Trump attacks Amazon, again, over U.S. postal rates

(Reuters) – U.S. President Donald Trump launched his second attack in a week on Inc on Saturday, accusing the world’s biggest online retailer of getting unfairly cheap rates from the U.S. Postal Service and not paying enough tax.

Trump’s comments on Twitter reiterated criticisms he made on Thursday about the company. He may have been prompted by a report from news website Axios saying he was obsessed with Amazon and considering ways to rein in the company’s power, possibly with federal antitrust or competition laws.

Investor concerns about regulatory action sent Amazon shares down 3.3 percent over Wednesday and Thursday, knocking $24 billion off the company’s market value.

“While we are on the subject, it is reported that the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon. That amounts to Billions of Dollars,” Trump tweeted on Saturday.

A Citigroup analysis last year showed that if the U.S. Postal Service (USPS) reallocated costs to account for the growing volume of packages it delivers, it would cost $1.46 more to deliver each package. Federal regulators, which review contracts made by USPS, have not raised any issues with the terms of its contract with Amazon.

FILE PHOTO: The logo of Inc is seen in Sao Paulo, Brazil October 17, 2017. REUTERS/Paulo Whitaker/File Photo

“If the P.O. ‘increased its parcel rates, Amazon’s shipping costs would rise by $2.6 Billion’,” Trump tweeted, although it was not clear what report he was citing. “This Post Office scam must stop. Amazon must pay real costs (and taxes) now!”

A White House spokeswoman said on Thursday the administration has no Amazon-related action at this time.

Trump also accused the Washington Post, owned privately by Amazon Chief Executive and founder Jeff Bezos, of being a “lobbyist” for Amazon.

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The newspaper, a frequent target of Trump’s ire, won a Pulitzer Prize last year for its critical investigation of Trump’s donations to charities.

Amazon declined comment. The Washington Post did not immediately reply to a request for comment.

Reporting by Bill Rigby; Editing by Bill Trott

Zuckerberg disavows memo saying all user growth is good

SAN FRANCISCO (Reuters) – A Facebook Inc executive said in an internal memo in 2016 that the social media company needed to pursue adding users above all else, BuzzFeed News reported on Thursday, prompting disavowals from the executive and Facebook Chief Executive Officer Mark Zuckerberg.

Facebook CEO Mark Zuckerberg speaks on stage during the Facebook F8 conference in San Francisco, California April 12, 2016. REUTERS/Stephen Lam

The memo from Andrew Bosworth, a Facebook vice president, had not been previously reported as Facebook faces inquiries over how it handles personal information and the tactics the social media company has used to grow to 2.1 billion users.

Zuckerberg stood by Bosworth, who goes by the nickname “Boz,” while distancing himself from the memo’s contents. Bosworth confirmed the memo’s authenticity but in a statement he disavowed its message, saying its goal had been to encourage debate.

Facebook users, advertisers and investors have been in an uproar for months over a series of scandals, most recently privacy practices that allowed political consultancy Cambridge Analytica to obtain personal information on 50 million Facebook members. Zuckerberg is expected to testify at a hearing with U.S. lawmakers as soon as April.

“Boz is a talented leader who says many provocative things. This was one that most people at Facebook including myself disagreed with strongly. We’ve never believed the ends justify the means,” Zuckerberg said in a statement.

Bosworth wrote in the June 2016 memo that some “questionable” practices were all right if the result was connecting people.

Facebook CEO Mark Zuckerberg speaks on stage during the Facebook F8 conference in San Francisco, California April 12, 2016. REUTERS/Stephen Lam

“That’s why all the work we do in growth is justified. All the questionable contact importing practices. All the subtle language that helps people stay searchable by friends,” he wrote in the memo, which BuzzFeed published on its website.

He also urged fellow employees not to let potential negatives slow them down.

“Maybe it costs a life by exposing someone to bullies. Maybe someone dies in a terrorist attack coordinated on our tools. And still we connect people,” he wrote.

Bosworth said Thursday that he did not agree with the post today “and I didn’t agree with it even when I wrote it.

“Having a debate around hard topics like these is a critical part of our process and to do that effectively we have to be able to consider even bad ideas, if only to eliminate them,” Bosworth’s statement said.

Reporting by David Ingram; editing by Grant McCool

Eager for calming news, investors look to earnings

NEW YORK (Reuters) – Nervous stock investors are hoping an unusually U.S. strong earnings season can restore some of the optimism that characterized equity markets last year.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 26, 2018. REUTERS/Brendan McDermid

Imploding technology stocks and fears of a trade war have pummeled the market in recent days. Given the surge in volatility this year, there is no guarantee that worst is over.

Analysts predict strong results when reporting season starts up next month, with first-quarter S&P 500 profit growth on track to be the highest in seven years, according to Thomson Reuters data. That follows a blockbuster fourth-quarter period, and recent corporate tax cuts that boosted forecasts for all of 2018.

A robust earnings period would bring back the focus on fundamentals and possibly put a floor under prices, supporting views that the 9-year-old bull market will go on, strategists said.

