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US and World News

Texas authorities arrest wife, friend of fugitive wanted in shooting

by Reuters May 3, 2023
By Reuters

(Reuters) -Texas authorities have arrested the wife and a friend of a man accused of killing five of his neighbors, saying the two helped the suspect evade capture for four days, a local prosecutor said on Wednesday.

Francisco Oropesa was apprehended on Tuesday after a manhunt conducted by local, state and federal officials. He was found in a closet under some laundry in a home in Montgomery County.

The bloodshed erupted on Friday in nearby San Jacinto County after neighbors asked the suspect to stop firing his semiautomatic rifle in his yard because it was keeping their baby awake. Instead, the 38-year-old man reloaded, entered the home of the neighbors and killed five, including an 8-year-old boy, officials said.

The suspect’s wife, identified as Divimara Nava, 52, was arrested Wednesday morning and was being held in Montgomery County, San Jacinto County District Attorney Todd Dillon said at a news conference.

“We believe that Nava was providing him with material aid and encouragement, food and clothes, and had arranged transport to this house,” Dillon said.

Nava was facing a felony charge of hindering apprehension and prosecution of a known felon, according to jail records.

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A friend of the suspect was also arrested on a marijuana charge and will be charged with helping the suspect flee the neighborhood in Cleveland, Texas, where the crime took place, Dillon said.

A $5 million bond will be set for the suspected gunman when he appears later Wednesday before a judge in a local jail where he is being held on five counts of murder, San Jacinto County Chief Deputy Tim Kean said at an earlier news conference on Wednesday.

The suspect was arrested in the town of Cut and Shoot, Texas, roughly 17 miles (27 km) west of Cleveland. Both are about 50 miles (80 km) north of Houston.

Officials acted on a tip from an unidentified person who was eligible for an $80,000 reward offered for information leading to the arrest, San Jacinto County Sheriff Greg Capers said on Tuesday.

Most of the victims were shot in the head. All were from Honduras and among the 10 people living at the address, but they were not all family members, Capers said.

The suspect is a Mexican national who was deported from the United States four times since 2009, U.S. immigration officials said.

(Reporting by Brendan O’Brien in Chicago; Editing by Mark Porter and Lisa Shumaker)

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Green Thumb revenue rises as more US states allow marijuana use

by Reuters May 3, 2023
By Reuters

By Mrinalika Roy

(Reuters) – Green Thumb Industries Inc reported higher first-quarter sales on Wednesday, as customer traffic rose at the cannabis producer’s retail stores after more U.S. states legalized the recreational use of marijuana.

The company said its quarterly revenue grew despite continued price compression, helped by strong business performance in states like New Jersey, Rhode Island, Connecticut, Virginia and Minnesota.

Its total revenue for the quarter rose 2.4% to $248.5 million from $242.6 million last year.

Same-store sales, which account for sales in stores open for more than a year, in the quarter rose 6.3% from a year earlier.

“There’s demand from Americans for cannabis products and we continue to execute,” CEO Ben Kovler told Reuters.

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The Chicago-based company, however, reported a decline in net income, blaming pressure from the tax regime that continues to be unfavourable for federally illegal businesses like cannabis.

Still, adjusted earnings before interest, tax, depreciation and amortization (EBITDA) rose 13.7% to $76.2 million.

“For us to be able to year-over-year expand the margin 300 basis points with pricing pressure is a pretty good situation. Keep in mind pricing is down about mid-teens across the country,” Kovler said.

The cannabis industry is in a tight spot due to the lack of access to capital and the banking system, but Green Thumb has continued to generate positive cash flow, which the company said it would invest in building facilities.

“Our $185 million cash balance continues to give us the optionality to make investment decisions that will position us for the increasing demand for legal cannabis, a market estimated by analysts to grow to $75 billion over the next decade,” Kovler added.

Capital expenditure is expected to be about $150 million or more for 2023, Kovler said, compared with $240 million last year.

(Reporting by Mrinalika Roy in Bengaluru; Editing by Shweta Agarwal)

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Blinken says US engaged with Syria on case of missing American journalist Austin Tice

by Reuters May 3, 2023
By Reuters

By Humeyra Pamuk and Daphne Psaledakis

WASHINGTON (Reuters) – The United States is extensively engaged on the case of a U.S. journalist who disappeared a decade ago, including with Syria and other countries, U.S. Secretary of State Antony Blinken said on Wednesday.

Austin Tice, a former U.S. Marine and a freelance journalist, was kidnapped in August 2012 while reporting in Damascus on the uprising against Syrian President Bashar al-Assad. He was 31 at the time.

His family believes he is alive and still being held in Syria. The identity of Tice’s captors is not known, and there has been no claim of responsibility for his abduction.

President Joe Biden last year said Washington knows “with certainty” that Tice has at times been held by the Syrian government. Syria’s government has denied kidnapping or holding Tice.

“We’re extensively engaged with regard to Austin – engaged with Syria, engaged with third countries – seeking to find a way to get him home. And we’re not going to relent until we do,” Blinken said in a Washington Post interview on Wednesday.

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The Wall Street Journal on Wednesday reported that the Biden administration has renewed direct talks with Syria over Tice’s case and those of other Americans, citing Middle East officials familiar with the efforts.

When asked about Tice, White House press secretary Karine Jean-Pierre said she could not confirm any meetings.

Washington suspended its diplomatic presence in Syria in 2012 with the onset of the country’s civil war.

State Department deputy spokesperson Vedant Patel in a briefing said the United States has pursued every channel to seek Tice’s release.

“We have pursued every channel we can to seek his safe return to his family and will continue to do so, and that includes discussing the case with a number of countries in the region,” Patel told reporters.

(Reporting by Humeyra Pamuk and Daphne Psaledakis; editing by Jonathan Oatis)

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‘Plagiarism machines’: Hollywood writers and studios battle over the future of AI

by Reuters May 3, 2023
By Reuters

By Dawn Chmielewski and Lisa Richwine

LOS ANGELES (Reuters) -Hollywood writers have for decades penned sci-fi scripts featuring machines taking over the world. Now, they are fighting to make sure robots do not take their jobs.

The Writers Guild of America is seeking to restrict the use of artificial intelligence in writing film and television scripts. Hollywood studios, battling to make streaming services profitable and dealing with shrinking ad revenues, have rejected that idea, saying they would be open to discussing new technologies once a year, according to the guild.

A spokesperson for the Alliance of Motion Picture and Television Producers, which is negotiating the contract on behalf of the studios, did not comment.

The dispute over AI is one of several issues that led Hollywood’s film and TV writers to strike Monday, marking the first work stoppage in 15 years.

Although the issue is one of the last items described in a WGA summary of negotiating points, many of which focus on improving compensation in the streaming era, the debate over AI’s role in the creative process will determine the future of entertainment for decades to come.

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Screenwriter John August, a member of the WGA negotiating committee, said writers have two concerns regarding AI.

“We don’t want our material feeding them, and we also don’t want to be fixing their sloppy first drafts,” he said.

At issue is a rapidly growing, multifaceted technology that’s swept across global industry.

In Hollywood, AI is helping to erase wrinkles from an aging performer’s face, clean up an actor’s liberal use of f-bombs and draw animated short films with the aid of OpenAI’s Dall-E, which can create realistic images. Some writers are experimenting with creating scripts.

‘LAST BASTION’

“The problem here seems to be that we thought that creativity, per se, was the last bastion, the line in the sand, that would stop machines from replacing someone’s job,” said Mike Seymour, co-founder of Motus Lab at the University of Sydney, who has a background in visual effects and artificial intelligence and has consulted with several studios. “I would argue that that’s just some kind of arbitrary notion that people had that caught the popular imagination.”

AI can help writers break “the blank piece of paper phenomenon,” Seymour said, and it’s good at what he describes as “pantomime,” or producing straight-forward, blunt dialogue, though it lacks nuance.

“I’m also not claiming that AI is going to become super intelligent and produce, you know, ‘Citizen Kane,’ because it just isn’t right,” said Seymour.

Writers fear they will be sidelined, or at least, shortchanged.

