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Bernie Sanders grilled on socialism by Harvard student whose family fled Soviet Russia

Multiple town halls were hosted in Manchester, N.H. on Monday evening with five 2020 Democratic presidential candidates, and Sen. Bernie Sanders found himself answering tough questions about his socialist ideals from a Harvard University student whose family fled Soviet Russia.

Samantha Frankel-Popell told Sanders about how socialism impacted her family's life and grilled him on how his version of Democratic socialism will aim to be different from the socialist regimes of other countries.

“My father’s family left Soviet Russia in 1979 fleeing from some of the very same socialist policies that you seem eager to implement in this country,” the young woman said during the CNN event. “How do you rectify your notion of Democratic socialism with the failures of socialism in nearly every country that has tried it?”

Sanders smiled as Frankel-Poppel asked her question, which was met with mixed applause from the crowd.

"Thank you for asking that question,” Sanders said, before responding with a question himself. “Is it your assumption that I supported or believe in authoritarian communism that existed in the Soviet Union? I don’t. I never have, and I opposed it. I believe in a vigorous democracy."

BERNIE SANDERS BACKERS UPSET WITH PETE BUTTIGIEG OVER TRUMP COMPARISON

SANDERS TOPS BIDEN IN NWE HAMPSHIRE POLL, AS BUTTIGIEG SURGES

Sanders went on to expand on his frequent tirade against the nation's billionaires, discussing the polarization of wealth in the country and rallying for government-funded social initiatives like universal healthcare and tuition-free public education.

"It's a radical idea," he said. "Maybe not everyone believes but it's what I believe. We should have a government that represents working families and not just the 1 percent and powerful corporations."

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He concluded by summarizing to the student the differences between what his version of socialism is, and that which the student's family experienced in Russia decades ago.

“What Democratic socialism means to me is we expand Medicare, we provide educational opportunity to all Americans, we rebuild our crumbling infrastructure. In other words, the government serves the needs of all people rather than just wealthy campaign contributors. That’s what it means to me," he said.

Source: Fox News Politics

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Small plane crashes in southern Bulgaria, 2 killed

Authorities in Bulgaria say a small private plane has crashed in a field in a southern region, killing the pilot and the lone passenger on board.

Plovdiv police chief Atanas Ilkov said the two-seat Zodiac aircraft was on a demonstration tour when one of its wings separated in flight and it fell to the ground near a stadium in the village of Orizare. The accident occurred at 10:20 a.m. Saturday as a sports event was taking place at the stadium.

The cause of the crash is under investigation.

The crash is the second of a small Bulgarian aircraft this month. On April 2, a small plane crashed into a mountain in neighboring Northern Macedonia, killing all four people on board.

Source: Fox News World

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Nielsen says she still supports Trump’s border goals

Kirstjen Nielsen said Monday she still shares President Donald Trump's goal of securing the border, a day after she resigned as Homeland Security secretary amid Trump's frustration and bitterness over a spike in Central American migration.

Trump announced on Sunday in a tweet that U.S. Customs and Border Protection Commissioner Kevin McAleenan would be taking over as acting head of the department. The decision to name a top immigration officer to the post reflects Trump's priority for the sprawling department founded to combat terrorism following the Sept. 11 attacks.

Nielsen had traveled to the U.S.-Mexico border on Friday with Trump to participate in a roundtable with border officers and local law enforcement. There she echoed Trump's comments on the situation at the border, though she ducked out of the room while Trump spoke. As they toured a section of newly rebuilt barriers, Nielsen was at Trump's side, introducing him to local officials. She returned to Washington afterward as Trump continued on a fundraising trip to California and Nevada.

But on Sunday, she wrote in her resignation letter that "it is the right time for me to step aside." She wrote that she hoped "the next secretary will have the support of Congress and the courts in fixing the laws which have impeded our ability to fully secure America's borders and which have contributed to discord in our nation's discourse."

Nielsen told reporters outside her Alexandria, Virginia home Monday that she continues to support the president's goal of securing the border.

"I will continue to support all efforts to address the humanitarian and security crisis on the border," she said in her first public remarks since the surprise resignation, thanking the president "for the tremendous opportunity to serve this country."

