A Huawei company logo is seen at the Shenzhen International Airport in Shenzhen in Shenzhen, Guangdong province, China June 17, 2019. REUTERS/Aly Song
June 18, 2019
By Sijia Jiang
HONG KONG (Reuters) – China’s Huawei Technologies Co Ltd has taken a harder-than-expected hit from a U.S. ban, the company’s founder and CEO Ren Zhengfei said, and slashed revenue expectations for the year.
Ren’s downbeat assessment that the ban will hit revenue by $30 billion, the first time Huawei has quantified the impact of the U.S. action, comes as a surprise after weeks of defiant comments from company executives who maintained Huawei was technologically self-sufficient.
The United States has put Huawei on an export blacklist citing national security issues, barring U.S. suppliers from selling to the world’s largest telecommunications equipment maker and No.2 maker of smartphones, without special approval.
The firm has denied its products pose a security threat.
The ban has forced companies, including Alphabet Inc’s Google and British chip designer ARM to limit or cease their relationships with the Chinese company.
Huawei had not expected that U.S. determination to “crack” the company would be “so strong and so pervasive”, Ren said, speaking at the company’s Shenzhen headquarters on Monday.
Two U.S. tech experts, George Gilder and Nicholas Negroponte, also joined the session.
“We did not expect they would attack us on so many aspects,” Ren said, adding he expects a revival in business in 2021.
“We cannot get components supply, cannot participate in many international organizations, cannot work closely with many universities, cannot use anything with U.S. components, and cannot even establish connection with networks that use such components.”
Huawei, which turned in a revenue of 721.2 billion yuan ($104 billion) last year, expects revenue of around $100 billion this year and the next, Ren said. This compares to an initial target for a growth in 2019 to between $125 billion and $130 billion depending on foreign exchange fluctuations.
The Trump administration slapped sanctions on Huawei at a time when U.S.-China trade talks hit rough waters, prompting assertions from China’s leaders about the country’s progress in achieving self-sufficiency in the key semiconductor business.
Huawei has also said it could roll out its Hongmeng operating system (OS), which is being tested, within nine months if needed, as its phones face being cut off from updates of Google’s Android OS in the wake of the ban.
But industry insiders have remained skeptical that Chinese chip makers can quickly meet the challenge of supplying Huawei’s needs and those of other domestic technology firms.
Negroponte, founder of the Massachusetts Institute of Technology Media Lab, said the U.S. ban was a mistake.
“Our president has already said publicly that he would reconsider Huawei if we can make a trade deal. So clearly that is not about national security,” he said.
“It is about something else,” Negroponte added.
Huawei’s smartphone sales have, however, been hit by the uncertainty. Ren said the firm’s international smartphone shipments plunged 40%. While he did not give the time period, a spokesman clarified the CEO was referring to the past month.
Bloomberg reported on Sunday that Huawei was preparing for a 40-60% drop in international smartphone shipments.
The CEO, however, said Huawei will not cut research and development spending despite the expected hit from the ban to the company’s finances and would not have large-scale layoffs.
($1 = 6.9239 Chinese yuan)
(Reporting by Sijia Jiang in Hong Kong and Brenda Goh in Shanghai; Writing by Sayantani Ghosh; Editing by Himani Sarkar and Muralikumar Anantharaman)
Big Tech is under the Hot Seat… Will someone make these Monopolies do the right thing? Will those cast out be let back in?
Big Tech on a rare bipartisan hot seat
Big Tech and its practices will be under a bipartisan microscope as the House Judiciary Committee on Tuesday will launch its investigation into the market dominance of Silicon Valley’s biggest names. It will begin with a look at the impact of the tech giants’ platforms on news content, the media and the spread of … See More misinformation online. The House Judiciary Committee’s investigation of tech market power stands out because it’s bipartisan and the first review by Congress of industry that dominated with generally little interference from federal regulators.
But with regulators at the Justice Department and Federal Trade Commission apparently pursuing antitrust investigations of Facebook, Google, Apple and Amazon, and several state attorneys general exploring bipartisan action of their own, the tech industry finds itself being increasingly accused of operating like monopolies. Rep. David Cicilline, D-RI, will lead Tuesday’s subcommittee hearing and vowed that the panel will broadly investigate the digital marketplace and “the dominance of large technology platforms,” with an eye toward legislative action to increase competition.
