statement Tuesday.
Before GM can shutter factories next year in Michigan, Ohio and Ontario, Canada, it must reach agreement with the United Auto Workers union. The union has vowed to fight the closures legally and in collective bargaining.
GM’s restructuring reflects changes in buying trends in North America, prompting vehicle manufacturers to shift away from cars and toward SUVs and trucks.
Powell: Fed’s Gradual Rate Hikes Balance Against Risks
U.S. Federal Reserve Chair Jerome Powell said on Wednesday that while there was “a great deal to like” about U.S. prospects, the Fed’s gradual interest rate hikes are meant to balance risks as it tries to keep the economy on track.
“We know that things often turn out to be quite different from even the most careful forecasts,” Powell said in a speech that comes in the wake of last week’s volatile market selloff. “Our gradual pace of raising interest rates has been an exercise in balancing risks.”
Powell offered few clues on how much longer the U.S. central bank would raise interest rates in the face of a slowdown overseas and market volatility at home. Instead he highlighted a new financial stability report the Fed published earlier on Wednesday.
“My own assessment is that, while risks are above normal in some areas and below normal in others, overall financial stability vulnerabilities are at a moderate level,” he said at an Economic Club of New York luncheon.
…
With An Eye on Past Problems, Facebook Expands Local Feature
Facebook is cautiously expanding a feature that shows people local news and information, including missing-person alerts, road closures, crime reports and school announcements.
Called “Today In,” the service shows people information from their towns and cities from such sources as news outlets, government entities and community groups. Facebook launched the service in January with six cities and expanded that to 25, then more. On Wednesday, “Today In” is expanding to 400 cities in the U.S. — and a few others in Australia.
The move comes as Facebook tries to shake off its reputation as a hotbed for misinformation and elections-meddling and rather a place for communities and people to come together and stay informed.
Here are some things to know about this effort, and why it matters:
The big picture
It’s something users have asked for, the company says. Think of it as an evolution of a “trending” feature the company dropped earlier this year. That feature, which showed news articles that were popular among users, but was rife with such problems as fake news and accusations of bias.
Anthea Watson Strong, product manager for local news and community information, said her team learned from the problems with that feature.
“We feel deeply the mistakes of our foremothers and forefathers,” she said.
This time around, Facebook employees went to some of the cities they were launching in and met with users. They tried to predict problems by doing “pre-mortem” assessments, she said. That is, instead of a “post-mortem” where engineers dissect what went wrong after the fact, they tried to anticipate how people might misuse a feature — for financial gain, for example.
Facebook isn’t saying how long it has been taking this “pre-mortem” approach, though the practice isn’t unique to the company. Nonetheless, it’s a significant step given that many of Facebook’s current problems stem from its failure to foresee how bad actors might co-opt the service.
Facebook also hopes the feature’s slow rollout will prevent problems.
How it works
To find out if “Today In” is available in your city or town, tap the “menu” icon with the three horizontal lines. Then scroll down until you see it. If you want, you can choose to see the local updates directly in your news feed.
For now, the company is offering this only in small and mid-sized cities such as Conroe, Texas, Morgantown, West Virginia, and Santa Fe, New Mexico. Large cities such as New York or Los Angeles have added challenges, such as an abundance of news and information, and may need to be broken up into smaller neighborhoods.
The posts in “Today In” are curated by artificial intelligence; there is no human involvement. The service aggregates posts from the Facebook pages for news organizations, government agencies and community groups like dog shelters. For this reason, a kid couldn’t declare a snow day, because “Today In” relies on the school’s official page. Discussion posts from local Facebook groups may also be included.
For now, the information is tailored only by geography, but this might change. A person with no kids, for example, might not want to see updates from schools.
Safeguards?
Facebook uses software filters to weed out objectionable content, just as it does on people’s regular news feed. But the filters are turned up for “Today In.” If a good friend posts something a bit objectionable, you are still likely to see it because Facebook takes your friendship into account. But “Today In” posts aren’t coming from your friends, so Facebook is more likely to keep it out.
