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N.Y. Fed lowers U.S. second-quarter GDP view below 2%

The U.S. economy is expanding at a 1.79% annualized pace in the second quarter following disappointing data on retail sales and industrial output in April released earlier this week, the New York Federal Reserve's Nowcast model showed on Friday. This was slower than the 2.20% growth rate calculated by the N.Y. Fed model a week earlier.

Facebook breakup would be solution of last resort: EU's Vestager

A break-up of U.S. social media company Facebook would be a solution of last resort that would probably generate long judicial procedures, EU Competition Commissioner Margrethe Vestager said on Friday. The EU antitrust chief was asked about Facebook at the VivaTech technology conference in Paris after leading U.S. Democratic politicians and one of Facebook's co-founders recently spoke in favor of a break-up of the company. "Of course it would be a remedy of very last resort. I think it would keep us in court for maybe a decade. It is much more direct and maybe much more powerful to say we need access to data," Vestager told reporters. Facebook founder Mark Zuckerberg's co-founder and former college roommate Chris Hughes this month used a New York Times opinion piece to urge U.S. regulators to break up the tech giant.

Walmart says higher tariffs on China goods will increase prices for U.S. shoppers

Walmart Inc said on Thursday that prices for shoppers will go up due to higher tariffs on imports from China as the world's largest retailer reported its best comparable sales growth for the first quarter in nine years. Walmart shares, which have gained 7% so far this year, rose 2.4% to $102.30 in premarket trade. U.S. President Donald Trump increased tariffs on $200 billion worth of Chinese imports to 25% from 10% last week. The move is widely expected to raise prices on thousands of products including clothing, furniture and electronics. China retaliated on Monday, though on a smaller scale. Walmart Chief Financial Officer Brett Biggs told Reuters that higher tariffs will result in increased prices for consumers. He said the company will seek to ease the pain, in part by trying to obtain products from different countries and by working with suppliers' "costs structures to manage higher tariffs." Moody's analyst Charlie O'Shea said the potential impact on Walmart and its shoppers (from tariffs) is limited by its food business. Its grocery operation, which includes fresh food, contributes roughly 56 percent to overall revenue. "We believe Walmart has the wherewithal both financially and via its vendor relationships to minimize the impact on both itself and its shopping base," he said. CFO Biggs said the retailer has not seen signs of a slowdown in consumer spending, but he declined to comment on the health of the consumer in the near term. Investors and analysts expect U.S. spending to slow this year against a backdrop of rising debt, tariffs and economic uncertainty. U.S. retail sales unexpectedly fell in April as households cut back on purchases of vehicles and a range of other goods, reflecting a slowdown in economic growth after a temporary boost from exports and inventories in the first quarter. Earlier this week, Walmart stepped up its battle with Amazon.com Inc by offering one-day delivery in some markets without a shipping fee, weeks after Amazon announced a similar plan. Walmart said it will cost the company less than two-day shipping since orders will be delivered from warehouses closer to the customer and arrive in a single box rather than multiple packages. Sales at Walmart's U.S. stores open at least a year rose 3.4%, excluding fuel, in the quarter ended April 30. Analysts estimated growth of 3.1%, according to IBES data from Refinitiv. Adjusted earnings per share increased to $1.13 per share, beating expectations of $1.02 per share. Online sales rose 37%, slowing from the previous quarter's 43% increase but stronger than online sales growth at most of its brick-and-mortar rivals. The company has forecast a 35% increase in online sales this year. Total revenue was up 1% at $123.9 billion but lower than analysts' estimates of $125.03 billion dragged down by currency impact and lower international sales. Excluding currency, revenue was up 2.5% at $125.8 billion. On Tuesday, Walmart said it was considering a stock market listing for its British supermarket arm Asda, whose attempt to combine with rival J Sainsbury Plc was blocked by UK regulators last month.

