The Jim Bakker Show

An economy in ruins leaves Gazans with hard choices

Palestinians stand at their house in the northern Gaza Strip February 12, 2018. REUTERS/Mohammed Salem

By Nidal al-Mughrabi

GAZA (Reuters) – The man who makes crisps, chocolate and vanilla snacks for Gaza had just finished explaining how his business was going through the worst economic crisis of his life when the lights went out, shutting down his factory. Again.

Wael Al-Wadiya has been running his food manufacturing business since 1985 – in a Gaza Strip that was very different from the one in which he and two million other Palestinians now live.

Back then Israeli settlers were still in Gaza, the Islamist militant group Hamas did not yet exist, and Palestinians were still two years away from the first of the uprisings against Israeli military occupation that introduced the word ‘Intifada’ to the world.

Sitting in a slowly declining industrial estate near the fortified border with Israel, the 51-year-old confectioner says that Gaza has been brought to a near-standstill by a decade of Israeli-led blockades, and internal Palestinian divisions.

“The situation is very miserable. People’s ability to buy has fallen to a minimum, therefore our businesses and businesses in Gaza are suffering as never before,” said Wadiya.

Palestinians work at Wael Al-Wadiya’s snacks and chips factory, east of Gaza City February 19, 2018. REUTERS/Mohammed Salem

He has cut production by 70 percent and wages by 30 percent. Employees who used to work each day now may work one day in three. “Unless a miracle happens, factories and companies will close down and it will be the real death of the economy,” he said.

There has long been poverty in Gaza, but with unemployment now at 43.6 percent, according to the Palestinian Bureau of Statistics, even once-wealthy merchants are defaulting on debts, causing other businesses to collapse, like dominoes.

Many in Gaza blame Israel for the hardships, accusing it of placing an economic blockade on the enclave that has drastically reduced the movement of people and goods.

But Gazans also fault their own leaders, complaining of a power struggle between Hamas, the armed group that seized military power in Gaza in 2007, and Fatah, the secular party of Western-backed Palestinian President Mahmoud Abbas.

Both Hamas and Fatah levy taxes. Both run competing bureaucracies. And even electricity has become a tool of political power – until recently the blackouts that plagued Wadiya’s factory were exacerbated by Abbas cutting money for Israeli current for Gaza.

Fatah says Hamas exploits money it collects from electricity consumers for its own purposes.

Israel, which pulled its settlers and soldiers out of Gaza in 2005, says it has been forced to control access to and from the territory to stop Hamas sending out gunmen and bombers, and from smuggling in weapons or material to make them.

The Israeli military says that it carries out “constant calculated risk management” between allowing humanitarian aid through to Gazans, while contending with Hamas, which “attempts to exploit the aid intended for Gaza’s civilian residents”.

POVERTY AND SECURITY

A combination of war, isolation, and internal rivalries has left Gaza in its current state.

Last year Abbas cut the salaries of 60,000 government employees in Gaza by 30 per cent, leaving them with little to spend in shops and markets after paying off bank loans. The sums of bounced checks in Gaza nearly doubled from $37 million to $62 million between 2015 and 2016, and then again to $112 million in 2017, according to the Palestinian Monetary Authority.

This lack of buying power contributed to a drop in imports through the one remaining commercial crossing with Israel, with just 350 truckloads per day compared with 800 in the last quarter of 2017.

Palestinian children play as a girl held by her mother looks out of the window of house in the northern Gaza Strip February 12, 2018. REUTERS/Mohammed Salem

Some merchants took a religious initiative in December in which they offered to write off customers’ debts using the hashtag ‘Sameh Toajar’ – ‘Forgive, and Be rewarded (by God).’

It was supported by Hamas and other factions, but the scale of the debts was too great for such a small-scale remedy.

“Gaza has gone into clinical death and is in need of root solutions, real and sustainable, and not temporary or short-lived solutions,” said Maher al-Tabba, a Gaza economist.

At the other end of the economic scale from the merchants are Suhaib, Shadi and Ahmed al-Waloud, who scavenge through garbage near their home in northern Gaza searching for plastic to sell to recycling plants.

Their father was one of the Gazans who lost their jobs in Israel more than a decade ago when Israel closed the door to thousands of Palestinian workers following Hamas’s seizure of control.

“I have been used to doing this job since I was a child,” said Suhaib, 19, from Beit Lahiya. But they now earn just enough to “stay alive,” he said, because the price paid for second-hand plastic has fallen by 80 per cent. “Nowadays there is not much work. People are not throwing away a lot of plastic.”

The question that dominates Gaza is whether hard times will make Palestinians more inclined to support attacks on Israel, or less so, because they fear reprisals.

Ali al-Hayek, the chairman of the Palestinian Businessmen Association in Gaza, said that total collapse of the economy would lead to instability that would be in nobody’s interests.

“Gaza is living through a real humanitarian crisis,” he said. “An economic collapse will lead to a security collapse that will cause trouble for the international community and for Israel.”