Porsche Shows off New Edition of Mainstay 911 Sports Car
Porsche says its future is in electric cars but for now it is rolling out a more powerful version of its internal combustion mainstay, the sleek 911 sports car.
Stuttgart-based Porsche, part of Volkswagen, is to show off the eighth version of its brand-defining model at the Los Angeles Auto Show.
The new 911 doesn’t look much different than earlier editions of the car. The new one has bigger wheel housings and a slightly wider body but the same long hood, sloping roof and prominent headlights that have marked successive versions since 1963.
The company said in a news release Wednesday that the new 911 Carrera S and 4S have flat six-cylinder turbocharged engines putting out 443 horsepower, 23 horsepower more than the predecessor. The Carrera S has a top speed of 191 mph and accelerates from zero to 60 mph (96.5 kph) in 3.5 seconds.
The rear-drive 2020 Carrera S has a base price of $113,200 and the 4S all-wheel drive version starts at $120,600, not including a $1,050 delivery fee. They can be ordered now and will reach dealers in summer 2019.
Porsche boss Oliver Blume says that the 911 remains “the core of our brand, we are making it even more emotional.”
Blume says nonetheless by 2025 about half of all new Porsche cars and SUVs will have electric motors, whether they are all-electric or hybrids combining batteries with internal combustion engines.
He was quoted by the Welt am Sonntag newspaper as saying that the company would be ready for a world in which some cities and countries are talking about banning internal combustion cars in coming decades. “It’s clear, the future belongs to electric mobility,” he said.
The company is developing an all-electric sports car, the Taycan, that would compete with sports car offerings by Tesla, BMW and others.
US Charges 2 Iranian Cyber Criminals in Ransomware Scheme
In the first case of its kind, the U.S. Justice Department announced charges Wednesday against two alleged Iranian cybercriminals who used malware to infect the computer networks of U.S. municipalities, hospitals and other organizations in a scheme to extort millions of dollars from the victims.
Faramarz Shahi Savandi, 34, and Mohammad Mehdi Shah Mansouri, 27, are accused of creating and deploying a sophisticated malware known as SamSam Ransomware to forcibly encrypt data on the computer networks of more than 200 organizations and other victims in the United States and Canada. Savandi and Mansouri would then demand a ransom payment in the form of the virtual currency known as bitcoin in exchange for decryption keys for the encrypted data.
In all, the two allegedly received more than $6 million in extortion payments. Officials did not name the victims that made the payments Other victims that refused to pay ransom suffered more than $30 million in lost data.
The victims included state agencies, city governments and hospitals, including the City of Atlanta, the City of Newark, the Port of San Diego, the Colorado Department of Transportation, the University of Calgary in Calgary, Canada, and six U.S. public health related entities, according to the 26-page indictment.
Deputy Attorney General Rod Rosenstein announced the six-count indictment against Saandi and Mansouri. The two residents of Tehran remain at large and have been placed on the FBI’s wanted list. Officials said the pair have no known ties to the Iranian government.
The hacking and extortion scheme lasted nearly three years starting in January 2016. The investigation started when a victim of the scheme came forward, officials aid.
“Every sector of our economy is a target of malicious cyber activity,” Rosenstein said. “But the events described in this indictment highlight the urgent need for municipalities, public utilities, health care institutions, unviersities other public organizations to enhance their cyber security.”
Assistant Attorney General Brian A. Benczkowski said the indictment was the first ever “against criminal actors for deploying a for-profit- ransomware, hacking, and extortion scheme.
Benczkowsi said the Iranian hackers carefully targeted their victims. In one instance, a few days before attacking the network of Kansas Heart Hospital, “the defendants conducted online searches concerning the hospital and accessed its website,” he said.