Investigators seek clues behind NYC helicopter crash
The helicopter pilot killed in Monday’s crash in New York Cityhas been identified as a former volunteer fire chief and a “dedicated, highly professional and extremely well trained firefighter,”as well as a skilled pilot. Tim McCormack died Monday after he made a “crash landing” on the roof of 787 Seventh Avenue in MidtownManhattan around 2 p.m. as rain and strong winds hammered the city, the Fire Department of New York (FDNY) said. Investigators believe he was conducting “executive travel” and was headed to the “home airport in Linden, N.J.” New York City Mayor Bill de Blasio later told reporters that there appeared to be no connection to terrorism.
The Federal Aviation Administration said the National Transportation Safety Board was in charge of the investigation and “will determine probable cause of the incident.” McCormack had been involved in a bird strike-related emergency landing for a helicopter in 2014.
DOJ casts wide net in probe of surveillance abuses in Russia investigation
As part of its ongoing “multifaceted” and “broad” review into potential misconduct by U.S. intelligence agencies during the 2016 presidential campaign, the Justice Department revealed Monday it is also investigating the activities of several “non-governmental organizations and individuals.” In addition, the DOJ announced that the probe, let by Connecticut U.S. Attorney John Durham, was looking into the involvement of “foreign intelligence services.”
The DOJ’s announcement came as House Judiciary Committee Chairman Jerrold Nadler announced Monday that he plans to hit pause on efforts to hold Attorney General William Barr in contempt, after reaching a deal with the Justice Department for access to evidence related to former Special Counsel Robert Mueller’s Russia report. Separately, John Dean, the former White House counsel to Richard Nixon, testified Monday that he sees “remarkable parallels” between Watergate and the findings of Special Counsel Robert Mueller’s report – at a dramatic Capitol Hill hearing that Republicans panned as a political “show.”
Kim Jong Un’s half-brother was CIA informant: Report
Kim Jong Un’s half-brother was working as a CIA informant before he was brazenly murdered in a Malaysian airport in 2017,according to a report Monday. Kim Jong Nam, the late North Korean dictator Kim Jong Il’s eldest son, “met on several occasions with agency operatives,” according to the Wall Street Journal. “There was a nexus” between Kim Jong Nam and the intelligence agency,according to the Journal’s source. Little else is known about what Kim Jong Un’s older brother told the feds; however, the report did state he “was almost certainly in contact with security services of other countries, particularly China’s.”
Ortiz back in Boston
Retired Red Sox player David Ortiz landed in Boston in an air ambulance Monday night after a targeted shooting at a bar in Santo Domingo forced doctors in his home nation of the Dominican Republic to remove his gallbladder and part of his intestine. Ortiz, 43, arrived in Boston around 10:30 p.m. after the Red Sox sent a plane to transport him to Massachusetts General Hospital.
Dems halt effort to secure pay increase for lawmakers, as contempt votes, funding drama loom.
Justin Amash gone from House Freedom Caucus after saying Trump’s conduct was ‘impeachable.’
Jonathan Morris: My decision to leave the Catholic priesthood.
MINDING YOUR BUSINESS
Walmart vs. Amazon: Who is ahead in battle for retail dominance?
Makan Delrahim, Ajit Pai met Friday to discuss T-Mobile-Sprint deal as DOJ decision looms.
Why Americans should get into the housing market now.
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Alex Jones, Milo Yiannopoulos, Paul Joseph Watson, Paul Nehlen, Laura Loomer, and Louis Farrakhan have all been removed from Facebook and Instagram.
The details: They’re all accused of engaging in, and promoting, hate speech. Facebook has also banned any other accounts and pages associated with these individuals; one is InfoWars, which is owned by Alex Jones. Facebook and Instagram (which Facebook owns) will take down any content that includes InfoWars articles, videos, or radio clips. Facebook won’t allow any attempt to create accounts in the likeness of the individuals listed above.
