A $100 billion semiconductor company based in Singapore will legally relocate its home address to the United States, President Donald Trump announced Thursday.

Broadcom Limited, which manufactures communications chips around the world, said it would relocate its legal address to Delaware once shareholders approve the move, bringing $20 billion in annual revenue back to the U.S. The move will allow Broadcom to avoid a cumbersome federal review process.

The Oval Office announcement was tied to the release of congressional Republicans’ tax reform proposal, which would drastically reduce corporate rates and makes it easier for companies to deduct foreign taxes.

The company credits the GOP plan with making it easier to do business in the U.S. “America is once again the best place to lead a business with a global footprint,” Broadcom CEO Hock Tan said.

However, Broadcom’s move to the U.S. will take place regardless of whether the Republican plan passes, the company said.

Scrutiny regarding merger deal

A year ago, the company entered a $5.5 billion agreement to merge with U.S. network provider Brocade Communications Systems, but that has been delayed while it’s scrutinized by the Committee on Foreign Investment in the United States. The high-level government committee, familiarly known as CFIUS, investigates proposed acquisitions of U.S. companies by foreign buyers on national security and intellectual property grounds.

By becoming a U.S.-based company, Broadcom can avoid the CFIUS process. Broadcom’s corporate headquarters will remain in San Jose, California.

The company makes semiconductor chips used for a variety of products, from cable set-top boxes to smartphones and other wireless devices.

It’s rooted in one of the largest-ever tech industry acquisitions, when Singapore-based Avago Technologies Ltd. bought Broadcom Corp. for $37 billion last year. The deal made Broadcom Ltd. the parent company of both Broadcom Corp. and Avago Technologies. By joining forces, the rival chipmakers hoped to make a bigger dent in the rapidly growing market for wireless devices.

Nearly 20 percent of its revenue in the most recent fiscal quarter came from sales to Apple and the contractors that manufacture Apple products, such as the Foxconn Technology Group.

About half of its revenue comes from China-based distributors and manufacturers, though the end products are used around the world.

Singapore tax breaks

The Singapore Economic Development Board has awarded the company with tax breaks for having a major presence there, but the company warned in a recent regulatory filing that one of those benefits terminates in 2021, four years earlier than expected.

About 39 percent of Broadcom’s employees are in Asia.

Broadcom has 7,500 U.S. employees across 24 states, the company said. It has manufacturing facilities in Colorado and Pennsylvania and engineering offices in California and traces its origins to blue chip American companies like Bell Laboratories, Lucent, and Hewlett-Packard.

“The proposed tax reform package would level the global playing field and allow us to compete worldwide from here in the United States,” Tan said in a statement. “Our move would domicile our $20 billion annual revenue in the United States. From our base here, each year we will invest $3 billion in research and engineering and $6 billion in manufacturing, resulting in more high-paying tech jobs.”
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Google is partnering with AutoNation, the country’s largest auto dealership chain, in its push to build a self-driving car.

AutoNation said Thursday that its dealerships will provide maintenance and repairs for Waymo’s self-driving fleet of Chrysler Pacifica vehicles. The agreement will include additional models when Waymo brings them on line.

Terms of the multi-year deal were not disclosed.

Google has been partnering with a number of car-centric companies like Avis, the ridesharing company Lyft, and Fiat Chrysler.

AutoNation Inc., based in Fort Lauderdale, Florida, runs about 360 dealerships in the U.S.
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Vietnam is hoping leaders of the remaining 11 member countries of a Pacific Rim trade pact, the Trans-Pacific Partnership, may be able to discuss during next week’s regional summit a revised deal following the U.S.’s withdrawal.

Deputy Foreign Minister Bui Thanh Son said he hoped talks held in Japan this week will have narrowed differences enough to allow trade ministers and leaders to endorse an amended TPP agreement during the Asia Economic Cooperation forum, whose annual regional summit will be held in Danang, Vietnam, next week.

“Vietnam will actively contribute together with other TPP member countries to achieve the most positive results that meet the interests of TPP members,” Son said. He told reporters he hoped there would be ministerial and summit meetings on it next week.

In Tokyo, Japanese officials also said they were hoping for a “framework” agreement on pursuing the TPP by the time of the APEC summit, despite having lost the U.S., the world’s biggest economy, as its anchor.

U.S. President Donald Trump withdrew the U.S. from the dozen-member trade agreement just days after taking office earlier this year, saying he preferred country-to-country trade deals, a departure from his predecessor Barack Obama in which TPP was the key to his “pivot” to Asia policies.

The TPP is meant to dismantle tariffs and other trade barriers while protecting labor, environment and intellectual property standards.

Son said the remaining 11 member countries in the TPP are still working toward an agreement with balanced interests to all members and it’s open for the United States and other countries to join in the future.

The TPP includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

 
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Facebook reported better-than-expected quarterly profit and revenue on Wednesday as it pushed further into video advertising, showing no sign of financial damage from the controversy over how Russia used the social network in an attempt to sway voters in the 2016 U.S. election.

The company’s shares, which hit a record earlier in the day, initially rose in after-hours trading, but later fell into negative territory. They have gained almost 60 percent this year.

Chief Executive Mark Zuckerberg condemned Russia’s attempts to influence last year’s election through Facebook posts designed to sow division, and repeated his pledge to ramp up spending significantly to increase the social network’s security, something he said on Wednesday would affect profits.

“What they did is wrong, and we are not going to stand for it,” Zuckerberg said of the Russians, on a conference call with analysts.

Facebook is at the center of a political storm in the United States for the ways it handles paid political ads and allows the spread of false news stories. U.S. lawmakers have threatened tougher regulation and fired questions at Facebook General Counsel Colin Stretch in hearings this week.

Facebook, in a series of disclosures over two months, has said that people in Russia bought at least 3,000 U.S. political ads and published another 80,000 Facebook posts that were seen by as many as 126 million Americans over two years. Russia denies any meddling.

Facebook’s total advertising revenue rose 49 percent in the third quarter to $10.14 billion, about 88 percent of which came from mobile ads.

Analysts on average had expected total ad revenue of $9.71 billion, according to data and analytics firm FactSet.

Facebook in the third quarter gave advertisers for the first time the ability to run ads in standalone videos, outside the Facebook News Feed, and the company is seeing good early results, Chief Operating Officer Sheryl Sandberg told analysts on a conference call.

“Video is exploding, and mobile video advertising is a big opportunity,” Sandberg said.

More than 70 percent of ad breaks up to 15 seconds long were viewed to completion, most with the sound on, she said.

The 49 percent increase in total ad sales in the latest quarter compares with a 47 percent rise in the prior quarter and a 51 percent jump in the first quarter.

Facebook has been warning for more than a year about reaching a limit in “ad load”, or the number of ads the company can feature in users’ pages before crowding their News Feed.

Advertisers seem unfazed, though, spending heavily as the social network continues to attract users.

The nearly 50 percent jump in ad revenue “is phenomenal, especially when for the past few quarters they’ve been trying to bring that expectation way, way down. Yet it keeps going up,” Tigress Financial Partners analyst Ivan Feinseth said.

Of the Russia scandal enveloping Facebook publicly, Feinseth said: “In the bigger picture, I don’t think it’s a really big factor.”

The company’s performance was strong in comparison with smaller social media firms Snap Inc and Twitter, Wedbush analyst Michael Pachter said.

“Facebook grew revenues by $3.3 billion year-over-year for the quarter. This is more than Twitter and Snapchat generate combined for the full year,” he said.

Facebook said about 2.07 billion people were using its service monthly as of Sept. 30, up 16 percent from a year earlier.

Analysts on average had expected 2.06 billion monthly active users, according to FactSet.

Net income rose to $4.71 billion, or $1.59 per share, from $2.63 billion, or 90 cents per share.

Analysts on an average were expecting the company to earn $1.28, according to Thomson Reuters I/B/E/S.

Total revenue increased 47.3 percent to $10.33 billion beating analysts estimate of $9.84 billion, according to Thomson Reuters I/B/E/S.

Various U.S. investigations into how Russia may have tried to sway American voters in the months before and after last year’s elections are hanging over Facebook and its competitors.

There is also proposed U.S. legislation that would extend rules governing political ads on television, radio and satellite to also cover digital advertising.

“We expect more scrutiny about Facebook’s ad system ahead,” analyst Debra Aho Williamson of research firm eMarketer said in a note. “We’re also monitoring for any signs that this investigation will have a material impact on ad revenue.”
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President Trump appears to be a step closer to naming Jerome Powell as the new head of the U.S. central bank.

Late Wednesday, The Wall Street Journal, citing unnamed sources, reported that White House officials have notified Powell that he will replace Federal Reserve Chair Janet Yellen when her term expires early next year.

Trump is expected to announce his choice to head the bank on Thursday.

Powell is already one of the Federal Reserve’s governors.  Analysts say he is a Republican centrist who appears inclined to continue the Fed’s strategy of gradually raising interest rates.  The Journal story cautions that Trump, who has praised Yellen recently,  might still change his mind.

Powell would be a middle-ground pick for Trump, who is also considering current Fed Chair Janet Yellen as well as Stanford University economist John Taylor and former Fed Governor Kevin Warsh.

