Author Archives: Kevin

Pelosi: Attorney General Barr ‘off the rails’ on Mueller report

WASHINGTON (Reuters) – U.S. House of Representatives Speaker Nancy Pelosi castigated Attorney General William Barr on Wednesday for comments he made during congressional hearings this week about the federal probe of Russian interference in the 2016 election.

“Let me just say, I’m very, very dismayed and disappointed that the chief law enforcement officer of our country is going off the rails yesterday and today,” Pelosi told reporters at a news conference in Virginia.

(Reporting by Susan Cornwell and Doina Chiacu; Editing by Alistair Bell)

Trump says NATO countries’ burden-sharing improving, wants more

By Steve Holland and Lesley Wroughton

WASHINGTON (Reuters) – U.S. President Donald Trump said on Tuesday his pressure on NATO nations to pay more for their defense is leading to tens of billions of dollars more in contributions, but the allies may need to boost their budgets even more.

Trump used a well-worn script about burden-sharing with NATO Secretary General Jens Stoltenberg in talks at the White House. The meeting came a day before NATO foreign ministers sit down in Washington for what is expected to be a session dominated by concerns about Russia.

Trump, who has ruffled feathers among European allies by repeatedly saying that NATO nations needed to pay more and ease the burden on the United States, said his tactics have paid off.

“Since I came to office it’s a rocket ship up. We’ve picked up over $140 billion in additional money, and we look like we’re going to have at least another $100 billion in spending by the nations…by 2020,” he said.

The U.S. president said he would like to see NATO members pay more than 2 percent of their gross domestic product for defense. Trump told NATO leaders last year to increase defense spending to 4 percent of GDP. He said the United States pays 4.3 percent of its GDP to NATO.

Trump singled out Germany for not doing enough, while praising German Chancellor Angela Merkel.

“Germany honestly is not paying their fair share,” he said. “They’re not paying what they should be paying. They’re paying close to 1 percent.”

The White House, in a statement, said that Trump met with Stoltenberg to mark NATO’s 70th anniversary and reaffirm U.S. support for the alliance. The White House said the two leaders “reviewed NATO’s unprecedented progress to increase burden-sharing” and also discussed “ongoing efforts to fight terrorism (and) check Russian aggression.”

“WE’LL GET ALONG WITH RUSSIA”

Trump said a stronger NATO provides a bulwark against Russia, but that he believed relations with Moscow will be fine. As has been his norm, Trump was reluctant to criticize Russia.

“I hope we have a good relationship with Russia,” he said. “But I think we’ll get along with Russia.”

Stoltenberg, who is to address a joint meeting of the U.S. Congress on Wednesday, singled out Russia for “violating the INF treaty,” the Cold War-era Intermediate-range Nuclear Forces treaty.

Trump in February announced plans to withdraw the United States from the INF treaty this summer, saying Russia was in violation of it.

Russia is sowing discord in the alliance by selling to NATO member Turkey the S-400 air defense system. The United States has halted delivery of equipment related to its F-35 fighter jets to Turkey over its S-400 plans.

“We have very serious concerns about its stated plans to proceed with the acquisition of the S-400 missile defense system and there will be potential consequences, within sanctions law and the F-35 program if they continue,” said a senior State Department official who briefed reporters.

The United States says that Turkey’s purchase of the Russian air defense system would compromise the security of F-35 aircraft, which is built by Lockheed Martin Corp.

The official, speaking on condition of anonymity to preview the meeting of NATO foreign ministers, said the gathering would discuss all elements of the military threat posed by Russia, including in the Black Sea, as well as the Afghan peace process and members’ budget contributions to the alliance.

The official said the NATO allies would seek to agree on a package of measures to bolster NATO’s military presence in the Black Sea, which has become a flashpoint with Moscow over its seizure of Ukrainian ships last year.

“The focus is on the defense and deterrence posture of the alliance in the Black Sea region,” said the official, adding that a plenary session on Thursday would focus on Russia, including what Washington sees as Moscow’s breach of the INF treaty.

(Reporting by Steve Holland and Lesley Wroughton; editing by Chizu Nomiyama and Leslie Adler)

U.S. charges Facebook with racial discrimination in targeted housing ads

By Akanksha Rana and Katie Paul

(Reuters) – The Trump administration accused Facebook Inc on Thursday of selling targeted advertising that discriminated on the basis of race in violation of the U.S. Fair Housing Act.

