Business

GENEVA (Reuters) – Canada has the right to impose tariffs on U.S. imports in the future to ward off the threat of the United States penalising Canadian manufacturers for alleged unfair subsidies, the World Trade Organization said on Wednesday.

Canada brought a case to the WTO in 2016 over U.S. anti-subsidy duties on Canadian “supercalendered” paper, which is used in glossy magazines and catalogues. A WTO panel in 2018 and a WTO appeals body in 2020 found these duties breached global trading rules, prompting Canada to request the right to impose tariffs on a specific amount of U.S. goods.

The WTO typically allows successful complainants to impose tariffs on a specific amount of imports, but in this case awarded Ottawa a formula to calculate the volume of U.S. imports to hit should Washington use similar methods to determine whether U.S. producers are facing unfair Canadian competition.

At issue is a U.S. rule that allows the Department of Commerce to select only the facts that are adverse to the other party, in this case Canada, if it is not satisfied that the other party has complied with a request for information to the best of its ability.

Canada said this was an ongoing practice in the United States, citing nine U.S. cases of duties applied in this way, including to Chinese solar cell, tyre and PET resin makers, as well as to Indian stainless steel pipe producers.

The U.S. subsidy investigation into paper had resulted in import duties for Canadian firms Port Hawkesbury Paper LP, Resolute FP, Irving Paper Ltd and Catalyst Paper Corp.

U.S. authorities revoked the duties in 2018, with payments made by importers since August 2015 being returned with interest.

(Reporting by Philip Blenkinsop; Editing by Josie Kao)

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(Reuters) -Short-seller Hindenburg Research said on Wednesday it had taken a long position in Twitter Inc shares, sending the stock up about 8%, a day after the social media firm sued Elon Musk for backing out of his $44 billion deal.

On Tuesday, Twitter sued Musk for violating his $44 billion deal and asked a Delaware court to order him to complete the merger at the agreed $54.20 per Twitter share.

Musk, chief executive officer at Tesla Inc and SpaceX head, backed out of the deal on Friday, saying Twitter had violated the agreement by failing to respond to requests for information regarding fake or spam accounts on the platform.

Hindenburg did not elaborate on the threat the lawsuit poses to Musk, but legal experts have said that from the information that is public Twitter would appear to have the upper hand.

“We have accumulated a significant long position in shares of Twitter. Twitter’s complaint poses a credible threat to Musk’s empire,” Hindenburg said in a tweet.

Twitter was not immediately available for a comment.

The legal face-off is the latest twist in the months-long saga that began after Musk in April bought a stake in Twitter and later offered to buy the company.

Then in May, he put the buyout on hold until Twitter proved that spam bots account for less than 5% of its total users, even as he had gathered investors to fund a portion of his deal.

“We believe Twitter does appear to have the upper hand ahead of the start of the trial,” CFRA analyst Angelo Zino said, questioning Musk’s motives.

Twitter’s shares rose about 8% to $36.82 in mid-day trading.

Hindenburg, which earlier had a short position on Twitter, had said in May that Musk’s offer could get repriced lower if he walked away from the deal.

(Reporting by Nivedita Balu in Bengaluru; Additional reporting by Medha Singh, Editing by Shinjini Ganguli)

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By David Morgan

WASHINGTON (Reuters) -Michael Barr, a former top official at the U.S. Treasury, won Senate confirmation Wednesday to the Federal Reserve Board as its newest member, and he is expected to also be confirmed later in the day as the central bank’s top Wall Street regulator.

Senators voted 66-28 to confirm him as a Fed governor and immediately started in on a procedural vote to advance his nomination to be the Fed’s vice chair of supervision. A confirmation vote on that post, the Fed’s top banking cop job, is expected later in the day.

The Fed is raising interest rates sharply to bring down inflation that rose 9.1%, a fresh 40-year high. Barr will join as the seventh and last member of the Fed’s Board who, along with the Fed’s 12 regional bank presidents, decide every six weeks exactly how much policy tightening to deliver.