(Reporting by Nidal al-Mughrabi Writing by Stephen Farrell, Editing by William Maclean)

‘Migrate or die’: Venezuelan migrants flood into Colombia despite crackdown

Venezuelans line the street at the border between Venezuela and Colombia, in Cucuta, Colombia February 21, 2018. REUTERS/Carlos Eduardo Ramirez

By Julia Symmes Cobb and Anggy Polanco

MAICAO/CUCUTA, Colombia (Reuters) – The desert wind whipping their faces, hundreds of Venezuelan migrants lugging heavy suitcases and overstuffed backpacks trudge along the road to the Colombian border town of Maicao beneath the blazing sun.

The broken line snakes back 8 miles (13 km) to the border crossing at Paraguachon, where more than a hundred Venezuelans wait in the heat outside the migration office.

Money changers sit at tables stacked with wads of Venezuelan currency, made nearly worthless by hyperinflation under President Nicolas Maduro’s socialist government.

The remote outpost on the arid La Guajira peninsula on Colombia’s Caribbean coast marks a frontline in Latin America’s worst humanitarian crisis.

Venezuelans pray as they gather at a dining facility organised by Caritas and the Catholic church, in Cucuta, Colombia February 21, 2018. REUTERS/Carlos Eduardo Ramirez

The Venezuelans arrive hungry, thirsty and tired, often unsure where they will spend the night, but relieved to have escaped the calamitous situation in their homeland.

They are among more than half a million Venezuelans who have fled to Colombia, many illegally, hoping to escape grinding poverty, rising violence and shortages of food and medicine in their once-prosperous, oil exporting nation.

“It’s migrate and give it a try or die of hunger there. Those are the only two options,” said Yeraldine Murillo, 27, who left her six-year-old son behind in the Venezuelan city of Maracaibo, some 56 miles (90 km) across the border.

“There, people eat from the trash. Here, people are happy just to eat,” said Murillo, who hopes to find work in Colombia’s capital Bogota and send for her son.

The exodus from Venezuela – on a scale echoing the departure of Myanmar’s Rohingya people to Bangladesh – is stirring alarm in Colombia. A weary migration official said as many as 2,000 Venezuelans enter Colombia legally through Paraguachon each day, up from around 1,200 late last year.

Under pressure from overcrowded frontier towns such as Maicao, Colombian President Juan Manuel Santos announced a tightening of border controls this month, deploying 3,000 additional security personnel.

But the measures are unlikely to stem the flow of illegal migrants pouring across the 1,379-mile (2,219 km) frontier.

At Paraguachon, where a lack of effective border controls has long allowed smuggling to thrive, officials estimate 4,000 people cross illegally daily.

“We left houses, cars. We left everything: money in the bank,” said former electronics salesman Rudy Ferrer, 51, who sleeps outside a warehouse in Maicao. He estimates there are 1,000 Venezuelans sleeping on the town’s streets every night.

‘THE MADURO DIET’

Some 3 million Venezuelans – or a tenth of the population – have left Venezuelan since late Venezuelan leader Hugo Chavez started his Socialist revolution in 1999.

Despite four months of violent anti-government protests last year, Chavez’s hand-picked successor Maduro is expected to win a fresh six-year term at elections on April 22. The opposition, whose most popular leaders have been banned from running, is boycotting the vote.

Mechanic Luis Arellano and his children were among the lucky ones who found beds at a shelter in Maicao run by the Catholic diocese with help from the U.N. refugee agency. The 58-year-old said his children’s tears of hunger drove him to flee Venezuela.

“It was 8 p.m. and they were asking for lunch and dinner and I had nothing to give them,” he said, spooning rice into his 7-year-old daughter’s mouth.

Children from Venezuela eat a meal at a dining facility organised by Caritas and the Catholic church, in Cucuta, Colombia February 21, 2018. REUTERS/Carlos Eduardo Ramirez

“This isn’t the size they should be,” Arellano said, raising his children’s spindly arms.

Migrants told Reuters they were paying up to 400,000 bolivars for a kilo of rice in Venezuela. The official monthly minimum wage is 248,510 bolivares – around $8 at the official exchange rate, or $1.09 on the black market.

Food shortages, which many migrants jokingly refer to as the “Maduro diet”, have left people noticeably thinner than in photos taken years earlier for their identification cards.

The shelter – where bunk beds line the walls of the bedrooms – provides food and shelter for three days and, for those joining family already in Colombia, a bus ticket onwards.

It will soon have capacity for 140 people a night – a fraction of the daily arrivals.

Colombia is letting the migrants access public health care and send their children to state schools. Santos is asking for international help to foot the bill, which the government has said runs to tens of millions of dollars.

‘NO WORK’ FOR VENEZUELANS

At another shelter in the border city of Cucuta, some 250 miles (400 km) to the south, people regularly spend the night on cardboard outside, hoping places will free up.

The largest city along the frontier, Cucuta has borne the brunt of the arriving migrants. About 30,000 people cross the pedestrian bridge that connects the city with Venezuela on daily entry passes to shop for food.

Conditions are desperate for migrants like Jose Molina, a 48-year-old butcher unable to find work after leaving his wife and son in Venezuela’s northern Carabobo state four months ago.

People sit on a makeshift bed, on a street, where Venezuelan migrants gather to spend the night, in Maicao, Colombia February 15, 2018. REUTERS/Jaime Saldarriaga

“I feel so depressed,” said Molina, his face puffed and tired after sleeping outside a church. “I got sick from eating rotten potatoes but I was hungry so I had to eat them.”