“What (AI) could do is spew out a garbled piece of work,” said Warren Leight, a screenwriter who served as showrunner and executive producer of the NBC drama “Law & Order: SVU.”

“Instead of hiring you to do a first draft, (studios) hire you to do a second draft, which pays less. You want to nip that in the bud.”

The union proposed that material generated by an AI system such as ChatGPT could not be considered “literary material” or “source material,” terms already defined in their contract.

As a practical matter, that means that if a studio executive were to hand a writer an AI-generated script to revise, the writer could not be paid a lower rewrite or polish rate.

The union is arguing existing scripts should not be used to train artificial intelligence, which would open the door to intellectual property theft.

“We call it the ‘Nora Ephron problem,'” August said, referring to the writer of romantic comedy hits including “When Harry Met Sally” and “You’ve Got Mail.”

“One can imagine a studio training an AI on all of Nora Ephron’s scripts, and having it write a comedy in her voice. Our proposals would prevent that.”

WGA chief negotiator Ellen Stutzman said some members have another term for AI: “plagiarism machines.”

“We have made a reasonable proposal that the company should keep AI out of the business of writing television and movies and not try and replace writers,” she said.

(Reporting by Dawn Chmielewski and Lisa Richwine in Los Angeles, additional reporting by Rollo Ross and Danielle Broadway in Los Angeles. Editing by Kenneth Li and Lincoln Feast)

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Google wins US patent trial over data-retrieval technology

by Reuters May 3, 2023
By Reuters

By Blake Brittain

(Reuters) – Alphabet’s Google LLC won a jury trial on Tuesday in a long-running patent lawsuit in Delaware federal court over features in Google’s smartphones and apps.

The jury decided that Luxembourg-based patent owner Arendi SARL’s patent was invalid and that Google did not infringe it, according to the verdict made public on Wednesday.

Attorneys for Arendi did not immediately respond to a request for comment. Google spokesperson José Castañeda said the company was pleased with the decision and appreciated the jury’s “careful attention to the extensive evidence presented in this case.”

Norwegian inventor Atle Hedloy’s Arendi sued Google in 2013 over the patent, which relates to retrieving information like names and addresses from a database and entering it into word processors and spreadsheets.

Arendi alleged that Google’s mobile devices and apps including Gmail, Chrome, Docs and Messages infringed. It asked the court for $45.5 million in damages, according to a spokesperson for Google’s law firm Paul Hastings.

The jury determined that Google did not infringe Arendi’s patent and agreed with Google’s argument that the patent was invalid based on earlier publications that disclosed the same invention.

Arendi has also sued other tech companies including Apple Inc, Microsoft Corp and Samsung Electronics Co over related patents. Those cases have all been dismissed or resolved.

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Fed’s Powell: don’t assume Fed can shield U.S. economy from debt limit default

by Reuters May 3, 2023
By Reuters

By David Lawder

WASHINGTON (Reuters) -The U.S. Federal Reserve is unlikely to be able to protect the U.S. economy from the damage caused by a failure to raise the federal debt ceiling, Fed Chair Jerome Powell said on Wednesday, adding that the government should never be in a position where it is unable to pay all of its bills.

Powell told a news conference after the Fed’s latest rate hike decision that resolving the debt ceiling standoff between Republicans and Democrats was a matter for Congress and the Biden administration.

“We don’t give advice to either side,” Powell said. “We would just point out that it’s very important that this be done.”

A U.S. default would be unprecedented and have “highly uncertain” and “quite diverse” consequences for the U.S. economy, Powell said, but he declined to enumerate them.

“We shouldn’t even be talking about a world in which the U.S. doesn’t pay its bills. It just shouldn’t be a thing,” Powell said.

“No one should assume that the Fed can really protect the economy and the financial system and our reputation globally from the damage that such an event might inflict,” he added.

On Monday, U.S. Treasury Secretary Janet Yellen said the Treasury’s best estimate was that a default on U.S. payment obligations due to insufficient cash could come as early as June 1, raising alarm bells on the need for urgent action to increase the borrowing cap.

President Joe Biden reacted by summoning the four top Congressional leaders to the White House for a May 9 meeting, but it remained unclear whether he would open negotiations over Republicans’ spending cuts demands or continue to insist on a “clean” debt ceiling increase.

Yellen has warned that a debt ceiling default will cause “severe hardship” to American families by raising borrowing costs, and harm the U.S. global leadership position.

(Reporting by David Lawder; Editing by Chris Reese and Daniel Wallis)

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Estee Lauder sinks after dour 2023 outlook due to slow recovery in Asia

by Reuters May 3, 2023
By Reuters

By Ananya Mariam Rajesh and Katherine Masters

(Reuters) -Estee Lauder Cos Inc’s shares plunged on Wednesday after the cosmetics maker forecast weaker sales and profit for the year than previously estimated, blaming slow recovery at duty-free and travel destinations, especially in Asia.   

Global retailers have banked on improved demand out of Asia after China eased COVID restrictions last year, but Estee’s travel retail division, one of its highest-growth sectors, did not rebound as expected.

Shares of the company hit a six-month low of $190.30 during trading hours after Estee Lauder slashed its fiscal-year forecasts for a third time. They closed down 17% at $202.70.

Estee expects full-year 2023 net sales to fall between 10% and 12%, compared with its prior forecast of a 5% to 7% decrease.

It said while major shopping districts such as Hainan, an island in the southernmost province of China, and Korea saw more traffic, the conversion of travelers to consumers in luxury beauty lagged.

Even though China relaxed pandemic-related restrictions, the company saw January 2023 pressured by retailers destocking due to an increase in COVID-19 cases.

Meanwhile, European luxury companies LVMH and L’Oreal saw a rise in first-quarter sales, boosted by a rebound in Asia as China eased COVID restrictions last year. 

Barclays analyst Lauren Lieberman said in a note that Estee’s forecast was the “last thing” expected even by the Street and the company’s comments on its travel retail division in Asia raise doubt on how much “control or visibility” Estee has in sales through this channel.

CFO Tracey Travis said in a post-earnings call Estee has seen improvement in travel retail, which includes duty-free sales at airports and shopping districts in China and Korea, through the third quarter, and the company also expects sales from the segment to rise in double digits.

However, Travis said it’s “difficult to know” when travel in China and Korea will normalize.

Estee’s sales also remain challenged in the U.S., another major market. The company’s organic sales in the Americas grew in double digits last fiscal year, but began to decline in the first quarter of 2023.

Bernstein analyst Callum Elliott said the company’s brands skew toward older customers even as millennials and Gen-Z increase their share of beauty spending.

Estee has also been challenged by the growth of smaller competitors in the beauty space, according to Travis.

“We’re seeing an awful lot of indie activity in the U.S. that has taken share gains away from the largest companies,” she said.

Estee reported mid-single-digit growth in North America in the third quarter, while prestige beauty as a category grew more than 16%, according to data from Circana.

LVMH said its U.S. spending declined in the April earnings call, though the company noted its performance there was strengthened by brisk business at its Sephora beauty chain.

A stronger dollar has also hurt Estee, which has sprawling global operations and convert foreign currencies into the greenback.

Estee forecast adjusted per-share profit to fall by 50% to 51%, compared with a 27% to 29% decrease it expected earlier.

The company beat third-quarter sales expectations, but missed profit estimates.

(Reporting by Ananya Mariam Rajesh in Bengaluru and Kate Masters in New York; Editing by Shinjini Ganguli and David Gaffen)

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US regional bank stocks draw bearish options bets despite bounce

by Reuters May 3, 2023
By Reuters

By Laura Matthews and Saqib Iqbal Ahmed

NEW YORK (Reuters) – The cost of insuring against further losses in regional U.S. bank stocks stood near a one-month high in options markets on Wednesday, even as shares of lenders saw a reprieve from their recent sell-off.

The 30-day implied volatility on the SPDR S&P Regional Banking ETF, which measures traders’ expectation for near-term price swings, stood at 46 on Wednesday, just shy of the one-month high of 47 hit on Tuesday, signaling little letup in investor fears despite JPMorgan Chase & Co’s weekend rescue of First Republic Bank.