Macron takes aim at U.S. in push for fairer tech industry

President Emmanuel Macron on Thursday took a swipe at the freewheeling U.S. business model, saying the private sector had too much influence on U.S. policy and Europe should offer a middle way between China's state control and U.S. laissez-faire. Speaking at the opening of a tech summit in Paris, Macron said he favored a toughening of merger and acquisition rules in Europe and that he wanted to make sure European software firms were not taken over by U.S. firms. The French president, a former investment banker, has come under constant fire from opponents for being too close to big business and pushing through tax reforms that favor the wealthy. On Thursday, less than two weeks out from European elections in which he is under pressure from the far-right, he championed his call for 'a Europe that protects' by shielding its companies from being devoured by foreign corporate giants. "The United States are a formidable continent but they have a model which is completely steered by big private sector players and which is no longer subject to democratic checks and balances," Macron said at the end of a question and answer session at a tech summit in Paris. Macron in particular wants Europe to be the global standard bearer for tougher regulation of digital technology, finding a way between what he calls an excessively lax United States and an over-restrictive China. He is urging tech companies to do more for the "common good" in society, spearheading European efforts to force Google, Amazon, Facebook Inc and Apple Inc to pay more tax at the source of revenue. "In Europe we are building a model that is competitive, innovative ... that is democratic and driven by the common good," Macron said. Silicon valley investors, however, have warned former investment banker Macron that he risks undoing the work he has done to make France more attractive if he pursues a digital tax too aggressively and there are divisions among EU allies too. Macron spoke a day after the Trump administration hit Chinese telecoms giant Huawei with severe sanctions on national security grounds, adding another incendiary element to the U.S.-China trade dispute.

Trump expected to delay auto tariffs decision by up to six months: officials

U.S. President Donald Trump is expected to delay a decision on imposing tariffs on imported cars and parts by up to six months, three Trump administration officials told Reuters, a decision expected to relieve a broad swath of U.S. industry. A formal announcement is expected by Saturday, the due date for Trump to make a decision on recommendations by the Commerce Department to protect the U.S. auto industry from imports on national security grounds, the officials said. A White House spokesman declined to comment. They added that the administration has drafted language to formally delay a decision on the tariffs that is due by May 18. Reuters reported last week that automakers expected Trump to delay the decision as trade negotiations get underway with the European Union and Japan. General Motors Co (NYSE:GM), Volkswagen (DE:VOWG_p) AG, Toyota Motor Corp and others have warned of the damaging impacts of imposing tariffs of up to 25 percent on imported cars and parts. The White House has held a series of high-level meetings on the issue in recent days, and administration officials have repeatedly told automakers they planned to delay the decision. In February, the Commerce Department submitted its "Section 232" national security report to the White House. The agency was investigating whether imports harmed U.S. national security by weakening American automakers' ability to invest in future technologies. The Commerce Department's specific recommendations have not been revealed. A series of announcements by GM last week of $700 million in investments in three Ohio plants and efforts to sell the company's closed Lordstown plant had made Trump more inclined to delay the tariffs, administration officials told Reuters last week. At the same time, Trump has escalated his trade war with China, sharply increasing tariffs on $200 billion worth of Chinese goods and launching public consultations on remaining Chinese imports of about $300 billion. The auto tariffs face wide opposition in Congress. The White House has refused to turn over the Commerce Department report to Republican Senator Chuck Grassley, chairman of the Senate Finance Committee, who has been demanding to see it. Last week, 159 House of Representatives members led by Ways and Means Committee Vice Chair Terri Sewell wrote White House National Economic Council Director Larry Kudlow to urge him to advise Trump against “imposing trade restrictions that could harm the auto sector and the American economy.”