While Powell is expected to continue Yellen’s cautious approach to raising interest rates, economists say he might relax some of the financial rules designed to prevent another financial crisis like the one that caused chaos in the markets during the 2007-2008 recession.  Trump has complained that those rules hurt banks and economic growth.  

Yellen, who was selected as Fed chair by President Barack Obama, has been an outspoken advocate for the stricter financial regulations that took effect in 2010.

Many conservative members of Congress had been pushing Trump to select Taylor, rather than Powell, for Fed chairman. Taylor, one of the country’s leading academics in the area of Fed policy, would likely embrace a more “hawkish” approach — more inclined to raise rates to fight inflation than to keep rates low to support the job market.

Taylor is the author of a widely cited policy rule that provides a mathematical formula for guiding rate decisions. By one version of that rule, rates would be at least double what they are now.
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President Donald Trump on Wednesday signed the repeal of a banking rule that would have allowed consumers to join together to sue their bank or credit card company to resolve financial disputes.

The president signed the measure at the White House in private. Journalists were not present to witness the signing.

The Republican-led Senate narrowly voted to repeal the Consumer Financial Protection Bureau’s regulation, which the banking industry had been seeking to roll back.

The Trump administration and Republicans have pushed to undo regulations they say harm the free market and lead to frivolous lawsuits.

Democrats contend the rule would have given consumers more leverage to stop companies from financial wrongdoing. CFPB Director Richard Cordray, an appointee of former President Barack Obama, has called the move a “giant setback” for consumers.

The repeal means bank customers will still be subject to what are known as mandatory arbitration clauses. These clauses are buried in the fine print of nearly every checking account, credit card, payday loan, auto loan or other financial services contract and require customers to use arbitration to resolve any dispute with their bank. They effectively waive the customer’s right to sue.

The overturning of the rule marks a notable victory for Wall Street. After the financial crisis, Congress and the Obama administration installed tough new regulations on how banks operated and fined them tens of billions of dollars for the damage they caused to the housing market.

But since Trump’s victory last year, banking lobbyists have worked hard to get some of the rules repealed or replaced altogether.
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Members of the U.S. International Trade Commission on Tuesday made three different recommendations for restricting solar cell and panel imports on Tuesday, giving President Donald Trump a range of choices to address injury to domestic producers.

The recommendations range from an immediate 35 percent tariff on all imported panels to a four-year quota system that allows the import of up to 8.9 gigawatts of solar cells and modules in the first year. The president’s ultimate decision could have a major impact on the price of U.S. power generated by the sun.

Both supporters and critics of import curbs on solar products were disappointed by the proposals, which were unveiled at a public meeting in Washington.

Trade remedies were requested in a petition earlier this year by two small U.S. manufacturers that said they were unable to compete with cheap panels made overseas, mainly in Asia. The companies, Suniva Inc and the U.S. arm of Germany’s SolarWorld AG, said Tuesday’s recommendations did not go far enough to protect domestic producers.

“The ITC’s remedy simply will not fix the problem the ITC itself identified,” Suniva said in a statement. The company, which is majority owned by Hong Kong-based Shunfeng International Clean Energy, filed the rare Section 201 petition nine days after seeking Chapter 11 bankruptcy protection in April. It had sought a minimum price on panels of 74 cents a watt, nearly double their current cost.

One analyst said the stiffest remedy recommended, a 35 percent tariff on solar panels, would add about 10 percent to the cost of a utility-scale project but would have a negligible impact on the price of residential systems because panels themselves make up a small portion of their overall cost.

“It’s not nearly the doomsday impact we were potentially expecting,” said Camron Barati, a solar analyst with market research firm IHS Markit Technology.

But the top U.S. solar trade group, the Solar Energy Industries Association, said in a statement on Tuesday that any tariffs would be “intensely harmful” to the industry. The group has lobbied heavily against import restrictions on the grounds that they would undermine a 70 percent drop in the cost of solar since 2010 that has made the technology competitive with fossil fuels.

Recommendations

The ITC will deliver its report to Trump by Nov. 13. He will have broad leeway to come up with his own alternative or do nothing at all. Since only two members agreed on the same restrictions, there was no majority recommendation from the four-member commission.

“There is still plenty to be worried about,” said MJ Shiao, who follows the U.S. solar market for GTM Research.

Trump has vowed to protect U.S. manufacturers from low-priced imports, and U.S. Commerce Secretary Wilbur Ross has talked about tariff-rate quotas as a flexible way to protect some industries, allowing imports in as needed, but only up to a certain level before high tariffs kick in.

Commissioners David Johanson and Irving Williamson urged the president to impose an immediate 30 percent tariff on completed solar modules, to be lowered in subsequent years, and a tariff-rate quota on solar cells. Imports of cells in excess of one gigawatt would be subject to a 30 percent tariff that would decline after the first year.

ITC Chair Rhonda Schmidtlein recommended an immediate 35 percent four-year tariff on imported solar modules, with a four-year tariff rate quota on solar cells. This would impose a 30 percent tariff on imports exceeding 0.5 gigawatts and 10 percent on imports below that level. These tariffs would decline over a four-year period.

In the most lenient recommendation, Commissioner Meredith Broadbent said the president should impose a four-year quota system that allows for imports of up to 8.9 gigawatts of solar cells and modules in the first year.
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Property damage claims from a series of deadly October wildfires now exceed $3.3 billion, California Insurance Commissioner Dave Jones said Tuesday.

The figure represented claims for homes and businesses insured by 15 companies and was more than triple the previous estimate of $1 billion. Jones said the number would continue to rise as more claims were reported.

The amount of claims now reported means that the fires caused more damage than California’s 1991 Oakland Hills fire, which was previously the state’s costliest, with $2.7 billion in damage in 2015 dollars, according to the Property Casualty Insurers Association of America.

Forty-three people were killed in the October blazes that tore through Northern California, including the state’s renowned winemaking regions in Napa and Sonoma counties. They destroyed at least 8,900 buildings as more than 100,000 people were forced to evacuate. It was the deadliest series of fires in California history.

Several dozen buildings were also damaged or destroyed in fires in Southern California’s Orange County.

“Behind each and every one of these claims … are ordinary people, Californians who lost their homes, lost their vehicles, in some cases whose family members lost their lives,” said Jones, a Democrat who is running for attorney general.

Jones said there were just over 10,000 claims for partial home losses, more than 4,700 total losses and about 700 for business property. There were 3,200 claims for damaged or destroyed personal vehicles, 91 for commercial vehicles, 153 for farm equipment and 111 for watercraft.

The figures do not reflect uninsured losses, including public infrastructure and the property of people who were uninsured or underinsured.

Arson suspect’s warning

Meanwhile, a man facing arson charges for a wildfire that destroyed two homes south of the San Francisco Bay Area had an ominous message for a prosecutor during a court hearing Tuesday: “You’re next.”

Marlon Coy, 54, uttered the words while glaring at Santa Cruz County District Attorney Jeffrey Rosell while he explained four of the felony charges Coy is facing, the Santa Cruz Sentinel reported.

Coy pleaded not guilty to charges of arson of a nondwelling, arson causing bodily injury and being a felon in possession of a firearm, the newspaper reported.

Witnesses saw Coy start the fire on October 16 near a property in Santa Cruz County connected to someone with whom he had a dispute, sheriff’s officials said.

Coy was arrested in possession of jewelry and a bicycle taken from a home that had been burglarized while under evacuation, according to sheriff’s officials.
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Imagine you could swipe your phone over a piece of fish in the supermarket and instantly see secure records of its entire path through the supply chain, from the technique used by the fisherman who caught it in Indonesia to when it was shipped and how it was processed at a factory in your home country —  all at the tap of a smartphone.

Trial projects such as that one are testing the potential of Blockchain technology to bring transparency to all sorts of notoriously inefficient or shadowy industries in Southeast Asia.

Blockchain, the technology that powers bitcoin, is an essentially unchangeable form of bookkeeping. It creates cryptographically chained signatures between blocks of information that are authenticated by users over a peer-to-peer distributed ledger — a public record that can be applied to any type of bookkeeping, not just cryptocurrencies.

“It removes the requirement for a centralized authority, and in a lot of the products that it’s being launched in, this centralized authority tends to be the government,” said Alisa DiCaprio, head of research at R3 — an enterprise banking software firm that uses distributed ledger technology.

In a region where the most important records — identity and ownership for instance — are often subjected to little or no external oversight, blockchain offers enormous potential benefits.

Erin Murphy, Founder and Principal of Inle Advisory Group, a Myanmar and emerging business advisory firm, said major Asian business hubs are looking to blockchain to clean up and simplify transactions.

“Ideally, we would want to see adoption of blockchain at an official level all across the region,” she said in an email. “But perhaps not surprisingly, the governments that are leading blockchain adoption are those that are already low-corruption.”

One of those governments, she said, is Singapore, which is working with major banks on a blockchain-based system to streamline and qualitatively improve their customer (KYC) processes.

In other countries, it is being used for completely different purposes. In the Philippines, a remittance market worth billions of dollars per month has been invaded by firms offering cheaper services built on blockchain, which people can access without a bank account..

“Any steps that get taken at first may not be viewed through an anti-corruption lens and may inadvertently tackle that issue; it will likely be viewed through a development lens to kickstart poverty alleviation and bringing sectors up to international standards that attract foreign investment,” Murphy said.