Nielsen had grown increasingly frustrated by what she saw as a lack of support from other departments and increased meddling by Trump aides on difficult immigration issues, according to three people familiar with details of her resignation. They spoke on condition of anonymity because they were not authorized to discuss the matter.

She went into the White House on Sunday to meet with Trump not knowing whether she'd be fired or would resign. She ended up resigning, though she was not forced to do so, they said.

Though Trump aides were eyeing a staff shake-up at the Department of Homeland Security and had already withdrawn the nomination of another key immigration official, the development Sunday was unexpected.

Still, it was unclear how McAleenan would immediately assume the role. The agency's undersecretary of management, Claire Grady, is technically next in line for the job, and she will need to resign — or more likely be fired — in order for McAleenan to assume the post.

"The president works very well with Kevin McAleenan. He's done an incredible job in the administration and we expect that relationship and the work to continue," White House spokesman Hogan Gidley told reporters Monday.

He cited McAleenan's "extensive" knowledge of immigration issues and said the change in leadership would hopefully lead to "massive changes" at the border.

Nielsen is the latest person felled in the Trump administration's unprecedented churn of top staff and Cabinet officials, brought about by the president's mercurial management style, insistence on blind loyalty and rash policy announcements.

She was also the highest profile female Cabinet member, and her exit leaves DHS along with the Pentagon and even the White House staff without permanent heads. Patrick Shanahan has held the post of acting defense secretary since the former secretary, Jim Mattis, was pushed out in December over criticism of the president's Syria withdrawal plans. Acting White House chief of staff Mick Mulvaney has held his post since January, following John Kelly's resignation last year.

McAleenan has helped shape many of the administration's policies to date and is considered highly competent by congressional leaders, the White House and Homeland Security officials. But it's unclear if he can have much more of an effect on the issues at the border. The Trump administration has bumped up against legal restrictions and court rulings that have hamstrung many of its major efforts to remake border security.

Rep. Joaquin Castro, chairman of the Congressional Hispanic Caucus, was critical of Nielsen, saying she spent her tenure "championing President Trump's cruel anti-immigrant agenda," and he called McAleenan's appointment "deeply disturbing."

"He cannot be trusted as Acting DHS Secretary based on his record of prioritizing Trump's harmful policies that undermine national security and the economy, and hurt vulnerable families and children at the border," Castro, a Texas Democrat, said in a statement.

Tensions between the White House and Nielsen have persisted almost from the moment she became secretary, after her predecessor, Kelly, became the White House chief of staff in 2017. Nielsen was viewed as resistant to some of the harshest immigration measures supported by the president and his aides, particularly senior adviser Stephen Miller, both on matters around the border and others like protected status for some refugees.

Once Kelly left the White House, Nielsen's days appeared to be numbered, and she had expected to be pushed out last November.

During the government shutdown over Trump's insistence for funding for a border wall, Nielsen's standing inside the White House appeared to rise. But in recent weeks, as a new wave of migration has taxed resources along the border and as Trump sought to regain control of the issue for his 2020 re-election campaign, tensions flared anew.

The final straw came when Trump gave Nielsen no heads-up or opportunity to discuss his decision to pull the nomination of acting Immigration and Customs Enforcement Director Ron Vitiello — a move seen as part of a larger effort by Miller, an immigration hardliner, and his allies at the White House to clean house at the department and bring in more people who share their views, the people said.

Nielsen had wanted to discuss the move with Trump during their visit to the border Friday, but when there was no time, she asked for the meeting Sunday. She walked into it prepared to resign, depending on what she heard. The people described mounting frustrations on both sides, with Trump exasperated at the situation at the border and Nielsen frustrated by White House actions she felt were counterproductive.

Arrests along the southern border have skyrocketed recently. Border agents are on track to make 100,000 arrests and denials of entry at the southern border in March, more than half of which are families with children. A press conference to announce the most recent border numbers — scheduled to be held by McAleenan on Monday — was postponed.

Nielsen dutifully pushed Trump's immigration policies, including funding for his border wall, and defended the administration's practice of separating children from parents. She told a Senate committee that removing children from parents facing criminal charges happens "in the United States every day." But she was also instrumental in ending the policy.

