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Countdown to recession: What a inverted yield curve means

REUTERS/Brendan McDermid
By Karen Brettell
NEW YORK — A dramatic dip in Treasuries this week directed some key areas of the U.S. yield curve into reinvert, a signal that’s traditionally been bearish for the U.S. economy.
The curve involving two-year and five-year notes inverted on Monday for the first time since December, and also the three-month, 10-year curve turned negative on Tuesday for the first time since October.

As worries over the financial effect of China’s coronavirus led investors to search out safe-haven assets returns dropped.
The movement has offset optimism heading that inflation and growth would pick up, after the United States and China in December agreed to de-escalate their trade warfare.
The difference between three-month and 10-year returns is watched. An inversion, when yields fall under these on bills, has before been a reliable indicator that a downturn will follow in one to two years.
This region of the yield curve inverted for the first time since the 2007-2009 financial catastrophe.
While a recession could be prone to followalong with the timing is unclear, and fiscal policy could result.
Some analysts also feel that the relative appeal of U.S. bonds into those in Europe and Japan, many of which have negative yields, is maintaining longer-dated returns below where they would otherwise be, reducing the truth of the yield curve inversion as a recession signal.

WHAT IS THE TREASURY YIELD CURVE?
The yield curve is a plot of the returns all Treasury maturities — debt offered by the national government — ranging from 1-month invoices to 30-year bonds.
In normal circumstances, it’s an arcing, upward incline because bond investors expect to be compensated more for taking on the added probability of owning bonds with longer maturities.
The curve is also referred to as steep, when yields further out on the curve are substantially higher than those near the front. Therefore a bond will provide a higher yield than a 2-year note.
When the gap, or”spread”, is narrow, it is referred to as a horizontal curve. In that circumstance, a 10-year note, for example, may offer only a higher yield than a 3-year note.

What’s a CURVE INVERSION?
On rare occasions, a few or all the yield curve stops to be upward sloping. This happens when shorter-dated yields are higher than ones that are longer-dated and can be known as an inversion.
While various economic or market commentators may focus on different areas of the yield curve, any inversion of the yield curve tells the same story: An expectation of weaker growth in the future.
Back in March, inversion of the yield curve struck 3-month T-bills for the very first time in about 12 years once the yield on 10-year notes dropped below those for 3-month securities.
It has traded in positive territory since October, with the exception of Tuesday’s brief inversion.
The curve between 2-year and 10-year notes, that is also viewed as a recession indicator, inverted for the first time since 2007 at August. It has been positive since early September.

WHY DOES INVERSION MATTER?
Yield curve inversion is a classic signal of a looming recession.
The U.S. curve has inverted before each recession in the past 50 years. A signal was offered by it only once in that moment.
When short-term yields climb above longer-dated ones, it signals short-term borrowing prices are somewhat more costly than longer-term loan expenses.
Under these circumstances, companies often find it even more costly to fund their operations, and executives tend to temper or shelve investments.
The economy contracts and unemployment rises.

Shorter-dated securities are highly sensitive to interest rate coverage set by a central bank such as the U.S. Federal Reserve.
Longer-dated securities are more influenced by investors’ expectations for future inflation because inflation is anathema to bond holders.
Therefore, when the Fed is raising rates, as it did for three years, that pushes up returns on shorter-dated bonds in the front of the curve. And when future inflation is seen as contained, because it is now because higher borrowing costs are predicted to become a drag on the economy, investors are willing to accept relatively modest yields on long-dated bonds in the rear end of the curve.

(Reporting by Karen Brettell and Dan Burns; Editing by Megan Davies and Lisa Shumaker)

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Grammy winner Cara bags nominations in the 2020 Juno Awards of Canada

FILE PHOTO: Alessia Cara performs during the 2019 Latin Recording Academy’s Person of the Year Gala honoring Colombian musician Juanes in the MGM Grand hotel-casino, in Las Vegas, Nevada, U.S. November 13, 2019.

REUTERS/Steve Marcus
From Moira Warburton
TORONTO (Reuters) — Grammy award-winning artist Alessia Cara picked up six nominations for its 49th annual Juno Awards, celebrating Canadian music, with stars such as Shawn Mendes, Bryan Adams and Sum 41 among those also nominated Tuesday.
Cara was nominated for the awards this season, including album of the year and artist of this year.