More than money

There are many trials with clear utility in Southeast Asia underway, including systems for land titling under development in Sweden and Japan.

In June, the United Nations unveiled a blockchain-based system built in partnership with Microsoft and Accenture that gives stateless refugees a permanent identity based on biometric data.

It’s also being explored for secure voting systems.

The blockchain-based app developed to track the supply chain of fish from Indonesia — Provenance — is now the basis of many other trials, including a project to create a similar system for the garment industry.

Online you can view the results of a pilot released in May this year that follows a piece of clothing — an Alpaca Mirror Jumper from London-based designer Martine Jarlgaard, from a farm in Dulverton, Britain, through every step of production into London with location, content and timestamps.

It is a long way, though, from realizing that something can be done to actually making it happen, DiCaprio of R3 said.

“The technical capability to do this exists in most developing countries,” she said. “You have engineers who can code on the blockchain. But the understanding of how to actually implement this from a business point of view is very poor.”

DiCaprio estimates it will take about five years before we actually see large-scale functioning applications and believes the most impactful will occur at the macro economic level.

“So for example one area that it’s moving very quickly is trade finance,” she said. “And trade finance, you’re generally talking about fairly large companies, generally in Asia mostly exporting or importing from or to the US or EU,.”

Faster, cheaper and more transparent transactions combined with reductions in the risks of lending and borrowing would flow to down to the village level, she added.

Subversion vs centralization

Blockchain proponents are divided by some sharply divergent values. Some see blockchain — whose slogan is “be your own bank,” as technology that can fundamentally upend a global financial system they believe is intractably corrupt.

“There is a serious opportunity for us here to remove money out of government,” said a Southeast Asia based bitcoin trader who would only give his alias FlippingABitCoin, fearing he could expose himself to physical theft.

Billions of people currently excluded from the formal banking system will be able to access global cryptocurrencies with no middle man using nothing more than a phone, he said.

“It will level out the playing field of power,” he said.

Another group of enthusiasts are encouraging the absorption of this technology by states, as demonstrated by Canada, Singapore, China and Germany, all of which are either exploring or conducting trials of their own central bank digital currencies using blockchain.

“In the long run, we believe if there is any threat at all to governments, it is that other governments will lead the way in adopting blockchain technologies in producing low-corruption, high-transparency, highly-secure digitized economic infrastructures that will attract business, investment and stakeholder confidence,” wrote Michael Hsieh, a non-resident affiliate at the Center for International Security and Cooperation at Stanford University, in an email.

“The societies who lead in the great fintech [financial technology] innovation race of the 21st century will siphon all the capital and productivity from those that lag,” he wrote.
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Opening a new trade route to Afghanistan that bypasses Pakistan, India has dispatched its first consignment of wheat to the war torn country via the Iranian port of Chabahar.

The strategic sea route is a significant step in bolstering trade with Kabul that has been hampered because rival Pakistan does not allow India to transport goods to Afghanistan through its territory.

After the shipment was seen off by Indian Foreign Minister Sushma Swaraj and her Afghan counterpart Salahuddin Rabbani via a joint video conference Sunday, the Indian government called it a “landmark moment.”

In the coming months, six more consignments of wheat totaling 1.1. million tons will be sent from India’s western port of Kandla to Chabahar. From the Iranian port it will be taken by road to Kabul.

The shipment comes days after U.S. Secretary of State Rex Tillerson, on a visit to New Delhi, allayed concerns that the Trump administration’s tough stand on Iran could pose a fresh stumbling block to India’s plans to develop the strategic Iranian port as a regional transit hub.

Easier connectivity to Afghanistan is key for India to step up its economic engagement with Kabul, which Washington has called for as part of its new policy to stabilize the war torn country.

And Chabahar port, in which India is investing $500 million to build new terminals, cargo berths and connecting road and rail lines, is the centerpiece of the strategy to improve linkages not just with Afghanistan, but also to resource-rich Central Asian republics.

“This is the first time that we are getting into Afghanistan through a route different than what traditional routes have been,” said South Asia expert Sukh Deo Muni at New Delhi’s Institute of Defense Studies and Analyses.

Indian leaders expressed optimism about the project, which is still a work in progress. Minister Swaraj called it the starting point of a journey that would spur the unhindered flow of commerce and trade throughout the region. Prime Minister Narendra Modi tweeted the launch of the trade route, “marks a new chapter in regional cooperation & connectivity.”

The sea route via the Iranian port is the second step taken by India to increase connectivity with Kabul. In June it opened an air freight corridor to provide greater access for Afghan goods to the Indian market.

The Chabahar port is seen as India’s answer to the Gwadar port in Pakistan being developed by China.

The project was conceived almost 15 years ago, but the plans were stalled for years due to U.S. led international sanctions on Iran. Their easing prompted India to sign a trilateral pact with Iran and Afghanistan last year to develop the port.

U.S. Secretary of State Tillerson indicated in New Delhi last week that fresh sanctions on Iran by the Trump administration would not pose a stumbling block to those plans.

“It is not our objective to harm the Iranian people, nor is it our objective to interfere with legitimate business activities that are going on with other businesses, whether they be from Europe, India or agreements that are in place that promote economic development and activity to the benefit of our friends and allies as well. We think there is no contradiction within that policy,” he told reporters in India.

Those words have been welcomed in New Delhi said analyst Muni. “I think there is a far more reassuring feeling in India vis-a-vis the Trump administration than what the initial thought was,” he said.

The shortest and most cost effective land routes between India and Afghanistan lie through Pakistan. However, due to longstanding rivalries between the two countries, India is not allowed to send any exports through Pakistani territory and Afghanistan is only allowed to send a limited amount of perishable goods through Pakistani territory to India.

 
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President Donald Trump’s plan for overhauling the U.S. tax system faced growing opposition from interest groups on Sunday, as Republicans prepare to unveil sweeping legislation that could eliminate some of the most popular tax breaks to help pay for lower taxes.

Republicans who control the U.S. House of Representatives will not reveal their bill until Wednesday. But the National Association of Home Builders, a powerful housing industry trade group, is already vowing to defeat it over a change for home mortgage deductions, while Republican leaders try to head off opposition to possible changes to individual retirement savings and state and local tax payments.

Trump and Republicans have vowed to enact tax reform this year for the first time since 1986. But the plan to deliver up to $6 trillion in tax cuts for businesses and individuals faces challenges even from rank-and-file House Republicans.

House and Senate Republicans are on a fast-track to pass separate tax bills before the Nov. 23 U.S. Thanksgiving holiday, iron out differences in December, send a final version to Trump’s desk before January and ultimately hand the president his first major legislative victory. Analysts say there is a good chance the tax overhaul will be delayed until next year.

The NAHB, which boasts 130,000 member firms employing 9 million workers, says the bill would harm U.S. home prices by marginalizing the value of mortgage interest deductions as an incentive for buying homes. The trade group wants legislation to offer a $5,500 tax credit but says it was rebuffed by House Republican leaders.

“We’re opposed to the tax bill without the tax credit in there, and we’ll be working very aggressively to see it defeated,” NAHB chief executive Jerry Howard told Reuters.

Republicans warned that the Trump tax plan is entering a new and difficult phase as lobbyists ramp up pressure on lawmakers to spare their pet tax breaks.

“When groups start rallying against things and they succeed, everything starts unraveling,” Senator Bob Corker, a leading Republican fiscal hawk, told CBS’ Face the Nation.

Anxiety in high-tax states

One of the biggest challenges involves a proposal to eliminate the federal deduction for state and local taxes (SALT), which analysts say would hit upper middle-class families in high income tax states such as New York, New Jersey and California. The states are home to enough House Republicans to stymie legislation.

The top House Republican on tax policy gave ground over the weekend, saying he would allow a deduction for some local taxes to remain.

“We are restoring an itemized property tax deduction to help taxpayers with local tax burdens,” House Ways and Means Committee Chairman Kevin Brady said in a statement.

But the gesture appeared to do little to turn the tide of opposition to SALT’s elimination.

“I’m not going to sign onto anything until the full package is fully analyzed by economists,” Representative Peter King of New York told the Fox News program Sunday Morning Futures. “The fact that we’re getting it at the eleventh hour raises real issues with me,” he added.

A lobby coalition representing state and local governments, realtors and public unions rejected Brady’s statement outright, saying the move would “unfairly penalize taxpayers in states that rely significantly on income taxes.”

House Republicans have also faced opposition from Trump and others after proposing to sharply curtail tax-free contributions to 401(k) programs and move retirement savings to a style of account that allows tax-free withdrawals, rather than the tax-exempt contributions that are popular with 401(k) investors.

House Republicans now say they could permit higher 401(k) contribution limits but continue to talk about tax-free withdrawals. “We will expand the amount that you can invest. But we’ll also give you an option to actually not be taxed later in life,” House Republican leader Kevin McCarthy told Fox News.

The current cap on annual 401(k) tax-free contributions is $18,000.

Corker said congressional tax committees seem to be falling short of their goal to eliminate $4 trillion in tax breaks to prevent the Trump plan from adding to the federal deficit.