“It’s going to be earnings,” said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York. “The market has given up so much that earnings can start to redirect attention back into a market that has gotten much cheaper relative to where we were.”

With this year’s sell-off and rising profit forecasts, stocks also are near the cheapest on a price-to-earnings basis that they have been since late 2016. The S&P 500 is trading at about 16.5 times forward earnings, well below the 18.9 level it was at in mid-December, according to Thomson Reuters data.

(To view a graphic on S&P PEs, click

Stocks’ rout in early February, and more recent selling following worries over a U.S. trade war with China, Facebook privacy issues and a collapse in other tech leaders, have made investors skittish and more likely to discount the relatively strong economic backdrop that persists.

“We’ve been caught up in all of these things that could happen and may happen and that the sky is falling, but once earnings season kicks in, it’s headline news and that steals away some of the negativity,” said Daniel Morgan, senior portfolio manager at Synovus Trust Company in Atlanta.

To be sure, next week brings the monthly U.S. jobs report, a potential catalyst for further volatility. A strong payrolls report in early February had helped spark the stock sell-off that drove the S&P 500 more than 10-percent below its Jan. 26 record high – a “correction.”

The job report briefly drove up bond yields and touched off worries that the Federal Reserve may need to speed up interest rate hikes. The S&P 500 is now about 8 percent below its record.

Just in the first three months of this year, the S&P has jumped or fallen 1 percent on 23 trading days, three times the number of 1-percent moves it made in all of 2017. In 2016, there were 48 such days.

Market participants agree that U.S. stocks are unlikely to return to the unusually calm conditions seen last year, when the Cboe Volatility Index, the most widely-followed barometer of expected near-term ups and downs for the S&P 500, logged a record low daily average reading of 11. The VIX hit a two-and-a-half-year high above 50 in early February.

Expectations for U.S. earnings this year have jumped since December, when U.S. lawmakers approved sweeping changes to the tax law, including slashing the corporate tax rate to 21 percent from 35 percent. Growth in other major economies has also lifted profit forecasts for the large stocks that generate a lot of sales overseas.

Analysts now expect first-quarter earnings for S&P 500 companies to rise 18.5 percent from a year ago, according to Thomson Reuters data.

The first-quarter S&P profit forecast is up 6.3 percentage points since Jan. 1, while the forecast for all of 2018 is up 7.7 points since then, based on Thomson Reuters data.

That suggests the bar might be relatively low for the first quarter. “You still could see some relative upside there,” said Keith Parker, U.S. equity strategist at UBS.

Many companies already have announced plans for increased buybacks and dividends, or bringing cash back from overseas, and other ways to use their tax savings. More news on that front is expected this reporting period, which is set to start with reports from JPMorgan Chase and others April 13.

“If we get a discussion of repatriation – what companies are going to bring back … that will have a positive effect on the market,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

Reporting by Caroline Valetkevitch; additional reporting by Saqib Iqbal Ahmed; editing by Alden Bentley and Nick Zieminski

Facebook cuts ties to data brokers in blow to targeted ads

(Reuters) – Facebook Inc (FB.O) said on Wednesday it would end its partnerships with several large data brokers who help advertisers target people on the social network, a step that follows a scandal over how Facebook handles personal information.

The world’s largest social media company is under pressure to improve its handling of data after disclosing that information about 50 million Facebook users wrongly ended up in the hands of political consultancy Cambridge Analytica.

Facebook adjusted the privacy settings on its service on Wednesday, giving users control over their personal information in fewer taps.

Facebook has for years given advertisers the option of targeting their ads based on data collected by companies such as Acxiom Corp (ACXM.O) and Experian PLC (EXPN.L).

The tool has been widely used among certain categories of advertisers – such as automakers, luxury goods producers and consumer packaged goods companies – who do not sell directly to consumers and have relatively little information about who their customers are, according to Facebook.

“While this is common industry practice, we believe this step, winding down over the next six months, will help improve people’s privacy on Facebook,” Graham Mudd, a Facebook product marketing director, said in a statement.

Shares in Acxiom traded down more than 10 percent to $25 after Facebook’s announcement after the bell. Shares in other data brokers were largely unchanged.

Acxiom said late on Wednesday it did not expect this change to impact its revenue or earnings for the year ending in March. The company currently expects revenue in the range of $910 million to $915 million in the 2018 fiscal year.

However, for the 2019 fiscal year, Acxiom expects total revenue and profitability to be negatively impacted by as much as $25 million.

Facebook declined to comment on how the change could affect its ad revenue.

Advertisers would still be able to use third-party data services to measure how well their ads performed by examining purchasing data, Facebook said.

Facebook’s website lists nine third-party data providers that it has worked with, including Acxiom, Experian, Oracle Data Cloud (ORCL.N), TransUnion (TRU.N) and WPP PLC (WPP.L).

Other companies, besides Acxiom, were not available for comment.