In an interview with the Canadian Broadcasting Corporation on Tuesday, she stated that despite winning international awards, the Junos will always be special to her.
“There’s nothing like being encouraged by your own country,” Cara, stated. Cara was named Best New Artist in the 2018 Grammy Awards, becoming the first artist to win the award.
Mendes, from Pickering, Ontario, and Adams were nominated for artist of the year. Mendes’ cooperation with Cuban-American singer Camila Cabello,”Señiorita,” was nominated for single of the year, and Adams’ album”Shine a Light” will vie against Michael Bublé’s”love” for album of the year, amongst others.
Sum 41’s album,”Order in Decline,” was nominated for rock album of this year.
Artists such as Justin Bieber, Avril Lavigne and The Weeknd joined Cara and Mendes in being nominated for Juno Fan Choice Award.
The awards are administered by the Canadian Academy of Recording Arts and Sciences.
Cara will host the ceremony to be held on March 15 in Saskatoon, Saskatchewan.

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Road and belt Initiative to Improve lending in LatAm

FILE PHOTO: A woman checks her mobile phone next to a poster promoting a project of This Belt and Road in Colombo, Sri Lanka in China International Fair for Trade in Services in Beijing, China, May 28, 2019.

REUTERS/Jason Lee January 28, 2020
From Aaron Weinman and Daniela Guzman

Initiated in 2013 from the Chinese authorities, the BRI seeks to Construct a modern version of the Silk Road to link China with the rest of Asia, Europe and beyond through large-scale endeavors. It’s one of the toughest infrastructure initiatives conceived.

Latin America is estimated to be the”bright spark” for Chinese investment during 2020, according to a report by Fitch Solutions, as more countries sign up to the initiative and Chinese companies acquire new contracts to construct and finance infrastructure projects in the area.
China is the second-largest trading partner, following the United States of Latin America. Trade between China and the area grew 19% year-over-year to US$307.4bn in 2019 from 2018, based on Fitch Solutions.
As 2017, Ecuador, Chile, Uruguay, Trinidad & Tobago, Panama, the Dominican Republic and El Salvador have signed agreements to collaborate with China on the BRI.
As China’s President Xi Jinping seeks to fortify ties with governments in the area, the country’s biggest state-owned companies are winning construction, power and transport projects.
Before this month, usefulness China Yangtze Power finished a US$4bn bridge loan with the Bank of China, Industrial Commercial Bank of China, Santander in Hong Kong and MUFG confirming its proposed acquisition of Sempra Energy’s power assets in Peru.
In November, power firm State Grid Corp of China was seeking over US$2bn in bank debt to finance the purchase of Sempra’s resources in neighboring Chile, sources told Refinitiv LPC in the moment.
“The favourite strategy of the Chinese investor is to invest in a Latin American firm that has a relationship with China, and they (China’s banks) prefer to lend bilaterally,” stated a managing director in a US investment bank, adding that the country’s banks generally fund deals straight or on a club basis.
ICBC and the Bank of China, for example, are supplying US$600m in debt to help construct a petroleum refinery in the Mexican port of Dos Bocas, China’s Ambassador to Mexico Zhu Qingqiao told reporters on January 13 in a Mexican economy ministry occasion. The refinery is estimated to cost around US$8bn, according to media reports.
China Civil Engineering Construction Corp on January 7, signed a contract to build the Regiotram de Occidente, an elevated rail line in Colombia’s capital Bogotá, and the company is after US$300m in debt to finance the performance, banking sources said.

DUE DILIGENCE
As Chinese-backed projects progress in Latin America, the pace of BRI-related works could slow down in 2020, as the Chinese government functions to improve sustainability and transparency on financing with BRI-linked nations, according to the January 8 report by Fitch Solutions.
Given that most nations are characterized as emerging markets that pose risks for investors, some criticism has been faced by the scheme. Most observers are fearful that financing arrangements could lead than bringing growth, whether the initiative is about promoting sway.
“There has been complaint around the sorts of projects that were advanced and transparency about projects’ prices, sovereign debt and also the sustainability of government financing affected by loans,” said Matteo Addonizio, an analyst at Fitch Solutions.
The accounts, which were repayable became expensive because oil prices dropped.
Ecuador has since struggled to tighten its fiscal deficit. In February 2019 it resorted to a US$10.2bn bailout package in global financial institutions including the International Monetary Fund and the World Bank.
Going ahead, China’s approach to every country is predicted to be customized, based on Fitch Solutions. And this is very likely to reduce threat and help gain the confidence of additional BRI countries.
“This greater focus on transparency will impede the progress of projects overall as the deal-making process will lengthen,” explained Addonizio, but added that these processes would be stricter with heightened due diligence steps.