Why? Facebook claims it has “always banned individuals or organizations that promote or engage in violence and hate, regardless of ideology.” In reality, enforcement has been patchy. However, evidence of the real-world impact of hate speech and misinformation online (for example, hate crimes like the Christchurch shootings) is ratcheting up the pressure on social-media platforms to act. Twitter, YouTube, and Apple had already banned Jones and InfoWars.
The bigger picture: Piecemeal announcements of individual bans underline just how difficult it is to consistently tackle misinformation and hate speech online. And it’s a reminder of how much power we’ve given to big tech firms to decide what is and isn’t acceptable in modern society.
Source: The Washington Pundit
FILE PHOTO: A Huawei logo is seen outside the fence at its headquarters in Shenzhen, Guangdong province, China May 29, 2019. REUTERS/Jason Lee/File Photo
June 9, 2019
By Cate Cadell and Michael Martina
BEIJING (Reuters) – China summoned global technology companies for talks last week following last month’s U.S. ban on selling technology to China’s Huawei Technologies Co Ltd, two people familiar with the matter told Reuters on Sunday.
The blacklisting of Huawei, the world’s largest maker of telecoms network equipment, bars U.S. companies from supplying it with many goods and services due to what Washington said were national security issues, a potentially crippling blow that sharply escalated U.S.-China trade tensions.
Huawei denies that its equipment poses a security threat.
Soon afterwards, Beijing announced it would release its own list of “unreliable” foreign entities. It also has hinted that it will limit its supply of rare earths to the United States.
A person at U.S. software giant Microsoft Corp said the company’s session with Chinese officials was not a direct warning but it was made clear to the firm that complying with U.S. bans would likely lead to further complications for all sector participants.
The company was asked not to make hasty or ill-considered moves before the situation was fully understood, the person said, adding that the tone was conciliatory.
Microsoft declined to comment.
The New York Times first reported on the meetings led by the National Development and Reform Commission (NDRC), saying major foreign tech firms were warned against complying with a U.S. ban on selling American technology to Chinese firms or potentially face what the newspaper described as dire consequences.
The NDRC did not immediately reply to a faxed request for comment from Reuters.
It is not unusual for China to summon representatives of foreign and domestic companies, sometimes in groups, to make its views heard.
One person with another U.S. tech company in China who was briefed by colleagues on the company’s meeting told Reuters that the tone was “much softer” than expected.
“No mentioning of Huawei. No ultimatums. Just asked to stay in the country, contribute to the win-win negotiation,” the person said, declining to be identified by name or company given the sensitivity of the matter.
“I think they realize they still need U.S. tech and products for now; self-sufficiency will take a long time, and only after then they can kick us out,” the person said.
The New York Times reported that other companies summoned for meetings last Tuesday and Wednesday included U.S. computer maker Dell Technologies Inc, South Korea’s Samsung Electronics Co Ltd and SK Hynix Inc, and British chip designer ARM, which last month halted supplies to Huawei.
Samsung and SK Hynix declined to comment. Dell did not immediately respond on Sunday to an emailed request for comment and a spokesperson for ARM could not immediately be reached.
Separately, the editor of China’s Global Times tabloid said on Saturday that Beijing was preparing to curb some tech exports to the United States. In a tweet, Global Times Editor-in-Chief Hu Xijin said that China “is building a management mechanism to protect China’s key technologies.”
“This is a major step to improve its system and also a move to counter U.S. crackdown,” he added. “Once taking effect, some technology exports to the U.S. will be subject to the control.”
Hu did not cite any named sources in his tweet. The Global Times is a tabloid published by the ruling Communist Party’s official People’s Daily.
Also on Saturday, Chinese state media outlet Xinhua reported that the NDRC would organize a study to establish a “national technological security management list system”.
Last week, Reuters reported that Facebook Inc was no longer allowing pre-installation of its apps on Huawei smartphones.