Facebook on Wednesday also put all its privacy settings on one page and made it easier to stop third-party apps from using personal information. Privacy settings had previously been spread over at least 20 screens, Facebook said.

Facebook said in a blog post it had been working on the updates for some time but sped things up to appease users’ anger over how the company uses data and as lawmakers around the globe call for regulation.

Facebook’s shares closed up 0.5 percent at $153.03 on Wednesday. They are still down more than 17 percent since March 16, when Facebook first acknowledged that user data had been improperly channeled in 2014 via a third-party app to Cambridge Analytica, which was later hired by Donald Trump’s 2016 presidential campaign.

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The data leak has raised investor concerns that any failure by big tech companies to protect privacy could deter advertisers, who are Facebook’s lifeblood, and lead to tougher regulation.


Facebook Chief Executive Mark Zuckerberg has repeatedly apologized for the mistakes the company made and has promised to crack down on abuse of the Facebook platform and restrict developers’ access to user information.

There is a new Facebook page – called Access Your Information – where users can see what they have shared and manage it.

“The biggest difference is ease of access in settings, which fulfills Mark Zuckerberg’s promise to make the privacy process and permissions more transparent to users,” Wedbush analyst Michael Pachter said.

It was uncertain whether the changes will satisfy lawmakers.

They were announced ahead of a stringent European Union data law which comes into force in May. It requires companies to give people a “right to portability” – to take their data with them – and imposes fines of up to 4 percent of global revenue for companies breaking the law.

Lawmakers in the United States and Britain are still clamoring for Zuckerberg himself to explain how users’ data ended up in the hands of Cambridge Analytica.

He plans to testify before Congress, a source briefed on the matter said on Tuesday. Facebook has said it has received invitations to testify and that it is talking to legislators.

Zuckerberg and the CEOs of Alphabet Inc (GOOGL.O) and Twitter Inc (TWTR.N) have been invited to testify at an April 10 hearing on data privacy. The U.S. House Energy and Commerce Committee and U.S. Senate Commerce Committee have also asked Zuckerberg to appear at a hearing.

The U.S. Federal Trade Commission has opened an investigation into Facebook, and attorneys representing 37 states are also pressing Zuckerberg to explain what happened.

Reporting by David Ingram and Julia Fioretti; Additional reporting by Laharee Chatterjee, Arjun Panchadar and Ismail Shakil in Bengaluru; Editing by James Dalgleish and Cynthia Osterman

Uber’s use of fewer safety sensors prompts questions after Arizona crash

TEMPE, Ariz./PITTSBURGH (Reuters) – When Uber decided in 2016 to retire its fleet of self-driving Ford Fusion cars in favor of Volvo sport utility vehicles, it also chose to scale back on one notable piece of technology: the safety sensors used to detect objects in the road.

That decision resulted in a self-driving vehicle with more blind spots than its own earlier generation of autonomous cars, as well as those of its rivals, according to interviews with five former employees and four industry experts who spoke for the first time about Uber’s technology switch.

Driverless cars are supposed to avoid accidents with lidar – which uses laser light pulses to detect hazards on the road – and other sensors such as radar and cameras. The new Uber driverless vehicle is armed with only one roof-mounted lidar sensor compared with seven lidar units on the older Ford Fusion models Uber employed, according to diagrams prepared by Uber.

In scaling back to a single lidar on the Volvo, Uber introduced a blind zone around the perimeter of the SUV that cannot fully detect pedestrians, according to interviews with former employees and Raj Rajkumar, the head of Carnegie Mellon University’s transportation center who has been working on self-driving technology for over a decade.

The lidar system made by Velodyne – one of the top suppliers of sensors for self-driving vehicles – sees objects in a 360-degree circle around the car, but has a narrow vertical range that prevents it from detecting obstacles low to the ground, according to information on Velodyne’s website as well as former employees who operated the Uber SUVs.

Autonomous vehicles operated by rivals Waymo, Alphabet Inc’s self-driving vehicle unit, have six lidar sensors, while General Motors Co’s vehicle contains five, according to information from the companies.

Uber declined to comment on its decision to reduce its lidar count. In a statement late Tuesday, an Uber spokeswoman said, “We believe that technology has the power to make transportation safer than ever before and recognize our responsibility to contribute to safety in our communities. As we develop self-driving technology, safety is our primary concern every step of the way.”

Uber referred questions on the blind spot to Velodyne. Velodyne acknowledged that with the rooftop lidar there is a roughly three meter blind spot around a vehicle, saying that more sensors are necessary.

“If you’re going to avoid pedestrians, you’re going to need to have a side lidar to see those pedestrians and avoid them, especially at night,” Marta Hall, president and chief business development officer at Velodyne, told Reuters.

The safety of Uber’s self-driving car program is under intense scrutiny since Elaine Herzberg, 49, was killed last week after an Uber Volvo XC90 SUV operating in autonomous mode struck and killed her while she was jaywalking with her bicycle in Tempe, Arizona.