“They’re having great difficulty just getting to $3.6 trillion,” said the Tennessee Republican, who has vowed to vote against tax reform if it increases a federal debt load that stands at more than $20 trillion.

Ohio’s Republican governor, John Kasich, told Fox News Sunday that spending on entitlement programs such as Medicare, Medicaid and Social Security should also be reviewed as part of the effort to pay for tax cuts.

“It may be separate from the tax bill, but it needs to happen,” Kasich said.
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Xavier Gabriel can take some credit if the tiny Catalan mountain town of Sort is one of the most famous in Spain.

He runs a lottery shop called La Bruja de Oro, or The Golden Witch, in a town whose name, aptly, means “Luck” in Catalan. Its fortune in having sold many prize-winning tickets has made it a household name and a successful online business.

But the crisis surrounding Catalonia’s push for independence has changed life for 60-year-old Gabriel. He joined more than 1,500 companies in moving their official headquarters out of the wealthy region in recent weeks. Their main fear: that they would no longer be covered by Spanish and European Union laws if Catalonia manages to break away, dragging their businesses into unknown territory.

“The time had come to make a decision,” said Gabriel, who employs 16 people and describes himself as a proud Catalan.

​Hedging their bets

Like Gabriel’s, the vast majority of companies that moved their headquarters didn’t transfer workers or assets, such as bank holdings or production equipment. So far, it’s mainly a form of legal insurance. But as the political crisis escalates, the risk is that companies are deferring investments and hiring. There is evidence that tourists are holding off booking, perhaps frightened by images in the media of police crackdowns, street demonstrations and strikes.

And the situation risks getting worse before it improves: the central government’s decision Friday to take control of the region could spiral out of control if there is popular resistance, whether by citizens or local authorities like the Catalan police force.

“There is absolutely no doubt that the crisis is having a very damaging effect on the economy,” said Javier Diaz Gimenez, an economics professor at Spain’s prestigious IESE Business School.

Financial markets in Spain have so far fallen only modestly, reflecting investors’ apparent belief that the tensions will eventually be resolved. The Spanish government has called a regional election in Catalonia for Dec. 21 and could later consider revisions to the constitution that might placate some of the independence supporters.

But that could take some time, Diaz Gimenez says, given how confrontational both sides have been.

Banks leave

The list of businesses moving headquarters includes Catalonia’s top two banks, Caixabank and Sabadell, which are among Spain’s top five lenders. Then there is the Codorniu cava sparkling wine maker for which Catalonia is famous. Another well-known cava maker, Freixenet, is also planning to follow if the independence drive continues. Publishing giant Planeta, the world’s leading Spanish-language publisher and second biggest publisher in France, has also moved its official address out of Catalonia.

Caixabank says it suffered a moderate but temporary run on deposits because of the crisis, but said it has since recovered and was adamant the move was permanent.

Shares for Caixabank, Sabadell and some other companies have been volatile, falling after the Oct. 1 vote for independence and jumping sharply when they announced their decision to move headquarters.

Tip of the iceberg

Lottery shop owner Gabriel says ticket sales this month are up nearly 300 percent over last year, a rise he attributed to popular support for his decision to move his business.

Diaz Gimenez said the decisions to move headquarters, while not immediately affecting jobs, were “just the tip of the iceberg.”

“Plans to relocate firms or invest elsewhere are going to accelerate and some of it is going to go to, say, Poland, and it’s never going to come back,” he said.

“People that were thinking about investing in Spain and Barcelona are starting to think again,” he said. “It’s not just Catalonia. It’s the mismanagement by Spain, which is proving that it’s not a serious country because it cannot solve this thing.”

Spanish economy humming

The turmoil, ironically, comes just as Spain has been enjoying some of the fastest economic growth in Europe.

Its economy, the fourth-largest in the 19-country eurozone, grew by a hefty quarterly rate of 0.9 percent in the second quarter. The government has maintained its forecast for growth in 2017 at 3.1 percent, but revised its estimate for 2018 from 2.6 percent to 2.3 percent because of the political crisis. Moody’s credit rating agency has warned that a continued political impasse and, ultimately, independence for Catalonia would severely hurt the country’s credit rating.

Billions at stake

Tourism seems to be taking the biggest hit so far.

Experts say spending in the sector in Catalonia in the first two weeks of October — that is, following the independence referendum — was down 15 percent from a year earlier.

Tourism represents about 11 percent of Spain’s 1.1-trillion euro ($1.3 trillion) gross domestic product, with Catalonia and its capital, Barcelona, providing a fifth of that, being the most popular destinations for visitors.

Exceltur, a nonprofit group formed by the 25 leading Spanish tourist groups, expects growth in tourism this year to ease from an estimated 4.1 percent to 3.1 percent.

Reservations in Barcelona alone are down 20 percent compared with last year, it said. If the trend continues in the final three months of the year, it could lead to losses of up to 1.2 billion euros ($1.41 billion) in the sector, which in turn could affect jobs.

Analysts fear that the independence movement’s stated aim of continuing to create as much social and economic chaos for Spain as possible could exacerbate the situation. The Catalan National Assembly group has been openly talking about a boycott against Spain’s top companies and major strike activity.

“Spain, its tourism, everything is very dependent on image,” Diaz Gimenez said. “And this is just killing it.”
…

At the 2015 Paris summit, world leaders pledged to take steps to avoid catastrophic climate change. This November in Bonn, Germany, U.N. negotiators will be back, working out the details of how to cut emissions of planet-warming gases. It is the first conference since President Donald Trump said the United States would withdraw from the agreement. That leaves questions about the direction of U.S. greenhouse gas emissions. As VOA’s Steve Baragona reports, the answer is not straightforward.
…

Artisans in Mali are hoping that Bogolan, a traditional cotton fabric, will continue to fascinate Western fashion designers and provide jobs at home. VOA’s Teffera Girma Teffera and Bagassi Koura visited a small neighborhood in central Bamako where artisans are hard at work. Salem Solomon narrates.
…

Stores watching Amazon take a larger share of clothing sales are trying to solve one of the most vexing issues for online shoppers: finding items that fit properly.

The retailers are unleashing tools that use artificial intelligence to replicate the help a salesperson at a store might offer, calculate a shopper’s most likely body shape, or use 3-D models for a virtual fitting room experience. Amazon, which some analysts say will surpass Macy’s this year as the largest U.S. clothing seller, is offering some customers an Alexa-powered device that doubles as a selfie-stick machine and a stylist.

Retailers want to reduce the rate of online returns, which can be up to 40 percent, and thus make customers happier — and more likely to be repeat shoppers. And the more interaction shoppers have with a brand, the more the technology will learn about shoppers’ preferences, said Vicky Zadeh, chief executive of Rakuten Fits Me, a tech company that works with QVC and clothing startup brands.

“It’s all about confidence,” she said. “If they have the confidence to buy, they will come back to the retailer time and time again.”

The push is coming from big names like Levi’s and The Gap and startups like Rhone and Taylrd.

Levi’s new Virtual Stylist texts back and forth with online customers to offer recommendations, based on their preferences. Marc Rosen, Levi’s president of global e-commerce, said early tests show the chatbot is driving more browsers to become buyers.

Reliance on body shape

Rakuten Fits Me, which works with QVC and other companies, fine-tuned its fitting technology this summer and said its retail partners now offer garments that should fit shoppers’ body shapes when the customer first does the initial search. Shoppers provide three measurements — height, weight and age — and then it calculates a person’s most likely body shape, not size, to determine the fit for any garment and offer more accurate recommendations.

And Gap Inc. has an augmented reality app in collaboration with Google and startup Avametric that allows shoppers to virtually try on clothes. Shoppers enter information like height and weight and then the app puts a 3-D model in front of them. However, the tool only works on Google Tango smartphones.

Sebastian DiGrande, executive vice president and strategy and chief customer officer at Gap, said the augmented reality app had produced good feedback, but the company is still determining whether shoppers really want a virtual 3-D model.

Clothing brand Tommy Hilfiger similarly has built its mobile app around the camera and image recognition. It has an augmented reality feature enabling shoppers to see what the clothes look like on a virtual runway model — but not their own body type.

And men’s online clothier Bonobos, now owned by Wal-Mart, launched an app that offers customers a virtual closet to see items they bought and saved. The app is converting browsers to buyers at a faster rate, said Andy Dunn, founder of Bonobos.

Companies are smart to offer new tools, but many are too “gimmicky,” said Sapna Shah, principal at Red Giraffe Advisors, which makes early-stage investments in fashion tech.

“If it’s not Amazon, will brand-specific apps be the way for people to shop in the future?” she said. “How many apps are people going to have on their phone?”

And all the companies need to win over customers who prefer to touch and see things in person.

“It’s great that they’re busting their tail with all these apps, but I am skeptical,” said Doug Garnett of Portland, Oregon. Garnett said he buys some clothes online when he knows and understands the brands, but otherwise, “I really need to see them on my body before I act, and really prefer that to be in a store.”

Personalized offers

As Amazon dives further into fashion, it could use its base of data to spur trends and personalize offers for its customers. Its Echo Look features a built-in camera that photographs and records shoppers trying on clothes and offers recommendations on outfits. It works with its Style Check app, using machine learning and advice from experts. The potential: Learn shoppers’ styles and recommend outfits to buy. Amazon reportedly is exploring the idea of quickly fulfilling online orders for custom-fit clothing.