Molina is so hopeless he has considered returning home.

“My wife says everything’s getting worse and it’s best to wait,” he said. “I don’t want to be a burden to them. They don’t have enough to eat themselves.”

While many feel a duty to welcome the migrants, in part because Venezuela accepted Colombian refugees during that country’s long civil war, others fear losing jobs to Venezuelans being paid under the table.

After locals held a small anti-Venezuelan protest last month, police evicted 200 migrants who were living on a sports field, deporting many of them.

Migrants are verbally abused by some Colombians who refuse them work when they hear their accents, said Flavio Gouguella, 28, from Carabobo.

“Are you a Veneco? Then no work,” he said, using a derogatory term for Venezuelans.

In Maicao, locals also worry about an increase in crime and support police efforts to clear parks and sidewalks.

They already have to cope with smuggled subsidized Venezuelan goods damaging local commerce, and have grown tired of job-seekers and lending their bathrooms to migrants.

Spooked by police raids, migrants in Maicao have abandoned the parks and bus stations where they had makeshift camps, opting to sleep outside shuttered shops. Female migrants who spoke to Reuters said were often solicited for sex.

Despairing of finding work, some entrepreneurial migrants turn the nearly-worthless bolivar currency into crafts, weaving handbags from the bills and selling them in Maicao’s park.

A man sells bags made out of Venezuelan banknotes, in Maicao, Colombia February 16, 2018. Picture taken February 16, 2018. REUTERS/Jaime Saldarriaga

“This was made from 80,000 bolivars,” said 23-year-old Anthony Morillo, holding up a square purse featuring bills with the face of South America’s 19th century liberation hero Simon Bolivar. “It’s not worth half a bag of rice.”

($1 = 28,927.5000 bolivar)

(Reporting by Julia Symmes Cobb in Maicao and Paraguachon and Anggy Polanco in Cucuta and La Parada; Writing by Julia Symmes Cobb; Editing by Helen Murphy, Daniel Flynn and Daniel Wallis)

Explainer: Rising U.S. inflation and what it means for markets

A man unloads vegetables at Grand Central Market in Los Angeles, California, March 9, 2015. REUTERS/Lucy Nicholson

By Chuck Mikolajczak and Lucia Mutikani

(Reuters) – U.S. financial markets have been roiled recently by something neither the economy nor investors have had to contend with for the better part of a decade: concerns they may soon have to reckon with rising inflation.

The S&P 500.is down more than 7 percent from its lifetime high hit on Jan. 26 through Feb. 13, after falling as much as 10.2 percent, and yields on the benchmark U.S. 10-year note have climbed to a four-year high, largely due to inflation worries.

What exactly is inflation, aside from a rise in prices for goods and services, and why is it having such a strong influence on markets?

Inflation is measured in a number of ways by various government agencies, and as long as the economy continues to expand it will be a consideration for markets.

Investors will get the latest inflation data on Thursday with the monthly Producer Price Index.

WHAT IS INFLATION AND HOW IS IT MEASURED?

While inflation decreases consumer purchasing power, a certain level of inflation is considered a reflection of a strengthening economy and the impact on consumers can be offset by rising wages.

The U.S. government publishes several inflation measures on a monthly and quarterly basis. The main measures are the Consumer Price Index (CPI) and the personal consumption expenditures (PCE) price indexes. The CPI and PCE are constructed differently and perform differently over time.

The monthly CPI, compiled by the Labor Department’s Bureau of Labor Statistics (BLS), measures the change in prices paid by consumers for goods and services. The BLS data is based on spending patterns of consumers and wage earners, although it excludes rural residents and members of the Armed Forces.

CPI measures the prices that consumers pay for frequently purchased items. The components are weighted to reflect their relative importance, with the weightings derived from household surveys. Some of the components of the CPI basket such as food and energy can be volatile. Stripping out food and energy from the CPI gives us the core CPI, seen as a measure of the underlying inflation trend.

The January reading on consumer prices released on Wednesday showed prices rose more than expected, up 0.5 percent versus the 0.3 percent expectation. The core reading rose 0.3 percent against the 0.2 percent forecast. Both numbers increased from the 0.2 percent reading for December.

Another reading is the Producer Price Index (PPI), which measures prices from the seller’s point of view.

The Federal Reserve, whose mandate includes price stability along with maximum employment, prefers the personal consumption expenditures (PCE) price indexes constructed by the Commerce Department’s Bureau of Economic Analysis. PCE is considered to be more comprehensive because it includes some components that are excluded from the CPI. According to the BEA, the PCE reflects the price of expenditures made by and on behalf of households. Weights are derived from business surveys.

Housing has a greater weighting in the CPI than in the PCE index. The weighting for medical care is greater in the PCE price index than in the CPI. As with CPI, food and energy components of the PCE are volatile. Stripping them out yields the core PCE, which measures the underlying inflation trend. The core PCE is the Fed’s preferred measure for its 2 percent inflation target.

WHAT SPARKED THE RECENT INFLATION WORRY?

The government’s monthly employment report for January, released on Feb. 2, showed wages posted their largest annual gain in more than 8-1/2 years, suggesting the economy was moving closer to full employment and inflation was on the horizon.

