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The U.S. Securities and Exchange Commission has sent subpoenas to Tesla Inc. regarding Chief Executive Elon Musk’s plans to take the company private and his statement that funding was “secured,” Fox Business Network reported on Wednesday, citing sources.

Subpoenas typically indicate the SEC has opened a formal investigation into a matter. Tesla and the SEC declined to comment.

Musk stunned investors and sent Tesla’s shares soaring 11 percent when he tweeted early last week that he was considering taking Tesla private at $420 per share and that he had secured funding for the potential deal.

The electric carmaker’s shares were last down 1.9 percent at $341.00 on Wednesday. They have erased all their gains following Musk’s tweet last week.

Musk provided no details of his funding until Monday, when he said in a blog on Tesla’s website that he was in discussions with Saudi Arabia’s sovereign wealth fund and other potential backers but that financing was not yet nailed down.

The CEO’s tweet may have violated U.S. securities law if he misled investors. On Monday, lawyers told Reuters Musk’s statement indicated he had good reason to believe he had funding but seemed to have overstated its status by saying it was secured.

The SEC has opened an inquiry into Musk’s tweets, according to one person with direct knowledge of the matter. Reuters was not immediately able to ascertain if this had escalated into a full-blown investigation on Wednesday.

This source said Tesla’s independent board members had hired law firm Paul, Weiss, Rifkind, Wharton & Garrison to help handle the SEC inquiry and other fiduciary duties with respect to a potential deal.
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U.S. retail sales rose more than expected in July as households boosted purchases of motor vehicles and clothing, suggesting the economy remained strong early in the third quarter.

Other data on Wednesday showed worker productivity growing at its fastest pace in more than three years in the second quarter, but a drop in labor costs pointed to moderate wage inflation. Strong domestic demand supports expectations the Federal Reserve will raise interest rates in September for the third time this year.

The Commerce Department said retail sales increased 0.5 percent last month. But data for June was revised lower to show sales gaining 0.2 percent instead of the previously reported 0.5 percent rise. Economists polled by Reuters had forecast retail sales nudging up 0.1 percent in July. Retail sales in July increased 6.4 percent from a year ago.

Excluding automobiles, gasoline, building materials and food services, retail sales advanced 0.5 percent last month after a downwardly revised 0.1 percent dip in June. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Core retail sales were previously reported to have been unchanged in June. Consumer spending is being supported by a tightening labor market, which is steadily pushing up wages. Tax cuts and higher savings are also underpinning consumption.

July’s increase in core retail sales suggested the economy started the third quarter on solid footing after logging its best performance in nearly four years in the second quarter.

Gross domestic product surged at a 4.1 percent annualized rate in the April-June period, almost double the 2.2 percent pace in the first quarter. While the economy is unlikely to repeat the second quarter’s robust performance, growth in the

July-September period is expected to top a 3.0 percent rate.

The Fed increased borrowing costs in June and forecast two more interest rate hikes by December.

Prices of U.S. Treasuries fell and the U.S. dollar added slightly to gains immediately after the release of the data. U.S. stock index futures were trading lower.

Productivity rises

Last month, auto sales rose 0.2 percent after edging up 0.1 percent in June. Sales at clothing stores rebounded 1.3 percent after declining 1.6 percent in June. Receipts at service stations increased 0.8 percent.

Online and mail-order retail sales increased 0.8 percent, likely boosted by Amazon.com Inc’s “Prime Day” promotion. That followed a 0.7 percent rise in June. Americans

spent more at restaurants and bars, lifting sales 1.3 percent.

But receipts at furniture stores fell 0.5 percent and sales at building material stores were unchanged last month. Spending at hobby, musical instrument and book stores declined further in July, falling 1.7 percent.

In a separate report on Wednesday, the Labor Department said nonfarm productivity, which measures hourly output per worker, rose at a 2.9 percent annualized rate in the April-June quarter.

That was the strongest rate since the first quarter of 2015.

Data for the first quarter was revised lower to show productivity increasing at a 0.3 percent pace instead of the previously reported 0.4 percent rate. Economists had forecast productivity growing at a 2.3 percent rate in the second increased at a rate of 1.3 percent.