Under Nielsen, migrants seeking asylum are waiting in Mexico as their cases progress. She also moved to abandon longstanding regulations that dictate how long children are allowed to be held in immigration detention and requested bed space from the U.S. military for 12,000 people in an effort to detain all families who cross the border. Right now there is space for about 3,000 families, and facilities are at capacity.

Nielsen also advocated for strong cybersecurity defense and often said she believed the next major terror attack would occur online — not by planes or bombs. She was tasked with helping states secure elections following Russian interference during the 2018 election.

She led the federal agency since December 2017 and was this administration's third Homeland Security secretary. A protege of Kelly's, he brought her to the White House after Trump named him chief of staff.

___

Associated Press writers Jill Colvin and Lisa Mascaro contributed to this report.

___

This story corrects the month in which border agents are on track to make 100,000 arrests and denials of entry to March, not this month.

Source: Fox News National

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WHO: Death toll from fighting over Libyan capital now at 205

The World Health Organization says the death toll from this month's fighting between rival Libyan factions for control of the country's capital, Tripoli, has risen to 205.

The clashes threaten to ignite a civil war on the scale of the 2011 uprising that toppled and killed longtime dictator Moammar Gadhafi.

WHO said Wednesday it's deploying medical specialists, including surgeons needed to treat the wounded, whose number has reached 913. It wasn't clear how many among the dead are civilians.

Fighting over Tripoli erupted earlier this month, pitting the self-styled Libyan National Army, which is led by commander Khalifa Hifter and aligned with a rival government based in the country's east, against militias affiliated with Tripoli's U.N.-supported government.

The U.N. says more than 25,000 people have been displaced in the clashes.

Source: Fox News World

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World must keep lethal weapons under human control, Germany says

Weekly German cabinet meeting
FILE PHOTO: German Foreign Minister Heiko Maas arrives for the weekly German cabinet meeting at the Chancellery in Berlin, Germany, March 13, 2019. REUTERS/Annegret Hilse

March 15, 2019

BERLIN (Reuters) – Germany’s foreign minister on Friday called for urgent efforts to ensure that humans remained in control of lethal weapons, as a step toward banning “killer robots”.

Heiko Maas told an arms control conference in Berlin that rules were needed to limit the development and use of weapons that could kill without human involvement.

Critics fear that the increasingly autonomous drones, missile defense systems and tanks made possible by new technology and artificial intelligence could turn rogue in a cyber-attack or as a result of programming errors.

The United Nations and the European Union have called for a global ban on such weapons, but discussions so far have not yielded a clear commitment to conclude a treaty.

“Killer robots that make life-or-death decisions on the basis of anonymous data sets, and completely beyond human control, are already a shockingly real prospect today,” Maas said. “Fundamentally, it’s about whether we control the technology or it controls us.”

Germany, Sweden and the Netherlands signed a declaration at the conference vowing to work to prevent weapons proliferation.

“We want to want to codify the principle of human control over all deadly weapons systems internationally, and thereby take a big step toward a global ban on fully autonomous weapons,” Maas told the conference.

He said he hoped progress could be made in talks under the Convention on Certain Conventional Weapons (CCW) this year. The next CCW talks on lethal autonomous weapons take place this month in Geneva.

Human Rights Watch’s Mary Wareham, coordinator of the Campaign to Stop Killer Robots, urged Germany to push for negotiations on a global treaty, rather than a non-binding declaration.

“Measures that fall short of a new ban treaty will be insufficient to deal with the multiple challenges raised by killer robots,” she said in a statement.

In a new Ipsos survey, 61 percent of respondents in 26 countries opposed the use of lethal autonomous weapons.

(Reporting by Andrea Shalal; Editing by Kevin Liffey)

Source: OANN

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Obama refers to himself 270 times during speech to Berlin community organizers

It is said that Millennials are self-absorbed, but it turns out their idol is, too.

President Obama spoke to a group of young people in Berlin on Saturday, and during his speech and Q & A, he talked about himself a total of 270 times.

According to the president’s remarks, the Obama Foundation is making a push into Europe by supporting community organizers there to affect governmental change. (Hello, collusion? Influencing foreign governments?)