If the economy continues to gain momentum, inflation is likely to rise further toward the Fed’s 2 percent target.

There is concern, however, that the recent U.S. tax overhaul by the Trump administration, which slashed the corporate income tax rate and cut personal income tax rates, could cause an economy that may be nearing full capacity to overheat and prompt the Fed to become more aggressive than anticipated in its course of interest rate hikes.

Markets are pricing in an 87.5 percent chance of a quarter-point increase at the U.S. central bank’s next policy meeting in March. The Fed has forecast three hikes this year, after raising rates three times in 2017.

Some market participants are unsure about how swiftly the Fed will react to inflation and market turbulence under its new chair, Jerome Powell. The March meeting will be the first since Powell took over from Janet Yellen. Recent comments from some Fed officials suggested the possibility of more hikes should the economy continue to strengthen.

HOW HAS INFLATION AFFECTED MARKETS?

Many analysts believe the stock market was overdue for a pullback because valuations, as measured against corporate earnings, have been rich by historic standards, and that the employment data showed economic fundamentals underpinning stocks are strong. Inflation has yet to rise to concerning levels, and as long as the pace remains modest, stocks have room to climb.

Healthy economic growth, along with U.S. deficit spending and moves by central banks around the world to lift interest rates from ultra-low levels, has driven U.S. bond yields to a four-year high. Rising yields could dent the attractiveness of high dividend-paying stocks to investors and trigger increased borrowing costs for U.S. companies and households, which could crimp economic growth.

The initial reaction to the CPI data on Wednesday was sharp, with S&P 500 e-mini futures <ESc1> falling to a session low of 2,627 while yields on the benchmark U.S. 10-year note <US10YT=RR> rose as high as 2.891 percent. The dollar initially spiked higher against a basket of major currencies <.DXY> before weakening.

However, stocks recovered and turned positive shortly after the opening bell and yields on the 10-year note eased.

A strengthening currency would normally go hand-in-hand with an improving economy, yet the U.S. dollar is near four-year lows even after a recent uptick. Some of the weakness has been attributed to anticipation of scaling back in stimulus measures by central banks other than the Fed.

If the U.S. economy fails to show any meaningful uptick in inflation as currently feared, that could tie the Fed’s hands when it comes to interest rate hikes and drag the dollar lower.

(Reporting by Chuck Mikolajczak; Additional reporting by Richard Leong; Editing by Alden Bentley and Leslie Adler)

U.S. hiring accelerates; annual wage growth strongest since 2009

Job seekers line up to apply during "Amazon Jobs Day," a job fair being held at 10 fulfillment centers across the United States aimed at filling more than 50,000 jobs, at the Amazon.com Fulfillment Center in Fall River, Massachusetts, U.S., August 2, 2017.

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth surged in January and wages increased further, recording their largest annual gain in more than 8-1/2 years, bolstering expectations that inflation will push higher this year as the labor market hits full employment.

Nonfarm payrolls jumped by 200,000 jobs last month after rising 160,000 in December, the Labor Department said on Friday.

The unemployment rate was unchanged at a 17-year low of 4.1 percent. Average hourly earnings rose 0.3 percent in January to $26.74, building on December’s solid 0.4 percent gain.

That boosted the year-on-year increase in average hourly earnings to 2.9 percent, the largest rise since June 2009, from 2.7 percent in December. Workers, however, put in fewer hours last month. The average workweek fell to 34.3 hours, the shortest in four months, from 34.5 hours in December.

The robust employment report underscored the strong momentum in the economy, raising the possibility that the Federal Reserve could be a bit more aggressive in raising interest rates this year. The U.S. central bank has forecast three rate increases this year after raising borrowing costs three times in 2017.

“It definitely makes it a bit more likely that the Fed will have to do more than the three hikes that they’re currently planning for this year,” said Luke Bartholomew, investment strategist at Aberdeen Standard Investments.

Fed officials on Wednesday expressed optimism that inflation will rise toward its target this year. Policymakers, who voted to keep interest rates unchanged, described the labor market as having “continued to strengthen,” and economic activity as “rising at a solid rate.”

U.S. financial markets expect a rate hike in March. The dollar rose against a basket of currencies on the data. Prices for U.S. Treasuries fell, with the yield on the benchmark 10-year note rising to a four-year high. U.S. stock index futures slightly extended losses.

Economists say job gains are being driven by buoyant domestic and global demand.

Given that the labor market is almost at full employment, economists saw little boost to job growth from the Trump administration’s $1.5 billion tax cut package passed by the Republican-controlled U.S. Congress in December, in the biggest overhaul of the tax code in 30 years.

President Donald Trump and his fellow Republicans have cast the fiscal stimulus, which includes a reduction in the corporate income tax rate to 21 percent from 35 percent, as creating jobs and boosting economic growth.

According to outplacement consultancy firm Challenger, Gray & Christmas, only seven companies, including Apple, had announced plans to add roughly a combined 37,000 new jobs in response to the tax cuts as of the end of January.

Economists polled by Reuters had forecast nonfarm payrolls rising by 180,000 jobs last month and the unemployment rate unchanged at 4.1 percent. January’s jobs gains were above the monthly average of 192,000 over the past three months.

