Month: October 2018

Russian President Vladimir Putin on Wednesday strongly defended a prospective Russia-Germany natural gas pipeline as economically feasible and voiced hope that European Union nations will be able to resist U.S. pressure to thwart the project.

U.S. officials have warned that Washington could impose sanctions on the undersea Nord Stream 2 pipeline. The U.S. and some EU nations oppose it, warning it would increase Europe’s energy dependence on Russia. The U.S. is also interested in selling more of its liquefied natural gas in Europe.

Speaking Wednesday after talks with Austrian Chancellor Sebastian Kurz in St. Petersburg, Putin noted that Bulgaria caved in to pressure and dumped the Russian South Stream pipeline.

He added that he hopes that “Europe as a whole won’t look like Bulgaria and won’t demonstrate its weakness and inability to protect its interests.”

“Russia always has been and will remain the most reliable supplier,” Putin said, adding that the Russian gas supplied via pipelines is significantly cheaper than U.S. liquefied gas. “Supplies come directly from Yamal in Siberia. There are no transit risks.”

It would be “silly and wasteful” if Europe opts for a more expensive option, hurting its consumers and its global competitiveness, Putin charged.

Ukraine, which has served as the main transit route for Russian gas supplies to Europe, has strongly opposed the Russian pipeline, fearing that it would leave its pipeline empty. The two ex-Soviet neighbors have been locked in a bitter tug-of-war after Russia’s 2014 annexation of Ukraine’s Crimean Peninsula.

Kurz spoke in support of Nord Stream 2 but also emphasized the importance to continue supplies via Ukraine.

“It’s very important that Ukraine’s interests as a key transit country be upheld,” he said.

Putin has previously pledged to consider the continuation of gas supplies via Ukraine if it settles a commercial dispute with Russia over previous gas supplies.
…

Seven-year-old Ryan drew millions of views reviewing toys on YouTube. Now, he’s become a toy himself.

Walmart is selling action figures in his likeness, putty with his face on the packaging and other toys under the Ryan’s World brand. It’s a bet that kids, who are spending more time tapping tablets, will recognize Ryan from YouTube and want the toys he’s hawking.

The new line may also help Walmart lure former Toys R Us shoppers, as many chains make a play for those customers ahead of the holiday shopping season.

The first-grader, who’s been making YouTube videos for three years, has become a major influencer in the toy industry. The clips typically show him unboxing a toy, playing with it and then waving goodbye to viewers. His most watched video, in which Ryan hunts for large plastic eggs, has more than 1.5 billion views.

Toys featured in the videos can see a spike in sales, says Jim Silver, editor of toy review site TTPM.com. “Ryan is a celebrity,” he said. “Kids watch his videos. He’s entertaining.”

So much so that toymakers have paid Ryan and his parents to feature their products. Forbes magazine estimated that the Ryan ToysReview YouTube channel brought in $11 million last year, but his parents, Shion and Loann, declined to confirm that number or give any financial details about Ryan’s deals. They also do not give their last name or say where they live for privacy and safety reasons.

Ryan’s path from reviewer to tiny toy mogul started last year when his parents signed with Pocket.watch, a two-year-old company that works with several YouTube personalities to get their names on clothing, books and other products. Ryan is the first with a product line because of his large audience, Pocket.watch says.

Last month, Walmart started selling Ryan’s World bright-colored slime for $4, 5-inch Ryan action figures for $9 and french fry-shaped squishy toys for $18. The retailer is the exclusive seller of some of the line, including T-shirts and stuffed animals.

Whether kids will want them “all comes down to the toy,” says Silver, adding that hits are made on the playground, where youngsters show off their toys and tell others about it.

What Ryan does have is a built-in audience. A video of him searching the aisles of Walmart for Ryan’s World toys has nearly 10 million views in a month, and his YouTube page has more than 16 million subscribers. Anne Marie Kehoe, who oversees Walmart’s toy department, says a couple of thousand people showed up to a recent appearance at an Arkansas store just to see a kid “jumping around and acting crazy.”

Ryan, in a phone interview, says a lot of those people wanted his picture. He then left the phone call to play.

His parents, who stayed on the line, say Ryan spends about 90 minutes a week recording YouTube videos. They say he helped with the creation of some of the toys, like when he asked for an evil twin version of himself for a figurine.