The precise causes of the Arizona accident are not yet known, and it is unclear how the vehicle’s sensors functioned that night or whether the lidar’s blind spot played a role. The incident is under investigation by local police and federal safety officials who have offered few details, including whether Uber’s decision to scale back its sensors is under review.

Uber has said it is cooperating in the investigation and has pulled all of its autonomous cars off the road, but has provided no further details about the crash.

Like the older Fusion model, Uber’s top competitors place multiple, smaller lidar units around the car to augment the central rooftop lidar, a practice experts in the field say provides more complete coverage of the road.

The earlier Fusion test cars used seven lidars, seven radars and 20 cameras. The newer Volvo test vehicles use a single lidar, 10 radars and seven cameras, Uber said.

FILE PHOTO: A self driving Volvo vehicle, purchased by Uber, moves through an intersection in Scottsdale, Arizona, U.S., December 1, 2017. REUTERS/Natalie Behring/File Photo

Since Uber launched a self-driving car program in early 2015, it has hustled to catch up with Waymo, which began working on the technology in 2009. Uber management moved swiftly and confidently even as some car engineers voiced caution, according to former employees, in a rush to get more cars driving more miles.

Seven experts who have reviewed the crash agree that a self-driving system should have seen Herzberg and braked. She had crossed nearly the entire four-lane, empty road before being struck by the front right side of the vehicle. The night was clear and streetlights were lit.

“Radar is supposed to compensate for (the lidar’s) blind spot,” said Rajkumar.

Uber declined to comment on its radar system. Volvo Car Group, owned by China’s Geely, declined to comment. A Ford spokesman said the company was not involved in Uber’s use of the Fusion or the self driving technology employed on the cars.

To be sure, there are many possible causes of the crash other than the lidar blind spot. There could have been a software failure in the Uber car, said Richard Murray, an engineering professor at California’s Institute of Technology and the former head of Caltech’s student self-driving team.

“But this would be quite surprising since there was nothing else on the road,” he said.


An Uber diagram of the Fusion model notes that “front, rear and wing-mounted lidar modules aid in the detection of obstacles in close proximity to the vehicle, as well as smaller ones that can get lost in blind spots.”

A diagram of its Volvo version shows a single lidar system on the roof. In reducing its lidar units, Uber chose to rely more on radar to detect obstacles that may end up in those blind spots, according to company statements.

At Uber’s September 2016 unveiling of its Pittsburgh self-driving car operation, it was still using the Fusions, but had a Volvo on display. Uber staff pointed to the sleekness of the SUV and the relatively small roof mount with only one lidar system, a more attractive upgrade from the Fusion, which had a bulkier look with more sensors attached to the exterior.

A former employee said Uber justified the decision to slim down to one lidar by saying they “overdid it” with the additional sensors on the Fusions, suggesting the multiple lidars were unnecessary as Uber continued to refine its self-driving system.

Uber’s decision to move from the Fusion to a much taller vehicle exacerbated the issue of a blind spot from a single lidar unit, said former employees, because the lidar now sits up higher on top of an SUV, further reducing its ability to see low-lying objects – from squirrels to the wheels of a bicycle or a person’s legs.

One former Uber employee involved in testing both the Fusions and Volvo SUVs said that during a test run in late 2016, the Volvo failed to see a delivery truck’s tailgate lift that extended into the street, and the car nearly hit it going 35 miles-per-hour.

Uber declined to comment on specific testing incidents, but said its technology is constantly being updated and improved, and every incident in the cars is logged and checked out by an engineer.

Additional reporting by Salvador Rodriguez in San Francisco and Eric Johnson in Seattle; editing by Joe White and Edward Tobin

U.S. seeks China trade moves on autos, financials, chips: source

WASHINGTON/BEIJING (Reuters) – Top Trump administration officials are asking China to cut tariffs on imported cars, allow foreign majority ownership of financial services firms and buy more U.S.-made semiconductors in negotiations to avoid plans to slap tariffs on a host of Chinese goods and a potential trade war.

FILE PHOTO – U.S. President Donald Trump and China’s President Xi Jinping shake hands after making joint statements at the Great Hall of the People in Beijing, China, November 9, 2017. REUTERS/Damir Sagolj/File Photo

A person familiar with the discussions said these were among the asks from Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer as they pursue talks with Beijing.

The Wall Street Journal first reported the demands from U.S. officials, saying they came in a letter sent to Beijing last week.

White House trade adviser Peter Navarro confirmed that President Donald Trump asked Mnuchin and Lighthizer to try to resolve trade differences with China.

“We’re hopeful there that China will work with us to basically address some of these practices,” Navarro told CNBC television.

U.S. stocks surged on Monday on the news that the two sides were talking, after a massive rout last week when Trump announced plans to impose tariffs on up to $60 billion of Chinese imports over alleged misappropriation of U.S. intellectual property.

The Dow Jones Industrial Average .DJI posted its third biggest point gain ever, rising 669.4 points, or 2.8 percent, to close at 24,202.6 while the broader S&P 500 .SPX rose 2.7 percent after a nearly 6 percent drop last week.