In recent months, U.S. prosecutors have charged a number of Iranian hackers, some with ties to the Iranian government, with cybercrimes. In March, prosecutors charged nine Iranian hackers with penetrating the computer networks of hundreds of American and foreign universities and other institutions.
Ransomware has become a favorite tool of cybercriminals in recent years. According to a report by the cybersecurity firm Bitdefender, ransomware payments were expected to hit a record $2 billion in 2017.
Ikea Moving Into City Centers to Adapt to Consumer Changes
An airport worker drops by Warsaw’s newest Ikea store during her lunch break to finish up plans for a home refurbishment. Around her, people drift in and out of the shop, placing small houseware items in big yellow bags as cafe tables fill up with people just stopping in for lunch.
The store is not one of Ikea’s out-of-the-way, maze-like warehouses that require a car to visit, but a shop like any other in a city center shopping mall. The Swedish retailing giant plans to open 30 such smaller stores in major cities around the world as part of a broader transformation to adapt to changing consumer habits.
Compared with just a decade ago, shoppers are more likely to be living in urban areas and not have a car, and often want a nearby location to look at goods like furniture in person before ordering things online.
“I like the idea because you can come any time,” said 29-year-old Angelika Singh, the airport worker, as she finalized an order for a new kitchen. “Mostly when you go to Ikea you need to have a whole day free, or at least half a day free, because it’s far.”
Warsaw’s store is located on two floors covering nearly 5,000 square meters (54,000 square feet), about one-fourth of a traditional big-box store. Similar stores have also opened in major cities like London and Madrid and more are expected, with one due next year in Paris, among other locations.
Shoppers can buy cushions, curtains and other home items. They can design the layout of bedrooms and kitchens at computer stations. But those hoping to buy a bookcase or bed will not find them stocked in a large warehouse, though they can order them at kiosks and have them delivered to their homes.
As such, it offers a very different shopping experience from the usual visit to one of the large warehouse stores.
“Ikea’s been doing pretty much the same for 70 years. It’s been a cash-and-carry company, and it still is for the majority of its sales,” said Andreas Flygare, the project manager for the Warsaw store. Now, he explained, the company must adapt to a consumer environment that has changed dramatically in the last 10 years.
“You have companies like Amazon and Uber that are raising the bar for what is expected. Because if you can have same-day delivery, or an Uber is two minutes away, it influences other companies, like Ikea,” he said in a recent interview in the store’s cafe. “It can be a quite tough environment. Everything is changing so fast.”
While Ikea is still profitable, its earnings have recently been growing more slowly than expected.
Thomas Slide, senior retail analyst at the market research firm Mintel, described it as a rational response to a “global trend towards urban living and a rebirth of the cities.”
“While Ikea used to be able to build its big blue warehouses on the edge of towns and cities and expect shoppers to come to them, now it has recognized it needs to be more flexible in its approach and take the Ikea experience to them, through digital channels and smaller stores closer to where people live and work,” Slide said.
Ikea isn’t the first to embrace such an approach. In the U.S., retailer Target has rolled out smaller stores to broaden its reach. French hardware store Leroy Merlin has done the same, as have Kingfisher-owned DIY store B&Q and sofa retailer DFS in Britain.
“While Ikea may not be on the cutting edge of this trend, it’s an important strategy to prepare the business for the future,” Slide said. “The challenge will be adding extra services through additional channels while also maintaining profitability.”
Chen Yu Ting, a 25-year-old from Taiwan who studies medicine in Warsaw, said it used to take him 40 minutes by bus to visit one of the large Ikea stores outside the city. But he is a short walk to the new store, and after an initial trip to buy pillows and bed sheets he now returns often for lunch, which is priced right for his budget.
“It’s more convenient, and now I just come here to eat,” he said.
His only complaint? The store doesn’t stock frozen meatballs.
…
Trump Threatens to Cut GM Subsidies in Retaliation for US Job Cuts
U.S. President Donald Trump threatened on Tuesday to cut subsidies for General Motors after the largest U.S. automaker said it would halt production at five plants in North America and cut nearly 15,000 jobs.