The company also reportedly acquired Body Labs, which creates true-to-life 3-D body models.

“We’re always listening to our customers, learning and innovating on their behalf and bringing them products we think they will love,” said Amazon spokeswoman Molly Wade. She wouldn’t comment on the prospect of custom-fit or the reports about Body Labs.

Steve Barr, the U.S. retail and consumer sector leader at consultants PwC, said that Amazon was trying for a curated experience based on massive data analytics. But he said he thought such an approach had limitations.

“No matter how great Amazon is with artificial intelligence and predictive behaviors,” Barr said, “they can’t put a red tab on a pair of a jeans or a swoosh on a pair of shoes.”
…

Things are weird, as usual, in Key West.

A pair of Vikings push a stroller full of stuffed chimps down Duval Street. A man with a ponytail swallows a steel sword. People dressed only in body paint and glitter wander and jiggle from bar to bar.

Fantasy Fest, one of Key West’s major tourist draws of the year, is in full swing. And that’s a relief for Florida Keys business owners trying to weather the economic storm that hit after Hurricane Irma battered the middle stretch of the tourism-dependent island chain.

Bucket list trip

The festivities have not disappointed Gary Gates from Buffalo, New York, who planned this “bucket list” trip 10 months ago with six friends.

“We were coming whether there was a hurricane or not,” the former NFL cameraman said. “I’ve never seen anything quite like this. To come down here and actually see people dressed in all kinds of costumes — or no costumes at all — was something that I needed to see.”

Gates flew into Key West and has not left during its annual 10-day festival of costume parties and parades, so he has not seen the devastation that lingers more than a month since Hurricane Irma made landfall Sept. 10 about 20 miles north of the city.

​Middle Keys hit hardest

The mostly residential middle stretch of the island chain took the brunt of the hurricane’s 130-mph winds. The area is almost entirely brown, with debris piled alongside the highway and mangroves stripped bare. A stranded boat was christened the SS Irma with spray paint and offered “free” to drivers passing by.

But at opposite ends of the 120-mile-long island chain, tourist attractions in Key Largo and Key West escaped significant damage.

Dolphins Plus Bayside was ready for visitors three days after Irma’s landfall, but business has been down by half compared to last fall, said Mike Borguss, the third generation in his family to run the Key Largo attraction.

Some staff now live with friends or in temporary trailers parked outside their damaged homes, but the dolphins swim up to the water’s edge to check out new people toting cameras, and an adjacent hotel property is open for weddings and other events that had to be canceled elsewhere in the Keys because of Irma, said Art Cooper, Borguss’ cousin and curator at Dolphins Plus Bayside.

“The water’s pretty, the weather’s beautiful and we wish you were here,” Cooper said.

​Tourism down significantly

Scott Saunders, president and CEO of Fury Water Adventures, estimated tourism in Key West has been about a third of what it was at this time last fall, even though the city’s hotels, restaurants, cruise ship operations and beaches quickly reopened after the storm.

“There’s no reason not to be doing everything we did last year,” Saunders said before one of his fleet’s sunset cruises. “We should be having that tourist base down here, but we haven’t had any.”

Jodi Weinhofer, president of the Lodging Association of the Florida Keys and Key West, blames news coverage of Irma, but not the hurricane itself, for the downturn.

“There was over a $100 million worth of negative press,” Weinhofer said.

Tourism big business in Keys

Tourism is a $2.7 billion industry in the Keys, supporting 54 percent of all jobs in the island chain, according to Monroe County’s Tourist Development Council.

Some jobs have been lost to Irma. Last week, Hawks Cay Resort on Duck Key, about 35 miles northeast of Irma’s landfall, let go 260 workers amid ongoing repairs. The Islamorada Resort Company said its four properties in the Middle Keys will be closed for renovations over the next six months.

But up and down the island chain, bars, marinas and mom-and-pop establishments able to reopen have been hiring laid-off workers and keeping people from moving away, Daniel Samess, CEO of the Greater Marathon Chamber of Commerce.

About 70 percent of roughly 35 hotels and motels in the Middle Keys are open, though those rooms mostly are filled by displaced residents and state and federal recovery workers. Officials plan to provide alternative housing and open those hotel rooms fully to tourists within the next two months, Samess said.

Final sweeps for debris in some parts of the Keys are scheduled Sunday, which also is the finale for Fantasy Fest. So far, the amount of broken tree branches and remnants of homes and belongings wrecked by Irma could fill over 133 Goodyear Blimps, according to Monroe County officials.

The cleanup will help create a good impression for visitors to Key West long before they arrive in the southernmost city in the continental U.S., said Key West Mayor Craig Cates.

“It’s a scenic cruise in your car coming down, and it’s very important that they get it cleaned up,” he said.
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The U.S. economy expanded at a three percent annual pace in July, August and September, about the same pace as the prior quarter.

Friday’s Commerce Department data surprised economists, who thought damage from two hurricanes would cut growth to a lower level. The data show the world’s largest economy is now about 2.3 percent larger than it was at this time last year.

Stuart Hoffman of PNC bank says the “solid” growth data is likely to help corporate profits and reinforce the U.S. central bank’s determination to raise interest rates in December. Josh Bivens of the Economic Policy Institute says the figures “overstate” growth, and he notes inflation is still below the Fed’s two percent target, making an interest rate hike unnecessary at this time.

Officials raise rates to fend off high inflation by cooling economic activity. Rates were slashed during the recession to bolster growth and employment. 

Federal Reserve leaders gather Tuesday and Wednesday in Washington to debate interest rate policy. Most economists predict they will not raise rates until their next meeting in mid-December.

Next Friday, government experts will publish unemployment data for October. September’s rate was a low 4.2 percent.
…

President Trump says he is “very close” to picking a person for the most important economic post in the country: the head of the US Federal Reserve. Current Chair Janet Yellen, whose term expires early next year, is one of at least five candidates under consideration. Regardless of the president’s choice, most analysts who spoke with VOA don’t expect big changes in US monetary policy. But as Mil Arcega reports, others say, sooner or later the next Fed Chief could face a slowing economy.
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The United States has announced changes to its nonimmigrant work visa policies that are expected to make renewals more difficult.

In the past, U.S. Citizenship and Immigration Services would generally approve the renewals unless the visa holder had committed a crime. Now, renewals will face the same scrutiny as the original applications.

“USCIS officers are at the front lines of the administration’s efforts to enhance the integrity of the immigration system,” USCIS Director L. Francis Cissna said, according to the announcement posted on USCIS’ website this week. “This updated guidance provides clear direction to help advance policies that protect the interests of U.S. workers.”

The new regulations could affect more than 100,000 people holding at least eight different types of work visas who fill out the I-129 form for renewals.

Sam Adair, a partner at the Graham Adair business immigration law firm in California and Texas, said that for the most part, he expected visa holders would most likely face lengthier adjudication periods in their renewal processes, as opposed to increased numbers of denials.

“I don’t think it’s going to be a big shift for us,” Adair told VOA. “But I think what we’ll see is just an increase in the number of requests for evidence, an increase in the delays on the adjudication of these petitions, and really it’s going to just result in more costs for the employers who are filing these petitions.”

‘High-skilled’ workers

Of all visa holders affected by this policy, those in the United States on an H-1B, a visa for “high-skilled” workers, are the biggest group. Of 109,537 people who had to submit I-129 forms in fiscal 2017, 95,485 were H-1B holders, according to data sent to VOA by USCIS.

H-1B visas have been threatened in the past, most recently by a bill proposed this year that would have raised the minimum salary requirement for workers brought in on the visa. While advocates of the program argued that it would keep workers from being exploited, many H-1B holders feared that businesses would be less willing to hire them or keep them on board.

But some Americans support the new regulations, saying that nonimmigrant work visas hurt American workers.

“It’s prudent to make sure that the people that receive those visas are in complete compliance with all of the requirements,” Joe Guzzardi, national media director of Californians for Population Stabilization, told VOA.

“It just isn’t possible to think that there aren’t American workers that couldn’t fill these jobs,” he said, noting that while the regulations might hurt businesses, they would help Americans looking for work.
…

President Donald Trump says he is “very close” to picking a person for the most important economic post in the United States, the head of the Federal Reserve. Current Chair Janet Yellen’s term expires early next year and she is one of at least five candidates for the job.

Besides Yellen, the candidates include Fed board member Jerome Powell, former Fed governor Kevin Warsh, Stanford University economist John Taylor and Trump economic adviser Gary Cohn.

Moody’s Analytics economist Ryan Sweet says a new Fed chief is likely to continue current policy at least for a while because “rocking the boat” could rattle financial markets.

The Fed’s job is to manage the world’s largest economy in ways that maximize employment and maintain stable prices. During recessions, the bank cuts interest rates in a bid to boost economic growth and create more jobs.To cope with the most recent recession, the U.S. central bank slashed interest rates nearly to zero.

The jobless rate fell from 10 percent to the current 4.2 percent, and the economy stopped shrinking and began growing slowly.

Critics of the record-low interest rates said keeping rates too low for too long could spark strong inflation and damage the economy. However, the inflation rate has been below the two percent level that many experts say is best for the economy.