“I’m always amazed at the point of view Ryan has,” said his dad, Shion.

Chris Williams, Pocket.watch’s founder and CEO, sees Ryan as a franchise, like how “Nickelodeon looks at SpongeBob.”

But unlike a cartoon sponge, Ryan will grow up. Williams says he expects the products to evolve with Ryan’s taste. And Ryan’s parents agree, saying they’re prepared to follow his interests as he gets older, like to video games.

“We can change,” Shion said.
…

China’s hopes of negotiating a free trade pact with Canada or Mexico were dealt a sharp setback by a provision deep in the new U.S.-Mexico-Canada trade agreement that aims to forbid such deals with “non-market” countries, trade experts said on Tuesday.

The provision specifies that if one of the current North American Free Trade Agreement partners enters a free trade deal with a “non-market” country such as China, the others can quit in six months and form their own bilateral trade pact.

The clause, which has stirred controversy in Canada, fits in with U.S. President Donald Trump’s efforts to isolate China economically and prevent Chinese companies from using Canada or Mexico as a “back door” to ship products tariff-free to the United States.

The United States and China are locked in a spiraling trade war that has seen them level increasingly severe rounds of tariffs on each other’s imports.

Under the clause, the countries in the updated NAFTA, renamed the U.S.-Mexico-Canada Agreement (USMCA), must notify the others three months before entering into such negotiations.

Derek Scissors, a China scholar at the American Enterprise Institute in Washington, said the provision gave the Trump administration an effective veto over any China trade deal by Canada or Mexico.

If repeated in other U.S. negotiations with the European Union and Japan, it could help isolate Beijing in the global trading system.

“For both Canada and Mexico, we have a reason to think an FTA with China is a possibility. It’s not imminent, but this is a very elegant way of dealing with that,” Scissors said.

“There’s no China deal that’s worth losing a ratified USMCA,” Scissors added.

After months of bashing its Western allies on trade, the Trump administration is now trying to recruit them to join the United States in pressuring China to shift its trade, subsidy and intellectual property practices to a more-market driven focus.

Beijing has demanded that the World Trade Organization recognize it as a “market economy” since its WTO accession agreement expired in December 2016, a move that would severely limit Western trade defenses against cheap Chinese goods.

But the United States and European Union are challenging the declaration, arguing that Chinese state subsidies fueling excess industrial capacity, the exclusion of foreign competitors and other practices are signs it is still a non-market economy.

Canadian Sovereignty Questioned

Canadian Prime Minister Justin Trudeau’s Liberal government, seeking to diversify Canada’s export base, held exploratory talks with China on trade in 2016, but a launch of formal negotiations has failed to materialize.

Tracey Ramsey, a legislator for Canada’s left-leaning New Democrats, said in the House of Commons on Tuesday that the clause was “astonishing” and a “severe restriction on Canadian independence.”

“Part of Canada’s concessions in this deal was to include language that holds Canada hostage to the Americans if we decide to trade with another country,” Ramsey said. “Why did the Liberal (Party) give the go-ahead for the U.S. to pull us into their trade wars?”

Canadian Finance Minister Bill Morneau downplayed the provision, arguing it was not significantly different from NAFTA’s clause that allows any member to leave the pact in six months’ time for any reason.

“It is largely the same. It recognizes though that the non-market economy is of significant importance as we move forward. But I don’t think it’s going to make a material difference in our activities,” Morneau told a business audience.

Mexico’s business community sided with the Trump administration in endorsing the pact.

“We are associating ourselves with countries that promote market freedom and that promote free trade in the world, free trade under equal circumstances,” said Juan Pablo Castañon, head of the Consejo Coordinador Empresarial (CCE), which represented Mexico’s private sector during the NAFTA trade talks.
…

Mexico and Canada on Tuesday urged their governments to resolve a tariff dispute with the United States before signing a new trilateral trade deal that was unveiled this week.

In late May, the Trump administration announced tariffs of 25 percent on steel imports and 10 percent on aluminum imports, prompting quick retaliation from top trading partners including Canada and Mexico.

Late on Sunday, the United States and Canada reached a deal to overhaul the North American Free Trade Agreement (NAFTA), complementing an accord the Trump administration brokered with Mexico, the third member of NAFTA, in late August.