Seeking damages and unspecified relief for harm caused, the U.S. Department of Housing and Urban Development said https://www.hud.gov/press/press_releases_media_advisories/HUD_No_19_035 in its civil charge that Facebook also restricted who could see housing-related ads based on national origin, religion, familial status, sex and disability.

Facebook said it had been working with HUD to address the concerns and was surprised by the department’s decision to issue the charge, having taken “significant steps” to prevent ads that discriminate across its platforms.

The company also said HUD had “insisted on access to sensitive information – like user data – without adequate safeguards.” HUD claims Facebook mines data about its users and then uses machine learning to predict their responses to ads in ways that may recreate groupings defined by protected class.

The social media giant last week agreed to overhaul its paid advertising platform as part of a wide-ranging settlement with U.S. civil rights groups, which had filed five separate lawsuits accusing the company of enabling discrimination in advertising.

Under U.S. law, including the federal Fair Housing Act, it is illegal to publish certain types of ads – including online ads – if they indicate a preference based on race, religion, sex or other specified classifications.

As part of last week’s settlement, Facebook said it would create a new advertising portal for ads linked to housing and employment that would limit targeting options for advertisers. It also pledged to build a tool that would allow users to search all current housing ads listed in the United States, regardless of whether the ads were directed at them.

The HUD charge said Facebook enabled advertisers to exclude people whom the social network’s data classified as parents, non-American-born, non-Christian, or a variety of other interests that closely align with the Fair Housing Act’s protected classes.

“Facebook is discriminating against people based upon who they are and where they live,” HUD Secretary Ben Carson said. “Using a computer to limit a person’s housing choices can be just as discriminatory as slamming a door in someone’s face.”

GROWING DISCONTENT

CNBC later reported that HUD was also looking into similar ad targeting practices at Twitter and Google, Facebook’s main competition for online advertising dollars.

HUD could not immediately be reached for comment.

Both companies vehemently denied allowing discriminatory advertising, but acknowledged that they allow advertisers to target by gender.

Researchers have told Reuters that gender targeting could potentially be a violation of the Fair Housing Act.

Discrimination against transgender individuals was prohibited, Google said.

“We’ve had policies in place for many years that prohibit targeting ads on the basis of sensitive categories,” Google said in a statement.

Advertising practices at Facebook, the world’s largest social network with 2.7 billion users and $56 billion in annual revenue, have been in the spotlight for two years amid growing discontent over its approach to privacy and user data.

News organization ProPublica reported as far back as 2016 that advertisers could target ads through Facebook based on people’s self-reported jobs, even if the job was “Jew hater.”

ProPublica later reported that it was able to buy discriminatory housing ads and slip them past Facebook’s review process, despite the company’s claims it was blocking such ads.

Since then, Facebook has faced legal pressure over the issue from the National Fair Housing Alliance, the American Civil Liberties Union and the Communications Workers of America, among other groups and individuals.

The ACLU welcomed HUD’s complaint, saying it would add “much-needed pressure” on the company on top of last week’s settlement. It encouraged the department to investigate other online ad targeting platforms.

“Although the settlement we reached with Facebook will result in removing many of the most troubling of Facebook’s advertising practices, there is more work to be done,” Galen Sherwin, an ACLU attorney, said in a statement.

The civil charge against Facebook follows an investigation by HUD in August when it filed a formal complaint https://www.hud.gov/press/press_releases_media_advisories/HUD_No_18_085 against Facebook for violating the Fair Housing Act by allowing landlords and home sellers to use its advertising platform to engage in housing discrimination.

The charge will be heard by a U.S. law administrative judge who can award damages for harm caused by the discrimination, along with fines and injunctive and other equitable relief.

(Reporting by Akanksha Rana in Bengaluru and Katie Paul in San Francisco; Additional reporting by Paresh Dave in San Francisco; Editing by Saumyadeb Chakrabarty, Bernard Orr and Dan Grebler)

Lyft raises $2.2 billion in IPO: source

(Reuters) – Ride-hailing startup Lyft Inc raised $2.2 billion in its initial public offering on Thursday by pricing 30.77 million shares at $72, the top of its already elevated $70-$72 per share target range, according to a person familiar with the matter.