As a member of the Fed’s board and later as Chair, Yellen supported low interest rates and a slow, cautious return to “normal” rates. Experts also say she improved communication between the Fed and financial markets, which reduced uncertainty and reassured investors.

Trump criticized Yellen during the campaign, but then as president, praised her work. Analysts Tom Buerkle of “Reuters Breaking Views” gives the Fed credit for taking effective action during a crisis when Congress was reluctant to act.

Another candidate is former investment banker Gary Cohn, who now heads the National Economic Council at the White House. He has reportedly been working on efforts to reform taxes and boost spending on U.S. infrastructure.

Fed Board member Jerome Powell is also a candidate. He is a Republican with a background in private equity who served in a top Treasury Department post. Powell supported Yellen’s approach of slashing interest rates during the crisis, and returning them to historic levels as the economy recovers.

When rates were cut to nearly zero, Fed officials took the further step of buying huge quantities of bonds in an effort to push down long-term interest rates to give additional economic stimulus. The complex procedure is called “quantitative easing.”

“Ryan Sweet of Moody’s Analytics says when the next recession appears, Powell will be more willing to use tools like quantitative easing than more conservative candidates like Kevin Warsh and John Taylor.

Warsh is a former member of the Fed’s board, a lawyer, and a former executive of a major financial firm with experience at the president’s National Economic Council.

John Taylor of Stanford University and the Hoover Institution is an eminent economist who has served on advisory councils for presidents and congress and written books on economic topics. Taylor came up with an equation, called the “Taylor Rule,” that considers inflation as well as slack in the economy as a way to set interest rates. Some conservatives say the Taylor Rule would improve policymaking.

Critics say the economy is too complex to be managed by a computer, and the Taylor Rule would make the Fed less independent and effective.

Tara Sinclair of Indeed.com says independence is a “key part” of having an effective monetary policy. She says the interest rate-setting process and other decisions need to be separate from Congress and the administration so interest rates and other policies are based on long-run economic needs.

The president is expected to announce his choice in early November.
…

Elon Musk was fed up.

The seats on Tesla Inc’s new Model X SUV were a mess. An outside contractor was having trouble executing the complicated design, spurring frustration and finger-pointing between Tesla and its supplier.

How would Tesla ever pull off mass production of the upcoming Model 3, the car intended to catapult the niche automaker into the big leagues, if it could not deliver on something as fundamental as a seat?

Musk made a decision: Tesla would build the seats itself. 

But industry experts say Musk’s insistence on performing much of the work in-house is among the reasons Tesla is nowhere close to its stated goal of building 500,000 vehicles annually by next year, most of them Model 3s.

Missed target

The automaker this month revealed it built 260 of the vehicles between July and September, badly missing its target of 1,500 Model 3s in the third quarter. In a statement, Tesla blamed manufacturing “bottlenecks.” It declined to elaborate, but assured investors “there are no fundamental issues with the Model 3 production or supply chain.”

Tesla has demonstrated a commitment to vertical integration not seen in the auto industry for decades.

The company has so far sunk $2 billion into a sprawling Nevada factory to manufacture its vehicles’ batteries. In-house programmers design the bulk of the complex software that runs the Model 3, which Musk has described as a “computer on wheels.”

Tesla controls its own retail chain, selling its cars directly to customers and bypassing dealers.

But it is Tesla’s 2015 decision to build its own seats that has some industry veterans scratching their heads. Seat making is a low-margin, labor-intensive enterprise that big automakers generally farm out to specialists. Tesla is operating its own seat assembly line inside its factory, and it is hiring engineers and technicians to figure out a way to fully automate the process.

“Is that really the core competency of an auto company? It is not,” said analyst Maryann Keller, who has been tracking the car industry since the early 1970s. “Why would you want to do that?”

Tesla declined requests from Reuters to discuss its seat assembly efforts. The company is expected to reveal more about its production issues Nov. 1, when it announces third-quarter results. There is no indication that the “bottlenecks” mentioned previously by the company are associated with seat production.

Analyst Keller and others suspect Tesla eventually will be forced to farm out seat assembly to suppliers as the company transitions from a niche producer of pricey, hand-built luxury cars to a mass manufacturer. Seat makers including Germany’s ZF Friedrichshafen AG, France’s Faurecia SA and Detroit-based Lear Corp already are trying to win that business.

A lot is riding on Tesla’s ability to scale up operations quickly. Starting at $35,000, the Model 3 is Tesla’s attempt to bring its electric technology to a wider audience. 

More than a half-million customers have put down deposits.

Tesla has never turned an annual profit and it is burning through cash. Yet investors are betting big on its future. It is now the second most valuable U.S. automaker, behind General Motors Co. Tesla shares on Wednesday closed at $325.84, down 3.4 percent.

From stop-gap to strategy

Musk has defended Tesla’s hands-on approach as the way to ensure reliability, as well as an opportunity to rethink industry norms. It is also a reflection of the entrepreneur’s obsession with detail.

“One of the hardest things to design is a good seat,” Musk said at the September 2015 launch of the Model X in Fremont.

Problems first surfaced with the flagship Model S sedan in 2012. Musk complained that the seats made by its contract manufacturer, Australia-based Futuris Group, were not comfortable nor of the quality expected for a car whose price tag started at around $57,400, according to a former Tesla executive who described Musk’s thinking to Reuters.

Troubles accelerated with the Model X, leading Tesla to wrest assembly from Futuris just after the vehicle’s release in late 2015. If seats could be entirely redesigned from the ground up, Musk reasoned, maybe their assembly could be automated in preparation for the high volumes anticipated for the Model 3.

“He saw the opportunity to do it differently and better,” the former Tesla executive said. “The short term was a stop gap, but the long-term idea was to rethink the design of how a seat works to include how a seat is built.”

Futuris did not respond to requests for comment. It continues to supply seat parts to Tesla. Detroit-based seating supplier Adient PLC acquired Futuris for $360 million last month.

Meanwhile, Tesla’s seat woes continue. In all, the automaker has issued four seating-related recalls since 2013. The latest came this month with the recall of 11,000 Model Xs manufactured between Oct. 28, 2016 and Aug. 16, 2017.

Suppliers circling

Making car seats is a complex business. Choosing materials, dying and cutting, shaping foam and metal frames, and adding heaters, recliners and other gadgets can involve nearly a dozen suppliers for top models. Final assembly requires lots of labor.

That’s why most automakers opted decades ago to outsource seats for their lower-cost models to specialty seatmakers whose market is expected to reach $79 billion by 2022, according to market researcher Lucintel.

Although Musk’s philosophy has always been “build it right and then figure out how to get the cost down” later, according to the ex-Tesla executive, observers say Tesla can ill afford more production headaches. 

Philippe Houchois, an auto analyst, wrote in a September note to clients that “scalability” was now the main challenge at Tesla, whose manufacturing prowess is still unproven when it comes to building large numbers of vehicles.

Despite Tesla’s previous battles with Futuris, seat suppliers smell opportunity. ZF Friedrichshafen and Faurecia have opened Silicon Valley labs, in part to woo Tesla.

Lear, which cuts and sews material for Tesla, is likewise pressing to get the automaker’s seat manufacturing business, according to Matthew Simoncini, the company’s chief executive. “In general Tesla has a philosophy: ‘We’ll do it ourselves. We’ll change the mold,’” Simoncini said. “(Outsourcing) is a much more efficient use of capital. That would allow them to focus on what they do best.”
…

Ivanka Trump teamed up Wednesday with Republican legislators to try to ensure the tax overhaul package under construction on Capitol Hill includes an expansion of the child tax credit.

The White House adviser and presidential daughter, appearing at a Capitol Hill news conference with GOP lawmakers, framed the tax credit as crucial for working families.

“It is a priority of this administration and it is a legislative priority to ensure that American families can thrive,” she said.

Also attending were Republican Senators Marco Rubio of Florida, Mike Lee of Utah, Tim Scott of South Carolina, Shelly Moore Capito of West Virginia and Dean Heller of Nevada; and GOP Representatives Kristi Noem of South Dakota, Kevin Yoder of Kansas, Claudia Tenney of New York and Martha Roby of Alabama.

Rubio and Lee have worked closely with Ivanka Trump on the issue. Details are still being worked out, but Rubio and Lee would like to see the $1,000 credit doubled and made fully refundable.

The GOP tax plan would cut the corporate tax rate from 36 percent to 20 percent, reduce taxes for most individuals and repeal inheritance taxes on multimillion-dollar estates. The standard deduction would be nearly doubled, to $12,000 for individuals and $24,000 for families; the number of tax brackets would shrink from seven and the child tax credit would be increased.

Democrats and liberal family advocacy groups say the overall plan would provide limited benefits to low-income families while offering major cuts to the wealthy — and they say that any boost to the child tax credit must be viewed in that context.

Speaking to reporters earlier in the day, Rubio expressed optimism about the child tax proposal, saying the provision is needed because without it, people could “see a tax increase, which nobody around here is prepared to justify, because you can’t.”

Rubio praised Ivanka Trump, saying that “having the White House making it a priority of theirs has strengthened our chances.”
…

Jordan’s high and rising public debt has worried the International Monetary Fund and prompted a downgrade from Standard & Poor’s. So the government is planning a blast of austerity by year-end.