(Reporting by Cate Cadell and Michael Martina in Beijing; Additonal reporting by Ju-min Park in Seoul and Stella Qiu in Beijing; Writing and additional reporting by Tony Munroe; Editing by Christopher Cushing)
Japan’s Finance Minister Taro Aso poses with delegation members for a family photo during the G20 finance ministers and central bank governors meeting, in Fukuoka, Japan, June 8, 2019. Franck Robichon/Pool via REUTERS
June 9, 2019
By Francesco Canepa and Jan Strupczewski
FUKUOKA, Japan (Reuters) – Group of 20 finance leaders said on Sunday that trade and geopolitical tensions have “intensified” but failed to express a pressing need to resolve them, in a final draft communique that said global growth is likely to pick up.
After rocky negotiations that nearly aborted the issuance of a communique, the finance ministers and central bank governors gathered in Fukuoka, southern Japan, affirmed language on trade issued in Buenos Aires last December.
“Global growth appears to be stabilizing, and is generally projected to pick up moderately later this year and into 2020,” said the final draft, seen by Reuters.
“However, growth remains low and risks remain tilted to the downside. Most importantly, trade and geopolitical tensions have intensified. We will continue to address these risks, and stand ready to take further action,” the communique said.
The communique also said that G20 finance leaders had agreed to compile common rules by 2020 to close loopholes used by global tech giants such as Facebook and Google to reduce their corporate taxes.
The Buenos Aires G20 summit in December 2018 launched a five-month trade truce between the United States and China to allow for negotiations to end their deepening trade war. But those talks hit an impasse last month, prompting both sides to impose higher tariffs on each other’s goods as the conflict nears the end of its first year.
The G20 finance leaders’ final communique language excluded a proposed clause to “recognize the pressing need to resolve trade tensions” from a previous draft that was debated on Saturday.
The deletion, which G20 sources said came at the insistence of the United States, shows a desire by Washington to avoid encumbrances as it increases tariffs on Chinese goods. The statement also contains no admissions that the deepening U.S.-China trade conflict was hurting global growth.
The International Monetary Fund warned last week that the trade conflict would cut global growth next year, and financial markets had sold-off heavily as U.S.-Sino ties soured.
U.S. Treasury Secretary Steven Mnuchin said on Saturday he did not see any impact on U.S. growth from the trade conflict, and that the government would take steps to protect consumers from higher tariffs.
The widening fallout from the U.S.-China trade war has tested the resolve of the group to show a united front as investors worry if policymakers can avert a global recession.
The bickering over trade language has dashed hopes of Japan, which chairs this year’s G20 meetings, to keep trade issues low on the list of agendas at the finance leaders’ meeting.
Mnuchin said U.S. President Donald Trump and Chinese President Xi Jinping would meet at a June 28-29 G20 summit in Osaka.
Mnuchin described the planned meeting as having parallels to the two presidents’ Dec. 1 meeting in Buenos Aires, when Trump was poised to hike tariffs on $200 billion worth of Chinese goods.
Trump took that step in May and will be ready to impose similar 25% tariffs on a remaining $300 billion list of Chinese goods around the time of the Osaka summit.
At the Buenos Aires meeting, the G20 leaders described international trade and investment as “important engines of growth, productivity, innovation, job creation and development. We recognize the contribution that the multilateral trading system has made to that end.”
The leaders in that communique called for reform of the World Trade Organization rules that were falling short of objectives with “room for improvement,” pledging to review progress at the Japan summit.
(Reporting by Francesco Canepa, Jan Strupczewski, Christian Kraemer, Leika Kihara and David Lawder; Writing by David Lawder and Leika Kihara; Editing by Chris Gallagher, Christopher Cushing & Kim Coghill)
The effectiveness of President Donald Trump’s unprecedented weaponization of tariffs in addressing non-trade issues is facing its most significant tests yet in Mexico and China.
In the case of Mexico, he had threatened new 5% tariffs on Mexican goods – which were to be imposed as early as Monday. The aim was to force the Mexican government to stem the flood of undocumented migrants across U.S. borders.
The United States and Mexico reached a deal Friday night in which Trump dropped the tariff threat in return for Mexico’s commitment to increased immigration enforcement.
In the case of China, Beijing officials have grown convinced that the Trump administration’s aim is – at the very least – to alter the way the autocratic capitalist regime does business. At the very most, they believe Trump officials would like to slow or stop China’s rise and perhaps change the regime itself.