Obama began by regaling the audience with how many times he’s been to Europe.

“You know, it’s been over 10 years since I spoke to a slightly larger crowd,” he said, referring to the 2008 speech before 200,000 people when he was a presidential candidate.

“I’ve been back to Germany I think at least ten times. I’ve been to Europe countless times,” he said.

“I’m as excited to be here with you as I have been ever when I have come to Europe,” he said moments later.

“When I left office, or maybe a few months before I left office, I had to make some decisions about what I would do after the end of my presidency and I knew that I wanted to catch up on my sleep,” Obama told the crowd of 300.

“I was one of the youngest presidents elected,” he boasted, “which meant I was one of the youngest ex-presidents.”

“There’s only one of me,” Obama lamented, before saying the purpose of his foundation is to train people to be like he and Michelle, so he can “sit back and relax a little bit.”

“Now I’m not here to support any political party, I’ve held my last political office,” he said. “Michelle would leave me if I ever ran for office again.”

“I’m going to start taking some questions,” he said as his opening remarks concluded.

Recalling his time as an organizer, he said, “I wanted changed now. I wanted 100 percent of what I wanted,” he said.

“When I passed the Paris— or when I helped, uh, get the Paris agreement on climate accomplished,” he corrected himself.

“I know from experience in passing the healthcare law that I had to work on in the United States that that was not the ideal healthcare program that I wanted to set up, it was what I could get at the time,” he said.

Obama was asked about self-care, and without a hint of irony, he said, “When I was our age, I did a lot of writing. If I was writing well, it would take me out of myself. You become ego-less a little bit.”

All told, Obama said “I” 240 times, “My/Myself” 16 times, “Me” 13 times and “Mine” once.

Source: InfoWars

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China’s top banks warn of ‘fragile’ bad loans scenario as economy slows

Industrial and Commercial Bank of China Ltd (ICBC)'s logo is seen at its branch in Beijing
Industrial and Commercial Bank of China Ltd (ICBC)'s logo is seen at its branch in Beijing, China, March 30, 2016. REUTERS/Kim Kyung-Hoon/File Photo

March 29, 2019

By Shu Zhang and Julie Zhu

BEIJING/HONG KONG (Reuters) – China’s two largest state-controlled banks warned bad loans could rise and interest margins would shrink, as they posted their weakest quarterly profit growth in more than two years.

Top lender Industrial and Commercial Bank of China (ICBC) reported flat net profit of 58.05 billion yuan ($8.63 billion) for the fourth quarter, the first time it has seen no growth in a quarter since the July-September 2016 quarter.

And China Construction Bank Corp, the country’s second-largest lender, posted on Wednesday a 1 percent drop in net profit, its first quarterly decline since the October-December 2015 quarter.

While non-performing loan (NPL) ratios edged down by 0.01 percentage points at each bank, both sharply increased their provisions for future bad debt to cushion themselves against a slowdown in the world’s second-largest economy and festering China-U.S trade tensions.

“We deeply feel it’s quite difficult to maintain the low bad loan level. There are external factors, our own reasons, problems with multi layers of local governments and other pressure,” said Xu Yiming, CCB’s chief financial officer, in Beijing on Thursday.

“Do not think we are doing so well with 1.46 percent NPL ratio. It is very fragile. Once the environment changes, it can increase.”

China’s economy grew last year at its slowest pace since 1990, partially due to the trade war and Beijing’s crackdown on financial risks, which raised corporate borrowing costs.

To spur growth, Beijing is pushing banks to significantly boost lending to small businesses by at least 30 percent this year – a move that some analysts say could worsen banks’ future asset quality as those borrowers are riskier and more vulnerable to slowdowns.

ICBC set aside more than 160 billion yuan in provisions last year and lifted its provisions to 176 percent of its non-performing loans at end-December from 154 percent a year earlier, President Gu Shu said on Thursday. 

CCB’s ratio rose to 208 percent at end-December from 171 percent a year earlier.

“With a slowing economy and with also industrial profits undershooting meaningfully, for us it’s no surprise that provisions will have to go up from here,” said Gaël Combes, Geneva-based head of equities fundamental research at fund manager Unigestion, which has a small holding of Chinese bank shares.