Skew on the SPDR S&P Regional Banking ETF – a gauge of relative demand for puts versus calls – remained elevated, hovering near the highest level since the COVID-19 market slump, data from OptionMetrics showed. Puts convey the right to sell shares at a fixed price in the future, while calls offer the right to buy shares at a set price.

“I definitely don’t think we are out of the woods,” said Garrett DeSimone, head of quantitative research at OptionMetrics. “The market will start turning over stones to see which other regional banks are exposed.”

(Graphic: Lingering stress – https://www.reuters.com/graphics/USA-STOCKS/jnpwykrlapw/chart.png)

Shares of midsized U.S. lenders were broadly higher Wednesday following a two-day tumble, after the failure of a third major regional bank in two months fanned investor anxiety over the category. The SPDR S&P Regional Banking ETF rose about 1.9% to 39.64 in afternoon trade, though it is down 33% on the year and fell on Monday and Tuesday.

“The fact that you didn’t see the follow-through from some of these other regional banks, with what would appear to be such great news, really didn’t inspire a lot of confidence in some of these regional banks,” said Seth Hickle, a derivatives portfolio manager at Innovative Portfolios, referring to JPMorgan’s rescue of First Republic.

Adding to the concern around regional banks is another 25 basis point rate increase the Federal Reserve delivered on Wednesday, piling more pressure on lenders to pay higher rates to depositors as they seek to keep customers from parking their cash elsewhere.

“The problem with regionals are going to be rising interest rates,” said Matt Amberson, principal at options analytics firm ORATS. “There are so many good places to get a return now.”

(This story has been refiled to correct date in the dateline)

(Reporting by Laura Matthews and Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and Jonathan Oatis)

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WHO dismisses lead COVID origins investigator for sexual misconduct

by Reuters May 3, 2023
By Reuters

By Emma Farge

GENEVA (Reuters) – The World Health Organization said on Wednesday that it has dismissed a senior scientist, known for his role as the head of an international mission to China to probe the origins of COVID-19, for sexual misconduct.

The U.N. agency said Peter Ben Embarek, a Danish scientist who previously headed up its ‘One Health’ initiative on diseases jumping from animals to humans, was removed from his post last year. In a response to Reuters, Ben Embarek said he contested the accusation of harassment and was challenging the sanction.

“Peter Ben Embarek was dismissed last year following findings of sexual misconduct against him that were substantiated by investigations, and corresponding disciplinary process,” said WHO spokesperson Marcia Poole.

Poole said the cases that led to the dismissal occurred in 2015 and 2017. The agency was first made aware of them in 2018. The WHO did not provide further details of the misconduct allegations.

Ben Embarek said that a single incident in 2017 “was settled immediately in a friendly way.” He said he could not comment further as both he and the WHO are bound by confidentiality agreements until a resolution is reached.

“I am not aware of any other complaints and no other complaints have ever been brought to my attention,” Ben Embarek said in a digital message. “I duly contest the qualification of harassment and I am quite hopeful in the defense of my rights.”

Ben Embarek is the most senior WHO official known to have been dismissed since the U.N. agency launched a series of reforms to improve its response to sexual misconduct. He has often been quoted in the media about the origins of the pandemic. His dismissal can be appealed through the U.N. internal justice system.

He was the lead WHO representative on a trip to China in 2021 that aimed to investigate where COVID-19 came from. The team made global headlines with their conclusion that bats were the most likely initial hosts, eventually leading to a pandemic in humans. They had also determined that a leak of the virus from a laboratory in China was “highly unlikely,” despite calls from various scientists to probe that possibility.

Ben Embarek later said that there had been some political pressure on the team, including from outside China, but that nothing in the report had been changed as a result. He did not identify the source of such pressure.

The WHO has overhauled its handling of sexual abuse and misconduct cases after a 2021 inquiry found that dozens of aid workers, including some from WHO, had been involved in sexual abuse and exploitation during an Ebola crisis in the Democratic Republic of Congo.

The agency said that people are more willing to come forward about sexual misconduct and that it is taking action where allegations are substantiated. It has started a monthly report on disciplinary action taken.

(Reporting by Emma Farge, writing by Jennifer Rigby in London; Editing by Alistair Bell)

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US rate futures price in Fed pause in June, July; see September cut

by Reuters May 3, 2023
By Reuters

NEW YORK (Reuters) – U.S. interest rate futures on Wednesday have priced in a pause in Federal Reserve tightening at the June and July policy meetings, according to the CME’s FedWatch tool, after the U.S. central bank raised interest rates by 25 basis points and signaled it may hold off on further increases.

The Fed’s rate hike and the pause signal were expected. The U.S. central bank’s benchmark overnight interest rate is now at the 5.00%-5.25% range.

In an overt shift, the Fed no longer says it “anticipates” further rates will be needed, only that it will watch incoming data to determine if more hikes “may be appropriate.”

The fed futures market has also factored in a more than 70% chance of rate cuts at the September meeting.

“No other Fed has ever tightened policy this close to a possible debt default, and only once in 1984 did the Fed ever tighten into a financial crisis of any kind,” said David Rosenberg, president and chief economist & strategist at Rosenberg Research.

He added though that then-Fed chairman Paul Volcker ended up reversing those rate hikes very quickly and substantially.

“That said, the pause likely becomes official at the next meeting on June 14th…The language shifted just enough to suggest that, going forward, the bar has been raised on any further rate increases,” said Rosenberg.

The rate futures market expects about 50 to 75 bps in cuts this year, with traders looking at a fed funds rate at 4.33% by end-December, according to Refinitiv’s FedWatch.

(Reporting by Gertrude Chavez-Dreyfuss and Alden Bentley; Editing by Chris Reese and Andrea Ricci)

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Goldman Sachs names Kim Posnett as global TMT head

by Reuters May 3, 2023
By Reuters

By Anirban Sen, Jaiveer Shekhawat and Lananh Nguyen

(Reuters) – Goldman Sachs Group Inc has named Kim Posnett as the head of its global technology, media and telecommunications (TMT) investment banking group, according to an internal company memo.

Posnett, who joined Goldman in 2005 and became a partner in 2016, has held several top roles during her tenure at the bank, having previously led the global internet business. Posnett, who is currently the co-head of the One Goldman Sachs initiative at the bank, will continue to hold her existing responsibilities.

The One Goldman Sachs initiative aims to integrate the bank’s dealings with clients across teams.

Posnett’s appointment comes after a broader shake-up within the ranks of Goldman Sachs, which earlier this year combined investment banking and trading into one unit, while merging asset management and wealth management.

Posnett, who has also served as the global head of investment banking services at Goldman, is one of the few executives who spoke at the bank’s investor day in February alongside its chief executive and finance head. In her new role, Posnett will be among a few female bankers who currently lead the TMT franchise at a major Wall Street bank.

As a TMT banker, Posnett has led more than 400 tech deals over the last 20 years. Posnett has recently advised on several high-profile deals including Twitter Inc’s $44 billion sale to Elon Musk and Endeavor Group Holdings Inc’s $21 billion combination with World Wrestling Entertainment Inc in April.

Sam Britton, who previously served as co-head for TMT M&A and is one of Goldman’s top rainmakers in tech banking, will become co-chairman of the division, which is one of the investment bank’s most powerful groups.

In a separate memo sent out by Goldman’s heads of global banking & markets, Ashok Varadhan, Dan Dees and Jim Esposito, Goldman also named Aasem Khalil as the new global head of its Investment Banking Services division.

Khalil, who joined Goldman in 1996, will continue to serve as head of the bank’s Dallas office, co-head of Latin America, and head of investment banking in Latin America and the Southern region in the U.S.

On Tuesday, Goldman promoted Troy Broderick as the new chief operating officer of its global M&A business.

(Reporting by Jaiveer Singh Shekhawat in Bengaluru, Anirban Sen and Lananh Nguyen in New York; Editing by Arun Koyyur and Lisa Shumaker)

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U.S. offers $10 million reward for Russian allegedly tied to credit card theft

by Reuters May 3, 2023
By Reuters

WASHINGTON (Reuters) -The United States is offering a $10 million reward for information leading to the arrest of a Russian national charged with operating a Web platform key to the trade in stolen credit cards, the State Department said on Wednesday.