The source asked not to be identified ahead of any official announcement. Lyft did not immediately respond to a request for comment.

(Reporting by Joshua Franklin in New York; editing by Grant McCool)

Wall Street gives up gains on news of troubled trade talks

By Stephen Culp

NEW YORK (Reuters) – The benchmark S&P 500 index ended little changed on Tuesday as investor optimism regarding the Federal Reserve’s expected affirmation of its dovish policy stance was offset by reports of fault lines emerging in ongoing U.S.-China trade negotiations.

Financial stocks weighed on all three major U.S. stock indexes, which gave up early gains following a Bloomberg report that China is pushing back against American demands in trade talks.

The blue-chip Dow snapped a four-day winning streak, while the Nasdaq limped back into positive territory just before the closing bell.

“Trade fear has reared its head again with Trump administration concerns (that) China is walking back some of the pledges they’ve made in negotiations so far,” said Chris Zaccarelli, chief investment officer at Alliance in Charlotte, NC.

Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama, agreed.

“China seems to be balking on some of the terms of the trade negotiations,” Hellwig said. “And to me it sounds like there may be nervousness ahead of the Fed announcement.”

As the Fed convened its two-day policy meeting, investors expected little change in its measured approach to interest rate hikes.

Its summary of economic projections – or “dot plot” – due for release on Wednesday, will be closely scrutinized for clues regarding the extent of the central bank’s patience.

But some analysts question whether the dot plot deserves this level of scrutiny.

“The dot plot is consistently higher than where rates turned out to be, so the credibility hasn’t been that good,” Hellwig said. “But it gives insight was to what the members of the FOMC are thinking.”

A report from the U.S. Commerce Department showed a smaller-than-expected increase in factory orders, the latest in a string of underwhelming economic data that has supported the Fed’s more accommodative stance.

The Dow Jones Industrial Average fell 26.72 points, or 0.1 percent, to 25,887.38, the S&P 500 lost 0.37 points, or 0.01 percent, to 2,832.57 and the Nasdaq Composite added 9.47 points, or 0.12 percent, to 7,723.95.

Of the 11 major sectors of the S&P 500, eight closed in the red, with utilities and financials registering the biggest percentage drops.

Ford Motor Co shares rose 1.5 percent after the automaker announced it would boost U.S. production of its high-profit SUVs.

Online food delivery platform Grubhub Inc dropped 8.4 percent after Keybanc warned of diminished customer spending and user retention.

Nvidia Corp ended the session up 4.0 percent on news that the company has partnered with Softbank Group Corp and LG Uplus Corp to deploy cloud gaming servers in Japan and South Korea later this year.

The chipmaker provided the biggest boost to the Philadelphia SE Semiconductor Index, which has jumped by nearly 22 percent so far this year.

Declining issues outnumbered advancing ones on the NYSE by a 1.28-to-1 ratio; on Nasdaq, a 1.26-to-1 ratio favored decliners.

The S&P 500 posted 41 new 52-week highs and no new lows; the Nasdaq Composite recorded 68 new highs and 36 new lows.

Volume on U.S. exchanges was 7.33 billion shares, compared with the 7.56 billion average over the last 20 trading days.

(Reporting by Stephen Culp; additional reporting by Sinead Carew; Editing by Dan Grebler)

Wall Street rises; Boeing up despite U.S. grounding of 737 MAX jets

By Caroline Valetkevitch

NEW YORK (Reuters) – U.S. stocks rose on Wednesday, led by gains in healthcare shares, and Boeing edged upward even as the United States joined other nations in grounding the company’s 737 MAX jets.

Boeing Co shares ended up 0.5 percent at $377.14, recovering from a more than 3 percent fall in the afternoon, when the United States announced it was grounding Boeing’s 737 MAX jets following Sunday’s fatal crash in Ethiopia.

The U.S. Federal Aviation Administration cited new satellite data and evidence from the scene of Sunday’s crash, the second disaster involving the 737 MAX in less than five months.

The grounding gives Boeing time to address any problems and not face another potential disaster, said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

“It seems like the worst is over for Boeing,” he said. “The fact that (the stock) appears to be stabilizing means the market appreciates that.”