The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

JOB GAINS SEEN SLOWING

Job growth is expected to slow this year as the labor market hits full employment. Companies are increasingly reporting difficulties finding qualified workers, which economists say will force some to significantly raise wages as they compete for scarce labor.

Wage growth last month was likely supported by increases in the minimum wage which came into effect in 18 states in January. They probably also got a lift from the tax cut. Companies like Starbucks Corp and FedEx Corp have said they will use some of the savings from lower taxes to boost wages for workers.

Further gains are expected in February when Walmart raises entry-level wages for hourly employees at its U.S. stores. Annual wage growth is now close to the 3 percent that economists say is needed to push inflation towards the Fed’s 2 percent target.

The January household survey data incorporated new population controls. The department also released annual revisions to the payrolls data from the survey of employers and introduced new factors to adjust for seasonal fluctuations.

It said the level of employment in March of last year was 146,000 higher than it had reported, on a seasonally adjusted basis. The unemployment rate dropped seven-tenths of a percentage point in 2017 and economists expect it to hit 3.5 percent by the end of the year.

Employment gains were widespread in January. Manufacturing payrolls increased by 15,000 last month after rising 21,000 in December. The sector is being supported by strong domestic and international demand. A weak dollar is also providing a boost to manufacturing by making U.S.-made goods more competitive on the international market.

Hiring at construction sites picked up last month despite unseasonably cold weather. Construction payrolls increased by 36,000 jobs after rising 33,000 in December. Retail employment rebounded by 15,400 jobs in January after slumping 25,600 the prior month.

Government employment increased by 4,000 jobs following two straight months of declines. There were also increases in payrolls for professional and business services, leisure and hospitality as well as healthcare and social assistance.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Americans jobless claims rise from 45-year low; labor market tightening

Job seekers listen to a presentation at the Colorado Hospital Association job fair in Denver, Colorado, U.S., October 4, 2017.

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits rebounded from a 45-year low last week, though by less than expected, pointing to tightening labor market conditions.

Initial claims for state unemployment benefits increased 17,000 to a seasonally adjusted 233,000 for the week ended Jan. 20, the Labor Department said on Thursday. Claims fell to 216,000 in the prior week, the lowest level since January 1973.

Economists polled by Reuters had forecast claims rising to 240,000 in the latest week. Claims have been volatile recently because of the difficulty adjusting the data for seasonal fluctuations at the end of 2017 and the start of the new year. Unseasonably cold temperatures also had an impact on the data.

The Labor Department said claims for Maine were estimated. It also said claims-taking procedures in Puerto Rico and the Virgin Islands had still not returned to normal months after the territories were pummeled by Hurricanes Irma and Maria.

Last week marked the 151st straight week that claims remained below the 300,000 threshold, which is associated with a strong labor market. That is the longest such stretch since 1970, when the labor market was much smaller.

“The song remains the same for tightness of the labor market – employers are extremely reluctant to fire current workers, which reflects not only the current positive business environment but also the difficulty in finding qualified replacements,” said John Ryding, chief economist at RDQ Economics in New York.

The U.S. dollar was largely unchanged against a basket of currencies after the data. Prices of U.S. Treasuries were trading mostly weaker, while U.S. stock index futures were higher.

NEAR FULL EMPLOYMENT

The labor market is near full employment, with the jobless rate at a 17-year low of 4.1 percent. Last week, the four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 3,500 to 240,000.

The claims report also showed the number of people receiving benefits after an initial week of aid dropped 28,000 to 1.94 million in the week ended Jan. 13. The four-week moving average of the so-called continuing claims fell 3,500 to 1.92 million.

The continuing claims data covered the week of the household survey from which January’s unemployment rate will be calculated. The four-week average of continuing claims slipped 1,750 between the December and January survey periods.

That suggests little change in the unemployment rate this month. The jobless rate dropped seven-tenths of a percentage point in 2017, and economists expect it to hit 3.5 percent by the end of this year, which could spur faster wage growth as companies compete for workers.

Strong wage inflation would in turn likely prompt the Federal Reserve to raise interest rates a bit more aggressively than currently anticipated. The U.S. central bank has forecast three rate hikes this year. It increased borrowing costs three times in 2017.

“The Fed may have to pick up its game this year and raise rates four times, not just the three they have already forecast,” said Chris Rupkey, chief economist at MUFG in New York.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao)

Saudi Arabia begins screening films after decades-long ban lifted

Children are seen inside the first Saudi Arabia cinema in Jeddah, Saudi Arabia January 13, 2018. Picture taken January 13, 2018.

By Stephen Kalin

JEDDAH, Saudi Arabia (Reuters) – Saudi Arabia began screening feature-length animated children’s films this weekend in a makeshift theater, after a 35-year-old ban on cinemas was lifted in the conservative Islamic kingdom.

The first permanent theaters could open as early as March, part of a liberalizing reform drive that has already opened the door to concerts, comedy shows and women drivers over the past year.

For now, the authorities are sponsoring temporary settings, like the state-run cultural hall in the Red Sea city of Jeddah equipped with a projector, a red carpet and a popcorn machine.

“Until now, there is no infrastructure for movie theaters, so we are trying to take advantage of (alternative) venues to approximate the cinematic form,” said Mamdouh Salim, whose Cinema 70 brand organized the week-long screenings.