An indictment unsealed on Wednesday in federal court in Brooklyn charged Denis Gennadievich Kulkov with four counts of fraud, computer intrusion and money laundering conspiracy for operating Try2Check, which allegedly helped cybercriminals determine whether the credit card numbers they bought were valid and active.

Try2Check processed tens of millions of credit card numbers each year, according to federal prosecutors in Brooklyn.

“Today is a bad day for criminals who relied on the defendant’s platform,” Breon Peace, the U.S. attorney for the Eastern District of New York, said in a statement.

Another $1 million was being offered for information identifying other key leaders in the group, the State Department said in a statement.

(Reporting by Washington newsroom Additional reporting by Luc Cohen in New York)

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Ukraine tried to assassinate Putin by drone – Kremlin

by Reuters May 3, 2023
By Reuters

MOSCOW/KYIV (Reuters) – Russia accused Ukraine on Wednesday of a failed attempt to assassinate President Vladimir Putin in a drone attack on the Kremlin citadel in Moscow, and threatened to retaliate.

Ukrainian President Volodymyr Zelenskiy said Kyiv had nothing to do with the reported overnight incident.

“We don’t attack Putin, or Moscow, we fight on our territory,” Zelenskiy told a press conference during a visit to Finland, of the war against Russian occupiers.

A senior aide to Zelenskiy called the accusation a sign that the Kremlin was planning a major new attack on Ukraine, at a time of potential turning point in the war as Kyiv prepares to mount a long-anticipated counteroffensive.

Shortly after the Kremlin announcement, Ukraine reported alerts for air strikes over the capital Kyiv and other cities.

Russia said that two unmanned aerial vehicles were aimed at the Kremlin.

“As a result of timely actions taken by the military and special services with the use of radar warfare systems, the devices were put out of action,” a Kremlin statement said.

“We regard these actions as a planned terrorist act and an attempt on the president’s life, carried out on the eve of Victory Day, the May 9 Parade, at which the presence of foreign guests is also planned.”

Fragments of drones were scattered in the Kremlin grounds but there were no injuries or damage, it said.

Putin himself was safe. The RIA news agency said he had not been in the Kremlin at the time, and was working on Wednesday at his Novo Ogaryovo residence outside Moscow.

“The Russian side reserves the right to take retaliatory measures where and when it sees fit,” the Kremlin added.

Former Russian president Dmitry Medvedev, now deputy head of Russia’s Security Council, said the incident “leaves us no option but to physically eliminate Zelenskiy and his clique”.

SMOKE OVER KREMLIN

Two of numerous videos published on Russian social media channels show two objects flying on the same trajectory toward one of the highest points in the Kremlin complex, the dome of the Senate. The first seemed to be destroyed with little more than a puff of smoke, the second appeared to leave blazing wreckage on the dome.

Reuters checks on time and location indicated that the videos could be authentic, though some Western analysts said it was possible Russia might have staged the incident to pin the blame on Kyiv and justify some kind of crushing response.

Ukrainian presidential adviser Mykhailo Podolyak said the drone accusation, along with an announcement that Russia had caught suspected saboteurs in Ukraine’s Russian-occupied Crimea region, “clearly indicates the preparation of a large scale terrorist provocation by Russia in the coming days”.

In Washington, the White House said it was aware of reports that Russia had accused Ukraine of attacking the Kremlin with drones to try to kill Putin but could not authenticate the allegations.

Russia says it launched its “special military operation” to counter a threat from Kyiv’s relations with the West. Ukraine and its allies call it an unprovoked war of conquest by Moscow, derailed by a failed assault on the capital Kyiv early last year and Ukrainian advances in the second half of 2022.

Over the past five months, Ukrainian ground forces have kept mostly to the defensive, while Russia launched a huge, largely unsuccessful winter assault, capturing little new ground.

KHERSON SHELLED, 18 KILLED

In Ukraine’s southern Kherson region on Wednesday, 18 civilians were killed and 46 injured in heavy Russian shelling that hit a hypermarket, a railway station and residential buildings, Ukrainian officials said.

At least 12 of those killed were in Kherson city, which has been repeatedly shelled from areas of Kherson province occupied by Russia. The dead included three engineers trying to repair damage to the power grid from earlier Russian bombardments.

“When the enemy can achieve nothing on the battlefield, it strikes at peaceful cities,” Ukrainian military spokesperson Serhii Cherevatyi said.

Elsewhere, oil depots were ablaze in southern Russia and Ukraine alike as both sides escalated a drone war ahead of Kyiv’s promised spring counteroffensive against Russian forces.

Ukraine said it had shot down 21 of 26 Iranian-made drones in an overnight volley.

Ukraine and Russia have both been carrying out long-range strikes since last week in apparent anticipation of a Ukrainian counteroffensive, which Zelenskiy said would begin soon, aided by supplies of sophisticated Western weaponry.

Moscow says it has struck military targets, though it has produced no evidence to support this. Kyiv, without confirming any role in incidents in Russia or Crimea, says destroying infrastructure is preparation for its planned ground assault.

Zelenskiy visited Finland on Wednesday, his fourth known trip abroad since Russia’s full-scale invasion. Leaders of Denmark, Iceland, Norway and Sweden also attended his visit.

Zelenskiy said his goals were to beef up Ukraine’s military and secure an eventual place in the NATO alliance, a goal endorsed by the five Nordic nations in a statement.

Blinken said later the U.S. government had authorised another $300 million worth of arms and equipment for Ukraine.

(Additional reporting by Felix Light, Jake Cordell, Max Hunder, Olena Harmash, Essi Lehto, Anne Kauranen, Doina Chiacu and Daphne Psaledakis in Washington, Andrew Gray in Brussels; Writing by Peter Graff and Mark Heinrich; editing by Philippa Fletcher and Andrew Cawthorne)

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Iran seizes second oil tanker in a week in Gulf -U.S. Navy

by Reuters May 3, 2023
By Reuters

DUBAI (Reuters) -Iran seized a second oil tanker in a week on Wednesday in Gulf waters, and the U.S. State Department called for its release, in the latest escalation in a series of seizures or attacks on commercial vessels in Gulf waters since 2019.

The Bahrain-based Fifth Fleet of the U.S. Navy said the Panama-flagged oil tanker Niovi was seized by Iran’s Islamic Revolutionary Guard Corps Navy (IRGCN) at 6:20 a.m. (0220 GMT) while passing through the Strait of Hormuz.

In Iran’s first response, Tehran’s prosecutor announced the oil tanker was seized on a judicial order following a complaint by a plaintiff, the judiciary’s Mizan news agency said. No further details were provided.

The incident comes after Iran on Thursday seized a Marshall Islands-flagged oil tanker in the Gulf of Oman called the Advantage Sweet. That tanker is being held by Iranian authorities in Bandar Abbas, the Marshall Islands flag registry said on Tuesday.

Maritime security firm Ambrey has said it believed the Advantage Sweet’s seizure was in response to a recent seizure via a court order by the United States of an oil cargo aboard the Marshall Islands tanker Suez Rajan.

The Niovi oil tanker seized on Wednesday had been travelling from Dubai toward the UAE’s Fujairah port when it was forced by IRGCN boats to change course towards Iranian territorial waters, the Navy said.

The Niovi last reported its position at 0231 GMT on Wednesday off the coast of Oman in the Strait of Hormuz with Fujairah as its destination, Refinitiv ship tracking data showed.

According to the International Maritime Organization shipping database,, the Niovi’s owner is Grand Financing Co, and the ship is managed by Greece-based Smart Tankers, which did not immediately respond to a request for comment.

Vedant Patel, a deputy spokesperson at the U.S. State Department, told reporters the Biden administration and the “international community” call on Iran and its Navy to release the ships and their crews. “Iran’s harassment of vessels and interference with navigational rights in regional and international waters are contrary to international law and disruptive to regional stability and security,” Patel said.

