CEO Musk emails staff alleging employee ‘sabotage’

SAN FRANCISCO (Reuters) – Tesla Inc (TSLA.O) Chief Executive Elon Musk said on Monday in an email to staff that an unnamed Tesla employee had conducted “extensive and damaging sabotage” to the company’s operations including allegedly making unspecified code changes to its manufacturing operating system and sending what the email said was sensitive Tesla data to unnamed third parties.

FILE PHOTO: SpaceX founder Elon Musk listens at a press conference following the first launch of a SpaceX Falcon Heavy rocket at the Kennedy Space Center in Cape Canaveral, Florida, U.S., February 6, 2018. REUTERS/Joe Skipper

Company spokeswoman Gina Antonini declined to comment on the email.

Musk said in the email, which was seen by Reuters, that he learned about this alleged behavior over the weekend.

“The full extent of his actions are not yet clear, but what he has admitted to so far is pretty bad,” Musk wrote. “His stated motivation is that he wanted a promotion that he did not receive.” Musk did not specify to whom he was referring.

Reuters could not independently confirm any of the claims in the email.

Musk wrote that the company would be investigating the matter this week, adding that Tesla needed to determine if the person was acting alone or in concert with “any outside organizations.”

“As you know, there are a long list of organizations that want Tesla to die,” Musk wrote, saying they included Wall Street short-sellers, oil and gas companies, and car company rivals but naming none.

Earlier on Monday, Musk sent a separate email to employees informing them of a “small fire” on Sunday at a company facility. The email was seen by Reuters.

Tesla said in an email that on Sunday night there had been a “smoldering in an air filter in the welding area of the body line. The smoldering was extinguished in a matter of seconds. There were no injuries or significant equipment damage, and production is back online.” The company did not specify the location of the fire, which Reuters was unable to independently confirm.

Musk said in the email that while the fire could have been a random event, “Please be on the alert for anything that’s not in the best interests of our company.”

Last week, Musk announced that nine percent of the company’s workforce was being laid off, without specifying an exact number.

Musk said the reorganization did not affect hourly assembly-line employees and was not expected to delay manufacturing targets.

Tesla’s future long-term profitability hinges on ramping up Model 3 output, which is intended for mass production.

Tesla’s stock price slipped 53 cents to $370.30 in after-hours trading on Monday.

Reporting by Salvador Rodriguez; Additional reporting by Kristina Cooke; Editing by Bill Berkrot

Audi to resume crisis talks after CEO arrest: sources

MUNICH (Reuters) – Audi’s (NSUG.DE) board of directors will resume talks on Tuesday to address a leadership crisis at Volkswagen’s (VOWG_p.DE) most profitable brand, sources familiar with the matter said, following Audi chief Rupert Stadler’s arrest.

FILE PHOTO: Audi CEO Rupert Stadler attends company’s annual news conference in Ingolstadt, Germany March 15, 2018. REUTERS/Michael Dalder/File Photo

Hours of negotiations by Volkswagen and Audi’s supervisory boards on Monday failed to reach an agreement on how to move on from news that German authorities had detained Stadler as part of their investigation into the group’s emissions test cheating.

The arrest of 55-year-old on Monday threw Volkswagen (VW) into turmoil as it struggles to draw a line under the scandal, which emerged after U.S. regulators blew the whistle in September 2015 on the use of illegal software.

Stadler has been under fire from the media, politicians and VW’s powerful trade unions for his handling of the scandal, but he survived a major management reshuffle announced in August thanks to backing from the Piech and Porsche families that control Europe’s biggest automaker.

Last week, Munich prosecutors said they were investigating Stadler for suspected fraud and false advertising and for his alleged role in helping to bring cars equipped with illegal software on to the European market.

They said the decision to arrest him at his home in Ingolstadt in the early hours of Monday was made because they saw a risk that he could try to suppress evidence.

One source has said that Dutchman Bram Schot was the front runner to become interim Audi chief if Stadler is suspended from his duties.

VW shares were down 2.6 percent in early trading.

Reporting by Irene Preisinger; Writing by Edward Taylor; Editing by Mark Potter

OPEC sees strong oil market, possible need for more output

VIENNA (Reuters) – Global oil demand is set to stay strong in the second half of 2018, an OPEC technical panel forecast this week, suggesting the market could absorb extra production from the group.

FILE PHOTO: A man fixes a sign with OPEC’s logo next to its headquarters’ entrance before a meeting of OPEC oil ministers in Vienna, Austria, November 29, 2017. REUTERS/Heinz-Peter Bader/File Photo

OPEC meets on Friday to decide on output policy amid calls from major consumers such as the United States and China to cool down oil prices and therefore support the global economy by producing more crude.

OPEC’s de facto leader, Saudi Arabia, and non-member Russia have proposed relaxing production cuts gradually, while OPEC members Iran, Iraq, Venezuela and Algeria have opposed such a move.