Tax hikes and subsidy cuts —- likely to be highly unpopular —- are on the agenda as the country’s debt to GDP ratio has reached a record 95 percent, from 71 percent in 2011.

“Postponing problems might increase the popularity of the government but would be a crime against the nation,” Prime Minister Hani Mulki told a group of parliamentarians this week.

After an IMF standby arrangement that brought some fiscal stability, Jordan agreed last year to a more ambitious three-year program of long-delayed structural reforms to cut public debt to 77 percent of GDP by 2021.

The debt is at least in part due to successive governments adopting an expansionist fiscal policy characterized by job creation in the bloated public sector, and by lavish subsidies for bread and other staple goods.

It also hiked spending on welfare and public sector pay in a move to ensure stability in the aftermath of the “Arab Spring” protests in the region in 2011. But the economy has slowed, battered by the turmoil in neighboring Syria and Iraq.

The economic strains reduced local revenue and foreign aid, forcing Jordan to borrow heavily externally and also resort to more domestic financing.

Although there has been some progress this year with improving remittances, tourism and some rebound in exports, there has been no pickup in growth since 2015 — with the officials forecasting 2 percent growth this year from an earlier IMF 2.3 percent target.

“This year we are at a crossroads. Everything I am trying to do is to stop the hemorrhage and start breathing,” Mulki was quoted as saying at another meeting to garner support.

The rising debt accentuated by the protracted regional conflicts on Jordan’s borders was the main reason Standard and Poor last week downgraded its sovereign rating to B+.

Subsidy risk

Economists said Jordan’s ability to maintain a costly subsidy system and a large state bureaucracy was increasingly untenable in the absence of large foreign capital inflows or infusions of foreign aid, which have dwindled as the Syrian crisis has gone on.

Jordanian officials say they expect less donor support next year than any time since the crisis began. They are also concerned that Gulf states, hit by lower oil prices, have so far not committed any support funds given after the “Arab Spring” to be renewed.

Politicians and economists say the government’s fiscal consolidation plan envisages a doubling of bread prices and raising sales taxes on basic food and fuel items.

This should cut into the estimated 850 million dinars ($1.2 billion) the government pays in annual subsidies from bread to electricity to water.

But economists reckon subsidy cuts are bound to worsen the plight of poorer Jordanians, a majority of the country’s population, and removing subsidies has triggered civil unrest in the past.

As well as debt, the IMF has also pointed to the unemployment rate, which has risen sharply in the last two years to 16 percent, and to low tax collection.

The IMF says Jordan stands out among countries in the region with among the lowest tax collections. Personal taxes constituting only 0.4 percent of GDP, with nearly 95 percent of the population not subject to income tax.

Critics say any hikes would extract more from the segment of salaried employees that already pays while leaving influential business tycoons outside the tax net.

“The tax burden in comparison with countries of the region except the oil producers is low… there is big generosity in exemptions,” said Jihad Azour, the IMF’s director of the Middle East and Central Asia department during a recent visit to Jordan.

Economists fear that the IMF’s tax recommendations endorsed by the government that range from expanding corporate income tax to dividends and tougher sanctions for tax evaders will hurt business sentiment in a country whose political stability has turned it a safe haven.

“It’s important to activate growth to bolster stability and ensure a faster drop in debt,” said the IMF’s Azour adding that tackling Jordan debt problem was crucial for its future prosperity in a turbulent region.
…

An unprecedented Chinese financial and construction effort is rapidly developing Pakistan’s strategically located Arabian Sea port of Gwadar into one of the world’s largest transit and transshipment cargo facilities.

The deep water port lies at the convergence of three of the most commercially important regions of the world, the oil-rich Middle East, Central Asia, and South Asia.

Beijing is developing Gwadar as part of the China-Pakistan Economic Corridor, known as CPEC. The two countries launched the 15-year joint mega project in 2015 when President Xi Jinping visited Islamabad.

Under the cooperation deal construction or improvement of highways, railways, pipelines, power plants, communications and industrial zones is underway in Pakistan with an initially estimated Chinese investment of $46 billion.

The aim is to link Gwadar to landlocked western China, including its Muslim-majority Xinjiang region, giving it access to a shorter and secure route through Pakistan to global trade. The port will also provide the shortest route to landlocked Central Asian countries, including Afghanistan, through transit trade and offering transshipment facilities.

Chinese fuel imports and trading cargo will be loaded on trucks and ferried to and from Xinjiang through the Karakoram Highway, snaking past snow-caped peaks in northern Pakistan.

‘Qualitative change’

Gwadar will be able to handle about one million tons of cargo annually by the end of the year. Officials anticipate that with expansion plans under way, the port will become South Asia’s biggest shipping center within five years, with a yearly capacity of handling 13-million tons of cargo. And by 2030, they say, it will be capable of handling up to 400-million tons of cargo annually.

China has in recent months begun calling CPEC  the flagship project of its global Belt and Road Initiative, or BRI. The “qualitative change” from an experimental project to flagship project underscores the importance Beijing attaches to CPEC, said Zhao Lijian, the deputy chief of mission at the Chinese embassy in Islamabad.

Out of 39 “early harvest” projects under CPEC, 19 have since been completed or are under construction with a Chinese investment of about $18.5 billion, Lijian told VOA. The progress makes it the fastest developing of all of at least six BRI’s corridors China plans to establish, added the Chinese diplomat.

Gwadar is a “symbol of regional peace and prosperity” because it will connect countries around Pakistan to serve their trading interests, said port Chairman Dostain Khan Jamaldini.

Jamaldini dismissed as “not true” concerns that skilled Chinese laborers, engineers and businesses will flood Pakistan, hurting domestic industries. About 65 percent of the labor force on construction and other projects at Gwadar is Pakistani, and the number of Chinese is currently just over 300, he added.

Security concerns and India’s claims over some of the territory crossed by the massive project remain key challenges for Gwadar and CPEC in general. Pakistani and Chinese officials dismiss reported assertions that Beijing is expanding its presence at Gwadar to be able to handle naval ships and military transport planes.

The collaboration has “no strategic or political” aims against a third country, insisted Lijian. He went on to assert that the purpose of CPEC” is to help our iron brother Pakistan” to improve its economy and to strengthen the bilateral relationship.

Pakistani officials have trained and deployed about 15,000 troops and paramilitary forces to guard CPEC-related projects and the Chinese working on them. Islamabad alleges that the Indian intelligence agency has been tasked to plot subversive acts to derail CPEC.

Sleepy fishing town

Gwadar, with a population of around 100,000, mostly fishermen and boat makers, is often referred to as a sleepy fishing town.

The costal city’s poverty-stricken residents are hoping new employment opportunities will be created for them in the wake of the massive development underway in Gwadar.

But their immediate challenges are shortages of clean drinking water and hours long daily power blackouts.

“We are happy Chinese are building port, hospitals, schools and roads but right now we out of power during most of the day and limited water availability,” said fisherman Khalil Ahmed.

The family, like other fishermen in Gwadar, has been plying unspoiled crystal blue waters of the Arabian Sea for decades with age-old fishing techniques and barely surviving on limited income because financial resources do not allow them to buy modern fishing tools.

However, ongoing massive economic activity will “qualitatively” change the lives of its poverty-stricken residents for the better, says Mushahid Hussain, who chairs a parliamentary committee on CPEC.

He says a fisheries processing plant is being installed at the port and arrangements are being planned to train and equip fishermen to improve and export local fish to other parts of Pakistan and China.

Senator Hussain believes economic projects under construction in Gwadar will help its people and address long-running grievances of the province of Baluchistan, where the port is situated.

The poverty-stricken largest Pakistani province has long been in the grip of a low-level Baluchistan separatist insurgency, which mainly stems from demands from the federal government for local control over Baluchistan’s vast natural resources.

Gwadar’s existing 50-bed government hospital is being extended to 300 beds, a technical and vocational institute is being constructed, a 300-megawatts coal-based power plant and a desalination plant are being installed, a new international airport and a six-lane international standard expressway are being built to connect Gwadar port with the rest of Pakistan and neighboring countries, including Iran and Afghanistan.

Local officials say most of the projects, including the new airport, are being built with Chinese financial grants. The rest of the projects in Gwadar and elsewhere in Pakistan under CPEC are being built with “interest-free” and “soft-loans” from China.

 
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The U.S. economy is expected add another 11.5 million jobs by 2026, as an aging population and longer life spans raise the need for health care providers. The total U.S. workforce is expected to grow to 167.6 million people.

Tuesday’s projections come from the U.S. Bureau of Labor Statistics, which says job growth will accelerate slightly from its current pace, but it will not return to the brisk gains seen the over previous decades. The BLS updates its job outlook every two years as new information becomes available.

The percentage of the workforce over age 55 will rise to nearly one-quarter in 2026, a sharp increase from the less than 17 percent back in 2006. People in their 50s and 60s may retire, which is one reason experts expect workforce participation rates (the percentage of working age people who have jobs or are seeking work) to decline.

Over the decade, nine out of 10 new jobs will be in the services sector, particularly health care. Employment by companies that produce goods is expected to grow at a meager one-tenth of one percent a year, with a gain of just 219,000 jobs by 2026.