A draft trade agreement, which U.S. officials say the Chinese initially accepted before rejecting, appears to have included a Chinese commitment to change its laws to rein in illegal tech transfers, intellectual property theft and anti-competitive state subsidies.
No one disputes, least of all Mexican officials themselves, that Mexico should do more to help the United States address the migrant problem. Last month, U.S. officials apprehended or refused entry to more than 144,000 people who crossed the southern border illegally, the most in a single month in some five years. That number has grown consistently since January, fueled by the fear of even tougher restrictions to come and a desire to get in the door before it shuts.
Top Mexican officials flew to Washington this past week on an emergency mission to broker a deal to head off he tariffs. Ahead of the weekend, Mexican Foreign Minister Marcelo Ebard confirmed reports that Mexico would send 6,000 of its national guard troops to its southern border – the sort of physical showing designed to appeal to Trump. Mexico also has offered changes, U.S. officials have said, to its asylum rules that would require Central American migrants to seek asylum in the first foreign country they enter – namely Mexico
No one disputes either how positive it would be if Trump could coax the Chinese to mend their unfair trading ways, an effort that has broad global support and bipartisan political support at home. Yet Chinese officials say they drew the line, and they unusually leaked details of the talks to support their argument, when the U.S. side went beyond economic goals toward demands that Beijing rewrite its laws to alter its state-controlled system.
However commendable even the Trump administration’s most ardent supporters might find the president’s goals in Mexico and China, the unfortunate truth is that tariffs are insufficient at best and counterproductive at worst in achieving non-trade outcomes.
Ultimately, Mexico achieved a stand-down from the higher tariffs . The deal, however, won’t address the underlying problem.
The Atlantic Council’s Tony Wayne, a former U.S. ambassador to Mexico, argued this week: “Central American governments’ inability to provide for the basic needs and safety of many of their citizens, fueling the migration, has deep-rooted causes that will take years to solve.”
The U.S. recently cut aid to Central America, despite its growing needs, inadvertently fueling even more incentive to migrate. And though Mexico and the United States have agreed in principle to promoting economic development in southern Mexico and Central America, they haven’t delivered anything concrete.
Whatever Mexican officials may promise the Trump administration, it’s unclear they would have the capacity to deliver. “Mexico’s immigration and refugee agencies are severely understaffed, under-resourced and overwhelmed by the increased numbers of Central Americans heading north,” Wayne said.
The difficulty is even greater in addressing the multi-dimensional China challenge through escalating tariffs, even when one adds to that other economic tools such as the recent ban on Huawei selling its 5G products in the United States.
The combination of the tough line U.S. officials took in trade talks and the escalating confrontation over Huawei has prompted a more nationalist and assertive response by the Chinese government, reflected in President Xi Jinping’s visit to Russia this week to meet with Vladimir Putin, previewed last week in this space.
Xi and Putin left little doubt that their growing closeness is in no small part motivated as a coalition against the United States. It was also telling that among the 30 deals and agreements signed by the two leaders was an accord for Huawei to develop a 5G network in Russia together with Russia’s MTS telecoms company.
There’s little doubt the U.S. moves against Beijing will slow Chinese growth and complicate Huawei’s ability to expand its impressive hold on global telecom and emerging 5G markets.
Yet tariffs and tech sanctions can achieve little of lasting value without an accompanying set of talks and how the two powers together can manage the global future with a set of agreed rules that will allow them to be both strategic collaborators and competitors.
Trump’s tariff struggles with Mexico and China are only part of what the Economist on its cover this weekend called in a blazing headline, “Weapons of Mass Disruption,” printed beside a compelling illustration of a bomb tipped with Trump’s face heading earthward with these words stenciled on its side: “TARIFFS, TECH BLACKLISTS, FINANCIAL ISOLATION, SANCTIONS.”
Though tariffs on Mexico and China lead the news now, the U.S. this week also cancelled preferential trading rules for India, it continues to use sanctions in efforts to tame and punish Iran and Russia, it wields them in its effort to denuclearize North Korea and it deploys sanctions, working alongside some 50 other democracies, to replace Venezuela’s dictator with democracy.