“We tried to use these films to be a starting point as the first cinematic screening after the decision on Dec. 11 to permit movie theaters.”

Cinemas were banned in the early 1980s under pressure from Islamists as Saudi society turned towards a particularly conservative form of religion that discouraged public entertainment and public mixing between men and women.

But reforms led by 32-year-old Crown Prince Mohammed bin Salman have eased many of those restrictions, as the government tries to broaden the economy and lessen its dependence on oil.

In a nod to conservatives, films will be censored to make sure they remain in line with the kingdom’s “moral values”.

MORE FUN

After watching The Emoji Movie with his wife and daughter on Sunday evening, 28-year-old Sultan al-Otaibi said Saudis are happy to see movies in the theater instead of staying at home.

“It’s more comfortable, more fun to have a change of scenery and an activity on the weekend. It is a step that was very late in coming but thank God it’s happening now.”

Thousands of Saudis currently travel to Bahrain, the United Arab Emirates and other countries for entertainment. The government wants to retain the money spent on those trips.

The authorities expect to open 300 cinemas with 2,000 screens by 2030, building an industry it hopes will contribute more then 90 billion riyals ($24 billion) to the economy and create 30,000 permanent jobs.

Regional and international cinema chains are also eyeing the Saudi market, keen to tap the spending power of the young people who make up roughly 70 percent of the population.

“I want to see everything because it is something new for Saudi,” said 30-year-old movie-goer Ibtisam Abu Talib. “I hope everything is available – action, romance, children’s films, comedy. Everything, God willing.”

(Reporting By Stephen Kalin, editing by Larry King)

In jab at rivals, Rouhani says Iran protests about more than economy

: Iran's President Hassan Rouhani delivers remarks at a news conference during the United Nations General Assembly in New York City, U.S. September 20, 2017.

By Bozorgmehr Sharafedin

LONDON (Reuters) – In a swipe at his hardline rivals, President Hassan Rouhani said on Monday young Iranian protesters were unhappy about far more than just the economy and they would no longer defer to the views and lifestyle of an aging revolutionary elite.

The pragmatic cleric, who defeated anti-Western hardliners to win re-election last year, also called for the lifting of curbs on social media used by anti-government protesters in the most sustained challenge to conservative authorities since 2009.

“It would be a misrepresentation (of events) and also an insult to Iranian people to say they only had economic demands,” Rouhani was quoted as saying by Tasnim news agency.

“People had economic, political and social demands.”

Rouhani, 69, suggested there was a generational element to the unrest, which appears to have been spearheaded by under-25s.

“We cannot pick a lifestyle and tell two generations after us to live like that. It is impossible… The views of the young generation about life and the world is different than ours,” he said.

The Revolutionary Guards, Iran’s security backbone since the 1979 revolution that created the Islamic Republic, said on Sunday the security forces had put an end to a week of unrest fomented by what it called foreign enemies.

The protests, which began over economic hardships suffered by the young and working class, spread to more than 80 cities and towns and has resulted in 22 deaths and more than 1,000 arrests, according to Iranian officials.

Hamid Shahriari, the deputy head of the Judiciary said that all ringleaders of the protests had been identified and arrested, and they would be firmly punished and might face capital punishment.

Two Iranian lawmakers said on Monday that a 22-year-old detainee has died in prison.

The director of the Prisons Organization, Mostafa Mohebbi, confirmed the death on the judiciary’s official website and said “Sina Ghanbari has hanged himself in a toilet on Saturday”.

Many of the protesters questioned Iran’s foreign policy in the Middle East, where it has intervened in Syria and Iraq in a battle for influence with rival Saudi Arabia.

IRANIANS CAN CRITICIZE “EVERYONE”

The country’s financial support for Palestinians and the Lebanese Shi‘ite group Hezbollah also angered Iranians, who want their government to focus on domestic economic problems instead.

Rouhani won re-election last year by promising more jobs for Iran’s youth through more foreign investment, as well as more social justice, individual freedom and political tolerance – aims questioned by his main challenger in the contest.

Echoing some of his campaign rhetoric, Rouhani said on Monday people should be allowed to criticize all Iranian officials, with no exception.

Demonstrators initially vented their anger over high prices and alleged corruption, but the protests took on a rare political dimension, with a growing number of people calling on Supreme Leader Ayatollah Ali Khamenei, 78, to step down.

The Supreme Leader is commander-in-chief of the armed forces and appoints the heads of the judiciary. Key ministers are selected with his agreement and he has the ultimate say on Iran’s foreign policy. By comparison, the president has little power.

“No one is innocent and people are allowed to criticize everyone,” said Rouhani.

Rouhani also dismissed calls from hardline clerics who had asked the government to permanently block access social media and messaging apps.

As protests have ebbed, the government has lifted restrictions it imposed on Instagram, one of the social media tools used to mobilize protesters. But access to a more widely used messaging app, Telegram, was still blocked. The government has said the restrictions would be temporary.

“People’s access to social media should not permanently be restricted. We cannot be indifferent to people’s life and business,” Rouhani said.