Boeing shares are still down about 11 percent since Friday’s close. The world’s largest planemaker had been the best-performing Dow component this year.

Also helping stocks Wednesday, fresh economic data strengthened the Federal Reserve’s patient stance on future interest rate hikes.

Producer prices barely rose in February, resulting in the smallest annual increase in more than 1-1/2 years, yet another indication of benign inflation.

CVS Health Corp rose 3.5 percent after Bernstein started coverage of the pharmacy benefit manager with an “outperform” rating. The S&P 500 healthcare index rose 1.1 percent. UnitedHealth Group shares rose 2.6 percent.

The Dow Jones Industrial Average rose 148.23 points, or 0.58 percent, to 25,702.89, the S&P 500 gained 19.4 points, or 0.69 percent, to 2,810.92 and the Nasdaq Composite added 52.37 points, or 0.69 percent, to 7,643.41.

Energy shares rose as oil prices rallied about 2 percent. The S&P 500 energy index finished up 1.09 percent.

Adding to the upbeat mood was a vote in which British lawmakers rejected leaving the European Union without a deal in any scenario.

Fueling some volatility in afternoon trading, U.S. President Donald Trump said he was in no rush to complete a trade deal with China and insisted that any deal include how it treats U.S. intellectual property.

Advancing issues outnumbered decliners on the NYSE by a 2.43-to-1 ratio; on Nasdaq, a 1.62-to-1 ratio favored advancers.

The S&P 500 posted 61 new 52-week highs and one new low; the Nasdaq Composite recorded 65 new highs and 30 new lows.

About 7.3 billion shares changed hands on U.S. exchanges. That compares with the 7.4 billion daily average for the past 20 trading days.

(Additional reporting by Amy Caren Daniel and Medha Singh; editing by Jonathan Oatis, Tom Brown and Diane Craft)

U.S. missile defense budget cut as North Korea pushes ahead

By Mike Stone

WASHINGTON (Reuters) – Just when it looks like North Korean leader Kim Jong Un may restart his ballistic missile testing program, U.S. President Donald Trump has proposed trimming the missile defense budget, as one set of deterrents is delayed by two years.

The U.S. Missile Defense Agency – charged with developing, testing and fielding a ballistic missile defense system – will delay the expansion of the Ground-based Midcourse Defense (GMD) system by two years because of a delay in the redesign of the Raytheon Co-made “kill vehicle” the system uses.

A “kill vehicle” pops off the top of the defending missile above the Earth’s atmosphere and seeks out and destroys the attacking missile’s warhead.

The GMD is a network of radars, anti-ballistic missiles based in Alaska and California, and other equipment designed to protect the United States from intercontinental ballistic missiles, or ICBMS.

The expansion of the field of interceptors in Alaska from 44 ground-based interceptors, or GBIs, to 64 had been slated for completion in 2023. But the delay, due to technical issues and not connected to the cut in the agency’s budget, now means that the placement of the additional 20 interceptors will not be operational until 2025, the MDA said on Tuesday.

“The important thing is to get it right, and if we’re going to build more GBI’s, we want to put the best kill vehicle on the top of it,” said Tom Karako, a missile defense expert at the Center for Strategic and International Studies in Washington.

At the same time, North Korea has been pushing ahead with its nuclear weapons program after a summit meeting between Kim and Trump in Hanoi ended abruptly on Feb. 28 without an agreement on denuclearization.

New activity has been detected at a North Korean ICBM plant, South Korean media said on Thursday, as Trump said he would be “very disappointed” if Pyongyang rebuilt a rocket site.

In the budget, the Missile Defense Agency, or MDA, saw its appropriation cut by $1 billion to $9.4 billion.

Michelle Atkinson the acting comptroller of the MDA told reporters, “what you are seeing in ’20 actually looks like a decrease, but it’s really just the declining funding,” as the agency comes off recent financial injections.

Trump’s smaller request comes on the heels of a significant budget boost last year after several North Korean missile tests.

One Pentagon-wide effort in lasers that could be used to defeat missiles saw investment slow dramatically. After nearly doubling just the MDA’s budget for directed energy from $109 million in 2018 to $224 million in 2019, the Pentagon as a whole plans to invest only $235 million in the technology in fiscal 2020.