The government also revised data going back to 1947, which did not materially change the picture of lackluster productivity growth, though unit labor costs were stronger than previously estimated in 2017 because of upward revisions to hourly compensation.

The annual rate of productivity growth from 2007 to 2017 was revised up 0.1 percentage point to a rate of 1.3 percent.

Unit labor costs, the price of labor per single unit of output, fell at a 0.9 percent pace in the second quarter. That was the weakest pace since the third quarter of 2014.

First-quarter growth in unit labor costs was revised up to a 3.4 percent rate from the previously reported 2.9 percent pace.

Labor costs increased at a 1.9 percent rate compared to the second quarter of 2017, pointing to moderate wage inflation.

 
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Turkey on Wednesday announced tariff hikes on a range of U.S. goods in the latest back-and-forth move amid a deteriorating relationship between the two countries.

The extra tariffs apply to imports of vehicles, alcohol, coal, rice and cosmetics.

Turkish Vice President Fuat Oktay said on Twitter the increases were being done “within the framework of the principle of reciprocity in retaliation for the conscious economic attacks by the United States.”

President Recep Tayyip Erdogan is accusing the United States of waging a targeted economic war on his country, and on Tuesday he proposed a boycott of U.S. electronic goods.

“If they have the iPhone, there is Samsung elsewhere. In our own country we have Vestel,” said Erdogan.

Asked how U.S. President Donald Trump’s administration would react to any such Turkish boycott, White House Press Secretary Sarah Huckabee Sanders replied during Tuesday afternoon’s briefing, “I certainly don’t have a policy announcement on that at this point.” 

Trump administration sources say further sanctions against Turkey are under active consideration. But Sanders declined to say how the U.S. government plans to apply more pressure on Ankara, which repeatedly has ignored calls from Trump and others to free Christian pastor Andrew Brunson. 

Turkey accuses Brunson of espionage and is holding him under house arrest pending his trial. 

The chargé d’affaires at the U.S. embassy in Turkey, Jeffrey Hovenier, visited Brunson on Tuesday and called for his case — and those of others detained in Turkey — to be resolved “without delay” and in a “fair and transparent manner.”

National Security Adviser John Bolton met at the White House on Monday with Turkish ambassador Serdar Kilic, but the discussion reportedly did not result in any substantive progress.

Trump, who has called Brunson’s detention a “total disgrace,” last Friday doubled tariffs on Turkish steel and aluminum exports in order to increase pressure on Erdogan. 

Earlier this month, the U.S. Treasury Department sanctioned Turkey’s ministers of Justice and Interior in response to the continued detention of the pastor, who has lived in the country for 20 years and heads an evangelical congregation of about two dozen people in the port city of Izmir. 

The escalating dispute between the two countries has exacerbated Turkey’s economic crisis, pushing the lira to record lows. The Turkish currency has lost about 40 percent of its value this year against the U.S. dollar.

Erdogan has called on Turks to exchange their dollars for lira in order to shore up the domestic currency.

In a joint statement Tuesday, Turkish business groups called on the government to institute tighter monetary policy in order to combat the currency crisis. They also said Turkey should work to resolve the situation with the United States diplomatically while also improving relations with another major trading partner, the European Union.

The Turkish central bank has pledged to take “all necessary measures” to stabilize the country’s economy to make sure the banks have all the money they need. But world stock traders were dismayed the bank did not raise interest rates, which is what many economists believe is necessary to ease the crisis.

The United States and Turkey also have diverging interests over Syria, which is enmeshed in a protracted civil war. 

The differences are drawing Turkey closer to Russia, they key adversary of NATO but a country supplying more than half of Turkey’s gas.

Turkey has agreed to buy S-400 surface-to-air missiles from Russia, an unprecedented move by a NATO member, which has raised objections from members of both parties of the U.S. Congress and the Trump administration. 

Russia’s foreign minister, Sergey Lavrov, voiced support for Turkey during a joint news conference with his Turkish counterpart in Ankara on Tuesday, stating both countries plan to switch from dollars to national currencies for their mutual trade.