The workforce is expected to become more diverse as Asian and Hispanic parts of the U.S. population grow more quickly than average. Whoever is in the workforce will find additional education important, as two out of three jobs in the fastest-growing areas require at least some post-secondary education and training.

And the whole economy is predicted to expand at a two percent annual rate. That is faster than the current growth rate, but below the gains seen in previous decades.

 
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Amazon said Monday that it received 238 proposals from cities and regions in the United States, Canada and Mexico hoping to be the home of the company’s second headquarters.

The online retailer kicked off its hunt for a second home base in September, promising to bring 50,000 new jobs and spend more than $5 billion on construction. Proposals were due last week, and Amazon made clear that tax breaks and grants would be a big deciding factor on where it chooses to land.

Amazon.com Inc. said the proposals came from 43 U.S. states as well as Washington, D.C., and Puerto Rico, three Mexican states and six Canadian provinces. In a tweet, the company said it was “excited to review each of them.”

Besides looking for financial incentives, Amazon had stipulated that it was seeking to be near a metropolitan area with more than a million people; be able to attract top technical talent; be within 45 minutes of an international airport; have direct access to mass transit; and be able to expand that headquarters to as much as 8 million square feet in the next decade.

Generous tax breaks and other incentives can erode a city’s tax base. For the winner, it could be worth it, since an Amazon headquarters could draw other tech businesses and their well-educated, highly paid employees.

The seven U.S. states that Amazon said did not apply were: Arkansas, Hawaii, Montana, North Dakota, South Dakota, Vermont and Wyoming.

Ahead of the deadline, some cities turned to stunts to try and stand out: Representatives from Tucson, Arizona, sent a 21-foot tall cactus to Amazon’s Seattle headquarters; New York lit the Empire State Building orange to match Amazon’s smile logo.

The company plans to remain in its sprawling Seattle headquarters, and the second one will be “a full equal” to it, founder and CEO Jeff Bezos said in September. Amazon has said that it will announce a decision sometime next year.
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Sierra Leone hopes to raise millions of dollars for development projects by auctioning a huge uncut diamond, believed to be one of the world’s largest, in New York in December.

It will be the government’s second attempt to sell the 709-carat gem, known as the “Peace Diamond”, after it rejected the highest bid of $7.8 million at an initial auction in New York in May.

Over half of the proceeds from the sale will be used to fund clean water, electricity, education and health projects in Sierra Leone, and particularly in the village of Koryardu, in the Kono region in eastern Sierra Leone, where the diamond was discovered.

“There’s a reason God gave these diamonds to the poorest people in the world and made the richest people want them. This is Tikun Olam [Hebrew for correcting the world], this is making the world a better place,” Martin Rapaport, chairman of Rapaport Group, a network of diamond companies which will manage the auction, told Reuters.

The diamond, which the auctioneers described as the 14th largest in the world, was unearthed in Koryardu in March by a Christian pastor who gave it to the government.

Diamonds fuelled a decade-long civil war in Sierra Leone, ending in 2002, in which rebels forced civilians to mine the stones and bought weapons with the proceeds, leading to the term “blood diamonds.”
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The U.S. Federal Reserve will raise interest rates in December and twice next year, according to a Reuters poll of economists, who now worry that the central bank will slow its tightening because of expectations that inflation will remain low.

Most respondents expected the nation’s economy to determine future rate hikes, but a change in regime at the Fed could also affect monetary policy.

U.S. President Donald Trump could decide this week whether to reappoint Fed Chair Janet Yellen, whose term ends in February, since he has concluded interviews with five candidates for that post.

“There is a greater-than-usual degree of uncertainty around monetary policy next year, with the Fed’s leadership up in the air,” wrote RBC economist Josh Nye.

A Reuters poll of economists published last week showed Fed Board Governor Jerome Powell getting the top job, although most said reappointing Yellen would be the best option.

Still, a vast majority of the more than 100 economists in the latest poll expect rate hikes to depend largely on how the U.S. economy performs.

“Despite intense speculation about the next Fed chair, the path of policy rates is still likely to be driven primarily by the data, regardless of who is nominated,” said Christian Keller, head of economics research at Barclays.

Forty of the 50 economists who answered an extra question also said the U.S. economy, which is on a steady growth path, did not need a big fiscal stimulus in the form of sweeping tax cuts.

The dollar rose on Friday after the Senate approved a budget proposal for the 2018 fiscal year that cleared a critical hurdle for a tax-cut package.

But the need for such a large stimulus to boost the U.S. economy at this late stage of its cycle, when the jobless rate is at more than a 16-year low, remains questionable.

“The U.S. needs to return to a sustainable fiscal path, and I have little faith that sweeping tax cuts will generate enough growth to put us on that path,” said Bank of the West economist Scott Anderson.

While recent U.S. economic data has improved, the closely watched core PCE inflation measure has been below its medium-term target of 2 percent for more than five years, despite strong employment growth.

The latest poll, taken Oct. 16-23, showed scant expectations of economic growth lifting off from its current trend or of inflation reaching the Fed’s target before 2019.

That has divided Fed policymakers and raised doubts about the pace of further rate hikes, according to minutes from the Sept. 19-20 meeting.

Still, economists predicted the Fed would raise rates 25 basis points to 1.25-1.50 percent in December. All 100 economists polled expect it to keep policy on hold at its next meeting.

The central bank is projecting three more rate increases in 2018, while economists expect only two next year, which would take the fed funds rate to 1.75-2.00 percent.

But about two-thirds of 52 economists who answered an extra question said risks to those forecasts were skewed more toward a slower pace of rate hikes. Fifteen of those respondents suspected there could be fewer than two increases next year.

The remaining 17 economists said there was a greater chance of faster rate hikes.

Economic growth probably took a hit from the devastation caused by Hurricanes Harvey and Irma.

The consensus in the latest Reuters poll was for an annualized expansion of 2.4 percent in the third quarter, down from 2.6 percent in last month’s survey. Growth expectations for this quarter remained at 2.5 percent.

The median full-year forecast was 2.2 percent for 2017 and 2.3 percent for next year.

Predictions for core PCE inflation have not changed much from last month, with the consensus now in a 1.4-1.9 percent range through the end of next year even though the jobless rate has fallen well below 5 percent.

 
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The sloping vineyards of New York’s Finger Lakes region known for producing golden-hued rieslings and chardonnays also are offering a splash of orange wine.

The color comes not from citrus fruit, but by fermenting white wine grapes with their skins on before pressing – a practice that mirrors the way red wines are made. Lighter than reds and earthier than whites, orange wines have created a buzz in trendier quarters. And winemakers reviving the ancient practice like how the “skin-fermented” wines introduce more complex flavors to the bottle.  

“Pretty outgoing characteristics. Very spicy, peppery.  A lot of tea flavors, too, come through,” winemaker Vinny Aliperti said, taking a break from harvest duties at Atwater Estate Vineyards on Seneca Lake. “They’re more thoughtful wines. They’re more meditative.”

Atwater is among a few wineries encircling these glacier-carved lakes that have added orange to their mix of whites and reds. The practice dates back thousands of years, when winemakers in the Caucasus, a region located at the border of Europe and Asia, would ferment wine in buried clay jars. It has been revitalized in recent decades by vintners in Italy, California and elsewhere looking to connect wine to its roots or to conjure new tastes from the grapes. Or both. Clay jars are optional.

Aliperti has been experimenting with skin fermenting for years, first by blending a bit into traditional chardonnays to change up the flavor and more recently with full-on orange wines. This fall, he fermented Vignoles grapes with their skins in a stainless steel vat for a couple of weeks before pressing and then aging them in oak barrels.

Orange wines account for “far less than 1 percent” of what is handled by Southern Glazer’s Wine & Spirits, the nation’s largest distributor with about a quarter of the market, according to Eric Hemer, senior vice president and corporate director of wine education.

Hemer expects orange wines to remain a niche variety due to small-scale production, higher retail prices _ up to $200 for a premium bottle – and the nature of the wine.

“It’s not a wine that’s going to appeal to the novice consumer or the mainstream wine drinker,” Hemer said. “It really takes a little bit more of, I think, a sophisticated palate.”

The wines have caught on in recent years among connoisseurs who like the depth of flavors, sommeliers who can regale customers with tales of ancient techniques and drinkers looking for something different. Christopher Nicolson, managing winemaker at Red Hook Winery in Brooklyn, said the wines hit their “crest of hipness” a couple of years ago, though they remain popular.

“I think they’re viewed by these younger drinkers as, ‘Oh, this is something new and fresh. And they’re breaking the rules of these Van Dyke-wearing, monocled … fusty old wine appreciators,’” Nicolson said.

It’s not for everyone. The rich flavors can come at the expense of the light, fruity feel that some white wine drinkers crave. And first-time drinkers can be thrown by seeing an orange chardonnay in their glasses.

“Actually I wasn’t sure because of the color, but it has a really nice flavor,” said Debbie Morris, of Chandler, Arizona, who tried a sip recently at Atwater’s tasting room. “I’m not a chardonnay person normally, but I would drink this.”
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A bakery in a low-income area of Johannesburg slashed prices of its popular bread, with unexpected results. What started as a way to help feed the community became a recipe for success as the bakery has a lot more business than ever. VOA’s Arash Arabasadi reports.

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