Among other proposals included in a recently published Missile Defense Review is one involving lasers mounted on drones – aimed at stopping missiles just after takeoff in what is called the boost phase.

During this portion of the flight the missile is most vulnerable, flying at its slowest speed, easily detected by the heat from its engines and incapable of evading interceptors as it accelerates to break out of the Earth’s atmosphere.

(Reporting by Mike Stone; editing by Jonathan Oatis)

Oil edges higher on cuts to Saudi exports

By Stephanie Kelly

NEW YORK (Reuters) – Oil prices edged higher on Tuesday, supported by signs of tightening global supply after a Saudi official said the kingdom plans to cut oil exports in April, while the U.S. government reduced its forecast for domestic crude output growth.

Saudi Arabia, seeking to drain a supply glut and support prices, plans to cut its crude oil exports next month to below 7 million barrels per day (bpd), while keeping its output well below 10 million bpd, a Saudi official said on Monday.

Brent crude futures rose 9 cents, or 0.1 percent, to settle at $66.67 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 8 cents, or 0.1 percent, to settle at $56.87 a barrel.

Since the beginning of the year, both benchmarks have risen around 25 percent.

Crude has been supported since the Organization of the Petroleum Exporting Countries and its allies, including Russia, returned to supply cuts as of Jan. 1. The group, known as OPEC+, agreed to reduce supply by 1.2 million bpd for six months.

Saudi Arabia has voluntarily cut its supply by more than the deal requires and in April will keep output “well below” 10 million bpd, the Saudi official said – less than the 10.311 million bpd the kingdom had agreed to pump.

On Sunday, Saudi oil minister Khalid al-Falih said it would be too early to change OPEC+ output policy at the group’s meeting in April.

The United Arab Emirates in February exceeded its OPEC target for oil output cuts, achieving 119 percent of its goal, the country’s energy minister said on Tuesday at an energy conference.

A host of involuntary supply curbs in OPEC members, caused by unrest in Libya and U.S. sanctions on Iran and Venezuela, have also boosted prices.

In addition, Venezuela’s state-run oil firm PDVSA has been unable to resume crude exports from its primary port since a power outage last week, people familiar with the matter said on Monday.

In the United States, domestic crude production is expected to grow more slowly than previously anticipated in 2019, averaging about 12.3 million bpd, the U.S. Energy Information Administration (EIA) said.

“Part of the pushback against OPEC+ efforts has been this idea of unrelenting growth in U.S. oil production, primarily shale. The EIA report reined some of that in, and the report was supportive in that respect,” said John Kilduff, a partner at Again Capital LLC in New York.

However, the EIA cut its 2019 world oil demand growth forecast by 40,000 bpd to 1.45 million bpd.

U.S. crude inventories fell by 2.6 million barrels in the week to March 8 to 449 million, the American Petroleum Institute industry group said on Tuesday. Analysts had expected an increase of 2.7 million barrels.

The official U.S. government report on crude stockpiles will be released on Wednesday.

(Reporting by Stephanie Kelly in New York; additional reporting by Alex Lawler in London and Henning Gloystein in Singapore; Editing by Marguerita Choy, Diane Craft and Will Dunham)

Fed thinking about growing balance sheet again: Fed paper

By Trevor Hunnicutt and Richard Leong

NEW YORK (Reuters) – The U.S. Federal Reserve is considering when to stop reducing bank reserves and start building up its balance sheet again, according to a paper from the Kansas City Fed released on Wednesday.

Analysts and traders worry that a shrinking Fed balance sheet is making it expensive for banks to finance loans and trading positions, restricting their lending to companies and consumers.

U.S. monetary policymakers bulked up their books with bank reserves in order to buy trillions of bonds and stimulate the economy further once rates neared zero after the 2008-2009 global financial crisis. To restore policy to normal, the Fed began shrinking its balance sheet in late 2017 by not replacing as many bonds when they mature.

But investors have been critical, and U.S. President Donald Trump even urged the Fed in a tweet in December to “Stop with the 50 B’s.” Balance sheet reductions are capped at $50 billion a month.

