Month: February 2018

The governor of Sao Paulo and likely centrist presidential candidate Geraldo Alckmin said on Monday that he would privatize Brazil’s state-run oil company Petroleo Brasileiro SA if he wins the elections in October. Alckmin, who has single digit support in opinion polls, said during a television interview with Band TV that he favored private ownership of Petrobras, as Brazil’s biggest company is known, as long as the sale was conducted within a strict regulatory framework. Once a taboo issue in Brazilian politics because of national sovereignty concerns, the privatization of Petrobras is set to become a campaign issue this year as Brazil struggles to bring an unsustainable budget deficit under control. Brazil’s left fiercely rejects the sale of Petrobras, but the leftist leader leading early opinion polls, former President Luiz Inacio Lula da Silva, will likely be barred from running because of a corruption conviction and there are no obvious politicians who can fill his shoes. It is not clear where the far right candidate Jair Bolsonaro, who is currently second in opinion polls, stands on relinquishing state control of Petrobras. But his economic policy advisor Paulo Guedes told Valor newspaper in an interview published on Monday that he favored selling all state companies to raise 700 billion reais that would help pay off one fifth of Brazil’s public debt. …

The Trump Organization said Monday it has made good on the president’s promise to donate profits from foreign government spending at its hotels to the U.S. Treasury, but neither the company nor the government disclosed the amount or how it was calculated.   Watchdog groups seized on the lack of detail as another example of the secrecy surrounding President Donald Trump’s pledges to separate his administration from his business empire.   “There is no independent oversight or accountability. We’re being asked to take their word for it,” said Noah Bookbinder, executive director of Citizens for Responsibility and Ethics in Washington. “Most importantly, even if they had given every dime they made from foreign governments to the Treasury, the taking of those payments would still be a problem under the Constitution.”   Trump Organization Executive Vice President and Chief Compliance Counsel George Sorial said in a statement to The Associated Press that the donation was made on Feb. 22 and includes profits from Jan. 20 through Dec. 31, 2017. The company declined to provide a sum or breakdown of the amounts by country.   Sorial said the profits were calculated using “our policy and the Uniform System of Accounts for the Lodging Industry” but did not elaborate. The U.S. Treasury did not respond to repeated requests for comment.   Watchdog group Public Citizen questioned the spirit of the pledge in a letter to the Trump Organization earlier this month since the methodology used for donations would seemingly not require any donation …

The United States has issued a new round of sanctions targeting oil smugglers in Libya aimed at blocking exploitation of natural resources that is driving instability, the U.S. Treasury Department said Monday. In a statement, Treasury’s Office of Foreign Assets Control (OFAC) said it was sanctioning six people, 24 companies and seven vessels in a move that prohibits Americans from engaging with those targeted and freezes any related property under U.S. jurisdictions. The sanctions target people from Libya, Malta and Egypt, according to the statement. Issued under the authority of a 2016 executive order by then U.S. President Barack Obama, companies based in Italy, Libya and Malta are also targets, the statement said. The United Nations Security Council has condemned illicit exploitation of oil from Libya, which has been mired in conflict since an uprising in 2011 that overthrew Moammar Gadhafi, who led the country for more than 40 years. “Oil smuggling undermines Libya’s sovereignty, fuels the black market and contributes to further instability in the region while robbing the population of resources that are rightly theirs,” OFAC’s statement said. Libya’s oil production has steadied but is still well below the 1.6 million barrels per day it was pumping before the insurgency seven years ago and is suffering from theft, abduction and other security threats. Production from at least one Libyan oil field has also been disrupted by a dispute over security guards’ pay. …