About a fifth of the world’s crude oil and oil products passes through the Strait of Hormuz, a choke point between Iran and Oman, according to data from analytics firm Vortexa.

“Heightened military activity and geopolitical tensions in these regions continue to pose serious threats to commercial vessels,” the Marshall Islands flag registry said in an advisory on Tuesday.

“Associated with these threats is the potential for miscalculation or misidentification, which could lead to aggressive actions.”

Since 2019, there have been a series of attacks on shipping in the strategic Gulf waters at times of tension between the United States and Iran.

Indirect talks between Tehran and Washington to revive Iran’s 2015 nuclear pact with world powers have stalled since September over a range of issues, including the Islamic Republic’s violent crackdown on popular protests, Tehran’s sale of drones to Russia and acceleration of its nuclear program.

(Reporting by Jonathan Saul, Nadine Awadalla, Ahmed Elimam, Parisa Hafezi and Humeyra Pamuk and Timothy Gardner; Writing by Lisa Barrington, Editing by Louise Heavens, Alexandra Hudson, Bernadette Baum and Daniel Wallis)

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Instant View: Fed hikes another 25 basis points, hints it may be the last increase

by Reuters May 3, 2023
By Reuters

NEW YORK (Reuters) – The Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point and signaled it may pause further increases, giving officials time to assess bank failures, how the Washington standoff over the U.S. debt ceiling plays out, the course of inflation.

The U.S. central bank lifted it’s benchmark overnight interest rate to the 5.00%-5.25% range, it’s tenth consecutive increase since March 2022, and dropped language in it’s policy statement saying the Federal Open Market Committee still “anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time,” replacing it with a more qualified statement.

STORY:

MARKET REACTION:

STOCKS: The S&P 500 added to gains and was 0.4% higher

BONDS: Benchmark 10-year note yields ticked lower, then higher to 3.4012% after the decision; The 2-year note yield inched up to 3.941%

FOREX: The euro extended a slight gain and was last up 0.57% at $1.1062. The U.S. dollar index was off about 0.5%

COMMENTS:

BRIAN COULTON, CHIEF ECONOMIST, FITCH RATINGS, LONDON

“The Fed is no longer flagging that further hikes should clearly be expected but this falls short of a strong commitment to ‘pause’ on rate hikes. They are still talking about how they will determine the ‘extent’ of additional policy firming – not whether additional tightening is needed or not. The ongoing tightening of credit conditions is recognized but they have still raised rates today and have left the window open for future hikes. Inflation is still their main concern and they will not have been encouraged by recent wage developments.”

TOM GARRETSON, STRATEGIST, RBC PORTFOLIO ADVISORY GROUP, MINNEAPOLIS, MINNESOTA

     “It was a pretty dovish rate hike today. The expectations were that it might be a bit more of a hawkish rate hike in terms of leaving the door open to further hikes if needed.”

    “The updated language in the policy statement does suggest the bar is going to be quite high for further rate hikes. The statement is pretty clear that today’s hike is probably the last.”

    “Treasury yields have fallen and the dollar has weakened so it’s a pretty dovish market reaction.”

MICHAEL JAMES, MANAGING DIRECTOR OF EQUITY TRADING, WEDBUSH SECURITIES, LOS ANGELES

“The headlines were pretty much what people were expecting, but there’s a little twist in terms of what is going to cause the Fed to pause. So I don’t think it’s as clear cut as 25 basis point hike and no further hikes or a pause in the short term.”

“I think it’s going be more important than the headlines to listen to the commentary and explanations from Chair Powell when his press conference starts.”

“I don’t think the headlines themselves about the Fed’s decision were as clear cut as maybe some were hoping to see. There still needs to be some color around the Fed’s short-term intentions for rates.”

TIM GHRISKEY, SENIOR PORTFOLIO STRATEGIST, INGALLS & SNYDER, NEW YORK

“The statement was ho-hum. The only change in the statement really didn’t say anything about the future. It’s simply said we’re going to be data dependent. … The market is hoping or expecting the Fed to pause after this rate hike. But clearly, they’re not going to show their cards until the next Fed meeting.”

“The evidence of disinflation is slowly but surely mounting. Certainly, inflation is not accelerating down, but it’s crawling its way down. So, I think the Federal continues to be data dependent.”

“Certainly, the banking crisis doesn’t help the economy. It’s going to be tougher to get credit and there are going to be fewer places now to go to get credit. That will be cause a natural slowdown in the economy.”

ROB HAWORTH, SENIOR INVESTMENT STRATEGIST, U.S. BANK ASSET MANAGEMENT, SEATTLE

“Investors are trying to understand whether this is a pause or not. How is Powell and the committee thinking about the evolving data and the factors they cite in the press release? Investors are looking for how the Fed is thinking about the banking conditions and lending and the economy. What will enough be?”

“The market is pricing a pause at this point, with slight odds that they will hike again or cut. But the preponderance of data says we’re on pause.”

“The market is trying to incorporate the data and anticipate the Fed. The Fed is trying to indicate a direction, and the market is looking further down the path than the Fed’s willing to communicate.”

ADAM BUTTON, CHIEF CURRENCY ANALYST, FOREXLIVE, TORONTO

   “This is as clear of a signal of a pause as one could hope for from the FOMC… The Fed was never going to come out and clearly say that it’s on the sidelines because the facts can change with economic data. But the way I would say it is the Fed is on the sidelines now and the questions becomes for how long? So the name of the game now is watching economic data and trying to find signs of weakness in the U.S. economy or stubborn strength.“

BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN“When having to choose between hawk and dove, the FOMC opted for chicken instead. There isn’t a credit crunch, but there are credit cracks. Manufacturing and housing have been in a recession already. Services is set to slow. This move is consistent with our “slow-flation” theme where we think we will see sub-par growth and inflation only gradually returning to 2%. Gradual is good enough when it comes to inflation. A pause, however, isn’t good enough though to avert at least a mild recession.”

MICHELE RANERI, HEAD OF U.S. RESEARCH AND CONSULTING, TRANSUNION 

“This latest increase is an indicator that while inflation has slowed and the economy has cooled generally, the Fed believes we have not quite reached the point where interest rate hikes can be halted entirely. From a consumer credit perspective, the impact of further rate hikes will likely continue to be felt by borrowers across a range of industries. Some examples include consumers who are looking to buy a car, or perhaps those seeking to purchase a home, or refinance one they already own. For as long as interest rates remain relatively high, consumers are advised to continue to be diligent in keeping their own individual credit profiles in the strongest financial positions they can be. This includes continuing to pay down as much high-interest debt as they are able to, ensuring they have an ability to pay for any new debt acquired, and continuing to maintain a consistent record of on-time bill paying overall.” 

SAM STOVALL, CHIEF INVESTMENT STRATEGIST, CFRA RESEARCH, NEW YORK.

    “For me the key was a change of a single word, saying that they believe that they will be determining whether future raises are necessary, whereas last time they said that they are anticipating that further rate hikes will be necessary.”

“With the word ‘determining’ in place of ‘anticipating’ is essentially telling the markets that the Fed is now on pause.”

(Compiled by the Global Finance & Markets Breaking News team)

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Iranian president in Damascus for first visit since Syrian war began

by Reuters May 3, 2023
By Reuters

DAMASCUS (Reuters) -Iranian President Ebrahim Raisi met counterpart Bashar al-Assad in Damascus on Wednesday in the first visit by an Iranian head of state since Syria’s war began in 2011, underlining close ties as Syrian relations with Arab states thaw.

With military and economic support from both Iran and Russia, Assad regained control of most of Syria from rebels that were backed by regional countries now seeking dialogue with him.

Raisi’s visit comes as Iran and regional rival Saudi Arabia rebuild relations after years of tensions, and as Arab states that shunned Assad – including Riyadh – rebuild ties with his government.

Assad, speaking alongside Raisi, welcomed “the development” of ties between Tehran and Riyadh.

Assad also stressed the importance of meetings between officials from Syria, Turkey, Russia and Iran in Moscow.

He said the goal should be to secure the withdrawal of “the occupying forces and halting support to terrorist groups” – an apparent reference to Turkey’s troops in northern Syria and its support for Syrian rebels.