U.S. Crude Inventories Unexpectedly Rose by 5.4M Barrels

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) rose by 5.4 million barrels last week, versus expectations for a decline of 800,000 barrels, the Energy Information Administration said Wednesday. In the previous week, crude inventories fell by almost 4 million barrels. Analysts said the crude inventories numbers cast a pall over the oil market just as fuel demand for the summer was picking up, and geopolitical tensions in the Middle East were lending a premium to energy prices. West Texas Intermediate futures, the benchmark for U.S. crude, rebounded by 16 cents, or 0.3%, to $61.94 per barrel by 11:10 AM ET (15:19 GMT). London Brent futures, the global benchmark for oil, rose by 53 cents, or 0.7%, to $71.77. Traders attributed the rebound to market worries in recent days about drone and other attacks reported on Saudi Arabian oil tankers and pipelines. "The EIA report was bearish due to the large crude oil inventory build. Both imports and exports of crude oil rose substantially, and refinery utilization rose back above 90%," said John Kilduff, founding partner at New York energy hedge fund Again Capital. "There was also a large increase in crude oil inventories at the Cushing, Ok. delivery hub, which adds to the bearishness," he said, referring to the 1.8 million barrels build at the storage point for crude delivered against futures contracts of the U.S. crude benchmark, the West Texas Intermediate. Tariq Zahir, who runs another New York-focused oil fund, Tyche Capital Advisors, agreed. "While draws were expected across the whole complex, we saw builds almost across everywhere," Zahir said. "We had an eye opening 5.4 million barrel build in crude where a draw was expected of 1.1 million. This 6 million barrel surprise should keep a lid on prices. Couple with the fact that IEA also reported a revision down in demand for crude and the large Cushing build, which was also a surprise." The EIA also said that total motor gasoline stockpiles decreased by 1.1 million barrels during the week ended May 10, against forecasts for a drop of nearly 300,000. In the earlier week to May 3, gasoline inventories fell by almost 600,000. Distillate fuel inventories rose by 84,000 barrels last week versus expectations for a drop of around 1 million barrels. In the previous week, distillate stockpiles slid by almost 160,000 barrels.

Senior Conservatives tell May to ditch Brexit talks with Labor

British Prime Minister Theresa May was told by senior members of her own party on Tuesday to abandon talks to find a Brexit compromise with the opposition Labor Party as pressure mounted on her to name a date for standing down. Nearly three years after the United Kingdom voted 52% to 48% to leave the European Union, there is still no agreement among British politicians about when, how or even if the divorce should take place. The country was due to have left the European Union on March 29, but May has been unable to get her divorce deal approved by parliament, so she has turned to the Labor Party, led by socialist Jeremy Corbyn, for help. Thirteen of May’s former cabinet colleagues as well as Graham Brady, chairman of the 1922 Committee of Conservative lawmakers, wrote to May to ask her not to agree to Labor's demand for a post-Brexit customs union with the EU. "You would have lost the loyal middle of the Conservative Party, split our party and with likely nothing to show for it," the letter said. "We urge you to think again." "No leader can bind his or her successor so the deal would likely be at best temporary, at worst illusory," said the letter, which was signed by Gavin Williamson, who was sacked as defense minister this month, and former foreign minister Boris Johnson. May has repeatedly ruled out signing up to a permanent customs union. Corbyn said last week May had made no big offer on Brexit and had not moved her "red lines". At a meeting with the parliamentary Labor Party on Monday, Corbyn came under pressure to clarify his position on Brexit, with both backers of a second referendum and others who want a deal to leave arguing their case, sources told Reuters. May, who secured the leadership in the chaos that followed Britain's 2016 vote to leave the European Union, has promised to step down if lawmakers back the deal she struck with Brussels to leave the bloc. But the prime minister has lost heavily on three attempts to get it through parliament. And some of her own lawmakers want her to name a date for her departure. U.S. investment bank JPMorgan said on Tuesday it was difficult to see May surviving beyond the end of June. "Although PM May’s survival skills have been impressive to date, our sense is that the sand is finally running out of the hourglass for her leadership of the Conservatives," JPMorgan said. May's chief Brexit negotiator Olly Robbins was due in Brussels to discuss changes to the political declaration on the UK's future relationship with the EU. The EU has said it is willing to change the political declaration but it must know what changes London wants to make.