It is unclear if Barr could be sworn in in time for the Fed’s next policy-setting meeting at the end of this month.

If, as expeted, he is also confirmed as vice chair of supervision, Barr’s to-do list will likely include revisiting rules for banks that were eased under his predecessor, Randal Quarles. The Fed has been without a point person on regulation since Quarles, a Trump appointee, left the role last October after four years.

Barr is also expected to use the powerful role overseeing the country’s largest lenders to step up efforts on other issues dear to the Biden administration such as climate change risk, as well as addressing other rapidly evolving areas like fintech and cryptocurrencies.

(Reporting by David Morgan in Washington and Lindsay Dunsmuir and Ann SaphirEditing by Chizu Nomiyama)

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By Daniel Leussink

TOKYO (Reuters) – Confidence at Japanese manufacturers in July was subdued, a Reuters poll showed, reflecting pressure from a problematic chip shortage, China’s heavy pandemic response and a weak yen that is making imported materials increasingly expensive.

The Reuters Tankan – which closely tracks the Bank of Japan’s quarterly tankan survey – showed both manufacturers’ and service-sector morale only improving modestly over the next three months.

The subdued sentiment adds to a recent mixed batch of data that underlines the economy’s difficulty to stage a robust recovery, and shows that companies struggled to benefit from improving demand, particularly at home.

The poll of 495 big and midsize firms between June 29 and July 8, of which 248 responded, showed business managers were worried about the fallout from China’s COVID-19 curbs and a persistent chips and parts shortage.

“Our sales are declining due to the impact of China’s lockdowns and the semiconductor shortage,” said a manager at a transportation equipment producer.

Japan’s factories cut output at the fastest rate in two years in May, largely due to adverse effects from China’s coronavirus restrictions, such as in Shanghai.

Some analysts believe it may take time before Japanese manufacturing and especially the key car sector will benefit from a recovery of economic activity in Shanghai, as the risk of new COVID-19 curbs remains.

The Reuters Tankan sentiment index for manufacturers held steady at 9 in July.

The index is seen inching up to 13 in October, though that is likely largely to depend on whether conditions in the autos/transport equipment sub-sector will improve. Its sentiment remained deeply negative in July.

The service-sector index inched up to 14 from 13 in June, driven by wholesalers and information/communications. It was expected to rise to 18 in October.

Retailers’ mood remained flat, while that of real estate/construction was negative, weighing on overall service sector sentiment.

The BOJ is scheduled to hold its next policy-setting meeting on July 20-21.

The central bank’s own tankan survey showed this month that the mood among Japan’s big manufacturers’ soured for a second straight quarter in the three months to June, also in part due to the hit from rising input costs.

Rising prices of energy and raw materials were frequently mentioned by business managers in the Reuters Tankan survey.

“Our margins declined due to the cost of raw materials and the weak yen,” a manager at a steel maker wrote.

(Reporting by Daniel Leussink; Editing by Kirsten Donovan)

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By Stephen Culp

NEW YORK (Reuters) – Wall Street ended in negative territory on Tuesday as growing signs of recession kept buyers out of the equities market ahead of inflation data.

While all three major U.S. stock indexes seesawed between modest gains and losses earlier in the session, they turned sharply lower late in the day as Wednesday’s Consumer Prices report from the Labor Department drew near, with big bank earnings looming later in the week.

“(Investors are) waiting to hear what happens with CPI and earnings,” said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company, in Milwaukee, Wisconsin. “For several months we’ve swung back and forth between inflation fears and recession fears, almost on a daily basis.”

“We have really confused investors who have chosen to go on a buyers strike,” Schutte added. “I don’t hear many people saying ‘buy the dip.’”

While the CPI report is expected to show inflation gathered heat in June, the so-called “core” CPI, which strips away volatile food and energy prices, is seen offering further confirmation that inflation has peaked, which could potentially convince the Federal Reserve to ease on its policy tightening in autumn.