After researching digital currencies for work last year, personal finance writer J.R. Duren hopped on his own crypto-rollercoaster. Duren bought $5 worth of litecoin in November, and eventually purchased $400 more, mostly with his credit card. In just a few months, he experienced a rally, a crash and a recovery, with the adrenaline highs and lows that come along. “At first, I was freaking out,” Duren said about watching his portfolio plunge 40 percent at one point. “The precipitous drop came as a shock.” The 39-year-old Floridian is part of the new class of crypto-investors who do not necessarily think bitcoin will replace the U.S. dollar, or that blockchain will revolutionize modern finance or that dentists should have their own currency. Dubbed by longtime crypto-investors as “the noobs” — online lingo for “newbies” — they are ordinary investors hopping onto the latest trend, often with little understanding of how cryptocurrencies work or why they exist. “There has been a big shift in the type of investors we have seen in crypto over the past year,” said Angela Walch, a fellow at the UCL Centre for Blockchain Technologies. “It’s shifted from a small group of techies to average Joes. I overhear conversations about cryptocurrencies everywhere, in coffee shops and airports.” Walch and other experts cited parallels to the late-1990s, when retail investors jumped into stocks like Pets.com, a short-lived online seller of pet supplies, only to watch their wealth evaporate when the dot-com bubble burst. Bitcoin is the best-known virtual currency …

President Emmanuel Macron on Saturday faced heckles and whistles from French farmers angry with reforms to their sector, as he arrived for France’s annual agricultural fair. For over 12 hours, Macron listened and responded to critics’ rebukes and questions — only to return home to the Elysee Palace with an adopted hen. “I saw people 500 meters away, whistling at me,” Macron said, referring to a group of cereal growers protesting against a planned European Union free-trade pact with a South American bloc, and against the clampdown on weedkiller glyphosate. “I broke with the plan and with the rules and headed straight to them, and they stopped whistling,” he told reporters. “No one will be left without a solution,” he said. Macron was seeking to appease farmers who believe they have no alternative to the widely used herbicide, which environmental activists say probably causes cancer. Mercosur warning He also wanted to calm fears after France’s biggest farm union warned Friday that more than 20,000 farms could go bankrupt if the deal with the Mercosur trade bloc (Brazil, which is the world’s top exporter of beef, plus Argentina, Uruguay and Paraguay) goes ahead. Meanwhile, Macron was under pressure over a plan to allow the wolf population in the French countryside to grow, if only marginally. “If you want me to commit to reinforce the means of protection … I will do that,” he responded. And he called on farmers to accept a decision on minimum price rules for European farmers, “or else the market will decide for …

Investor Warren Buffett says Wall Street’s lust for deals has prompted CEOs to act like oversexed teenagers and overpay for acquisitions, so it has been hard to find deals for Berkshire Hathaway. In his annual letter to shareholders Saturday, Buffett mixed investment advice with details of how Berkshire’s many businesses performed. Buffett blamed his recent acquisition drought on ambitious CEOs who have been encouraged to take on debt to finance pricey deals. “If Wall Street analysts or board members urge that brand of CEO to consider possible acquisitions, it’s a bit like telling your ripening teenager to be sure to have a normal sex life,” Buffett said. Berkshire is also facing more competition for acquisitions from private equity firms and other companies such as privately held Koch Industries. Sticking with guideline Buffett is sitting on $116 billion of cash and bonds because he’s struggled to find acquisitions at sensible prices. And Buffett is unwilling to load up on debt to finance deals at current prices. “We will stick with our simple guideline: The less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own,” Buffett wrote. He said the conglomerate recorded a $29 billion paper gain because of the tax reforms Congress passed late last year. That helped it generate $44.9 billion profit last year, up from $24.1 billion the previous year. Investors left wanting Buffett’s letter is always well-read in the business world because of his remarkable track record over …

Australia appears to be failing in its efforts to crack down on bribery, according to the latest survey conducted by Transparency International, a non-governmental organization based in Germany. The group said developed countries – including Australia – appeared to be lagging in their efforts to combat corruption in the public sector.  It pointed to an inadequate regulation of foreign political donations in Australia, conflicts of interest in planning approvals, revolving doors and improper industry lobbying in large-scale mining projects.   While Australia’s ranking is unchanged – it remains ranked 13th out of 180 countries – its corruption score has slipped eight points since the index started in its current form in 2012. Concern about Australia’s ranking comes as debate continues about the need for a nationwide anti-corruption body similar to the Independent Commission Against Corruption in the state of New South Wales.  It was set up in 1989 and has scored many notable victories, including the jailing of corrupt state politicians. Professor A.J. Brown, who leads a project called “Strengthening Australia’s National Integrity System” for Transparency International, says much more work needs to be done. “We do not have a federal anti-corruption body amongst other things, so it is also about the fact that our track record in terms of government commitment to controlling foreign bribery or money laundering and some of the things that the private sector is also involved in internationally is not that strong.  We are moving but we have been moving very slow and very late, …