Chinese Premier Li Keqiang earlier on Monday said that China and the United States should maintain negotiations and repeated pledges to ease access for American businesses to China’s markets.

Li told a conference that included global chief executives that China would treat foreign and domestic firms equally, would not force foreign firms to transfer technology and would strengthen intellectual property rights, repeating promises that have failed to placate Washington.

Despite a steady stream of fierce rhetoric from Chinese state media lambasting the United States for being a “bully” and warning of retaliation, Chinese and U.S. officials are busy negotiating behind the scenes.


In an interview aired on Sunday, Mnuchin told Fox News that he was pursuing an agreement with the Chinese “for them to open up their markets, reduce their tariffs, stop forced technology transfer. These are all the things we want to do.”

“We are proceeding with these tariffs, we’re not putting them on hold unless we have an acceptable agreement that the president signs off on,” Mnuchin added.

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China has offered to buy more U.S. semiconductors by diverting some purchases from South Korea and Taiwan, the Financial Times reported, citing people briefed on the negotiations. China imported $2.6 billion of semiconductors from the United States last year.

Chinese officials are also working to finalize rules by May – instead of the end of June – to allow foreign financial groups to take majority stakes in Chinese securities firms, the Financial Times said.

“I anticipate that for political reasons it would be logical for China to respond, because countries do,” Blackstone Group (BX.N) Chief Executive Stephen Schwarzman told Reuters on Monday on the sidelines of the Beijing conference where Li spoke.

“That’s why I view this more as a skirmish, and I think the interests of both countries are served by resolving some of these matters.”

China called on World Trade Organization members on Monday to unite to oppose Trump’s proposed tariffs targeting alleged intellectual property theft, saying they should “lock this beast back into the cage of WTO rules.”

On Friday, China responded to the U.S. tariffs on steel and aluminum by declaring plans to levy additional duties on up to $3 billion of U.S. imports, including fruit, nuts and wine.

China could also inflict pain on U.S. multinationals that rely on China for a substantial – and growing – portion of their total revenues, said Alex Wolf, senior emerging markets economist at Aberdeen Standard Investments.

“This could put U.S. companies such as Apple (AAPL.O), Microsoft (MSFT.O), Starbucks (SBUX.O), GM (GM.N), Nike (NKE.N), etc in the firing line,” Wolf said in a note.

China can increase the regulatory burden on U.S companies through new inspections and rules; ban travel; stop providing export licenses of key intermediate goods; raise the tax burden on U.S. multinationals in China; or block U.S. companies from the government procurement market, he said.


The Trump administration has demanded that China immediately cut its $375 billion trade surplus with the United States by $100 billion.

China has a 25 percent tariff on U.S. cars and has talked recently of lowering it, while Trump has often complained that the U.S. import tariff on passenger vehicles is only 2.5 percent. China’s imports of U.S.-built motor vehicles totaled $10.6 billion in 2017, about 8 percent of the country’s overall U.S. imports by value, according to U.S. government data.

On the reported offer to increase U.S. semiconductor imports, it is unclear how U.S. chips would replace South Korean and Taiwanese chips, since there is minimal overlap between U.S. chips and those of the two Asian producers.

China is heavily dependent on foreign semiconductors, one of its biggest import categories by value. That said, the United States accounted for just 1 percent of China’s total semiconductor imports last year by value, according to Reuters calculations based on Chinese customs data.

Additional reporting by Matthew Miller, Ben Blanchard, Elias Glenn and Stella Qiu in Beijing and Eric Beech in Washington; Editing by Cynthia Osterman and Leslie Adler

Asian shares stumble as trade war fears roil global markets

SYDNEY (Reuters) – Fears of a full-blown trade war between the United States and China battered Asian shares again on Monday, keeping the safe haven yen near a 16-month peak as investors fretted over the fate of global growth.

People walk past an electronic board showing Japan’s Nikkei average outside a brokerage at a business district in Tokyo, Japan August 9, 2017. REUTERS/Kim Kyung-Hoon

Japan’s Nikkei .N225 stumbled 0.9 percent to a near six-month trough in early trade, due in part to worries over the stronger yen squeezing export earnings.

Australian shares declined 0.5 percent to their lowest since early October.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.1 percent for their fourth consecutive day in the red.

The index is headed for its first quarterly loss since late 2016 as the risk of faster U.S. rate rises and the specter of a trade war spooked investors who had enjoyed a multi-year bull run.

U.S. President Donald Trump signed a memorandum last week that could impose tariffs on up to $60 billion of imports from China, although the measures have a 30-day consultation period before they take effect.

“Protectionism remains a source of volatility and downside for equities,” analysts at JPMorgan said in a note.

“Asia ex-Japan equity outperformance is in part a function of faster growth and capital inflows; both clearly at risk in a trade war.”

China urged the United States to “pull back from the brink” as the world’s two largest economies moved closer to a trade war with potentially dire consequences for the global economy.

The tariffs are on top of additional duties on steel and aluminum on a number of countries including China, which has already hit back with its own plans to slap duties on up to $3 billion of U.S. imports.