Paul Kim, chief executive officer at Simplify ETFs in New York, expects year-on-year topline CPI to “be in the high eight or potentially even nine percentage range, and with inflation that high, the Fed has only one thing in mind.”

Worries that overly aggressive moves by the Fed to reign in decades-high inflation could push the economy over the brink of recession were exacerbated by the steepest inversion of the 2 year and 10 year Treasury yields since at least March 2010, a potential signal of near-term risk and economic contraction.

The market expects the central bank to raise the key Fed funds target rate by 75 basis points at the conclusion of its July policy meeting, which would mark its third consecutive interest rate hike.

The Dow Jones Industrial Average fell 192.51 points, or 0.62%, to 30,981.33, the S&P 500 lost 35.63 points, or 0.92%, to 3,818.8 and the Nasdaq Composite dropped 107.87 points, or 0.95%, to 11,264.73.

All 11 major sectors in the S&P 500 fell, with energy shares, weighed down by plunging crude prices, suffering the largest percentage loss. [O/R]

The second-quarter reporting season will hit full stride later in the week as JPMorgan Chase & Co, Morgan Stanley, Citigroup and Wells Fargo & Co post results.

As of Friday, analysts saw aggregate annual S&P earnings growth of 5.7% for the April to June period, down from the 6.8% forecast at the beginning of the quarter, according to Refinitiv.

PepsiCo got the ball rolling this week by beating its quarterly earnings estimates and announced it could increase prices amid resilient demand.

Shares of Boeing Co jumped 7.4% after the plane maker’s June aircraft deliveries hit the highest monthly level since March 2019.

That news, along with falling energy prices, helped the S&P 1500 Air Lines index rise 6.1%.

Apparel retailer Gap Inc fell 5.0% following its announcement that its CEO would step down, and that margins would stay under pressure in the second quarter due to input costs.

Software provider Service Now plunged 12.7% after its CEO’s remarks about macro headwinds and currency pressures. Other software companies, including Salesforce.com, Paycom Software, Intuit and Microsoft, were also down.

Declining issues outnumbered advancing ones on the NYSE by a 1.37-to-1 ratio; on Nasdaq, a 1.19-to-1 ratio favored decliners.

The S&P 500 posted one new 52-week high and 30 new lows; the Nasdaq Composite recorded 13 new highs and 145 new lows.

Volume on U.S. exchanges was 9.86 billion shares, compared with the 12.79 billion average over the last 20 trading days.

(Reporting by Stephen Culp; additional reporting by Amruta Khandekar and Shreyashi Sanyal in Bengaluru; Editing by Marguerita Choy)

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By Tom Hals

WILMINGTON, Del. (Reuters) – Twitter Inc sued Elon Musk on Tuesday for violating his $44 billion deal to buy the social media platform and asked a Delaware court to order the world’s richest person to complete the merger at the agreed $54.20 per Twitter share.

“Musk apparently believes that he – unlike every other party subject to Delaware contract law – is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” said the complaint.

The lawsuit sets in motion what promises to be one of the biggest legal showdowns in Wall Street history, involving one of the business world’s most colorful entrepreneurs in a case that will turn on staid contract language.

On Friday, Musk said he was terminating the deal because Twitter violated the agreement by failing to respond to requests for information regarding fake or spam accounts on the platform, which is fundamental to its business performance.

Musk, who is the chief executive officer of electric vehicle maker Tesla Inc, did not immediately respond to a request for comment.

The lawsuit accused Musk of “a long list” of violations of the merger agreement that “have cast a pall over Twitter and its business.” It said for the first time that employee attrition has been “on the upswing” since the deal was announced.

Twitter also accused Musk of “secretly” accumulating shares in the company between January and March without properly disclosing his substantial purchases to regulators, and “instead kept amassing Twitter stock with the market none the wiser.”