Mexican steel producers association Canacero welcomed the new trade pact, called the United States-Mexico-Canada Agreement (USMCA), but said it viewed “with concern” the ongoing steel dispute and the “serious situation” it created for the industry.

U.S. President Donald Trump said on Tuesday that U.S. steel and aluminum tariffs would remain in place for Canada and Mexico until they “can do something different like quotas, perhaps.”

In a statement, Canacero said it supported efforts to find a solution to the impasse before the leaders of Mexico, the United States and Canada signed USMCA, which officials say could happen at a G20 summit at the end of November.

If no solution can be found, Mexico should put tariffs on U.S. steel to level the playing field, Canacero said.

Mexico has already slapped tariffs on U.S. pork, bourbon, motor boats and other products. Canada has levied tariffs on a range of U.S. imports, including steel and aluminum.

Joseph Galimberti, president of the Canadian Steel Producers Association, said he expected Canada’s government to continue to support the industry after the USMCA breakthrough.

“There is clearly an opportunity to constructively engage the United States between the achievement of a deal in principle and the ratification or signature of that deal,” he said.

Canada is the top exporter of steel and aluminum to the United States. The United Steelworkers of Canada adopted a less conciliatory tone after the new trade deal was announced, calling it a “sell-out” for Canadian workers.

Mexican officials have said they hope the steel and aluminum dispute can be resolved before USMCA is signed.

Since the tariff row broke out, Mexican steel exports to the United States had fallen 30 percent on average, Canacero said.
…

Palu, the Indonesian city devastated by an earthquake, tsunamis and mudslides, has strived to transform itself into a major trading hub, but the city’s buildings and other infrastructure were no match for the triple whammy that has left more than 1,200 people dead. 

The disasters that struck late Friday left the city’s port in ruins, its lone gantry crane atilt in the water. Its airport terminal was a sea of shattered glass and broken ceiling panels. A seven-story, 4-year-old hotel lay flat on its side. Its biggest bridge disintegrated, its picturesque yellow arches mangled in the mud. 

Ringed by coconut, coffee and cocoa farms, over the past two decades Palu has acquired modern shopping malls, hotels and other amenities to suit its ambitions. Poverty has fallen from nearly a third of its 380,000 residents to under one in 10, local officials say. 

A national blueprint calls for developing Palu as part of the “Sulawesi Economic Corridors” — a plan to attract investment and build up trade and commerce in a region that has remained somewhat isolated since the days of the ancient spice trade.  

Given how seismically active the area is — the Palu-Koro fault runs right through the city — it’s been a race against the odds. Historical records show the area has been hit by tsunamis — triggered by powerfully destructive earthquakes — at least seven times in the past two centuries. 

It’s unclear what standards were required, or enforced, in the construction of Palu’s modern buildings.

It’s an issue for all of Indonesia, an archipelago that sits square on the Pacific Ring of Fire. 

Teddy Boen, an expert on earthquake-resistant engineering who has consulted with foreign governments and international organizations, has been researching the problem for a half-century.

“From 50 years ago until today, there is similar damage. Somebody is not doing their job,” he said in a phone interview. “The codes are complete. The manuals are complete. The political will is not there.” 

The collapse of a mezzanine floor inside the Jakarta Stock Exchange in January that injured dozens of people underscores the extent of the problem, even in Indonesia’s capital.

After a tsunami in 2004 killed 230,000 people in Indonesia and elsewhere across Asia, it became apparent that in many communities, sturdy mosques and other strong buildings dating back to colonial times were the only structures still standing while newer structures often crumbled. 

In Palu, the Arkam Babu Rahman “floating mosque” on the city’s waterfront was pushed off-kilter by Friday’s tsunamis, while its worship halls remained intact. But a bigger, 20-year-old structure topped by a heavy dome was gutted as the debris-laden water swept through. 

Few of the buildings in Palu’s suburbs of Petobo, Biromaru and Bala Roa could withstand the sideways mudslide that engulfed those communities in expanses of oozing quicksand.  

Indonesia’s disaster agency spokesman Sutopo Purwo Nugroho said the soil there had liquefied and that authorities believed hundreds of people may have been buried in the mud. In Bala Roa, the ground violently heaved up and then sank in places, trapping many people under their wrecked homes. 