“Tariffs on China will very likely cause collateral damage in Asia, particularly to smaller open economies,” said Alex Wolf, Hong Kong-based senior emerging markets economist at Aberdeen Standard Investments.

“A greater share of value-added in U.S. computer imports comes from Asia ex-China than from China itself,” Wolf added.

“And the integration of cross-border supply chains means that small open economies like Korea and Taiwan would be highly sensitive to US and/or China trade barriers.”

Indeed, the Korean won KWR= held near one month lows on the U.S. dollar while South Korea’s benchmark share index .KS11 was off 0.3 percent after being bitterly hammered on Friday.

U.S. shares were also clobbered last week, with the Dow .DJI falling 1.8 percent on Friday, the S&P 500 .SPX declining 2.1 percent and the Nasdaq .IXIC off 2.4 percent.


Amid the uncertain global economic climate, investors seeking safer assets jumped into government bonds in Europe and the United States.

Treasury futures were a shade firmer on Monday TYc1 while German Bund futures were stronger too. FGBLc1

Many investors also turned to the Japanese yen JPY=, traditionally a safe haven asset thanks to the country’s massive current account surplus.

The yen held at 104.79 after last week going below 105 for the first time since November 2016. The euro EUR=, another perceived haven for nervous investors, was up 0.1 percent at $1.2364.

The dollar index .DXY, tracking the greenback against six other major currencies, was unchanged near a one-month low of 89.447.

In commodities, U.S. crude CLcv1 rose 53 cents to $66.42. Brent LCOcv1 was last at $70.79, up 48 cents. Spot gold XAU= added 0.2 percent to $1,349.72.

Reporting by Swati Pandey; Editing by Eric Meijer

China warns U.S. it will defend own trade interests

BEIJING (Reuters) – The United States has flouted trade rules with an inquiry into intellectual property and China will defend its interests, Vice Premier Liu He told U.S. Treasury Secretary Steven Mnuchin in a telephone call on Saturday, Chinese state media reported.

FILE PHOTO: Containers are seen at the Yangshan Deep Water Port, part of the Shanghai Free Trade Zone, in Shanghai, China February 13, 2017. REUTERS/Aly Song

The call between Mnuchin and Liu, a confidante of President Xi Jinping, was the highest-level contact between the two governments since U.S. President Donald Trump announced plans for tariffs on up to $60 billion of Chinese goods on Thursday.

The deepening rift has sent a chill through financial markets and the corporate world as investors predicted dire consequences for the global economy should trade barriers start going up.

Several U.S. chief executives attending a high-profile forum in Beijing on Saturday, including BlackRock Inc’s Larry Fink and Apple Inc’s Tim Cook, urged restraint.

In his call with Mnuchin, Liu, a Harvard-trained economist, said China still hoped both sides would remain “rational” and work together to keep trade relations stable, the official Xinhua news agency reported.

U.S. officials say an eight-month probe under the 1974 U.S. Trade Act has found that China engages in unfair trade practices by forcing American investors to turn over key technologies to Chinese firms.

However, Liu said the investigation report “violates international trade rules and is beneficial to neither Chinese interests, U.S. interests nor global interests”, Xinhua cited him as saying.

In a statement on its website, the office of the U.S. Trade Representative Robert Lighthizer said it had filed a request – at the direction of Trump – for consultations with China at the World Trade Organization to address “discriminatory technology licensing agreements”.

China’s commerce ministry expressed regret at the filing on Saturday, and said China had taken strong measures to protect the legal rights and interests of both domestic and foreign owners of intellectual property.


During a visit to Washington in early March, Liu had requested Washington set up a new economic dialogue mechanism, identify a point person on China issues, and deliver a list of demands.

The Trump administration responded by telling China to immediately shave $100 billion off its record $375 billion trade surplus with the United States. Beijing told Washington that U.S. export restrictions on some high-tech products are to blame.

“China has already prepared, and has the strength, to defend its national interests,” Liu said on Saturday.

According to an editorial by China’s state-run Global Times, it was Mnuchin who called Liu.

Firing off a warning shot, China on Friday declared plans to levy additional duties on up to $3 billion of U.S. imports in response to U.S. tariffs on steel and aluminum, imposed after a separate U.S. probe.

Zhang Zhaoxiang, senior vice president of China Minmetals Corp [CHMIN.UL], said that while the state-owned mining group’s steel exports to the U.S. are tiny, the impact could come indirectly.

“China’s direct exports to the U.S. are not big. But there will be some impact due to our exports via the United States or indirect exports,” Zhang told reporters on the sidelines of the China Development Forum in Beijing on Saturday.

FILE PHOTO: Chinese Vice Premier Liu He attends the news conference following the closing session of the National People’s Congress (NPC), at the Great Hall of the People in Beijing, China March 20, 2018. REUTERS/Jason Lee

Global Times said Beijing was only just beginning to look at means to retaliate.