Bank of England calls for 'super shield' against cyber attacks

Britain may need to copy the United States in building a "super shield" against catastrophic cyber attacks or major IT glitches that could cripple the finance industry, a senior Bank of England official said on Tuesday. The BoE is already taking action to ensure that banks, insurers and other financial firms can minimize the impact of cyber attacks or technology outages on customers and recover as soon as possible. But Nick Strange, BoE director of supervisory risk specialists, said individual firms may not be able to meet minimum requirements for restoring services like payments within the timescales to be set and tested by the Bank. "It this were the case, then it would either fall to the public or private sector to come up with a collective solution," Strange told a conference on operational risk. "In the U.S., a private sector initiative has been set up called Sheltered Harbor to protect customers, financial institutions and public confidence in the financial system if a catastrophic event like a cyber attack causes critical systems, including backups, to fail." Under the industry-led, not-for-profit scheme launched in 2015, companies provide copies of customer account data to a centrally maintained vault. Companies can designate other companies to restore critical customer data if they suffer a major hack or outage that they cannot recover from quickly. "Although yet to be tested in a real cyber event, this shows that by working together innovative and ambitious solutions can be initiated within the sector itself," Strange said. Later this year, the Bank will pilot a cyber stress test of financial companies that includes an "impact tolerance" to assess how many customers and payments would be hit by an outage, and how quickly services could recover. Disruption from last year's IT upgrade at TSB bank served as an important reminder that banks need to be resilient to a wider range of operational issues than cyber, Strange said. "We will be working with a small number of firms to 'test the test'," Strange said.

China to impose tariffs on $60 billion of U.S. goods

China plans to impose tariffs on $60 billion worth of U.S. goods, the finance ministry said on Monday, after the United States escalated a bitter trade war with a tariff hike on $200 billion of Chinese products. China will impose tariffs on a total of 5,140 U.S. products from June 1, the ministry said in a statement on Monday.

Uber shares fall for second day after ill-fated IPO; Lyft follows

Uber Technologies Inc shares fell as much as 10% on Monday, doubling losses since its poorly-received Wall Street debut on Friday and raising more questions about investors' faith in its ability to make profits. The move, which came in a wide-ranging sell-off on global financial markets spurred by more U.S.-China trade tensions, led to shares trading lower at $37.17, valuing the company at about $12 billion less than Friday's debut price of $45. Before going public, Uber lowered its valuation expectations twice in two months to address investor concerns over the company's mounting losses, and priced its initial public offering at the low end of the targeted range. Rival Lyft Inc, which went public at $72 a share on March 29, has lost a third of its market value since and was down 6% at $47.95 in early trading. Both IPOs took place against a backdrop of renewed concerns on Wall Street over global growth due to the trade tensions, although U.S. stock markets are all currently far higher than they were at the end of last year. "The current narrative relating to the social economic nature of the ride-hailing segment is negatively having an impact on the shares of both UBER and LYFT," said Zephirin Group analyst Lenny Zephirin. While both companies are trying to find ways to lower driver costs to become profitable, drivers went on a protest in several U.S. cities earlier this month demanding job security, livable incomes and a cap on the amount ride-hailing companies can collect from fares. Investors have struggled to figure out how much Uber and Lyft are worth, given both companies have not estimated a timeline for turning a profit. Lyft posted a $1.1 billion quarterly loss last week and forecast losses would peak this year as it controlled expenses and got more revenue from each customer. Uber has warned in a regulatory filing that it may never be profitable. Wedbush analyst Ygal Arounian said investors need to be patient as Uber reaches full monetization potential with its ride-sharing platform and a broader growth engine with Uber Eats, Uber Freight and autonomous driving initiatives. "While it will take time for the stock to settle and Uber must execute flawlessly over the coming 12 to 18 months, we believe a $100 billion+ market cap is warranted," Arounian said. Both Zephirin and Wedbush have top ratings on Uber stock.