Traditional homes with thatched or tin roofs cannot withstand tsunamis or storm surges from typhoons but pose much less of a risk of severe damage even if they do collapse in an earthquake. Many homes built recently are hybrids, combining traditional styles with unreinforced masonry and tile roofs too heavy for the structures when they are shaken by quakes. 

The rush to rebuild after a disaster involves cutting corners, rather than fortifying buildings to prevent future calamities.

“Now, they say, build back better, build back better, but they do the same thing again,” Boen said. “The earthquake comes, they made the same mistakes and people get killed again.”
…

Tesla announced record quarterly car production numbers on Tuesday but warned it was facing major problems with selling cars in China due to new tariffs that will force it to accelerate investment in its factory in Shanghai.

The California-based electric carmaker, emerging from several months of turmoil around its Chief Executive Elon Musk, confirmed numbers leaked to an industry news site on Monday that showed it produced roughly 80,000 cars in the third quarter.

Deliveries reached a record 83,500, above Wall Street estimates of 80,000 and including almost 56,000 of the Model 3 sedan whose ramp-up is widely seen as crucial to the company’s drive to become profitable.

That overshadowed concerns expressed by the company over a 40 percent tariff being charged by China for the import of its cars, which it said was blocking sales in the world’s biggest electric car market. Shares gained 0.5 percent at the open.

“Yes it sounds like the tariff comments could haircut some of their profit plans but the production ramp is very impressive and it should continue to move higher,” analyst Chaim Siegel of Elazar Advisors said.

“The company’s at an inflection point for units and profit.”

Tesla did say that it had missed its weekly Model 3 production target on Tuesday and outlined a series of barriers it faced due to the worsening of President Donald Trump’s trade war with China.

The electric car maker said it was speeding up construction of its Shanghai factory as it seeks to combat a huge competitive disadvantage against other producers and even other imported cars, which it said are carrying a lower 15 percent tariff.

“Tesla is now operating at a 55 percent to 60 percent cost disadvantage compared to the exact same car locally produced in China,” the company said.

Musk in July landed a deal with Chinese authorities to build a new auto plant in Shanghai, its first factory outside the United States, that would double the size of the electric car maker’s global manufacturing.

The company flagged the tariff issue in August but said only that it was likely to have “some” impact on Chinese volumes and would not heavily affect global vehicle deliveries.

“With production stabilized, delivery and outbound vehicle logistics were our main challenges during Q3,” the company said on Tuesday. “We made many improvements to these processes throughout the quarter, and plan to make further improvements in Q4 so that we can scale successfully.”

Tesla produced over 5,300 Model 3 cars in the last week of September, falling short of its target of 6,000.

Overall in the third quarter the company produced 53,239 of the cars in the third quarter, in line with its target of 50,000 to 55,000 Model 3s, and delivered 55,840 of the vehicles to customers.

Tesla first met a long-held target of 5,000 vehicles per week at the end of June after a series of production bottlenecks and delays. Since then the company has been striving to sustain and increase that level.
…

Iran’s currency unexpectedly rallied Tuesday after weeks of depreciation linked to renewed American sanctions, sending Iranians rushing to exchange shops to cash in.

In the Iranian capital, money exchange shops offered 135,000 rials for one U.S. dollar at one point, drawing crowds of onlookers and those wanting to trade. Only the day before, the rial was selling at 170,000 to the dollar, with prices recently going as high as 190,000 to the dollar.

The currency plunged after President Donald Trump moved to restore tough U.S. sanctions after withdrawing from Tehran’s nuclear accord with world powers in May. U.S. sanctions targeting the country’s vital oil industry are set to take effect in early November, which will likely ramp up pressure on the economy.

Prices edged up to over 140,000 to the dollar later Tuesday, fueling suspicions among some Iranians.

“It does not make any sense at all that from four o’clock in the afternoon until the day after suddenly the price of the dollar plummets by 30 to 40 percent. It is not natural,” said Ruhollah Nikravesh, a dollar seller on the streets of Tehran. “It can be either the trick of the government or dealers who seek to collect the people’s dollar savings. There is no management in this.”

Analysts offered various explanations for the rally, including a new policy allowing the Central Bank to intervene more strongly to support the rial and providing for the import of more foreign currency from abroad.

There is also hope in Iran that Europe will be able to shield the country from further U.S. sanctions, including those targeting the oil industry.