“We believe it is only part of China’s countermeasures, and soybeans and other U.S. farm products will be targeted,” the widely-read tabloid said in a Saturday editorial.

Wei Jianguo, vice chairman of Beijing-based think tank China Centre for International Economic Exchanges, told China Daily that Beijing could impose tariffs on more U.S. products, and is considering a second and even third list of targets.

Possible items include aircraft and chips, Wei, a former vice commerce minister, told the newspaper, adding that tourism could be a possible target.


The commerce ministry’s response had so far been “relatively weak”, respected former Chinese finance minister Lou Jiwei said at the forum.

FILE PHOTO: U.S. President Donald Trump holds a signed memorandum on intellectual property tariffs on high-tech goods from China, at the White House in Washington, U.S. March 22, 2018. REUTERS/Jonathan Ernst

“If I were in the government, I would probably hit soybeans first, then hit autos and airplanes,” said Lou, currently chairman of the National Council for Social Security Fund.

U.S. farm groups have long feared that China, which imports more than third of all U.S. soybeans, could slow purchases of agricultural products, heaping more pain on the struggling U.S. farm sector.

U.S. agricultural exports to China stood at $19.6 billion last year, with soybean shipments accounting for $12.4 billion.

Chinese penalties on U.S. soybeans will especially hurt Iowa, a state that backed Trump in the 2016 presidential elections.

Boeing jets have also been often cited as a potential target by China.

China and the U.S. had benefited by globalization, Blackrock’s Larry Fink said at the forum.

“I believe that a dialogue – and maybe some adjustments in trade and trade policy – can be in order. It does not need to be done publicly; it can be done privately,” he said.

Apple’s Tim Cook called for “calm heads” amid the dispute.

The sparring has cast a spotlight on hardware makers such as Apple, which assemble the majority of their products in China for export to other countries.

Electrical goods and tech are the largest U.S. import item from China.

Some economists say higher U.S. tariffs will lead to higher costs and ultimately hurt U.S. consumers, while restrictions on Chinese investments could take away jobs in America.

“I don’t think local governments in the United States and President Trump hope to see U.S. workers losing their jobs,” Sun Yongcai, general manager at Chinese railway firm CRRS Corp, which has two U.S. production plants, said at the forum.

Reporting by Ryan Woo and Hallie Gu; additional reporting by Ben Blanchard, Kevin Yao, Matthew Miller and Cate Cadell; Editing by Richard Pullin

Globalists buck U.S. index fund trend

NEW YORK (Reuters) – Volatility in U.S. equity markets this year is pushing investors not only to invest in stocks abroad, but also to commit their money to an even more foreign place: the hands of stockpickers rather than index funds.

FILE PHOTO: Traders work on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., March 14, 2018. REUTERS/Andrew Kelly

A near decade of gains in U.S. stock prices has left investors on edge about the prospect that anything could end the party, including the prospect of interest rate rises under new Federal Reserve Chairman Jerome Powell or a misstep by one of the market’s darlings.

For instance, the 9.2 percent two-day slide of Facebook Inc (FB.O) earlier this week, which wiped out $50 billion in its market capitalization, underscored the risks to market leaders in the technology sector after the social media company faced questions from regulators and politicians about how its users’ personal data was mined by a political consultancy hired by Donald Trump’s presidential campaign.

Josh Shores, principal at Southeastern Asset Management Inc, said the time is ripe to look outside the United States as valuations are more attractive overseas relative to their risks.

“At the end of an almost 10-year bull up-cycle where the U.S, and growth and passive have really dominated,” he said, “we feel good about being positioned the other way from here.”

Small wonder.

Stockpickers focused on investment abroad have been huge beneficiaries of new investor cash as many have beaten their benchmarks. Those funds are on course to post their second straight year of inflows even as their U.S. counterparts face the sting of investor flight to lower-cost index funds.

Actively managed non-U.S. stock funds have already attracted $19.4 billion in 2018, far surpassing outflows at the same time last year, and nearing the $23.5 billion total for all of 2017, according to Thomson Reuters’ Lipper research unit.

Their passively managed rivals have taken in $45.6 billion so far this year, through February.

In 2017, 50.8 percent of “foreign large blend” funds tracked by Morningstar Inc beat their index-tracking rivals, while 59.1 percent of diversified emerging market funds succeeded, in both cases improving their less impressive long-term track record.

The volatile start to 2018 for U.S. stock prices is giving investors all the more reason to defang portfolios heavily weighted toward technology giants. Facebook accounts for about 2.0 percent of an S&P 500 index .SPX fund’s return. “Tech is not a heavy benchmark constituent in our part of the world,” said Thomas Melendez, manager of the $11 billion MFS International Diversification Fund (MDIDX.O), whose performance has bested most rivals over the last decade, according to Lipper.


More cash to manage would be a boon to investors including Fabio Paolini, a portfolio manager on the AMG Managers Pictet International Fund (APCTX.O), which has turned in stronger performance than its peers and index over the past three years. Pictet Asset Management SA manages $197 billion.