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Oil edges up as stock markets rebound after virus-related selloff

REUTERS/Christian Hartmann/File Photo January 28, 2020
By Scott DiSavino
NEW YORK (Reuters) — Oil stocks edged up on Tuesday after falling for five days, gaining support from a rally in Wall Street stocks and discuss that OPEC and its allies may tighten the market amid worries the coronavirus could weigh on oil requirement.
U.S. stocks rose as gains in financial and technology shares helped major indicators recover from their biggest selloff in roughly four weeks on worries over a coronavirus outbreak and its potential impact on global growth.

Brent futures rose 36 cents, or 0.6%, to $59.68 a barrel by 1:34 p.m. EST (1834 GMT), whereas U.S. West Texas Intermediate (WTI) crude gained 33 cents, or 0.6%, to $53.47.
“WTI is correlating to U.S. stocks, that are stronger,” stated Bob Yawger, director of energy futures at Mizuho at New York.
On Monday, both benchmarks dropped to their lowest since October with Brent down up to 18% and WTI falling up to 21% from highs hit earlier in January because of U.S.-Iran tensions. The contracts are available for their greatest declines.
Those movements come ahead of a report by the American Petroleum Institute (API) in 4:30 p.m. EST expected to demonstrate a 500,000-barrel build in U.S. crude stockpiles last week.
De-facto pioneer of the Organization of the Petroleum Exporting Countries, saudi Arabia, has sought to calm market jitters, advocating caution against expectations about the impact of the virus on global oil demand.
OPEC officials have also begun weighing options such as extending current oil output cuts until at least June, together with the possibility of reductions if oil demand in China is heavily hit by the virus, OPEC sources said.
OPEC+, the producer group which includes allies like Russia, has been reducing oil supply to support prices, agreeing in December to hold back 1.7 million barrels every day (bpd) of output until the end of March.
Libyan output has fallen almost 75 percent to below 300,000 bpd amid the oil blockade for years. The OPEC member is exempt from cutting edge output.
President Xi Jinping said China was sure of defeating a”devil” coronavirus that’s killed 106 people and spread throughout the world, rattling financial markets.
The virus has been discovered in more than a dozen countries, and other countries and the United States warned against travel to China.

(Graphic: Map showing places with confirmed instances of 2019-nCoV IMG, https://graphics.reuters.com/CHINA-HEALTH-MAP/0100B589312/coronavirus-map.jpg)

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A place in the sun: French Shield Directly to retire

January 28, 2020 rEUTERS/Eric Gaillard
From Caroline Pailliez
NICE, France (Reuters) — Many weekdays, 64-year-old Joelle Svetchine steps from her French Riviera apartment, checks the sun is shining and the sea calm, and decides whether to proceed rowing.
“It clears the head on the ground,” that the pensioner told Reuters as she sculled across a bay near Nice beneath a blue sky. “I am blessed to have free time to be in good health, to have this liberty and no longer worry about work.”

The former physiotherapist says she could lead an active life since she retired at age 61 and 1/2, profiting from a pension system which allows many employees to quit at other parts of Europe ahead of their peers.
President Emmanuel Macron is though now under threat from a reform of the pension system driving that system. Weeks of strikes and protests have triggered.
France has one of the first retirement ages amongst nations and its own pensioners like the third greatest income level on a purchasing power basis of European Union citizens, behind only those in Austria and Luxembourg.
A former investment banker, macron, is currently pushing forward with developing a pension system from a mishmash of schemes, each with their own advantages. He says it will be fairer. Trade unions say it will mean employees affected could need to work longer to get the exact same pension.
Macron has pulled back on a different plank of his reform, raising the retirement age by two years to 64, as the government says that the system is underfunded but this could be a temporary escape.
Svetchine started before switching to public associations operating. She said she frequently saw the likes of that unions cite as justification for many others, dockers and rail workers retiring to a decade sooner than typical employees to workplace injuries.
“In most jobs, the body becomes worn down. I know that like Germany, in countries, people work longer. But in what condition?” Svetchine said.
Macron has stated a points-based system that provides every employee the very same rights for every euro will be fairer, in particular for girls.
That aspect of the reform complies with Svetchine, who failed to achieve her pension by the retirement age after having taken two decades maternity leave and afterwards working.
But she expressed support for its anti-reform strikes and protests.
Longer life expectancies supposed the early 50s was too early to retire however a system which did not factor in a job demands would be unjust, said Svetchine.
“After all, to enjoy retirement, then you have to be in good shape,” she said.