“The U.S. saved General Motors, and this is the THANKS we get! We are now looking at cutting all @GM subsidies, including … for electric cars,” Trump said on Twitter.
Trump has made boosting auto jobs a key priority during his almost two years in office and has often attacked automakers on Twitter for not doing enough to boost U.S. employment.
GM electric vehicles are eligible for a $7,500 tax credit under federal law, but it is not clear how the administration could restrict those credits or if Trump had other subsidies in mind. GM shares extended earlier declines and were down 3.6 percent after Trump’s tweets.
GM declined to immediately comment.
GM Chief Executive Mary Barra spoke to Trump over the weekend to discuss the cuts and was at the White House on Monday to meet with economic adviser Larry Kudlow.
Trump also criticized GM for not closing facilities in Mexico or China.
“General Motors made a big China bet years ago when they built plants there (and in Mexico) – don’t think that bet is going to pay off. I am here to protect America’s Workers!” Trump wrote on Twitter.
GM currently builds just one vehicle in China that it exports to the United States — the Buick Envision — and has sold about 22,000 through September. GM sold nearly 2.7 million vehicles in China through September, nearly all of them built in China for the market.
White House spokesman Sarah Sanders told reporters Tuesday that the president is looking at options.
“The president wants to see American companies build cars here in America, not build them overseas and he is hopeful that GM will continue to do that here,” she said.
GM has been lobbying Congress, along with Tesla, to lift the current cap on electric vehicles eligible for tax credits, but any action by Congress before 2019 is a long-shot, congressional aides said.
Under current law, once a manufacturer sells 200,000 electric vehicles, the tax credit phases out over time starting in the following quarter. GM has said it expects to hit the 200,000-vehicle threshold by the end of the year.
GM announced Monday it will halt production at one Canadian plant and four U.S. factories, including the Detroit-Hamtramck Assembly plant that builds the plug-in hybrid electric Chevrolet Volt. GM is ending production of six vehicles, including the Volt, as it cuts more than 6,500 factory jobs.
GM will continue to build the electric Chevrolet Bolt in Michigan.
Trump told GM on Monday it “better” find a new product for Lordstown Assembly plant in Ohio that will halt production in March. GM has said sagging demand for small cars largely prompted the cuts, but also cited factors including higher costs from U.S. tariffs on steel and aluminum.
GM said it also plans to close two unnamed plants outside North America by the end of 2019.
…
White House Adviser: US, China Could Reach New Trade Deal
U.S. President Donald Trump and Chinese President Xi Jinping could reach a new trade deal between the world’s two largest economies when they meet in Argentina this weekend, White House economic adviser Larry Kudlow said Tuesday.
“The president said there is a good possibility that we can make a deal and he is open to it,” he said of Trump. But he cautioned that obstacles remain.
Kudlow said the two leaders must resolve the issues of “fairness and reciprocity” at the center of the dispute.
“China should change its practices and come into the community of responsible trading nations,” he said. “Their responses have disappointed because … we can’t find much change in their approach.”
The U.S. and China over several months have imposed tit-for-tat tariffs on hundreds of billions of dollars of imports arriving from each other’s shores.
On Monday, Trump voiced doubts that a deal would be reached when he meets with Xi Saturday night in Buenos Aires on the sidelines of the G-20 summit of the world’s largest economies.
Trump has threatened to impose more tariffs on Chinese exports if the two sides cannot reach what he considers fairer trading between the two countries.
Kudlow said “certain conditions have to be met. … Intellectual property theft must be solved. Forced technology transfers must be solved.”
He said Trump is “not going away” if no deal is reached.
“I hope they understand that,” he added.
…
Google Blocks Gender-Based Pronouns From New AI Tool
Alphabet Inc’s Google in May introduced a slick feature for Gmail that automatically completes sentences for users as they type. Tap out “I love” and Gmail might propose “you” or “it.” But users are out of luck if the object of their affection is “him” or “her.”