Two more well-known companies said Saturday that they had ended marketing programs with the National Rifle Association (NRA), as gun control advocates stepped up pressure on firms to cut ties to the gun industry following a recent deadly mass school shooting in Florida. Activists have posted petitions online, identifying businesses that offer discounts to NRA members, in a push to pressure the companies to cut ties to the gun rights organization. Delta Air Lines and United Airlines were the latest companies to indicate they were ending discount programs with the gun lobbying organization. They said they would ask the organization to delete any references to their companies from their website. On Friday, corporations that ended their discount programs with NRA members included insurance company MetLife, car rental company Hertz and Symantec Corp., the software company that makes Norton Antivirus technology. The moves came after several other companies had cut their ties to the NRA this week, including car rental company Enterprise, First National Bank of Omaha, Wyndham Hotels and Best Western hotels. The NRA is one of the country’s most powerful lobbying groups for gun rights and claims 5 million members. Florida shooting renews debate Last week’s shooting at a Florida high school that left 17 people dead has renewed the national debate about gun control. Gun control activists have been mounting a campaign on Twitter, including using the hashtag #BoycottNRA as well as using social media to pressure streaming platforms, including Amazon, to drop the online video channel NRATV, which features …

The heaviest, the largest, the most impactful —  those were the superlatives the Trump administration used to describe its latest sanctions against North Korea. But were the Treasury Department designations of more than 50 companies and ships accused of illicit trading with the pariah nation really the toughest action yet by the U.S. and the wider world? Probably not. Here’s a look at how President Donald Trump and a top lieutenant described Friday’s sanctions to punish the North for its development of nuclear weapons and ballistic missiles — and how they stack up against past economic restrictions that have been piled on Kim Jong Un’s government in response to its illegal weapons tests. Treasury Secretary Steven Mnuchin: “The Treasury Department is announcing the largest set of sanctions ever imposed in connection with North Korea.” Trump: “I do want to say, because people have asked, North Korea — we imposed today the heaviest sanctions ever imposed on a country before.” As for Trump’s blanket assertion, in sheer dollar terms, the U.S. has actually imposed much costlier restrictions on countries such as Iran, a far richer economy than North Korea’s. Washington and its allies cut off tens of billions of dollars’ worth of Iranian oil exports and shut the country’s central bank out of the international financial system, among other steps, before eliminating those restrictions under a 2015 nuclear deal. Correct on number In terms of the number of entities targeted Friday, Mnuchin is probably correct about the history of sanctions on …

Federal Reserve policymakers fretted on Friday that they could face the next U.S. recession with virtually the same arsenal of policies used in the last downturn and, with interest rates still relatively low, those will not pack the same punch. In the midst of an unprecedented leadership transition, Fed officials are publicly debating whether to scrap their approach to inflation targeting, how much of its bond portfolio to retain, and how much longer they can raise interest rates in the face of an unexpectedly large boost from tax cuts and government spending. After years of near-zero rates and $3.5 trillion in bond purchases all meant to stimulate the economy in the wake of the 2007-09 recession, the Fed has gradually tightened policy since late 2015. Its key rate is now in the range of 1.25 to 1.5 percent, and while the Fed plans to hike three more times this year it has also forecast that it is about halfway to its goal. That could leave little room to provide stimulus when the world’s largest economy, which is heating up, eventually turns around. “We would be better off, rather than thinking about what we would do next time when we hit zero, making sure that we don’t get back there. We just don’t want to be there,” Boston Fed President Eric Rosengren told a conference of economists and the majority of his colleagues at the central bank. Rosengren, one of only a few sitting policymakers who also served during the last downturn, said the expanding U.S. deficits could further erode the government’s ability to help curb any future recession. “With the deficits we are …