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Trump team nears end of impeachment trial defense; Bolton controversy simmers

REUTERS/Mary F. Calvert January 28, 2020
By Makini Brice and Susan Cornwell
WASHINGTON (Reuters) — President Donald Trump’s lawyers launched their final day of discussions in his U.S. impeachment trial since the Senate’s top Democrat on Tuesday rejected a Republican proposal to let senators review former national security advisor John Bolton’s explosive, unpublished book manuscript on a classified basis.
Trump’s lawyers made the case to the Senate that the Republican president’s activities as explained in the manuscript — if true of Bolton — do not represent an impeachable offense. Trump’s legal group was expected to send its third and last day of discussions advocating his acquittal starting at about 1 p.m. (1800 GMT), with plans to finish by supper time.

Directly contradicting Trump’s report of events, Bolton, at the manuscript,” said the president told him he wished to suspend $391 million in security aid to Ukraine before Kiev pursued investigations into Democrats, such as Democratic political rival Joe Biden and his son Hunter Biden, the New York Times reported.
The allegations of bolton go to impeachment charges against Trump’s heart. Democrats have stated Trump abused his power by using the security aid — passed to help Ukraine battle separatists — as leverage to have a power to smear a political rival.
Trump is seeking re-election on Nov. 3. Biden is a candidate for the Democratic nomination to face Trump.
The trial will determine whether Trump is removed from office on charges of abuse of power and obstruction of Congress originating from his behavior toward Ukraine after being impeached by the House of Representatives last month.
Trump is expected to be acquitted in the 100-seat Senate, where Republicans hold 53 chairs and a two-thirds majority is needed to remove him from office under the U.S. Constitution.
Senate Republicans, who’ve refused to permit some witnesses or new evidence in the trial, faced pressure from Democrats and some moderates within their party to rally Bolton.
Trump lawyer Jay Sekulow alluded to the Bolton issue when he addressed the Senate, telling the senators they had been taking part in”the most solemn of duties under our constitutional frame — the trial of the chief of the free world, the duly elected president of the United States. It’s not a game of unsourced manuscripts and leaks. That’s politics, unfortunately.”
Republican Senator Lindsey Graham, a Trump president that had been at the White House on Tuesday afternoon, said he encouraged making the manuscript available on a basis that was classified of Bolton, but compared hearing as a trial witness from Bolton.
But we are not likely to call John Bolton. If you call John Bolton, we are calling everybody. We are not only going to call 1 witness,” Graham told reporters.
Top Senate Democrat Chuck Schumer compared the Republican proposal.
“What an absurd proposal. It is a book,” Schumer told me about the proposal floated by Graham and fellow Republican Senator James Lankford, stating there was no need to read the manuscript at a classified setting”unless you want to hide something.”
Schumer criticized Trump’s legal group for saying during its arguments to the Senate there was no eyewitness testimony detailing abuse of power by Trump”when we understand that John Bolton has eyewitness testimony and is willing to testify”
Schumer made a fresh appeal for four Republican senators — that the number required for most — to join Democrats. Schumer also signaled any attempt would be rejected by Democrats .
“The Republicans can call who they desire. They have the ability. They have the majority,” Schumer said.
Lankford late on Monday urged Bolton to speak publicly out the impeachment trial.
“John Bolton is no shrinking violet,” Lankford said in a video posted on his Facebook page. “My reinforcement is : If John Bolton’s got something to say, there’s plenty of microphones all around the country — which he should step ahead and start talking about it right now.”
8, bolton left his White House article. Trump has said he fired Bolton. Bolton said he stopped after coverage disagreements.