Fed Chairman Jerome Powell said last month that the bond shrinkage would stop this year, citing banks’ growing demand to keep cash with the Fed and technical factors regarding how policymakers currently set rates.

The Fed may need to hold as much as $1.5 trillion in bank reserves on its balance sheet to properly implement monetary policy, according to the research by Kansas City Fed Senior Economist A. Lee Smith released on Wednesday.

That would be a relatively small decline from less than $1.7 trillion now, implying as little as a few more months of reductions. Fed officials have mostly been citing lower estimates of what level of reserves would be needed, some not produced by the bank’s own researchers.

GRAPHIC-Bank reserves held at the Fed: https://tmsnrt.rs/2UQn2dJ

Asked about the estimate by Reuters on Wednesday, New York Fed President John Williams said the Kansas City figure is at the high end of analysts’ estimates.

“There’s a range of estimates out there about what’s the level of reserves consistent with there being abundant reserves in the system so that interest rates really are being controlled not by scarcity of reserves but by the interest rates that we set,” said Williams, who had not read the paper.

“There is no clear answer to this. … Personally my view is we’re nowhere near the point” where reserves are scarce, he added.

The New York Fed is charged with implementing the balance sheet policy.

Smith’s estimate is based on an assumption that the Fed will continue to operate, as now, with a near-zero gap between two bank borrowing rates, the federal funds rate and the interest rate the Fed pays on reserves. Were that spread to expand, the reserves estimate would fall to $1.1 trillion.

The “effective” or average fed funds rate has been running at 2.40 percent since mid-December, which is at parity with the interest rate on reserves.

Smith wrote last month that the shrinkage of the U.S. balance sheet has played a significant role in exerting upward pressure on borrowing costs.

GRAPHIC-U.S. federal funds activity: https://tmsnrt.rs/2EcJkRq

(Reporting by Trevor Hunnicutt and Richard Leong; Editing by Chizu Nomiyama and Richard Chang)

North Carolina elections board orders new U.S. House election

By Gabriella Borter

(Reuters) – North Carolina’s elections board on Thursday unanimously ordered a new election for a U.S. House seat after officials said corruption surrounding absentee ballots tainted the results of last November’s vote.

The bipartisan board’s 5-0 decision came after Republican candidate Mark Harris requested a new vote, telling the panel that evidence of possible ballot fraud had undermined confidence in the election.

In the televised hearing, board Chairman Bob Cordle said “the corruption” and “absolute mess” with the election’s absentee ballots had cast doubt on the fairness of the contest.

“It certainly was a tainted election,” Cordle said ahead of the vote. “The people of North Carolina deserve a fair election.”

Harris’ request for a new vote came as a surprise. For months, he had said he should be declared the victor in the 9th Congressional District after he led Democrat Dan McCready by 905 votes out of 282,717 ballots cast on Nov. 6. Elections officials, however, had refused to certify him as the winner due to allegations of irregularities in the vote.

“Through the testimony I’ve listened to over the past three days, I believe a new election should be called,” Harris said at a hearing in Raleigh.

It was unclear whether Harris would run in the new race. He told the board he was recovering from an infection that led to sepsis and two strokes and he was not prepared for the “rigors” of the hearing.

During this week’s hearing, Harris’ son said he had warned his father of potential illegal activity in the election by one of his political operatives, Leslie McCrae Dowless.

North Carolina’s Democratic Party said the hearing had laid bare the Harris campaign’s “illegal scheme to steal an election.”

“This saga could only have ended in a new election,” the state Democrats said.

Harris’ statement came on the fourth day of a hearing on whether his campaign benefited from what state investigators called illegal election manipulation by Dowless.

Earlier on Thursday, Harris said he had known Dowless was going door to door on the candidate’s behalf to help voters obtain absentee ballots, a process that is legal. Harris said Dowless assured him he would not collect the ballots from the voters, which would violate state law.

But residents of at least two counties in the district said Dowless and his paid workers collected incomplete absentee ballots and, in some instances, falsely signed as witnesses and filled in votes for contests left blank, according to testimony at the hearing.

Harris campaign officials said they did not pay Dowless to do anything illegal, and Dowless maintained his innocence.

(Additional reporting by Andrew Hay; Editing by Colleen Jenkins, Dan Grebler and James Dalgleish)