Google’s technology will not suggest gender-based pronouns because the risk is too high that its “Smart Compose” technology might predict someone’s sex or gender identity incorrectly and offend users, product leaders revealed to Reuters in interviews.
Gmail product manager Paul Lambert said a company research scientist discovered the problem in January when he typed “I am meeting an investor next week,” and Smart Compose suggested a possible follow-up question: “Do you want to meet him?” instead of “her.”
Consumers have become accustomed to embarrassing gaffes from autocorrect on smartphones. But Google refused to take chances at a time when gender issues are reshaping politics and society, and critics are scrutinizing potential biases in artificial intelligence like never before.
“Not all ‘screw ups’ are equal,” Lambert said. Gender is a “a big, big thing” to get wrong.
Getting Smart Compose right could be good for business. Demonstrating that Google understands the nuances of AI better than competitors is part of the company’s strategy to build affinity for its brand and attract customers to its AI-powered cloud computing tools, advertising services and hardware.
Gmail has 1.5 billion users, and Lambert said Smart Compose assists on 11 percent of messages worldwide sent from Gmail.com, where the feature first launched.
Smart Compose is an example of what AI developers call natural language generation (NLG), in which computers learn to write sentences by studying patterns and relationships between words in literature, emails and web pages.
A system shown billions of human sentences becomes adept at completing common phrases but is limited by generalities. Men have long dominated fields such as finance and science, for example, so the technology would conclude from the data that an investor or engineer is “he” or “him.” The issue trips up nearly every major tech company.
Lambert said the Smart Compose team of about 15 engineers and designers tried several workarounds, but none proved bias-free or worthwhile. They decided the best solution was the strictest one: Limit coverage. The gendered pronoun ban affects fewer than 1 percent of cases where Smart Compose would propose something, Lambert said.
“The only reliable technique we have is to be conservative,” said Prabhakar Raghavan, who oversaw engineering of Gmail and other services until a recent promotion.
New policy
Google’s decision to play it safe on gender follows some high-profile embarrassments for the company’s predictive technologies.
The company apologized in 2015 when the image recognition feature of its photo service labeled a black couple as gorillas. In 2016, Google altered its search engine’s autocomplete function after it suggested the anti-Semitic query “are jews evil” when users sought information about Jews.
Google has banned expletives and racial slurs from its predictive technologies, as well as mentions of its business rivals or tragic events.
The company’s new policy banning gendered pronouns also affected the list of possible responses in Google’s Smart Reply. That service allow users to respond instantly to text messages and emails with short phrases such as “sounds good.”
Google uses tests developed by its AI ethics team to uncover new biases. A spam and abuse team pokes at systems, trying to find “juicy” gaffes by thinking as hackers or journalists might, Lambert said.
Workers outside the United States look for local cultural issues. Smart Compose will soon work in four other languages: Spanish, Portuguese, Italian and French.
“You need a lot of human oversight,” said engineering leader Raghavan, because “in each language, the net of inappropriateness has to cover something different.”
Wispread challenge
Google is not the only tech company wrestling with the gender-based pronoun problem. Agolo, a New York startup that has received investment from Thomson Reuters, uses AI to summarize business documents.
Its technology cannot reliably determine in some documents which pronoun goes with which name. So the summary pulls several sentences to give users more context, said Mohamed AlTantawy, Agolo’s chief technology officer.
He said longer copy is better than missing details. “The smallest mistakes will make people lose confidence,” AlTantawy said. “People want 100 percent correct.”
Yet, imperfections remain. Predictive keyboard tools developed by Google and Apple Inc propose the gendered “policeman” to complete “police” and “salesman” for “sales.”
Type the neutral Turkish phrase “one is a soldier” into Google Translate and it spits out “he’s a soldier” in English. So do translation tools from Alibaba and Microsoft Corp. Amazon.com Inc opts for “she” for the same phrase on its translation service for cloud computing customers.