‘INFINITELY’
White House Deputy Counsel Patrick Philbin, also addressing the Senate for Trump’s legal group, kicked off his presentation by criticizing what he called the”infinitely malleable” premise for the misuse of power charge accepted by the House against the president. He pushed the point that actual impeachable offenses are not represented by the charges.
“They don’t have a regular that really defines a specific offense. They don’t have a standard that really defines in coherent conditions which are likely to be recognizable what the offenses are,” Philbin told the assembled senators, slamming this as”an unconstitutionally vague standard”
Trump has denied telling Bolton he sought to use the Ukraine aid to get Kiev to investigate the Bidens.
The Senate may resolve the matter of whether to call witnesses at a vote on Friday or even Saturday. Some moderate Republican senators, such as Mitt Romney and Susan Collins, said the disclosures were anticipated to influence at least four Republicans to call Bolton to testify, which would give Democrats the votes needed in the Republican-led Senate to summon him.
The focus was on if two other moderate Republicans, Lisa Murkowski and Lamar Alexander, would vote to hear from Bolton.
“The question is: Do they want to hear the truth or do they wish to conceal the reality?”
Romney told Reuters on Tuesday that the notion of a”one-for-one” watch bargain, with one witness called by Democrats and one by Republicans,”has merit,” but added:”I would not suggest any special names.”

(Reporting by Susan Heavey, Susan Cornwell, Makini Brice, Karen Freifeld, David Morgan, Patricia Zengerle and Richard Cowan; Writing by Will Dunham; Editing by Peter Cooney, Jonathan Oatis and Bernadette Baum)

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Weinstein accuser’s ex-roommate backs up sexual assault allegation

REUTERS/Jane Rosenberg January 28, 2020
From Brendan Pierson

Elizabeth Entin told jurors that Haleyi, visibly upset, told her that Weinstein forced oral sex on her.

“I said,’Miriam, that seems just like rape,'” Entin testified, with Haleyi’s full name.
67, weinstein, has pleaded not guilty to assaulting Jessica Mann and Haleyi. Since 2017, more than 80 girls, including many famous actresses, have accused Weinstein of misconduct.
The accusations showed that the motion, in which girls have accused powerful men of sexual misconduct in media, entertainment, business and politics. Weinstein’s trial is widely seen as a key moment for the motion.

Haleyi, who worked on a Weinstein television series as a production assistant, told jurors on Monday that Weinstein invited her in July 2006 to his Manhattan home and assaulted her, backing her into a bedroom and forcing sex.
Entin said she and Haleyi shared an apartment.
She told her Weinstein had attacked her, and stated that one day Haleyi appeared nervous.
“She said’I’m on my period’ and he said’I really don’t care,’ at which point he threw down her, pulled down her underwear, pulled out her tampon and went down on her while she was saying’no,'” Entin said.
Entin testified she told Haleyi her experience encouraged her to speak to a lawyer and seemed like rape, but that Haleyi did not wish to.
Entin said that weeks before the alleged assault, Haleyi called her to tell her that Weinstein had barged into their flat and begged her to return with him to Paris. Entin stated Haleyi told her that Entin’s chihuahua, Peanut, was”kind of chasing him about” and Weinstein seemed afraid of the puppy.
At the time, Entin said, she watched Weinstein less a danger but as”a pitiful older man trying to hit Miriam.”
On cross-examination, Donna Rotunno asked Entin whether she understood Weinstein had paid for Haleyi to travel to London and Los Angeles after the alleged assault, and that she’d continued to communicate with him. Entin said she did not.
After Entin left the stand, prosecutors showed jurors several old photographs of Weinstein, including him and former U.S. President Bill Clinton. They previously had stated they wanted to introduce the photograph to show the power and connections of Weinstein.
Haleyi was the next accuser to testify against Weinstein. Actress Annabella Sciorra, famous for her role on HBO’s”The Sopranos,” testified a week which Weinstein forced his way to her Manhattan apartment one winter night in 1993 or 1994 and raped her.
While Sciorra’s allegation is too old to support a separate rape charge against Weinstein, prosecutors hope it will show he is a repeat sexual predator — a charge that could put him in prison for life.
Jessica Mann, a former performer, is expected to announce that she was raped by Weinstein .

(Reporting from Brendan Pierson in New York; Editing by Noeleen Walder, Tom Brown and Jonathan Oatis)

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The Johnson of UK, defying Trump refuses to ban Huawei from 5G

Britain’s Prime Minister Boris Johnson reacts as he listens to students during his visit to King’s Maths School, a Part of King’s College London University, in central London, Britain January 27, 2020.