Syrian officials have repeatedly said that any moves towards normalising ties between Damascus and Ankara can only come after Turkey agrees to pull out thousands of troops it has stationed in the rebel-held northwest of Syria.

Raisi praised Syria for resisting what he described as U.S. pressure and confronting “takfiris”, a term used to describe jihadists such as Islamic State. “Iran will always stand by Syria … and supports its sovereignty,” he said.

Raisi and Assad signed a long-term strategic cooperation agreement, including a memorandum of understanding on oil industry cooperation, the Syrian state news agency reported.

Assad said he hoped the visit would give a “strong push” to trade and investment.

Arab nations which had isolated Syria over its violent crackdown on protests in 2011 are developing a roadmap to end the 12-year war and reintegrate Syria into the Arab fold.

A U.S. State Department spokesperson said on Wednesday that the deepening of ties between Iran and Syria should be of great concern, not just to U.S. allies and countries in the region, but to the world more broadly. The spokesperson, Vedant Patel, told reporters Washington has made clear to partners that it does not support others normalizing ties with Damascus.

Speaking to pro-Iran broadcaster al-Mayadeen on the eve of his visit, Raisi said the trip would “consolidate and develop” ties with Syria and other allies, including Lebanese armed group Hezbollah, which also intervened in Syria on Assad’s behalf.

Iranian and Syrian flags lined the airport road in preparation for the arrival of Raisi and his delegation, which included Iran’s ministers of oil, defence, foreign affairs and telecommunications.

Tehran has already supplied Assad’s government with credit lines and won lucrative business contracts in the telecoms and mining industries, among others.

In parallel, Iran has become more entrenched militarily in Syria. An Israeli rocket strike on Damascus in February killed Iranian military experts and Tehran has used the flow of aid in the aftermath of a deadly February earthquake to bring in arms.

Assad has never publicly acknowledged that Iranian forces have operated on his behalf in Syria’s civil war, saying Tehran has only military advisers on the ground.

(Reporting by Firas Makdesi in Damascus, and Laila Bassam in Beirut and Parisa Hafezi in Dubai; Additional reporting by Humeyra Pamuk in Washington; Writing by Maya Gebeily and Tom Perry; Editing by Gareth Jones, Mark Heinrich and Daniel Wallis)

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Analysis-As DeSantis readies 2024 presidential bid, Florida lawmakers hand him fresh ammo

by Reuters May 3, 2023
By Reuters

By James Oliphant

WASHINGTON (Reuters) -Republican Florida Governor Ron DeSantis had counted on a productive state legislative session this spring to turbocharge his coming 2024 presidential bid.

Things haven’t quite worked out that way.

As the two-month session draws to a close this week, DeSantis is arguably in worse political shape than he was when it began, having tumbled in public opinion polls, seen endorsements go to rival Donald Trump and watched as key Republican donors expressed doubts about his viability.

The Republican-dominated state legislature has indeed churned out bills at DeSantis’ behest, allowing him to crow that Florida is “the beating heart of the conservative movement.” But a sweeping abortion ban, permitless concealed carry for guns, and more anti-diversity and anti-“woke” measures have been largely overshadowed by his ongoing feud with Walt Disney Co.

And some of those legislative accomplishments, particularly the so-called “heartbeat” law that bans abortions after six weeks, could place DeSantis in political peril down the road, either in the Republican state nominating contests or in the general election should he become the party’s nominee.

Even so, DeSantis plans to launch his presidential run in some manner later this month, followed by a more formal event in June, sources close to the governor said, speaking on condition of anonymity.

He is expected to pitch himself to voters as more electable than front-runner Trump, who has used DeSantis’ absence from the race to attempt to frame him as a second-rate politician who owes his success to Trump’s backing when he first ran for governor.

With the first presidential nominating contest still nine months away, political analysts say DeSantis has plenty of time to turn his fortunes around.

“Anybody who has raised over $100 million and won reelection as governor of what used to be a swing state has a lot to sell,” said Whit Ayres, a veteran Republican pollster. “He’s got to do a better job of selling than he has done over the last six weeks.”

FAST AND FURIOUS

Friendly state lawmakers have moved at a relentless pace during the session to equip DeSantis with tools to make the case that he stands as his party’s leading warrior pushing back against rampant crime, illegal immigration and liberal polices favored by educators and investors.

“He got everything he wanted,” said Ron Book, a longtime Republican lobbyist in Tallahassee, Florida’s capital.

A spokesperson for DeSantis provided a list of the governor’s legislative accomplishments and declined to comment further.

On Tuesday, DeSantis signed a bill that forbids asset managers in the state from using environmental, social and governance (ESG) considerations when making investment decisions and prohibits banks from denying loans based on borrowers’ political beliefs.

The legislature on Wednesday sent DeSantis a bill that includes a series of reforms for Florida’s higher-education system and eliminates funding for diversity and inclusion programs at public universities.

Lawmakers also expanded last year’s controversial law that prohibits gender-identity instruction to include more grade levels and added a ban on educators using pronouns different than the one a student was born with.

Legislators are still wrangling over a bill that would ban gender-affirming care for minors, and it remains unclear whether a version will pass before the session ends Friday.

DeSantis has presided over a major expansion of the state’s voucher program that allows all students in kindergarten through 12th grade to receive taxpayer-funded assistance to attend private schools – long a goal of conservative activists.

The governor can trumpet a bill he signed on Monday that expands the state’s death penalty law to include criminals found guilty of raping a child under 12, in defiance of U.S. Supreme Court rulings on the issue. Earlier, he signed a measure that scrapped the state requirement that a jury must be unanimous to return a death sentence.

Lawmakers on Tuesday passed an immigration measure that would provide more money for DeSantis’ program for relocating undocumented migrants. However, language that would have made it a crime for Florida residents to transport or house migrants within the state was stripped from the bill after fierce pushback.

On guns, DeSantis and the legislature didn’t go as far as some gun-rights advocates wanted. But a new law that allows residents to carry a concealed weapon without a permit or training could still help give him traction with conservative voters.

“Nobody in the party can call him a squishy moderate,” said David Jolly, a former Republican U.S. representative from Florida.

POTENTIAL PERILS

The six-week abortion ban remains the thorniest outcome of the session for DeSantis’ national aspirations. The governor did not expressly advocate for the bill, and he signed it without fanfare to replace the current 15-week ban.

The issue has turned radioactive for Republican candidates in general elections. It was instrumental in helping Democrats ward off heavy losses in last year’s midterms and was central to a liberal judge’s recent victory in a high-profile Wisconsin Supreme Court race.

“It would have been helpful for DeSantis to not have to relitigate the abortion issue right now,” said Chris Stirewalt, a political analyst at the American Enterprise Institute.

But, Stirewalt said, the strict abortion ban may aid DeSantis in early voting states such as Iowa and South Carolina that have large blocs of evangelicals.

DeSantis will need a boost to wrest the nomination from Trump, who has maintained his grip on the Republican Party despite his 2020 election loss and his recent indictment on charges related to hush money payments to a [censored] star.

When the legislative session began in March, the former president held around a 15-percentage-point lead over DeSantis, according to polling averages compiled by Real Clear Politics. Trump’s lead has nearly doubled since then.

Even armed with a raft of new policy victories, Jolly said, DeSantis has to be concerned that his poll numbers have slid as he has tried to raise his national profile with a book tour, interviews and a multi-country overseas trip.

“The more people see him and get to know him, the less they like him,” Jolly said. “The question is how does he turn that around? That’s his biggest struggle.”

(Reporting by James Oliphant; Editing by Colleen Jenkins and Jonathan Oatis)

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FTC proposes ban on Meta profiting from minors’ data

by Reuters May 3, 2023
By Reuters

WASHINGTON (Reuters) – The U.S. Federal Trade Commission on Wednesday accused Meta’s Facebook of misleading parents about protections for children and proposed tightening an existing agreement on privacy to include a ban on making money from minors’ data.

Specifically, the FTC said Facebook misled parents about how much control they had over who their children had contact with in the Messenger Kids app and was deceptive about how much access app developers had to users’ private data, breaching a 2019 agreement on privacy.