ICBC’s board on Thursday approved a plan to sell 80 billion yuan in perpetual bonds to boost capital. Peer Bank of China (BoC), the country’s fourth-largest lender, sold 40 billion yuan worth of perps in January.

SHRINKING MARGINS

Net interest margin (NIM) – the difference between interest paid and earned by banks and a key gauge of profitability – narrowed at CCB and stayed flat at ICBC, while bankers and analysts say the pressure on NIM will only increase this year.

Margins are being squeezed by increased competition for deposits as well as the pressure from Beijing to boost lending but keep borrowing costs down.

“We are facing challenges in maintaining NIM this year. It will not be as comfortable as last year,” said ICBC’s Gu, who said the bank would work hard to avoid passing on higher borrowing costs to its clients.

“It is not easy for the real economy these days so we will not pursue high pricing on the asset side,” he said.

The other three of China’s so-called Big Five state banks, including Agricultural Bank of China Ltd and Bank of Communications Co Ltd,, will report fourth-quarter results after the market closes on Friday.

“2019 is bound to be different – acceleration in loan growth, especially to the private sector, but less margin as banks will be pushed to pass on the reduction in cost of funding to their clients especially SMEs,” said Alicia Garcia Herrero, chief economist of Natixis Asia Pacific.

(Reporting By Shu Zhang in BEIJING, Julie Zhu and Sumeet Chatterjee in HONG KONG; Editing by Jennifer Hughes and Muralikumar Anantharaman)

Source: OANN

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FILE PHOTO: An aerial photo looking north shows shipping containers at the Port of Seattle and the Elliott Bay waterfront in Seattle
FILE PHOTO: An aerial photo looking north shows shipping containers at the Port of Seattle and the Elliott Bay waterfront in Seattle, Washington, U.S. March 21, 2019. REUTERS/Lindsey Wasson/File Photo

April 26, 2019

NEW YORK (Reuters) – U.S. economic growth is running at a 1.1% pace in the second quarter as the gains in exports and inventories recorded in the first quarter are expected to reverse, Morgan Stanley economists said on Friday.

“Our preliminary expectations for growth in the second quarter sees large drags from net exports and inventories after their contributions in 1Q,” they wrote in a research note.

Gross domestic product increased at a 3.2% annualized rate in the first three months of the year, driven by a smaller trade deficit and the largest accumulation of unsold merchandise since 2015, the Commerce Department said earlier Friday.

(Reporting by Richard Leong)

Source: OANN

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FILE PHOTO: The Deutsche Bank headquarters are pictured in Frankfurt
FILE PHOTO: The Deutsche Bank headquarters are pictured in Frankfurt, Germany, April 25, 2019. REUTERS/Ralph Orlowski/File Photo

April 26, 2019

By Tom Sims

FRANKFURT (Reuters) – Within hours of the collapse of merger talks with Commerzbank, Christian Sewing scrambled to convince investors and employees that Deutsche Bank can stand on its own two feet.

The Deutsche Bank chief executive told staff, many of whom opposed a merger because of significant job losses, that while he had not been “skeptical” about the Commerzbank talks, he was cautious about the chances of success from the start.

And another top Deutsche Bank executive said on Friday that it had been Commerzbank that initiated the talks, suggesting there was no desperation on their part for a deal.

Commerzbank denied that version of events, ending the apparent truce between the normally highly competitive cross-town Frankfurt rivals over the past six weeks.

German hopes of creating a national banking champion able to challenge global competitors were finally dashed on Thursday when Deutsche Bank and Commerzbank ended their talks due to the risks of doing a deal, restructuring costs and capital demands.

For Sewing, the failure to clinch a deal has left the 49-year-old chief executive of Germany’s largest bank, who took over just over a year ago, with his back to the wall.

Credit ratings agency Standard & Poor’s, which downgraded Deutsche Bank last year, said on Friday that Deutsche Bank “will remain under strain”, adding that it “seems to have acknowledged the need to adjust its strategy”.