Daniel Leal-Olivas/Pool through REUTERS January 28, 2020
By Jack Stubbs and Paul Sandle

Whilst such businesses’ involvement is going to be capped at 35 percent, they’ll be excluded from the sensitive core, where information has been processed, and they’ll be prohibited from all essential networks and places like nuclear sites and military bases.
This kind of explicit rejection of U.S. worries that Huawei could be used to steal Western secrets President Donald Trump’s administration but was welcomed by the Chinese firm, founded in 1987 by a former People’s Liberation Army engineer.
Trump and johnson talked by phone soon after the decision was made public. “The Prime Minister underlined the value of like-minded nations working together to increase the sector and break the dominance of a few businesses,” the British government said in a statement.
Speaking ahead of the call, a Trump administration official stated:”There is no safe choice for untrusted sellers to control any part of a 5G network.
“We look forward to working with the UK on a way ahead that results from the exclusion of untrusted vendor parts from 5G networks”
A British official stated excluding Huawei cost customers more and would have delayed 5G, echoing warnings from the business.
5G faster data rates and increased capacity will make it the base stone of industries and also a driver of economic growth.
In what some have in relation to the Cold War antagonism with the Soviet Union, the United States is concerned that 5G dominance is a milestone towards technological supremacy that could define this century’s geopolitics.
But as a centre for Chinese investment, trading and banking Britain sided with Washington in years, in one of the biggest people breaks with Beijing.
“I fear London has freed itself from Brussels simply to cede sovereignty to Beijing,” said Senator Tom Cotton, an Arkansas Republican, adding there should be an overview of intelligence sharing with Britain.
“Letting Huawei to build up the UK’s 5G networks now is similar to allowing the KGB to construct its telephone network throughout the Cold War. The CCP (Chinese Communist Party) will finally have a foothold to conduct pervasive espionage… and has increased economic and political leverage over the United Kingdom.”

CHINA VS USA
The United States had warned London against allowing Huawei into 5G, arguing that the distinction between”edge” and”core” will blur since information is processed through 5G networks, making it difficult to include any safety risks.
Huawei, the world’s biggest manufacturer of telecoms equipment, has said the United States wants to ditch its own expansion because no U.S. firm could supply the same range of technology at an aggressive price.
“This decision will cause a more innovative, more secure and much more cost-effective telecoms infrastructure that’s fit for the long run,” Huawei’s vice president Victor Zhang told reporters.
“It gives the UK access to the world’s top technology and ensures a competitive market,” Zhang explained.
The only other large-scale telecoms equipment providers are Finland’s Nokia and Sweden’s Ericsson.
Zhang said it spent $15 billion final year on research.
It dedicated to spend 3 billion pounds as strategic location and a worldwide innovation hub in Britain, Zhang explained.
Huawei UK vice president Jeremy Thompson reported the 35 percent cap has been”pretty much in line with its expectations”.
“We welcome the diversity section and that’s what I’m sure our customers will be searching for too,” he told reporters.
Last July huawei has around a 35 percent share of this non-core 4G cellular network in Britain, a government document said.

INTELLIGENCE
Britain said national security was shielded by the decision whilst providing world-class connectivity. It stated intelligence-sharing, including with the U.S.-led’Five Eyes’ alliance, wouldn’t be sabotaged.
“How we build our 5G and complete fiber people telecoms networks has nothing to do with the way we will share classified data,” Foreign Secretary Dominic Raab told lawmakers following a meeting of the National Security Council chaired by Johnson.
“Intelligence-sharing will not be put at risk…”
British cyber security officials said they’d put specific measures in place to mitigate risks.
“We have never’reliable’ Huawei and also the (measures) you can see… exist since we treat them differently to other sellers,” Britain’s National Cyber Security Centre (NCSC), part of the GCHQ signs intelligence agency, said in a technical post.
The NCSC stated the belief that there was no way to separate edge and core parts of the 5G system”remained false”.
Huawei’s equipment is used by Britain’s biggest telecoms companies like BT and Vodafone, but it has been largely deployed in the edge of the community.
Sources told Reuters last week that senior British officers had suggested granting Huawei a restricted 5G job, a”calculated compromise” that could be presented to Washington because of tough limitation, while accepted by British operators.

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U.S. business investment weak; Customer confidence at five-month high

FILE PHOTO: The view from one of the ship-to-shore cranes in Wando Welch Terminal Controlled from the South Carolina Ports Authority at Mount Pleasant, South Carolina, U.S. May 10, 2018.

By Lucia Mutikani
WASHINGTON (Reuters) — New orders for key U.S.-made capital goods dropped by the most in eight months in December and imports were weak, suggesting business investment contracted further in the fourth quarter and remained a drag on economic development.
For now the longest economic expansion on record seems set to continue jumped to a high in January. That indicates consumer spending blunt a few of the hit on the market from business investment that is poor and could remain fairly strong in the long run.