The FTC’s proposed changes include barring Facebook from making money off data collected on users under age 18, including in its virtual reality business. It would also face expanded limitations on using facial recognition technology.

Meta shares fell as much as 2% on Wednesday but pared most of those losses and were off 0.3% at $238.50.

Meta, which also owns Instagram, relies on digital ads targeted on the basis of its users’ personal data for more than 98% of its revenue.

    The company maintains the world’s biggest social networks, but is battling short video app TikTok for young users’ attention after it soared to popularity with American teens several years ago.

In a statement, Meta said the FTC action was “a political stunt” and that the FTC failed to act against “Chinese companies, like TikTok.”

“We will vigorously fight this action and expect to prevail,” the company said.

The FTC move on Wednesday is the first step in the process of changing the 2019 agreement. Facebook will have 30 days to respond. The company also can appeal any commission decision to an appeals court.

“This is a very substantial statement from the FTC about whether or not Meta has fulfilled its duties to protect children,” said Debra Williamson of Insider Intelligence, adding that “the revenue implications are not likely very large.”

Williamson said that some 5.2% of Facebook’s monthly U.S. users are under 18, along with 12.6% of Instagram users.

“Facebook has repeatedly violated its privacy promises,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “The company’s recklessness has put young users at risk, and Facebook needs to answer for its failures.”

The FTC has twice before settled with Facebook over privacy violations.

The first was in 2012. Facebook agreed in 2019 to pay a record $5 billion fine to resolve allegations it had violated the 2012 consent order by misleading users about how much control they had over their personal data. That order was finalized in 2020.

Separately, the FTC sued to stop Meta from buying the virtual reality content maker Within Unlimited but lost in court. The agency also asked a federal court in 2020 to order Facebook to sell Instagram, which it bought for $1 billion in 2012, and WhatsApp, which it bought for $19 billion in 2014. The case is underway.

(Reporting by Diane Bartz and Katie Paul; Editing by Deepa Babington and Bill Berkrot)

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Ford hits production issue on F-150 trucks due to missing door handles – source

by Reuters May 3, 2023
By Reuters

(Reuters) – Ford Motor Co is facing another production snag building its popular F-150 pickup trucks due to missing door handles, according to a source familiar with the matter.

The automaker is working to resolve the issue, the source said on Wednesday, adding that some vehicles have been parked until the proper handle can be installed while some shipments are being held.

“While a supplier part shortage is affecting some of our North American plants, we expect to make up all of the production that is impacted,” the automaker said in an emailed statement to Reuters.

Ford temporarily halted factory work at three plants over the weekend where it makes both gasoline and electric versions of the F-150 pickup truck, according to the Wall Street Journal, which first reported the news.

In February, the automaker halted production of its electric truck F-150 Lightning after a battery fire. The production restarted in March.

Ford on Tuesday posted robust first-quarter revenue and profit, thanks to strong demand for trucks and SUVs. The automaker is sticking with plans to boost Lightning production to a rate of 150,000 vehicles a year by the end of this year.

(Reporting by David Shepardson in Washington and Aishwarya Nair in Bengaluru; Editing by Maju Samuel)

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U.S. military aid for Ukraine includes air-launched rockets

by Reuters May 3, 2023
By Reuters

WASHINGTON (Reuters) – The United States said Wednesday it would send a new military aid package for Ukraine worth $300 million, including for the first time the Hydra-70 short-range. air-launched rocket, taken from U.S. excess stocks.

The security assistance package would be the 37th approved by the United States for Ukraine since Russian invaded its neighbor in February 2022, for a total of $35.7 billion.

“The United States and our allies and partners will stand united with Ukraine, for as long as it takes,” U.S. Secretary of State Antony Blinken said in a statement announcing the aid package.

The rockets, munitions and 155mm howitzer cannons included in the package would help Ukraine weaken Russian ground positions for advancing Ukrainian ground forces as Kyiv plans a spring offensive.

The Hydra-70 is an air-launched, unguided rocket made by General Dynamics Corp. The rockets are typically launched from pods attached to aircraft to provide support for ground troops.

The package also includes AT-4 and Carl Gustaf anti-tank weapon systems, TOW anti-tank missiles, several sizes of mortars, and High Mobility Artillery Rocket System (HIMARS) munitions.

Demolition equipment and trucks are also part of the package as well as diagnostic equipment to maintain vehicles.

The package would be funded using Presidential Drawdown Authority, which authorizes the president to transfer articles and services from U.S. stocks without congressional approval during an emergency.

(Reporting by Mike Stone, Nandita Bose and Steve Holland; Editing by Chris Reese and Jonathan Oatis)

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Exclusive-EQT sounds out banks to manage LimaCorporate IPO – sources

by Reuters May 3, 2023
By Reuters

By Pablo Mayo Cerqueiro and Andres Gonzalez

LONDON (Reuters) – Private equity house EQT is weighing options including a possible initial public offering (IPO) for LimaCorporate, the Italian medical devices group it acquired in 2016, people familiar with the matter told Reuters on Wednesday.

The buyout firm has been discreetly sounding out investment banks for a potential transaction, said the people, speaking on condition of anonymity. It may explore a private sale alongside a stock market listing, they added.

An IPO might not take place until next year, as market conditions remain challenging for new listings, one person said.

Milan is deemed the more likely venue should EQT proceed with a listing, though a case could also be made for a Swiss IPO, the people said.

EQT declined to comment. LimaCorporate did not immediately reply to a request for comment.

LimaCorporate, which designs orthopedic implants, posted revenue of 248.6 million euros ($274.5 million) for 2022, and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of 66.2 million euros.

It also reported a yearly loss of 27.9 million euros after taxes.

Switzerland-based Medacta is LimaCorporate’s closest valuation comparable, the people said. Medacta trades at 5.6 times its sales for the last 12 months and 21.1 times EBITDA, according to Refinitiv data.

Based on those multiples, LimaCorporate could be worth in the region of 1.4 billion euros, including debt.

EQT was reported in 2020 to be working with advisers on a possible IPO or sale of the business, but a transaction never materialised.

The latest explorations come after LimaCorporate appointed a new CEO last year.

They also follow a drought in IPOs in Europe, after soaring interest rates and economic and geopolitical uncertainty all but ground the market to a halt last year.

($1 = 0.9056 euros)

(Reporting by Pablo Mayo Cerqueiro and Andres Gonzalez in London; Additional reporting by Elisa Anzolin in Milan; Editing by Elisa Martinuzzi and Jan Harvey)

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Oil falls 4%, extending losses after Fed rate hike

by Reuters May 3, 2023
By Reuters

By Stephanie Kelly

NEW YORK (Reuters) -Oil prices fell 4% on Wednesday, extending steep losses from the previous session after the U.S. Federal Reserve raised interest rates and as investors fretted about the economy.

Brent futures settled $2.99 lower, or 4%, to $72.33 a barrel, the global benchmark’s lowest close since December 2021. Brent hit a session low of $71.70 a barrel, its lowest since March 20. 

    U.S. West Texas Intermediate crude (WTI) fell $3.06, or 4.3%, to $68.60. WTI’s session low was $67.95 a barrel, lowest since March 24.

A day earlier, both benchmarks fell 5%, their biggest daily percentage declines since early January.

On Wednesday afternoon, the Fed raised interest rates by a quarter of a percentage point, pressuring oil prices as traders worried that slower economic growth could hit energy demand.

But the Fed also signaled it may pause further increases, giving officials time to assess fallout from recent bank failures, wait for resolution of a political standoff over the U.S. debt ceiling and monitor inflation.

Banking sector concerns returned to the spotlight on Monday after U.S. regulators seized First Republic, the third major U.S. institution to fail in two months, with JPMorgan Chase & Co agreeing to take $173 billion of the bank’s loans, $30 billion of securities and $92 billion of deposits.

“The Fed going into a pause mode should be very supportive for the price of oil,” said Phil Flynn, an analyst at Price Futures Group. “The big question is whether or not we’re going to have more shoes drop in the banking sector.”