Under Sewing, a new leadership has tried to revive Deutsche Bank’s fortunes, but it has faced money laundering allegations and failed stress tests, as well as ratings downgrades.

At the heart of the debate over its future is whether it should focus its business on Germany and draw a line under its costly global ambitions to take on Wall Street’s big guns.

“MARKET PLAY”

Without a deal, Deutsche Bank now finds itself back at the mercy of equity and debt markets, with UBS analysts warning that in a “stress scenario” it could again “be forced into a ‘debt-driven capital increase’ even with solid capital ratios”.

“Deutsche remains a levered market play vulnerable to external events,” the UBS analysts said in a note.

Sewing, along with many analysts, believes Deutsche Bank can go it alone in the short-term, but will be counting on a turnaround in market conditions to do so in the long-run given its dependence on volatile investment bank earnings.

“To reach our return objective, we also need to see a revenue recovery in our more market-sensitive business,” Sewing said on Friday after reporting results.

“These revenues are available to us in better market conditions given our leading positions in many of these businesses, but we need to capture them,” he added.

Revenue at Deutsche Bank’s bond trading division fell 19 percent in the first quarter, it said on Friday, underscoring weakness at its investment bank.

If those earnings do not improve, Berlin’s desire to keep its biggest bank out of foreign hands may start to wane.

“Germany’s globally active companies need competitive financial institutions that can support them around the world,” German finance minister Olaf Scholz said on Thursday.

(Writing by Alexander Smith; Editing by Keith Weir)

Source: OANN

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Panama's former president Ricardo Martinelli yells to the media while arriving to the Electoral Court in Panama City
Panama’s former president Ricardo Martinelli reacts to the media while arriving to the Electoral Court in Panama City, Panama April 26, 2019. REUTERS/Erick Marciscano

April 26, 2019

PANAMA CITY (Reuters) – Panama’s electoral tribunal has ruled that former President Ricardo Martinelli, who is awaiting trial on wiretapping charges, cannot take part in elections on May 5 in which he was running for mayor of Panama City and a seat in Congress, a spokesman for Martinelli said on Friday.

“The ruling of the electoral tribunal has disqualified him as candidate,” said the spokesman, Eduardo Camacho, calling the court’s ruling a “political decision.”

Officials at the tribunal did not immediately confirm the ruling, which also was reported in local media in Panama.

Martinelli, a supermarket tycoon who ran the Central American country from 2009 to 2014, was extradited to Panama last June from the United States and charged with spying on 150 people, including politicians, union leaders and journalists.

A judge had previously cleared Martinelli to run for mayor of the capital. His critics vowed to appeal that decision.

(Reporting by Elida Moreno and Stefanie Eschenbacher; Editing by Bill Trott)

Source: OANN

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FILE PHOTO: Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City
FILE PHOTO: Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City, January 29, 2016. REUTERS/Mike Segar/File Photo

April 26, 2019

(Reuters) – Shares of Walmart, Target and other U.S. retailers fell on Friday as Amazon.com Inc unveiled a one-day delivery plan for its Prime members in a move to further disrupt the fiercely competitive retail landscape.

The e-commerce giant’s announcement on Thursday could cause other brands, manufacturers, retailers, and logistics companies to have to invest more aggressively to compete with Amazon and its delivery, analysts said.

Retailers in recent years have poured billions into ecommerce and faster shipping options and are trying to close the gap with Amazon.

“This is about making it more expensive to catch up and affirms our world view that only the largest and smartest will survive,” Bernstein analyst Brandon Fletcher said.

The move is expected to heighten consumer expectations on e-commerce delivery just like Amazon did with its two-day shipping option for members of its loyalty club Prime, noted analysts.

“The faster you ship, the more people buy,” RBC Capital Markets analyst Mark Mahaney said.

The challenge for non-Amazon players was that very few of the existing logistics and parcel delivery players now have the ability to do nationwide one-day delivery, Morgan Stanley analyst Brian Nowak said.

“And even fewer can do it at the vast scale and reasonable cost that AMZN would need for Prime delivery,” Nowak said in a note.

Walmart Inc’s shares fell about 3 percent, while Target Corp dropped about 5 percent in morning trade.