Business spending has remained weak as three times reductions this past year. Officials from the U.S. central bank started a two-day policy meeting on Tuesday. They’re expected to emphasise that the desire to keep rates unchanged at least through this year of the Fed.
Weak business investment and the consequent downturn in manufacturing have been rising of Fed officials that have blamed commerce tensions, particularly the White House’s 18-month trade war with China, and an uncertain global economic growth outlook for the malaise.
Although tensions have eased with the signing this past month of a”Phase 1″ trade deal between Washington and Beijing, Boeing continues to loom more than manufacturing. Boeing this past month suspended production of its troubled 737 MAX jetliner, which was grounded following two deadly crashes.
“Manufacturing is clearly losing momentum as many of the very extreme tariffs on supply-chain inputs factories need to produce their final products stay in position,” explained Chris Rupkeychief economist in MUFG at New York. “When it comes to forecasting the market in 2020, it is the consumer stupid.”
The Commerce Department said orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.9percent last month as demand for machinery, primary metals and electronics, appliances and parts diminished. That was the most significant decrease since April.
Data for November was revised lower to demonstrate such so-called core capital goods orders edging up 0.1percent instead of gaining 0.2percent as previously reported. Economists polled by Reuters had predicted center capital goods would be unchanged in December.
Core capital goods orders rose 0.8percent in 2019. Shipments of core capital goods decreased 0.4percent last month. Core capital goods prices are utilized to compute equipment spending from the government’s gross domestic product measurement. They declined with an unrevised 0.3percent in November.
Business investment has contracted for two straight quarters and was stuck at the red from the fourth quarter. The data also imply a recovery is unlikely soon.
The government will publish its own snapshot of fourth-quarter GDP .
In a separate report on Tuesday, the Conference Board said its consumer confidence indicator increased 3.4 points to a reading of 131.6 in January, the highest reading since August. Economists expected a temporary fall because of the coronavirus, which has killed over 100 people together with cases reported in certain countries including France, the United States and Japan, in China.
The poll’s so-called labor market differential, based from data on respondents’ views on whether jobs are plentiful or difficult to get, improved to 37.4 this month from 33.5 in December.
Although the labor market remains strong, there are signs that momentum is slowing. Job growth cooled in December and vacancies recorded their biggest fall in over four years.
“The fantastic thing is that a fall in confidence is unlikely by itself to cause a considerable fall in consumer spending,” explained Ryan Sweet, a senior economist at Moody’s Analytics at West Chester, Pennsylvania.
The dollar firmed against a basket of currencies as worries about the economic fallout from the coronavirus outbreak fostered demand for safe-haven currencies. Stocks on Wall Street were trading high, while U.S. Treasury prices dropped.

MANUFACTURING SLUMP
The U.S.-China commerce war has hurt business confidence, devoting capital expenditure and compelling manufacturing, which accounts for 11 percent of the market, into recession.
Boeing stop in over 20 years is expected to wreak havoc. The plane maker’s biggest supplier, Spirit AeroSystems Holdings , announced early this month that it planned to lay off over 20% of the work force in its Wichita, Kansas base.
Economists estimate the manufacturing suspension could slice at least half a percentage point from GDP growth. The reach to GDP growth would come from a smaller inventory build. There have been no deliveries though airlines have continued to submit orders.
In December, overall orders for durable goods, items ranging from toasters to aircraft which are intended to last 3 years or more, rebounded 2.4% after tumbling 3.1percent in the previous month.

Prices for defense aircraft and parts soared 168.3% last month, offsetting a 74.7% decrease in demand for civilian aircraft. Boeing reported that it had obtained just three commercial aircraft orders in December, down from 63 in November. December is a strong month for aircraft requests. Motor vehicles and parts orders dropped 0.9percent in December.

(Reporting from Lucia Mutikani; Editing by Paul Simao)

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With capital in Jerusalem, Trump proposes Palestinian Nation in peace bid

U.S. President Donald Trump applauds Israel’s Prime Minister Benjamin Netanyahu as they deliver Combined remarks to Explore a Middle East peace plan proposal in the East Room of the White House in Washington, U.S., January 28, 2020.