“We view the policy of sanctions as unlawful and illegitimate, driven mostly by a desire to dominate everywhere and in everything, dictate policies and call shots in international affairs,” said Lavrov, predicting “such a policy can’t be a basis for normal dialogue and can’t last long.

Lavrov, alongside Turkish Foreign Minister Mevlut Cavusoglu, also declared, “We are at a turning point, without exaggeration, in world history” from dominance by a single power toward a multipolar environment. 
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Royal Bank of Scotland will pay $4.9 billion to settle U.S. claims that it misled investors on residential mortgage-backed securities between 2005 and 2008, the U.S. Justice Department said Tuesday.

The Justice Department said the penalty was the largest ever imposed on a bank for misconduct leading up to the financial crisis. The bank announced in May that it had reached the settlement in principle.

The government alleges RBS misled investors in underwriting and issuing residential mortgage-backed securities, understating the risks behind many of the loans and providing inaccurate data.

“Despite assurances by RBS to its investors, RBS’s deals were backed by mortgage loans with a high risk of default,” Andrew E. Lelling, U.S. attorney for the District of Massachusetts, said in a statement.

The Justice Department said that RBS disputes the allegations and does not admit wrongdoing, although the bank said in a statement it was happy to move on.

“There is no place for the sort of unacceptable behavior alleged by the DoJ at the bank we are building today,” RBS Chief Executive Ross McEwan said.

Dividend

In conjunction with the settlement, the bank also said it would be paying out an interim ordinary dividend of 2 pence per share on October 12 to shareholders.

The dividend is the bank’s first since its near-collapse and 45.5 billion-pound ($58 billion) state bailout in 2008.

The DOJ settlement and the resumption of dividends were two of the last big milestones in RBS’s decade-long journey back to normality. The looming Justice Department fine had weighed on the bank’s share price and prevented it from paying out to its shareholders.

Together with hefty cuts made to its investment bank and international business, a return to dividends could help shift the bank’s profile with investors from a risky bet into a safe, predictable value stock.

It also expands the market for future government share sales by enabling a broader array of investors to look at buying the bank’s shares.

Tuesday’s announcement marked the latest in a long-running series of massive settlements struck between the U.S. government and large global banks over conduct leading up to the financial crisis.

On August 1, the Justice Department struck a settlement with Wells Fargo, which agreed to pay $2.09 billion to settle similar claims.
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Alexei Nikolayev, one of more than 56 million Russians who re-elected President Vladimir Putin in March, is already counting the likely cost of a weaker ruble: less spending power abroad, higher prices at home and

another round of belt tightening.

But Nikolayev, 56, a graphic designer who enjoys foreign travel and imported wine, blames the West, not Putin, for the pain and has no regrets about voting for a politician he sees as the right man to guide Russia through trubled times.

“It’s painful and it’s unpleasant, but it won’t change my politics,” Nikolayev said of the ruble shedding 10 percent of its value against the dollar since the end of July, driven down largely by new U.S. sanctions on Russia. “In fact, as strange as it may sound, it will only strengthen my convictions. They [the West] are trying to break Russia.”

Nikolayev’s view that Putin is not to blame is held widely among Russians, according to Stepan Goncharov, a sociologist at the Levada Center pollster.

“People don’t really understand the dynamics behind it and the president, traditionally, is safe from criticism,” Goncharov told Reuters.

The narrative in Russia that the ruble’s slide is the result of a Western plot has direct echoes with Russian ally Turkey, whose lira currency slid to a record low Monday. Turkish President Recep Tayyip Erdogan has said that his country is the target of an economic war and that Turkey will boycott some U.S. imports in retaliation.

In Russia, the falling ruble causes pain for some. The price of imported goods is likely to rise. Foreign vacations have also become more expensive.

Irina Turina, a spokeswoman for the Russian Travel Industry Union, said travel agents saw demand for package holidays fall 10 to 15 percent last week because of the ruble’s volatility.

“People who have not yet paid in full for their holidays are rushing to pay off the rest even if they have no obligation to do so,” Turina told Reuters, saying people were worried that the outstanding balance would be recalculated according to a higher, less favorable exchange rate.

“People who have not yet bought package holidays are also pausing for thought,” she said. “It’s not just about paying for your holiday. You need spending money once you get there, and people take dollars.”