Shares of Kohl’s Corp, Macy’s Inc and Nordstrom Inc fell about 1 percent. Grocer Kroger Co was nearly 3 percent lower, while consumer electronics retailer Best Buy Inc dropped 2.1 percent.

(Reporting by Soundarya J and Akanksha Rana in Bengaluru; Editing by Maju Samuel)

Source: OANN

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A Chinese woman adjusts a Chinese national flag next to U.S. national flags before a Strategic Dialogue expanded meeting, part of the U.S.-China Strategic and Economic Dialogue (S&ED) in Beijing
A Chinese woman adjusts a Chinese national flag next to U.S. national flags before a Strategic Dialogue expanded meeting, part of the U.S.-China Strategic and Economic Dialogue (S&ED) held at the Diaoyutai State Guesthouse in Beijing, July 10, 2014. REUTERS/Ng Han Guan/Pool (CHINA – Tags: POLITICS BUSINESS)

April 26, 2019

By April Joyner

NEW YORK (Reuters) – Even as the lift from optimism over prospects for U.S.-China trade detente shows signs of wearing off for the wider U.S. stock market, upbeat sentiment around China’s economy could bolster shares of materials companies.

Shares of S&P 500 industrial and technology companies, which were buffeted by last year’s tit-for-tat tariffs as well as slowing global demand, have been very responsive to progress in U.S.-China trade relations and a strengthening Chinese economy. This year, those sectors have outpaced the ascent in the S&P 500, which reached a record closing high on Tuesday.

Materials stocks have not been as sensitive, however, even though they also stand to benefit as a stronger Chinese economy lifts global consumption and industrial output. As China has taken measures to stimulate its economy, its economic data have turned more upbeat. That in turn could aid global growth, which has flagged as a result of China’s cooldown.

“What we’re seeing is China spending more on stimulus: fiscal stimulus and monetary stimulus,” said Kristina Hooper, chief global market strategist at Invesco in New York. “That’s likely to be a positive for materials.”

The People’s Bank of China has cut banks’ reserve requirement ratio five times over the past year and is widely expected to ease policy further to spur lending and reduce borrowing costs. The stimulus appears to have boosted Chinese economic data, with factory activity growing in March for the first time in four months.

Yet so far in 2019, the S&P 500 materials index has underperformed the S&P 500 at large, rising just 11.9% compared with 16.7% for the benchmark index. Moreover, it is among the biggest decliners in the period since the S&P’s previous record closing level on Sept. 20. The materials index has fallen 7% over those seven months, versus a 5.2% gain for technology and a 3% loss for industrials. Only the energy index has dropped more over that period.

A trade agreement could serve as a catalyst for a bump in materials shares as a drag on China’s economy is lifted, some market strategists say. Some commodity prices, including those for copper and oil, have ascended this year as the prospects for the global economy have somewhat brightened.

“It all goes back to the global growth outlook,” said Andrea DiCenso, portfolio manager for alpha strategies at Loomis Sayles in Boston. “With the front run in hard data, we’re beginning to see a pretty significant rally.”

Additionally, a trade agreement is expected to include commitments from China to purchase higher quantities of U.S. products such as soybeans, which could benefit companies that make agricultural chemicals, including DowDuPont Inc and CF Industries Holdings Inc.

CF Industries is scheduled to report quarterly results after the bell on Wednesday, and DowDuPont is scheduled to report before the market open on Thursday.

To be sure, even with a trade agreement, some materials companies could face price pressures. Shares of Freeport-McMoRan Inc fell 10.1% on Thursday after the copper mining company posted a lower-than-expected profit as its production slipped and its costs rose.

A rollback of tariffs on Chinese imports, particularly aluminum and steel, would likely prompt a fall in some commodity prices, which could hurt prospects for certain materials companies, said Gene Goldman, chief investment officer at Cetera Investment Management in El Segundo, California.

Even so, those drawbacks may be outweighed by the support for global demand fostered by a U.S.-China trade agreement.

“You could see a number of companies with lowered expectations bring them back up as they talk favorably about the impact that a trade deal would have on them,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

(Reporting by April Joyner; additional reporting by Sinéad Carew; editing by Jonathan Oatis)

Source: OANN

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