Rising oil prices also have some more hopeful about the Iranian economy. Benchmark Brent crude now trades near $85 a barrel, and some analysts believe it could reach $100 a barrel by the end of the year.

Iranian state TV showed people gathering late Monday in the market to sell their dollars. Many had sought hard currencies like the U.S. dollar and the euro amid the rial’s slide, sending its value even lower. A year ago, the rial traded around 39,000 to $1.

Police also have cracked down on some illegal money changers in the streets and online.

“Managers of more than 15 websites that were announcing prices and caused irregularity in the economic situation were summoned or detained,” Tehran police chief Hossein Rahimi told state TV on Tuesday.

Seeking outside investors

In another effort to shore up the currency, the president’s office said Tuesday that Iran will offer five-year residency permits to foreigners if they invest $250,000 in the country.

A prominent Iranian entrepreneur, Pedaram Soltani, saw the Central Bank’s hand in the sudden rally.

“We should wait to see increase in prices of foreign currencies again, the Central Bank should allow that supply and demand decide the price,” he wrote on Twitter.

Iran’s hardline Kayhan newspaper said court cases targeting corrupt traders also helped strengthen the country’s economy. Meanwhile, Iran’s parliament is considering a law to counter money laundering and terror financing that may encourage foreign investment and ease some international sanctions.

Iran’s financial trouble has been fanned by Trump’s decision to pull America from the nuclear deal in May. Under the accord, which the United Nations says Iran still complies with, Tehran limit its enrichment of uranium in exchange for the lifting of some economic sanctions.

The rial’s rally could also partially be due to speculators realizing “the bubble has burst a little bit,” said Esfandyar Batmanghelidj, the founder of the Iranian economic website Bourse & Bazaar.

Others who sought the safety of the U.S. dollar likely want to cash in before the rial strengthens too much, he said.

“It’s possible that in a week or two weeks, some other bit of news will come out and restart the whole process, but it’s certainly a reprieve for the government right now,” Batmanghelidj said.

The restoration of sanctions on the oil industry next month could spark another exodus from the rial.

“It’s largely sort of a herd mentality, kind of an emotional response,” Batmanghelidj said. “That will continue to be a risk because people are susceptible to bad news.”

 
…

One of Australia’s biggest power companies says it will close a major coal-fired power station as it invests in renewable sources despite pressure from the government in Canberra to keep it open.

“Run down, dangerous and expensive” is how an Australian newspaper described the Liddell power plant, adding that it was “the perfect symbol of the decline of the coal industry.”

The facility was completed in 1973 with an expected lifespan of 25 years, but it continues to generate power in a country that relies on coal to generate more than 60 percent of its electricity.

The Australian government wants the plant to stay open for a few more years because of fears of power cuts and concerns about the potentially fragile state of the nation’s energy sector. Two years ago wild storms damaged transmission cables, causing a black-out across the entire state of South Australia. Ministers are also worried about the political implications of household power bills that have soared in recent years.

But energy giant AGL plans to decommission the facility in the New South Wales Hunter Valley in 2022 as it concentrates its commercial interests on renewable sources of energy, including solar and wind. The company insists its decision is economic, and not ideological.

Brett Redman, interim chief executive of energy company AGL says that despite pleas from the government the Liddell power station will close as scheduled in four years’ time.

“Our strategy to exit heavy carbon-emitting facilities over the long term is unchanged,” he said. “We continue in an operational sense to review our plans but there is no change at this point to the Liddell exit date. I have spoken to and I have met personally Angus Taylor, the new energy minister. I found that to be a very comfortable meeting where he understandably is very worried about power price on behalf of Australia’s consumers.”

Australia remains heavily reliant on fossil fuels not only for domestic power generation, but also for economic reasons. It exports billions of dollars worth of coking coal, currently a key ingredient in the making of steel, and thermal coal, which is used for heat and power generation. Much is sold to China, and into Southeast Asia.

Conservationists argue, however, that the coal industry is waning and that Australia should be vigorously pursuing alternative renewable sources. Despite Canberra’s continued enthusiasm for coal, which in Australia is cheap and plentiful, Australia’s energy mix is changing. There has been an increase in small-scale solar power generation, mostly through domestic rooftop panels and more consumption of natural gas.

 
…