AI experts have called on the companies to display a disclaimer and multiple possible translations.
Microsoft’s LinkedIn said it avoids gendered pronouns in its year-old predictive messaging tool, Smart Replies, to ward off potential blunders.
Alibaba and Amazon did not respond to requests to comment. Warnings and limitations like those in Smart Compose remain the most-used countermeasures in complex systems, said John Hegele, integration engineer at Durham, North Carolina-based Automated Insights Inc, which generates news articles from statistics.
“The end goal is a fully machine-generated system where it magically knows what to write,” Hegele said. “There’s been a ton of advances made but we’re not there yet.”
…
Uber Fined $1.2 Million For 2016 Data Breach
British and Dutch regulators have fined ride-hailing company Uber $1.2 million for what it said were inadequate security measures that left personal data at risk for a cyber attack.
The fines are linked to a 2016 hack of Uber data that allowed attackers to download information about 32 million users, including 2.7 million accounts in Britain.
The files included full names, mobile phone numbers, email addresses and some user passwords. Information about 3.7 million drivers, 82,000 of them in Britain, was also downloaded.
Britain’s Information Commissioner’s Office said the hack was the result of “a series of avoidable data security flaws.”
“This was not only a serious failure of data security on Uber’s part, but a complete disregard for the customers and drivers whose personal information was stolen,” ICO Director of Investigations Steve Eckersley said. “At the time, no steps were taken to inform anyone affected by the breach, or to offer help and support. That left them vulnerable.”
Uber said in a statement it is “pleased to close this chapter on the data incident from 2016.”
“As we shared with European authorities during their investigations, we’ve made a number of technical improvements to the security of our systems both in the immediate wake of the incident as well as in the years since,” the company said.
…
Lawmakers Criticize Facebook’s Zuckerberg for UK Parliament No-Show
Facebook came under fire on Tuesday from lawmakers from several countries who accused the firm of undermining democratic institutions and lambasted chief executive Mark Zuckerberg for not answering questions on the matter.
Facebook is being investigated by lawmakers in Britain after consultancy Cambridge Analytica, which worked on Donald Trump’s presidential campaign, obtained the personal data of 87 million Facebook users from a researcher, drawing attention to the use of data analytics in politics.
Concerns over the social media giant’s practices, the role of political adverts and possible interference in the 2016 Brexit vote and U.S. elections are among the topics being investigated by British and European regulators.
While Facebook says it complies with EU data protection laws, a special hearing of lawmakers from several countries around the world in London criticized Zuckerberg for declining to appear himself to answer questions on the topic.
“We’ve never seen anything quite like Facebook, where, while we were playing on our phones and apps, our democratic institutions… seem to have been upended by frat-boy billionaires from California,” Canadian lawmaker Charlie Angus said.
“So Mr. Zuckerberg’s decision not to appear here at Westminster [Britain’s parliament] to me speaks volumes.”
Richard Allan, the vice president of policy solutions at Facebook who appeared in Zuckerberg’s stead, admitted Facebook had made mistakes but said it had accepted the need to comply with data rules.
“I’m not going to disagree with you that we’ve damaged public trust through some of the actions we’ve taken,” Allan told the hearing.
Facebook has faced a barrage of criticism from users and lawmakers after it said last year that Russian agents used its platform to spread disinformation before and after the 2016 U.S. presidential election, an accusation Moscow denies.
Allan repeatedly declined to give an example of a person or app banned from Facebook for misuse of data, aside from the GSR app which gathered data in the Cambridge Analytica scandal.
Legal documents reviewed by Reuters show how the investigation by British lawmakers has led them to seize documents relating to Facebook from app developer Six4Three, which is in a legal dispute with Facebook.
Damian Collins, chair of the culture committee which convened the hearing, said he would not release those documents on Tuesday as he was not in a position to do so, although he has said previously the committee has the legal power to.
…