Shares of the social media platform closed at $34.06 on Tuesday, up 4.3%, but sharply below the levels above $50 where it traded when the deal was accepted by Twitter’s board in late April. The stock added another 1% after the bell.

GRAPHIC: Elon Musk vs Twitter (https://fingfx.thomsonreuters.com/gfx/mkt/jnvwedynqvw/Pasted%20image%201657659742658.png)

Musk said he was terminating the merger because of the lack of information about spam accounts and inaccurate representations that he said amounted to a “material adverse event.” He also said executive departures amounted to a failure to conduct business in the ordinary course – although Twitter said it removed that language from the merger contract during negotiations.

Twitter also said it did not share more information with Musk regarding spam accounts because it feared he would build a competing platform after abandoning the acquisition.

Twitter called the reasons cited by Musk a “pretext” that lacked merit and said his decision to walk away had more to do with a decline in the stock market, particularly for tech stocks.

Tesla’s stock, the main source of Musk’s fortune, has lost around 30% of its value since the deal was announced and closed on Tuesday at $699.21.

Legal experts have said that from the information that is public Twitter would appear to have the upper hand.

“In its complaint Twitter is taking a strong position that Musk had a case of buyer’s remorse – and that, and not bots, is the reason for his decision to walk away from the deal,” said Brian Quinn, a professor at Boston College Law School. “The facts Twitter presents here make an extremely strong argument in favor of Twitter getting this deal closed.”

Musk is among Twitter’s most-followed accounts and the lawsuit included images of several of his tweets, including a poop emoji, that the company said violated the merger’s “non-disparagement” clause.

Musk tweeted the emoji on May 16 in response to a pair of tweets by Parag Agrawal, Twitter’s chief executive officer, explaining the company’s efforts to fight spam accounts.

It also included an image of a text message Musk sent Agrawal after Twitter sought on June 28 reassurances about Musk’s financing for the deal.

“Your lawyers are using these conversations to cause trouble,” Musk texted to Agrawal. “That needs to stop.”

Twitter noted that after Musk said he was terminating the deal, he sent tweets on Monday that Twitter said suggested his requests about spam were part of a plan to force spam data into the public sphere.

“For Musk, it would seem, Twitter, the interests of its stockholders, the transaction Musk agreed to, and the court process to enforce it all constitute an elaborate joke,” the lawsuit said.

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Chris Reese, Noeleen Walder and Matthew Lewis)

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(Geely changes name of model to RD6 from R6 previously)

SHANGHAI (Reuters) -Chinese automaker Zhejiang Geely Holding on Tuesday unveiled a new electric pickup truck, targeting growing demand from city residents as coronavirus curbs fuel an interest in outdoor activities like camping.

The Volvo owner also launched a new brand, RADAR, at an online event on Tuesday where it showcased its first pickup product, which it called RD6. An earlier statement had referred to the new truck as R6.

It did not disclose the vehicle’s selling price but said it would have a driving range of more than 600 km (370 miles) per charge.

“In an optimistic estimation, the annual sales of pickup trucks can reach 3 million units in China by 2030,” CEO of RADAR Ling Shiquan told Reuters in an interview.

“More people are pursing a healthy lifestyle with more outdoor activities while the governments are also relaxing restrictions for pickups in cities. Those changes are supporting the growth of pickup trucks,” Ling added.

Pickups are considered a niche segment in China where they are mostly used by farmers. They are still banned from most urban roads despite trials since 2016 allowing entry to select areas in several cities and urging from Beijing to speed up the removal of red tape.

Such vehicles contributed around 2% of China’s auto sales last year, with growth outpacing that of other segments including sedans and sports utility vehicles.

Interest in the vehicles is growing among the country’s urban residents who are taking up outdoor pursuits as COVID-19 measures discourage gatherings and severely hit domestic and international travel.

Nonetheless, sales of pickups fell 10.3% in the first five months of this year, against a 13% fall in passenger vehicles more broadly, data from the China Passenger Car Association (CPCA) showed, with the industry also hit by COVID restrictions.

