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Update on the latest business

February 22, 2019

FINANCIAL MARKETS

Stocks rise

NEW YORK (AP) — Technology and health care companies are leading stocks higher in midday trading on Wall Street, erasing some of the market’s losses from a day earlier. The benchmark S&P 500 is on track for its fourth-straight weekly gain.

Wayfair vaulted more than 30 percent after reporting results that topped Wall Street’s forecasts.

Kraft Heinz plunged 27 percent after reporting huge write-downs on its main brands, slashing its dividend and disclosing an investigation by federal securities regulators.

Bond prices rose. The yield on the 10-year Treasury note fell to 2.66 percent.

FEDERAL RESERVE-MONETARY REPORT

Fed will be ‘patient’ in rate hikes amid global growth woes

WASHINGTON (AP) — The Federal Reserve says that in light of a slowing global economy and last year’s financial market turmoil, the central bank intends to remain “patient” in determining when to make future changes in its benchmark interest rate.

The Fed’s semi-annual report to Congress on monetary policy stood in contrast to its last report in July when it signaled that it was on track to keep raising rates at a gradual pace over the next two years.

The new report cites a range of risks to the economy that have developed over the last six months, as well as continued muted inflation as reasons to slow further hikes.

Many private economists believe the Fed may raise rates at most only one more time late this year.

US-CHINA TRADE TALKS

US and China resume trade talks as Trump’s deadline nears

WASHINGTON (AP) — The Trump administration and Chinese negotiators have resumed high-level talks aimed at resolving a trade dispute that has escalated uncertainty for corporations, unsettled investors and posed a threat to the global economy.

A Chinese team led by Vice Premier Liu He is meeting with U.S. Trade Representative Robert Lighthizer and other American officials. Liu is scheduled to meet President Donald Trump in the White House on Friday afternoon.

Trump is set to raise tariffs on $200 billion in Chinese imports if the two sides can’t reach a deal by March 2. But he has said he’d consider extending the deadline if negotiators are nearing an agreement.

The world’s two biggest economies are sparring over U.S. allegations that China steals trade secrets and forces American companies to hand over technology.

EUROPE-US-CAR TARIFFS

EU says it’s ready to hit back if US imposes car tariffs

BUCHAREST, Romania (AP) — A European Union official says “there is full support” from member states to hit back if U.S. President Donald Trump imposes tariffs on cars and car parts.

EU Trade Commissioner Cecilia Malmstrom said EU trade ministers had discussed the bloc’s trading relationship with Washington during an informal meeting Friday in Bucharest.

She said there were concerns about “certain aspects of the trade policy being pursued by the current U.S. administration.”

Trump says the U.S. is mulling tariffs on imported vehicles from Europe, suggesting a final decision will hinge on the two sides reaching a trade deal in the coming months

Malmstrom said the EU was preparing a list of “rebalancing measures,” if tariffs were levied.

She said: “There is full support to do this.”

GENERAL MOTORS-FACTORY

GM extends life of its only Detroit factory until early 2020

DETROIT (AP) — General Motors extending the life of its only Detroit factory until early next year.

The plant on the border of Detroit and the hamlet of Hamtramck was to stop making vehicles as of June 1. But the company now says production of the Chevrolet Impala and Cadillac CT6 will continue into January of 2020.

The factory is one of five that GM plans to shutter as part of a restructuring to cut costs and reduce underused plants.

In all, GM is shedding about 5,000 factory jobs and another 8,000 salaried workers.

The company says the plant will stay open as it produces a high-performance version of the CT6 and vehicles with its “Super Cruise” advanced driver assist system.

But the plant is likely to close early next year.

VOLKSWAGEN

Volkswagen CEO expects stiffer headwinds after ‘decent’ 2018

FRANKFURT, Germany (AP) — Volkswagen says it increased operating earnings and sales last year despite troubles getting vehicles certified under new European emissions tests.

The company said Friday that operating earnings before one-time factors rose to 17.1 billion euros in 2018 from 17.0 billion in 2017. Sales revenue rose by 6.3 billion euros to reach 235.8 billion for the year.

The company sold a record 10.8 million cars, a 0.9 percent increase, despite bottlenecks getting vehicles ready for the Sept. 1 start of the new emissions testing regime, which Volkswagen said caused “significant upheaval in our sales performance.

CEO Herbert Diess said the company had a “decent showing” in 2018 but cautioned that “headwinds in key markets are expected to strengthen further in 2019.”

Volkswagen is to release detailed full-year results on March 12.