European Union leaders staked out opening positions Friday for a battle over EU budgets that many conceded they are unlikely to resolve before Britain leaves next year, blowing a hole in Brussels’ finances. At a summit to launch discussion on the size and shape of a seven-year budget package to run from 2021, ex-communist states urged wealthier neighbors to plug a nearly 10 percent annual revenue gap being left by Britain, while the Dutch led a group of small, rich countries refusing to chip in any more to the EU. Germany and France, the biggest economies and the bloc’s driving duo as Britain prepares to leave in March 2019, renewed offers to increase their own contributions, though both set out conditions for that, including new priorities and less waste. Underlining that a divide between east and west runs deeper than money, French President Emmanuel Macron criticized what he said were poor countries abusing EU funds designed to narrow the gap in living standards after the Cold War to shore up their own popularity while ignoring EU values on civil rights or to undercut Western economies by slashing tax and labor rules. Noting the history of EU “cohesion” and other funding for poor regions as a tool of economic “convergence,” Macron told reporters: “I will reject a European budget which is used to finance divergence, on tax, on labor or on values.” Poland and Hungary, heavyweights among the ex-communist states which joined the EU this century, are run by right-wing governments …

U.S. stocks rallied on Friday, lifted by gains in technology stocks and a retreat in Treasury yields as the Federal Reserve eased concerns about the path of interest rate hikes this year. The U.S. central bank, looking past the recent stock market sell-off and inflation concerns, said it expected economic growth to remain steady and saw no serious risks on the horizon that might pause its planned pace of rate hikes. Investors largely expect the Fed to raise rates three times this year, beginning with its next meeting in March, the first under new Chair Jerome Powell. Traders currently see a 95.5 percent chance of a quarter-percentage-point hike next month, according to Thomson Reuters data. “Certainly bond yields pulling back today is helpful for stocks, at least for the short term, that has been the narrative that is out there — that higher bond yields are weighing on stocks and this preoccupation with three percent,” said Willie Delwiche, investment strategist at Baird in Milwaukee. “So moving away from that, for today at least, provides a bid for equities.” Powell’s first public outing will be on Tuesday, when he will testify separately before the House and Senate committees. The Dow Jones Industrial Average rose 347.51 points, or 1.39 percent, to 25,309.99, the S&P 500 gained 43.34 points, or 1.60 percent, to 2,747.30 and the Nasdaq Composite added 127.30 points, or 1.77 percent, to 7,337.39. Benchmark 10-year U.S. Treasury notes last rose 13/32 in price to yield 2.8714 percent, from 2.917 percent …

Leaders of Afghanistan, Turkmenistan, Pakistan and its arch rival India jointly inaugurated construction work Friday on the Afghan section of a long-delayed multibillion-dollar gas pipeline connecting the four nations, raising hopes for regional cooperation and peace. A ceremony took place in the ancient Afghan city of Herat, attended by President Ashraf Ghani, his Turkmen counterpart, Gurbanguly Berdymukhamedov, Pakistani Prime Minister Shahid Khaqan Abbasi and Indian External Affairs Minister M.J. Akbar. The long-awaited 1,814 kilometer pipeline, known as TAPI, will transport natural gas from the world’s fourth-largest reserves in Turkmenistan through Afghanistan to growing economies of Pakistan and India, which are facing energy shortages. TAPI was originally conceived in the 1990s, but differences over terms and conditions, unending Afghan hostilities and regional rivalries are blamed for delays. Turkmenistan took the initiative in December 2015 and has since constructed its portion of the pipeline up to the Afghan border. President Ghani, while addressing Friday’s ceremony, vowed Afghanistan believes in connectivity and will “not spare any efforts” to implement the project to connect South Asia with Central Asia after a century of separation. “This is the beginning of confidence in Afghanistan, confidence on national unity and harmony of the state and the people of Afghanistan,” noted Ghani. Pakistani Prime Minister Abbasi reiterated his country’s commitment to peace and stability in Afghanistan. “We are turning, by the grace of God, TAPI into a reality. It will provide shared regional prosperity … and it will provide peace dividends,” said Abbasi, whose country is accused of …