Ling said Geely aims to start offering the RD6 to Chinese consumers in the fourth quarter while the company is also studying the Southeast Asian market for potential expansion opportunities.

Geely may also seek to bring the trucks to the United States, the world’s largest pickup market, to compete with the existing players such as Ford, Tesla and Rivian, Ling said.

China’s pickup market is currently dominated by Hebei-based Great Wall Motor, while foreign players include Ford’s F-150 Raptor and a $9,000 pickup truck launched by General Motors with its local joint venture last year.

Geely previously rolled out a pickup with a combustion engine priced from 119,900 yuan ($17,815.75) two years ago.

($1 = 6.7300 Chinese yuan renminbi)

(Reporting by Zhang Yan, Brenda Goh; Editing by Kirsten Donovan)

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MINNEAPOLIS (AP) — A Minnesota farmer is accused of making $46 million by passing off chemically treated corn and soybeans as organically grown.

James Clayton Wolf was charged July 7 in federal court with felony wire fraud. Prosecutors say Wolf falsely labeled crops grown on his rural Cottonwood County farm as organic and that he defrauded grain buyers and undermined the nation’s organic labeling system.

Organic crops are grown from non-GMO seeds and without chemicals or fertilizers. They generate higher prices at market than non-organic crops.

Organic crop certification is controlled by the federal National Organic Program, run by the U.S. Department of Agriculture.

The grand jury’s indictment says Wolf’s organic farming certification was revoked in 2020. However, according to the document, Wolf continued selling non-GMO grain falsely labeled as organic through an “associate,” the Star Tribune reported.

Wolf’s attorney is Paul Engh.

“Mr. Wolf is a 65-year-old career farmer, who has never been in trouble,” said Engh. “He’s led a good life and now seeks his vindication.”

Wolf is scheduled to appear before a magistrate on July 22.

Wire fraud is a felony punishable by up to 20 years in prison, according to federal sentencing guidelines. U.S. Attorney Andrew Luger’s office said the indictment is the result of collaboration between the FBI and the inspector general’s office for the USDA.

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By Karen Brettell and Sujata Rao

NEW YORK (Reuters) – The euro rebounded on Tuesday after earlier sliding to a 20-year low and effectively reaching parity against the U.S. dollar as investors worried that an energy crisis in the region will tip the economy into recession.

The single currency reached $1.00005 against the greenback, the lowest since Dec. 2002, after data showed that German investor sentiment plunged below levels at the outset of the coronavirus pandemic in July due to energy concerns, supply bottlenecks and rate hikes from the European Central Bank.

“For all intents and purposes, it effectively reached parity,” said Mazen Issa, senior FX strategist at TD Securities in New York.

“It seems like it’s a very gloomy outlook for the euro…. a sub-parity paradigm is very much in the cards,” Issa said, adding that the single currency could drop to the $0.85-$0.90 area against the greenback.

GRAPHIC: Germany ZEW survey https://fingfx.thomsonreuters.com/gfx/mkt/lbvgnegwwpq/Pasted%20image%201657621170966.png

The dollar is benefiting from expectations that the Federal Reserve has more room to hike rates than peers, which are facing more challenging growth outlooks.

Concerns that Europe could fall into a recession have increased since the biggest single pipeline carrying Russian gas to Germany, the Nord Stream 1 pipeline, began annual maintenance on Monday. Governments, markets and companies are worried the shutdown might be extended because of the war in Ukraine.

The single currency was last $1.0050, after bouncing from the $1 level, which some analysts attributed to technical factors relating to options activity and short-covering.

Neil Jones, head of currency sales at Mizuho, said markets had been ‘short’ on the euro in anticipation of a break below parity, but “we didn’t get it and now these shorts are buying back into the early New York market.”

GRAPHIC: Euro-dollar parity https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwzkoapo/Pasted%20image%201657613096884.png

A possible catalyst that could push the euro back lower could be highly anticipated inflation data on Wednesday, which is expected to show that U.S. consumer prices rose by an annual rate of 8.8% in June.