Morteza Mousavian, head of information technology in the ministry of culture, was quoted as saying by Donya-e-Eqtesad Daily on Sunday that 9,000 business entities have been affected by the ban on Telegram.

Half of Iran’s 80 million population use Telegram.

State television showed live pictures of more pro-government rallies in several cities, including Sanandaj in western Iran, and Sari in north, as marchers carried posters of Ayatollah Khamenei and chanted slogans in his support.

Iranian Vice-President Masoumeh Ebtekar tweeted on Monday that Rouhani has insisted that all detained students should be released.

Mohammad Bathaei, the education minister said on Monday there were many school children among the detainees and he was asking for their release before exam season.

Amnesty International said last week that more than 1,000 Iranians had been arrested and detained in jails “notorious for torture and other ill-treatment over the past seven days”, with many being denied access to families and lawyers.

(Reporting by Bozorgmehr Sharafedin, Editing by William Maclean)

U.S. job growth cools as labor market nears full employment; wages rise

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth slowed more than expected in December amid a decline in retail employment, but a pick-up in monthly wage gains pointed to labor market strength that could pave the way for the Federal Reserve to increase interest rates in March.

Nonfarm payrolls increased by 148,000 jobs last month after surging by 252,000 in November, the Labor Department said on Friday. Retail payrolls decreased by 20,300 in December, the largest drop since March, despite reports of a strong holiday shopping season.

The unemployment rate was unchanged at a 17-year low of 4.1 percent. Economists polled by Reuters had forecast payrolls rising by 190,000 in December. The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

“We do not think that today’s employment report will keep the Federal Reserve from tightening again at the March policy meeting, given other strong recent economic data,” said David Berson, chief economist at Nationwide in Columbus, Ohio.

Job growth surged in October and November after being held back in September by back-to-back hurricanes, which destroyed infrastructure and homes and temporarily dislocated some workers in Texas and Florida.

Taking some sting out of the moderation in job gains, average hourly earnings rose 9 cents, or 0.3 percent, in December after a 0.1 percent gain in the prior month. That lifted the annual increase in wages to 2.5 percent from 2.4 percent in November.

Prices of U.S. Treasuries were mostly flat while the U.S. dollar <.DXY> was slightly stronger against a basket of currencies. U.S. stock indexes opened at fresh record highs.

Employment gains in December were below the monthly average of 204,000 over the past three months. Job growth is slowing as the labor market nears full employment, but could get a temporary boost from a $1.5 trillion package of tax cuts passed by the Republican-controlled U.S. Congress and signed into law by President Donald Trump last month.

The lift from the fiscal stimulus, which includes a sharp reduction in the corporate income tax rate to 21 percent from 35 percent, is likely to be modest as the stimulus is occurring with the economy operating almost at capacity. There are also concerns the economy could overheat.

“With the tax cuts we get solid GDP growth in the near-term and then a fiscal hangover, which will likely put the economy at a greater risk of recession,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania.

NEAR FULL EMPLOYMENT

Data ranging from housing to manufacturing and consumer spending have suggested solid economic growth in the fourth quarter, despite a widening of the trade deficit in both October and November, which could subtract from gross domestic product.

In a separate report on Friday, the Commerce Department said the trade gap widened 3.2 percent in November to $50.5 billion, the highest level since January 2012.

The deficit was boosted by record high imports, which offset the highest exports in three years. The economy grew at a 3.2 percent annualized rate in the third quarter.

For all of 2017, the economy created 2.1 million jobs, below the 2.2 million added in 2016. Economists expect job growth to slow further this year as the labor market hits full employment, which will likely boost wage growth as employers compete for workers.

Economists are optimistic that annual wage growth will top 3.0 percent by the end of this year. The December employment report incorporated annual revisions to the seasonally adjusted household survey data going back five years.

There was no change in the unemployment rate, which declined by seven-tenths of a percentage point last year.

Economists believe the jobless rate could drop to 3.5 percent by the end of this year. That could potentially unleash a faster pace of wage growth and translate into a much stronger increase in inflation than currently anticipated.

That, according to economists, would force the Fed to push through four interest rate increases this year instead of the three it has penciled in. The U.S. central bank raised borrowing costs three times in 2017.

“If the unemployment rate declines and wages rise faster, which is likely, the Fed is going to start worrying about wage inflation,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

Employment gains were largely broad-based in December. Construction payrolls increased by 30,000 jobs, the most since February, reflecting recent strong increases in homebuilding. Manufacturing employment increased by 25,000 jobs.

Manufacturing is being supported by a strengthening global economy and a weakening dollar. Employment in the utilities sector fell for a second straight month.

General merchandise stores payrolls tumbled by 27,300 in December, with employment at clothing stores dropping by 3,800 jobs.

For all of 2017, retail employment dropped by 67,000 jobs after rising by 203,000 in 2016. Further job losses are likely this year as major retailers, facing stiff competition from online sellers like Amazon.com Inc <AMZN.O>, close stores.

Sears Holdings Corp said on Thursday it was shuttering 103 unprofitable Kmart and Sears stores. Macys Inc also announced 11 store closures, which could leave 5,000 workers unemployed.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. Upper Midwest factory sector grows fastest in three years

Steam is seen drifting from a factory over the Hoan Bridge in Milwaukee, Wisconsin, in this February, 6, 2014 file photo.