​’Nothing is forever’

Nevertheless, early and anecdotal signs suggest many Russians, long inured to a volatile national currency, are stoic, even defiant, in the face of a falling ruble.

Russian Foreign Ministry spokeswoman Maria Zakharova said last week that the sanctions on Russia had nothing to do with Moscow’s behavior in places like Ukraine or Syria but were motivated by a U.S. need to keep economic rivals down.

That view finds favor with many Russians who have listened via state TV and taken in the Kremlin’s anti-Western rhetoric for years.

Other Russians were simply sanguine about a ruble drop that has taken few by surprise because they have seen worse before.

“Nothing is forever; things will change somehow,” said Moscow resident Gennady Tsurkan. “Everything will always change for the better. I think that these days are not far off, I believe that.”

The fall in the ruble is much less severe than the currency crisis after 2014, when an economic slump coincided with the fallout from Russia’s annexation of Ukraine’s Crimea.

Since that time, Russian companies have reduced their foreign borrowing, the state has cut the amount it needs to raise on Western debt markets, and the country imports fewer goods that it needs to pay for in dollars.

Putin’s still-high approval rating has slipped in the past few months, but pollsters put that down to an unpopular proposed pension reform, not the weakness of the ruble.

Pollsters say while the ruble’s weakness may fuel an emerging sense of discontent among some Russians that was sparked by the pension reform, it is unclear if it will lead to protests or influence a political landscape that Putin has bestrode for over 18 years.

“If it does have an effect, it will be an indirect one, magnifying discontent over falling living conditions,” said Levada Center’s Goncharov.

Nikolayev, the Putin-supporting graphic designer, was philosophical:

“It’s like sunshine or snow. I can’t influence it. Maybe I’ll have to drink a different kind of wine. Or maybe I’ll have to buy one instead of two pairs of shoes. It’s painful, but not that painful.”
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Sprint said Tuesday it has partnered with phone manufacturer LG Electronics to launch a 5G smartphone in the first half of next year, marking the first 5G device deal for the No. 4 U.S. wireless carrier.

Sprint is working to persuade antitrust regulators to approve its merger with larger rival T-Mobile US Inc in a $26 billion deal, which the companies say will help them more quickly build the next-generation wireless network. That network is expected to eventually pave the way for new technologies like autonomous cars.

The LG phone will be customized to Sprint’s planned 5G network, and will be compatible with T-Mobile only on that carrier’s existing 4G network, John Tudhope, Sprint director of product development, said in an interview.

The price of the phone and exact launch date will be announced later, Sprint said in a news release.

Last month, Sprint introduced new unlimited wireless plans bundled with video streaming platform Hulu and music streaming service Tidal, in an effort to attract more customers with media content.

Tudhope said Sprint will continue to use content as a way to “bring to life the value of 5G,” as one of the benefits of the 5G network will be faster download times of video content on smartphones.

The company had previously announced it would initially launch its 5G network in nine cities in 2019, including New York City and Los Angeles.

Sprint is the fourth-largest cellphone service provider in terms of number of customers, after Verizon Communications, AT&T and T-Mobile.
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Vienna has dislodged Melbourne for the first time at the top of the Economist Intelligence Unit’s Global Liveability Index, strengthening the Austrian capital’s claim to being the world’s most pleasant city to live in.

The two metropolises have been neck and neck in the annual survey of 140 urban centers for years, with Melbourne clinching the title for the past seven editions. This year, a downgraded threat of militant attacks in western Europe as well as the city’s low crime rate helped nudge Vienna into first place.

Vienna regularly tops a larger ranking of cities by quality of life compiled by consulting firm Mercer. It is the first time it has topped the EIU survey, which began in its current form in 2004.

At the other end of the table, Damascus retained last place, followed by the Bangladeshi capital Dhaka, and Lagos in Nigeria.

The survey does not include several of the world’s most dangerous capitals, such as Baghdad and Kabul.

“While in the past couple of years cities in Europe were affected by the spreading perceived threat of terrorism in the region, which caused heightened security measures, the past year has seen a return to normalcy,” the EIU said in a statement about the report published on Tuesday.