“We may have to wait for U.S. CPI…or a clearer picture for European energy markets once planned maintenance in Nord Stream comes close to finalising for euro-dollar to break the (parity) threshold,” said Simon Harvey, head of FX at Monex Europe.

Meanwhile the Australian dollar rebounded from a two-year low, after being hurt by global growth concerns as China implements new COVID-19 curbs.

The Aussie was last up 0.22% at $0.6752, after earlier falling to $0.6712, the lowest since June 2020.

The U.S. dollar fell 0.55% against the Japanese yen to 137.33, after hitting 137.73 on Monday, the strongest level in 24 years.

In the cryptocurrency market bitcoin dipped 0.46% to $19,858.

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Currency bid prices at 10:40AM (1440 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 108.0600 108.1600 -0.08% 12.959% +108.5600 +107.9600

Euro/Dollar $1.0050 $1.0041 +0.09% -11.60% +$1.0070 +$1.0001

Dollar/Yen 136.6450 137.4150 -0.55% +18.72% +137.5300 +136.4700

Euro/Yen 137.33 137.93 -0.44% +5.38% +138.0700 +137.0300

Dollar/Swiss 0.9814 0.9834 -0.19% +7.60% +0.9858 +0.9813

Sterling/Dollar $1.1870 $1.1894 -0.23% -12.25% +$1.1909 +$1.1808

Dollar/Canadian 1.3021 1.3006 +0.11% +2.97% +1.3050 +1.2997

Aussie/Dollar $0.6752 $0.6737 +0.22% -7.12% +$0.6760 +$0.6712

Euro/Swiss 0.9863 0.9869 -0.06% -4.88% +0.9898 +0.9837

Euro/Sterling 0.8465 0.8440 +0.30% +0.77% +0.8484 +0.8434

NZ $0.6127 $0.6114 +0.16% -10.53% +$0.6137 +$0.6103

Dollar/Dollar

Dollar/Norway 10.2150 10.1930 +0.31% +16.06% +10.2675 +10.2070

Euro/Norway 10.2724 10.2409 +0.31% +2.59% +10.2892 +10.2403

Dollar/Sweden 10.5671 10.6317 -0.55% +17.18% +10.6843 +10.5425

Euro/Sweden 10.6207 10.6793 -0.55% +3.78% +10.6926 +10.6044

(Additional reporting by Saikat Chatterjee in London, Editing by Angus MacSwan)

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(Reuters) -Australian buy-now-pay-later (BNPL) firm Zip Co Ltd dropped its plan to buyout U.S. rival Sezzle Inc, the companies said on Tuesday, adding to the list of fallen deals as rising interest rates hurt consumer finance firms.

As part of terminating the deal, which is effective immediately, Sezzle would receive $11 million from Zip, the companies added in a joint statement.

BNPL firms have seen their market value rapidly shrink over the past months as interest rate hikes to tame supercharged inflation fuelled concerns about a slowdown in consumer finance.

This has led to Australia’s Latitude Group pull back its buyout offer for Humm’s BNPL business, and fellow BNPL firm Openpay to pause its operations on the U.S. market.

Zip cited “current macroeconomic and market conditions” as a reason for pulling away from the deal, after saying in June “the acquisition of Sezzle remains on track”.

The Australian BNPL firm added that it continued to expect to deliver group profitability during FY2024.

“We remain dedicated to driving toward profitability and free cash flow and believe this (deal termination) is the best outcome for our shareholders,” said Charlie Youakim, chief executive officer of Sezzle.

Sezzle, which was valued at A$491 million ($330.34 million) by Zip while announcing the buyout in February, lost nearly 82% of its value to A84.9 million, as of Monday’s close.

($1 = 1.4863 Australian dollars)

(Reporting by Indranil Sarkar in Bengaluru; Editing by Rashmi Aich)

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