By Steve Holland
WASHINGTON (Reuters) — U.S. President Donald Trump on Tuesday proposed the creation of a Palestinian state with a capital in eastern Jerusalem, in a bid to attain a peace breakthrough with Israel who will be a tough market for Palestinians.
Underneath Trump’s proposed Middle East peace plan announced at a White House ceremony attended by Israeli Prime Minister Benjamin Netanyahu, the United States will recognize Israeli settlements on the occupied West Bank.

In exchange, while Palestinian statehood were being negotiated, Israel would consent to take a freeze settlement action that is new.
“Now, Israel has taken a giant step toward peace,” Trump said, adding that he’d sent a letter regarding the proposal to Palestinian President Mahmoud Abbas.
“This is a historical day,” Netanyahu said, comparing Trump’s peace plan to former President Harry Truman’s 1948 recognition of this nation of Israel.
“On this day, you became the first world leader to recognize Israel’s sovereignty over areas in Judea and Samaria that are vital to our safety and fundamental to our legacy,” he added, with the Biblical names for the West Bank.
Palestinian leaders had rejected Trump’s long-delayed plan before its official launch, saying his government was biased towards Israel.
The lack of these Palestinians from Trump’s announcement is likely to fuel criticism that the plan tilts toward the demands of Israel rather.
Talks broke down in 2014, and it was far from clear that they will be resuscitated by the Trump plan.
Palestinians have refused to manage the Trump government in protest at such pro-Israeli policies because its moving the U.S. Embassy in Israel from Tel Aviv to Jerusalem, he east of which is sought from the Palestinians.
U.S. senior management officials said they expected initial Palestinian skepticism over the plan but expected that over time they will consent to negotiate. It puts barriers to overcome to achieve their goal of a country.
“Strip away the domestic and Israeli political factors that determined the time of this plan’s launch, and the message to the Palestinians, boiled down to its essence, is: You have lost, get it over,” said Robert Malley, president of International Crisis Group and a former U.S. National Security Council official.
It remains to be seen also how Israel responds, given the pressures its right-wing prime minister, Netanyahu, faces moving into his third effort at re-election in under a year.
Both Trump and Netanyahu face challenges. Trump has been impeached in the House of Representatives and is on trial in the Senate on abuse of power prices.
On Tuesday, Netanyahu was officially indicted in court on corruption charges, after he withdrew his bid for parliamentary immunity against prosecution.

TWO-STATE MAP
The U.S. plan represented the most striking and thorough effort to violate the historical deadlock between Israel and the Palestinians in many decades, the result of a last-ditch effort by Trump senior consultants including his son-in-law Jared Kushner.
Trump has endorsed a proposed map outlining the 2 states, U.S. officials stated. The Palestinian state would be double the size of land that Palestinians control and would be connected by roads, tunnels and bridges, they stated.
Trump briefed Netanyahu and his rival in Israel’s March 2 elections, Blue and White Party chief Benny Gantz, in discussions on Monday.
Israeli leaders consented to the map and have agreed to negotiate on the basis of the Trump plan, the officials stated. Israel’s agreement on statehood for Palestinians is determined by a safety arrangement to protect Israelis, they stated.
Israel will also take steps to make sure Muslim accessibility to al-Aqsa mosque in Jerusalem and honor Jordan’s role regarding holy sites, the officials stated.
A U.S. official stated the question for Palestinians is will they”come to the table and negotiate?”
There are a number of areas that may be compromised in the future Should they consent to negotiate, the official said without offering details.
Palestinian statehood would be determined by Palestinians taking actions for self-government, for example respect for individual rights, freedom of the media and having transparent and credible institutions, the officials stated.
Trump’s plan calls for Palestinians to have the ability to return to some future state of Palestine and creates a”generous compensation fund,” among the officials stated.
About Israel keeping the settlements, a U.S. official stated:”The plan relies on a principle that people should not need to move to accomplish peace… But it will prevent future settlement expansion which we consider to be the most pragmatic approach.
Before the Trump announcement, thousands of Palestinians demonstrated in Gaza City and Israeli troops reinforced positions near a flashpoint site between the Palestinian city of Ramallah and the Jewish settlement of Beit El in the West Bank.
On Monday, Palestinian leader Abbas said he would not consent to any arrangement that didn’t secure a two-state solution. That formulation, the basis for many years of frustrated international peace efforts, envisages Israel co-existing using a brand new state.

(Additional reporting by Ali Sawafta in Ramallah, Ari Rabinovitch in Jerusalem and Dan Williams and Steve Holland in Washington; Editing by Howard Goller and Alistair Bell)

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