The European Central Bank is also expected to raise rates at its policy meeting on Thursday.

Also pressuring oil prices, government data showed U.S. gasoline inventories unexpectedly rose by 1.7 million barrels last week. Analysts polled by Reuters had expected a 1.2 million-barrel drop. [EIA/S]

“The most notable thing is that gasoline demand gave back all of the increases that we’d seen in previous weeks,” said Andrew Lipow, president of Lipow Oil Associates in Houston.

    U.S. crude inventories fell by 1.3 million barrels in the week, compared with forecasts for a 1.1 million-barrel drop.

In China, data over the weekend showed April manufacturing activity fell unexpectedly in the world’s largest energy consumer and top buyer of crude oil.

Morgan Stanley lowered its forecast for Brent prices to $75 a barrel by year-end.

“Downside risk to Russia’s supply and upside risk to China’s demand have largely played out and prospects for 2H tightness have weakened,” the bank said in a note, referring to buoyant exports from Russia despite Western sanctions.

(Reporting by Stephanie Kelly; additional reporting by Noah Browning and Muyu XuEditing by Emelia Sithole-Matarise, Marguerita Choy and David Gregorio)

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US and World News

Factbox-Kremlin drone incident: What do we know?

by Reuters May 3, 2023
By Reuters

(Reuters) – Here’s a look at what we know about the alleged overnight drone attack on the Kremlin, and the questions it raises.

WHAT HAPPENED?

Two of the numerous videos published on Russian social media channels show two objects flying on the same trajectory towards one of the highest points in the Kremlin complex, the dome of the Senate, with the clock on the nearby Spassky Tower showing 2:27 and 2:43 in the early hours of Wednesday. The first seemed to be destroyed with little more than a puff of smoke, the second appeared to leave blazing wreckage on the dome. Reuters checks on time and location indicated that the videos could be authentic.

WHAT IS RUSSIA SAYING?

Russia called the incident a terrorist attack and an attempt to assassinate President Vladimir Putin, for which it said it reserved the right to retaliate.

Western security analysts dismissed the idea that the attack was meant to kill Putin, given that the drones appeared to have been aimed at a highly visible point of the huge, walled Kremlin citadel, rather than any residential quarters, and that Putin often works from elsewhere. His office said he was not there at the time.

WHAT DOES UKRAINE SAY?

Ukraine denied responsibility. “We don’t attack Putin, or Moscow, we fight on our territory,” President Volodymyr Zelenskiy told a press conference in Helsinki.

WOULD UKRAINE BE ABLE TO MOUNT SUCH A STRIKE?

Possibly. Ukraine appears to have mounted drone strikes deep inside Russia and Russian-annexed Crimea on many previous occasions, including twice last December on an air base for Russian strategic bomber planes. It typically has not claimed responsibility for such actions, although Ukrainian officials have often celebrated them.

IF IT WAS UKRAINE, WHAT WOULD THAT MEAN?

Ukraine has frequently surprised Moscow with its military prowess, staging attacks far beyond the front lines, but a hit on the symbolic centre of Russian power would be its most audacious act to date.

“If we presume it was a Ukrainian attack, consider it a performative strike, a demonstration of capability and a declaration of intent: ‘don’t think Moscow is safe’, Russia specialist and security analyst Mark Galeotti wrote on Twitter.

Some commentators described it as a humiliation for Russia, drawing comparison with a 1987 incident when a young West German pilot, Mathias Rust, evaded Soviet air defences and landed a small plane on Red Square.

COULD IT BE A RUSSIAN ‘FALSE FLAG’ OPERATION?

Some Western analysts said it was possible that Russia might have staged the incident itself in order to pin the blame on Kyiv and justify some kind of crushing response. The aim could be “to make Ukraine look reckless, either to weaken Western support or try to shore up Russian domestic support”, said Phillips O’Brien of the University of St Andrews.

James Nixey of London’s Chatham House think tank said that, if it was a “false flag” operation, “it reeks of desperation … And it’s a high-risk strategy likely to be exposed”.

WHAT WILL THE U.S. MAKE OF IT?

The Biden administration has poured cash and weapons into Ukraine to help it defend against Russia’s invasion, but would likely be nervous of the unpredictable consequences that any Ukrainian attack on the Russian capital could entail. The White House said it had not been able to verify the Russian claim of a Ukrainian attack, and U.S. Secretary of State Antony Blinken said Russian assertions should be taken with a “very large shaker of salt”.

WHAT IS THE SIGNIFICANCE OF THE TIMING?

The incident comes at a moment of high tension and a potential turning point in the war, as Ukraine prepares to mount a long-anticipated counter-offensive.

Perhaps more immediately, it coincides with preparations for Russia’s Victory Day holiday on May 9, marked with a military parade across Red Square, under the Kremlin walls.

Some of the videos of the incident showed spectator stands that had already been put up for the parade, directly over the wall from the Senate. Security for the parade had already been tightened.

WHAT HAPPENS NEXT?

The statement from Putin’s office pointed to a significant response. Former Russian president Dmitry Medvedev said it was time to “physically eliminate Zelenskiy and his clique”, and parliament speaker Vyacheslav Volodin called for the use of “weapons capable of stopping and destroying the Kyiv terrorist regime”.

Western analysts questioned how far it was possible for Russia to escalate, given the death and destruction it has already inflicted on Ukraine with mass missile strikes.

Matthew Ford, associate professor at the Swedish Defence University, said further strikes on Ukrainian energy infrastructure would be less effective now that spring has arrived, and that disruption to grain supplies would hurt Russia’s own allies. He also questioned whether Russia was capable of taking out Zelenskiy. “The closest they got was last spring. How they could pull it off now – that seems very unlikely,” he said in a telephone interview.

(Reporting by Reuters; Writing by Mark Trevelyan; Editing by Kevin Liffey)

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Business News

U.S. SEC adopts new rules around private fund disclosures, share buybacks

by Reuters May 3, 2023
By Reuters

By John McCrank

NEW YORK (Reuters) – The U.S. Securities and Exchange Commission on Wednesday adopted new disclosure rules for hedge fund and private equity fund advisors aimed at increasing transparency, competition, and efficiency in the $25-trillion marketplace.

The rule-making updates Form PF, which was put in place following the financial crisis of 2008-2009 to monitor risks in the rapidly growing private fund sector, to boost the quality of confidential regulatory disclosures by large funds about their investment strategies and leverage.

“I think that this final rule, through the greater visibility into funds it will provide to regulators, will help protect investors and promote financial stability,” SEC Chair Gary Gensler said in an open meeting ahead of the vote.

Under the new rules, large hedge fund advisors have to inform financial regulators on certain events that may indicate significant stress or otherwise signal the potential for systemic risk and investor harm, such as significant margin calls or counterparty defaults, within 72 hours of the event.

The regulator also adopted a final rule to enhance the disclosures companies make around share buybacks that requires quantitative disclosure of daily repurchases on a quarterly or semi-annual basis, depending on the type of issuer. The aim of the rule is to provide investors with more information to assess the purposes and effects of share repurchases, which last year amounted to nearly $950 billion, the SEC said.

“Through these disclosures, investors will be able to better assess issuer buyback programs,” Gensler said. “The disclosures will also help lessen some of the information asymmetries inherent between issuers and investors in buybacks. That’s good for investors, issuers, and the markets.”

(Reporting by John McCrank; Editing by Mark Potter)

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US and World News

Senators will look at legislation addressing TikTok in China proposal — Schumer

by Reuters May 3, 2023
By Reuters

WASHINGTON (Reuters) – Senate Majority Leader Chuck Schumer said senators will consider legislation to bolster the Biden administration’s ability to crackdown on popular video sharing app TikTok as they craft wide-ranging legislation to address Chinese threats.

In March, Senators Mark Warner and John Thune joined by 24 other senators proposed the Restrict Act to grant the Commerce Department new authority to review or block a range of transactions involving foreign-owned apps like TikTok that pose national security risks. “This is one of the things we will look at for sure,” Schumer said Wednesday at a press conference citing Warner’s bill.

(Reporting by David Shepardson)

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