U.S. economic weapons are the most potent in the world, and 88% of world trade is still done in dollars, although the U.S. share of global GDP has shrunk from nearly half after World War II to 38% in 1969 to about 24% now. That remains the case because for many years a good part of the world viewed this arrangement positively.
It remains to be seen – in Mexico, China and beyond – how much Trump will gain through his unique willingness to use economic weapons.
What’s clear already is that friends and rivals are more interested than ever before in exploring alternatives to the U.S.-dominated system. Such a transition would take many years, involve enormous costs and unfold in stages. However, consistent overuse of U.S. economic power has made the unthinkable more plausible.
Frederick Kempe is a best-selling author, prize-winning journalist and president & CEO of the Atlantic Council, one of the United States’ most influential think tanks on global affairs. He worked at The Wall Street Journal for more than 25 years as a foreign correspondent, assistant managing editor and as the longest-serving editor of the paper’s European edition. His latest book – “Berlin 1961: Kennedy, Khrushchev, and the Most Dangerous Place on Earth” – was a New York Times best-seller and has been published in more than a dozen languages. Follow him on Twitter and subscribe here to Inflection Points, his look each Saturday at the past week’s top stories and trends.
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Stocks jumped on Friday, building on strong weekly gains, as weak economic data increased the odds of easier monetary policy from the Federal Reserve.
The Dow Jones Industrial Average closed 263.28 points higher at 25,983.94, led by gains in Microsoft and Apple. The S&P 500 climbed 1% to 2,873.34 as the tech sector outperformed. The Nasdaq Composite gained 1.7% to 7,742.10.
The U.S. economy added 75,000 jobs in May, marking the second time in four months that jobs growth totaled less than 100,000. Economists polled by Dow Jones expected an increase of 180,000 jobs. Wage growth also slowed.
“The market’s got a conundrum here. That’s a bad report. Just on the report itself, I think people would want to sell the market. However, the fact that it really makes the case for a rate cut, I think is why you’re seeing the market hang in there,” said JJ Kinahan, chief market strategist at TD Ameritrade.
Market expectations for a Fed rate cut in June rose to 27.5% from 16.7% after the data release, according to the CME Group’s FedWatch tool. The market is also pricing in a 79% chance of lower Fed rates by July.
Traders work on the floor of the New York Stock Exchange.
Jeenah Moon | Reuters
Treasury yields fell broadly, with the benchmark 10-year rate dropping to its lowest level since 2017. The dollar slid against a basket of currencies.
Apple shares rose more than 2.5% along with Microsoft. For the week, Apple soared more than 8% while Microsoft gained 6.3%.
Bank shares followed yields lower. Citigroup, J.P. Morgan Chase and Bank of America all fell more than 1%.
The major indexes posted sharp gains for the week. The Dow jumped 4.7%, its biggest weekly gain since November. It also snapped a six-week losing streak. The S&P 500 and Nasdaq were up 4.4% and 3.9% this week, respectively.
Fed Chair Jerome Powell said Tuesday the central bank is “closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion.”
“You’re seeing this view to price in cuts, that things are going to be worse later this year, that the Fed is going to have to quickly change its cycle again, and that puts Powell in a tough bind here,” said Erik Bregar, head of FX strategy at the Exchange Bank of Canada. “In December, they were still talking rate hikes and now they’ve got to flip around to pandering to the market’s want for cuts.”
“There’s this view that Powell is going to come in for the rescue and it’s lifting everything,” he said. “The punch bowl is back in play.”
Investors also kept an eye on trade as talks between U.S. and Mexico officials continue.
Mexican ambassador to the U.S. Martha Barcena Coqui told CNBC that negotiations involved a “very good discussion.” Mexico has also agreed to send its national guard to its border with Guatemala to stem the flow of undocumented migrants hoping to reach the U.S., Reuters reported Thursday.
President Donald Trump tweeted “there is a good chance ” the two countries can make a deal. This would keep the administration from slapping a 5% tariff on all Mexican imports into the U.S.
—CNBC’s Elliot Smith contributed to this report.
Correction: This story has been updated to reflect May the second time in four months that jobs growth totaled less than 100,000.