SOUTHWEST AIRLINES-COMPUTERS

Southwest hit by computer outage, adding to its problems

DALLAS (AP) — Hundreds of Southwest Airlines flights have been delayed as the carrier deals with winter weather and a computer outage.

The outage occurred early Friday and grounded Southwest flights around the country for nearly an hour.

A spokesman for the Federal Aviation Administration says Southwest had a problem with a system that transmits flight plans to the FAA.

By midmorning Central time, about 600 Southwest flights had been delayed, 15 percent of Southwest’s schedule and far more than any other U.S. carrier, according to FlightAware.

The airline says some of the delays are due to winter weather.

The outage and winter weather come as Southwest reports a higher than normal number of planes taken out of service for maintenance. That’s causing tension between the airline and the aircraft mechanics’ union.

KRAFT HEINZ

Kraft Heinz discloses federal investigation and a $15.4 billion write-down

PITTSBURGH (AP) — Kraft Heinz has disclosed an investigation by federal regulators and said it will slash the value of its Oscar Mayer and Kraft brands by $15.4 billion, major setbacks for a company trying to revitalize its stable of household-name brands.

A wave of bad news, which also included a dividend cut and a weak outlook for the year, sent shares plunging 26 percent at the opening bell Friday, their largest decline in a single day. Before noon, the company had lost $16 billion of its market value.

Kraft Heinz said the investigation by the U.S. Securities and Exchange Commission is related to its accounting practices in the division that handles interactions with suppliers. The SEC declined to comment.

The steep write-down and loss in the quarter is a devastating recognition that efforts to change the trajectory of the company have not been as successful as once thought.

FINANCIER-TEENAGE GIRLS-WHITE HOUSE

White House looking into Acosta role in sex abuse plea deal

WASHINGTON (AP) — The White House says it’s “looking into” Labor Secretary Alex Acosta’s handling of a secret plea deal with a wealthy financier accused of sexually abusing dozens of underage girls

A federal judge ruled Thursday that prosecutors in Florida violated the rights of victims by reaching the non-prosecution agreement with Jeffrey Epstein. Acosta was the Miami U.S. attorney who oversaw the arrangement.

President Donald Trump’s spokeswoman, Sarah Sanders, on Friday called it a “complicated case” that the White House was “looking into.”

Asked if Trump still had confidence in Acosta, Sanders said: “Again, we’re looking into the matter. I’m not aware of any changes.”

Acosta has called the deal appropriate.

VIRGIN GALACTIC

Virgin Galactic: Rocket reaches space again in test flight

LOS ANGELES (AP) — Virgin Galactic says its rocket plane has reached space for a second time in a test flight over California.

The company says the winged spaceship reached an altitude of 55.8 miles Friday and then safely landed at Mojave Air and Space Port in the desert north of Los Angeles.

In addition to two pilots, the spacecraft carried a third crewmember to evaluate the cabin from a passenger perspective.

The flight marks another step toward commercial operations that will take passengers on supersonic thrill rides to the lower reaches of space to experience a few minutes of weightlessness and a view of the Earth far below.

The ship, named VSS Unity, first reached space on Dec. 13 in a test flight to an altitude of 51.4 miles.

YOUTUBE-CREATOR PROTEST

YouTube walks a tightrope with its video makers, advertisers

UNDATED (AP) — YouTube has learned its latest hard lesson about dealing with schisms between its two big customer groups: advertisers and creators.

YouTube’s year-in-review video is the site’s most downvoted video, ever, with more than 15 million dislikes. The video faces controversy for leaving out some of the site’s most popular and contentious creators.

It’s another reminder of the tension YouTube navigates as it tries to balance advertiser interests with the creativity of the bloggers who upload free videos onto the site.

Many creators felt the video was sanitizing YouTube’s image in favor of advertisers. YouTube CEO Susan Wojcicki admits the video missed its mark.

Advertisers have staged multiple boycotts of the site when ads appear next to controversial videos.

CHINA-GENDER BIAS

China’s new policy against gender bias meets fans, sceptics

BEIJING (AP) — China has announced new measures against gender discrimination that will prevent employers from asking potential female hires questions such as if they are married or have children.

Many have welcomed the government notice published Thursday, which explicitly bans companies and recruitment agencies from taking certain discriminatory actions against female employees and job candidates.

But female workers and analysts alike are skeptical that such measures can be strictly enforced.

The notice forbids companies from including pregnancy tests in health checkups required for employment, and orders employers to not place restrictions on the number of children that women can have as a condition of hiring. It also says companies that post discriminatory job ads can be fined.