Paolini and other investors focused outside the United States see places where they can put the cash to work with bargain-priced, all-weather companies that will grow even if the economy stalls.

“We see opportunities – a little bit everywhere,” said Paolini. The company took a stake, for instance, in Safran SA (SAF.PA), the Parisian aircraft engine company that he said enjoys a near-monopoly position in its market.

Southeastern, with $18 billion under management, has built up a stake in London-based Hikma Pharmaceuticals PLC (HIK.L) in recent months, as other asset managers have ditched stocks in the region.

That stock’s true value has been clouded by investors’ pessimistic view on both generic drugs and the United Kingdom’s negotiations to exit the European Union, but the drug company has valuable business units including injectable drugs, said Shores.

More than four in ten fund managers surveyed by Bank of America Corp are holding less stock in Britain than their benchmark, an all-time high.

Many of the active international funds are taking big bets on small groups of stocks, hoping that they will end up with far better gains than index funds whose performance is diluted by hundreds of holdings.

The Prudential Jennison Global Opportunities Fund (PRJAX.O) has fewer than 40 holdings, with top positions like Tencent Holdings Ltd (0700.HK) taking up nearly 6.0 percent of the portfolio.

One of the portfolio managers, Thomas Davis, said he has high conviction in the Chinese technology giant’s prospects. The company on Wednesday reported quarterly revenue that fell short of estimates but its profits were up 98 percent compared to the year prior.

“You have Facebook, Opentable, Uber, Airbnb, some basic financial services all embedded within the Tencent WeChat app,” said Davis, noting that the company offers many functions in one place.

“It’s more than Facebook.”

Reporting by Trevor Hunnicutt; editing by Jennifer Ablan and Clive McKeef

Stocks tumble to worst day in six weeks after Trump tariff action

NEW YORK (Reuters) – U.S. stocks slumped on Thursday as President Donald Trump’s move to impose tariffs on up to $60 billion of Chinese imports drove fears about the impact on the global economy, fueling the biggest percentage declines in Wall Street’s three major indexes since they entered correction territory six weeks ago.

Trump signed a presidential memorandum that will target the Chinese imports only after a consultation period. China will have space to respond, reducing the risk of immediate retaliation from Beijing.

But after equities recovered somewhat from earlier lows, selling pressure resumed on Wall Street heading into the close as investors fretted over the potential scale of U.S tariffs and possible impact on global trade.

“There’s too much negative sentiment right now,” said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston. “It’s possible that it will be rough sledding for a while. I don’t see anything on the horizon that will reassure people that things are just great.”

Major industrials slumped. Plane maker Boeing Co lost 5.2 percent, Caterpillar Inc dropped 5.7 and 3M Co lost 4.7. The three were among the biggest drags on the Dow Jones Industrial Average. The S&P industrials sector plunged 3.28 percent.

The Dow Jones Industrial Average fell 724.42 points, or 2.93 percent, to 23,957.89, the S&P 500 lost 68.24 points, or 2.52 percent, to 2,643.69, and the Nasdaq Composite dropped 178.61 points, or 2.43 percent, to 7,166.68.

The losses marked the biggest daily percentage drop for each of the major indexes since Feb. 8, when the Dow and S&P confirmed a market correction from their Jan. 26 highs.

Selling was broad, with only the defensive utilities 0.44on the plus side, up 0.44 percent, out of 11 major S&P sectors.

Specialist trader Meric Greenbaum works at his post on the floor of the New York Stock Exchange, (NYSE) in New York, U.S., March 22, 2018. REUTERS/Brendan McDermid

The CBOE Volatility Index, the most widely followed barometer of expected near-term volatility in the S&P 500, finished up 5.48 points at 23.34, its highest close since Feb. 13.23.34

U.S. treasury prices gained as investors sought out safe havens. Benchmark 10-year notes last rose 23/32 in price to yield 2.8244 percent, from 2.907 percent late on Wednesday.

The drop in yields weighed on financial stocks, which were down 3.70 percent, making them the worst performing of the major sectors.

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Another decline in shares of Facebook Inc, down 2.7 percent, continued to weigh on the broader market and the tech sector, the best performing S&P group for this year. The S&P technology index fell 2.69 percent on fears of greater regulation in the wake of the Facebook data leak.

Facebook Chief Executive Mark Zuckerberg said he was open to additional government regulation and happy to testify before the U.S. Congress.

AbbVie Inc tumbled 12.8 percent after the drugmaker said it would not seek accelerated approval for its experimental lung cancer treatment based on results from a mid-stage study.

Declining issues outnumbered advancing ones on the NYSE by a 4.51-to-1 ratio; on Nasdaq, a 4.09-to-1 ratio favored decliners.

The S&P 500 posted three new 52-week highs and 19 new lows; the Nasdaq Composite recorded 36 new highs and 59 new lows.

Volume on U.S. exchanges was 7.77 billion shares, compared to the 7.17 billion average for the full session over the last 20 trading days.

Additional reporting by April Joyner; Editing by Leslie Adler