“A long-running contender to the title, Vienna has succeeded in displacing Melbourne from the top spot due to increases in the Austrian capital’s stability category ratings,” it said, referring to one of the index’s five headline components.

Vienna and Melbourne scored maximum points in the healthcare, education and infrastructure categories. But while Melbourne extended its lead in the culture and environment component, that was outweighed by Vienna’s improved stability ranking.

Osaka, Calgary and Sydney completed the top five in the survey, which the EIU says tends to favor medium-sized cities in wealthy countries, often with relatively low population densities. Much larger and more crowded cities tend to have higher crime rates and more strained infrastructure, it said.

London for instance ranks 48th.

Vienna, once the capital of a large empire rather than today’s small Alpine republic, has yet to match its pre-World War I population of 2.1 million. Its many green spaces include lakes with popular beaches and vineyards with sweeping views of the capital. Public transport is cheap and efficient.

In addition to the generally improved security outlook for western Europe, Vienna benefited from its low crime rate, the survey’s editor Roxana Slavcheva said.

“One of the sub-categories that Vienna does really well in is the prevalence of petty crime … It’s proven to be one of the safest cities in Europe,” she said.
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Venezuela’s heavily subsidized domestic gasoline prices should rise to international levels to avoid billions of dollars in annual losses due to fuel smuggling, President Nicolas Maduro said in a televised address on Monday.

“Gasoline must be sold at an international price to stop smuggling to Colombia and the Caribbean,” Maduro said in a televised address.

Venezuela, like most oil-producing countries, has for decades subsidized fuel as a benefit to consumers. But its fuel prices have remained nearly flat for years despite hyperinflation that the International Monetary Fund has projected would reach 1,000,000 percent this year.

That means that for the price of a cup of coffee, a driver can now fill the tank of a small SUV nearly 9,000 times.

Recently, the average price of a coffee with milk was 2.2 million bolivars, or about 50 cents, local media has reported.

Smugglers do brisk business reselling fuel in neighboring countries.

Maduro said the government would still provide “direct subsidies” to citizens holding the “fatherland card,” a state-issued identification card that the government uses to provide bonuses and track use of social services.

He said the subsidy was only available to those who registered their cars in a vehicle census being conducted by the state.
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Mexican President-elect Andres Manuel Lopez Obrador said on Monday his administration will invest more than $11 billion to boost refining capacity in order to curb growing fuel imports.

Lopez Obrador, who will take office on Dec. 1, told reporters his government plans to invest $2.6 billion to modernize existing domestic refineries owned and operated by national oil company Pemex, and spend another $8.4 billion to build a new one within three years.

The $8.4-billion figure is higher than a $6 billion estimate provided by a key energy advisor during the campaign.

Lopez Obrador, set to become Mexico’s first leftist president in decades, did not detail how the projects would be financed or whether private capital would be involved, but he has often said he will not raise taxes or grow government debt.

Mexico is among Latin America’s largest crude exporters, but is also the biggest importer of U.S. refined products. The country’s next president has pledged to lift refining capacity, which he says has declined due to corruption and neglect.

Pemex, formally known as Petroleos Mexicanos, has six domestic refineries with a total processing capacity of some 1.6 million barrels per day (bpd), but the facilities are only operating at about 40 percent of capacity so far this year.

Meanwhile, gasoline and diesel imports have sky-rocketed in recent months amid planned and unplanned refinery stoppages.

Pemex has posted losses in its refining division for years but Lopez Obrador aims to boost crude processing enough to halt imports within three years.

Lopez Obrador also said he plans to invest another $4 billion to drill new onshore and shallow-water oil wells in the states of Veracruz, Tabasco and Chiapas.

Pemex production has consistently declined in recent years to fall below 2 million bpd after hitting peak output of 3.4 million bpd in 2004.

President Enrique Pena Nieto passed a reform to open up Mexico’s state-run energy industry to private producers, which has led to a series of competitive auctions that have awarded more than 100 oil exploration and production contracts.

Lopez Obrador has said he will respect those contracts as long as an ongoing review does not find signs of corruption. He is widely expected to slow down the process of offering more contracts to private players.

($1 = 19.1100 Mexican pesos)
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