(Reuters) – A gauge of factory activity in the U.S. Upper Midwest improved to the strongest level in over three years in December, led by much stronger readings on new orders and production, according a private survey released on Friday.

Marquette University and the Institute for Supply Management-Milwaukee said their seasonally adjusted index on manufacturing in the Milwaukee region rose to 65.57 this month from 59.62 in November.

The December figure was the highest since November 2014 when it was 68.9.

A reading above 50 indicates regional factory activity is expanding.

The upbeat snapshot of upper Midwest business activity coincided with a jump in a similar measure for the Chicago area.

On Thursday, MNI Indicators and ISM-Chicago said their jointly developed Chicago Purchase Management Index rose to 67.6 in December, the highest since March 2011.

The Marquette University and Milwaukee ISM survey’s component on new orders, a proxy on future activity, increased to 88.33 from 66.46 last month, while its production gauge improved to 72.65 from 57.94.

Not all the components improved in December. The survey’s employment index fell to 58.67 from 61.73, while its six-month outlook gauge slipped to 71.43 from 73.33.

(Reporting by Richard Leong; Editing by Chizu Nomiyama)

‘Congratulations’: EU launches next phase of Brexit but warns of tough talks ahead

By Philip Blenkinsop and Robin Emmott

BRUSSELS (Reuters) – The European Union agreed on Friday to move Brexit talks onto trade and a transition pact but some leaders cautioned that the final year of Britain’s divorce negotiations could be fraught with peril.

On the second day of a Brussels summit, EU leaders agreed “sufficient progress” was made after a deal on citizens’ rights, the Irish border and Britain’s outstanding payments, giving negotiators a mandate to move on to the main phase of talks.

“EU leaders agree to move on to the second phase of Brexit talks. Congratulations PM Theresa May,” European Council President Donald Tusk, who chairs EU summits, said on Twitter.

Discussion of a transition period to calm nerves among businesses is due to start in the new year, although talks on a future free trade pact will not begin until after March — a date underlined by “guidelines” that set out how to proceed as Britain seeks to unravel more than 40 years of membership.

May replied via Twitter, thanking Tusk and European Commission President Jean-Claude Juncker: “Today is an important step on the road to delivering a smooth and orderly Brexit and forging our deep and special future partnership,” May said.

“We will deliver on the will of the British people and get the best Brexit deal for our country – securing the greatest possible access to European markets, boosting free trade with countries across the world, and delivering control over our borders, laws and money,” she added.

However, the future partnership discussion is set to be difficult, leaders including German Chancellor Angela Merkel, Juncker and Italy’s Prime Minister Paolo Gentiloni warned.

Austrian Chancellor Christian Kern went further, saying even a primary school student could see that the “first phase” deal on the Irish border would come back to haunt the talks because it was impossible for Britain to leave the bloc’s single market while avoiding a hard border on the island of Ireland.

“There cannot be any border controls between Northern and southern Ireland, there cannot be border controls between Northern Ireland and the UK, but there can between UK and the EU,” he said.

“So our primary school students can see that there is a riddle to be solved.”

In more formal language, leaders used the nine-point guidelines they agreed at the summit to support May’s call for a two-year transition out of the bloc, which aims to help British business and citizens adjust to life after the European Union.

Leaders reiterated their position that Britain cannot conclude a free-trade accord with the European Union until it has left and become a “third country”.

“AMBITION, CREATIVITY”

In coded language aimed at ensuring that Britain’s departure will not set a precedent for others and further undermine the bloc, leaders also agreed to “ensure a balance of rights and obligations” during Britain’s transition period.

Ireland’s Prime Minister Leo Varadkar cautioned that there were “quite divergent opinions” on how a new relationship and transition would look. EU officials are unsure exactly how far Britain should continue to receive the full, unfettered economic benefits of EU membership during a transition after it leaves, even if it loses political representation in Brussels.

A day after she suffered a defeat in parliament over her blueprint for quitting the EU, May won applause from her peers on Thursday evening. As she left to return to London, she said she was eager to move on, once her peers give the formal green light to trade talks on Friday.

The EU is willing to start talks next month on a roughly two-year transition period to ease Britain out after March 2019, but has asked for more detail from London on what it wants before it will open trade negotiations from March of next year.

A British government official said the prime minister was approaching the next phase, which will discuss a transition period as well as the terms of the future trading relationship, “with ambition and creativity”.

German Chancellor Angela Merkel gave her stamp of approval, but cautioned time was running out.

“We made clear that Theresa May has made an offer that should allow us to say that we have seen sufficient progress,” she told reporters. “Nevertheless, there are still a lot of problems to solve. And time is of the essence.”

May, weakened after losing her Conservative Party’s majority in a June election, has so far carried her divided government and party with her as she negotiated the first phase of talks on how much Britain should pay to leave the EU, the border with Ireland and the status of EU citizens in Britain.

But the next, more decisive phase of the negotiations will further test her authority by exposing the deep rifts among her top team of ministers over what Britain should become after Brexit.

(Additional reporting by Luke Baker, Alastair Macdonald and Liz Piper in Brussels; Writing by Guy Faulconbridge and Alastair Macdonald; Editing by Mark John)

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