Three sources in the Organization of the Petroleum Exporting Countries told Reuters on Tuesday a technical OPEC panel – OPEC’s economic commission – met on Monday to review the market outlook and present it to the ministers later in the week.

“If OPEC and its allies continue to produce at May levels then the market could be in deficit for the next six months,” one of the sources said.

Another source said: “The market outlook in the second half is strong.”  

Some countries including Algeria, Iran and Venezuela said at the meeting that they still opposed an oil output increase, one of the sources said.

Reporting by Alex Lawler and Rania El Gamal; writing by Dmitry Zhdannikov; Editing by Dale Hudson

China slams U.S. ‘blackmailing’ as Trump issues new trade threat

BEIJING/WASHINGTON (Reuters) – U.S. President Donald Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods and Beijing warned it would retaliate, in a rapid escalation of the trade conflict between the world’s two biggest economies.

Trump’s latest move, as Washington fights trade battles on several fronts, was unexpectedly swift and sharp.

It was retaliation, he said, for China’s decision to raise tariffs on $50 billion in U.S. goods, which came after Trump announced similar tariffs on Chinese goods on Friday.

“After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced,” Trump said in a statement on Monday.

The comments sent global stock markets skidding and weakened both the dollar and the Chinese yuan on Tuesday. Shanghai stocks plunged to two-year lows.[MKTS/GLOB]

China’s commerce ministry said Beijing will fight back with “qualitative” and “quantitative” measures if the United States publishes an additional list of tariffs on Chinese goods.

“Such a practice of extreme pressure and blackmailing deviates from the consensus reached by both sides on multiple occasions,” the ministry said in a statement.

“The United States has initiated a trade war and violated market regulations, and is harming the interests of not just the people of China and the U.S., but of the world.”

U.S. business groups said members were bracing for a backlash from the Chinese government that would affect all American firms in China, not just in sectors facing tariffs.

  • China urges U.S. to stop damaging words and deeds on trade
  • China says will ‘fight back firmly’ if U.S. publishes additional tariffs
  • China stocks face ‘darkest hour’ after fresh Trump tariff threat

Jacob Parker, vice president of China operations at the U.S.-China Business Council in Beijing, said China would undoubtedly “begin looking at other ways to enforce action against U.S companies that are operating in the market.”

Some companies have reported Beijing is meeting with Chinese businesses to discuss shifting contracts for U.S. goods and services to suppliers from Europe or Japan, or to local Chinese firms, Parker said.

Washington and Beijing appeared increasingly headed toward open trade conflict after several rounds of talks failed to resolve U.S. complaints over Chinese industrial policies, lack of market access in China and a $375 billion U.S. trade deficit.

U.S. Trade Representative Robert Lighthizer said his office was preparing the proposed tariffs and they would undergo a similar legal process as previous ones, which were subject to a public comment period, a public hearing and some revisions. He did not say when the new target list would be unveiled.

“As China hawks, like Lighthizer and (Peter) Navarro, appear to have gained power within the Trump administration lately, an all-out trade war now seems more inevitable,” said Yasunari Ueno, chief market analyst at Mizuho Securities in Japan.

TIT-FOR-TAT

On Friday, Trump said he was pushing ahead with a 25 percent tariff on $50 billion worth of Chinese products, prompting Beijing to respond in kind.

FILE PHOTO: FILE PHOTO: The label of a Washington D.C. sweatshirt bears a U.S. flag but says “Made in China” at a souvenir stand in Washington, DC, U.S., January 14, 2011. REUTERS/Kevin Lamarque/File Photo/File Photo

Some of those tariffs will be applied from July 6, while the White House is expected to announce restrictions on investments by Chinese companies in the United States by June 30.

“China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology. Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong,” Trump said.

Trump said if China increases its tariffs again in response to the latest U.S. move, “we will meet that action by pursuing additional tariffs on another $200 billion of goods.”

Trump said he has “an excellent relationship” with Chinese President Xi Jinping and they “will continue working together on many issues.”

But, he said, “the United States will no longer be taken advantage of on trade by China and other countries in the world.”

COOLING CHINESE ECONOMY

The intensifying trade row threatens to put more pressure on the already cooling Chinese economy, risking an end to a rare spell of synchronized global expansion and collateral damage for its export-reliant Asian neighbors.

China’s central bank unexpectedly injected 200 billion yuan ($31 billion) in medium-term funds into the banking system on Tuesday in a move analysts said reflected concerns about liquidity but also the potential economic drag from a full-blown trade war.

China imported $129.89 billion of U.S. goods last year, while the U.S. purchased $505.47 billion of Chinese products, according to U.S. data.

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Derek Scissors, a China scholar at the American Enterprise Institute, a Washington think tank, said that means China will soon run out of imports of U.S. goods on which to impose retaliatory tariffs.

China was unlikely change its industrial policies in response to the U.S. trade threats, he said. That could take a long and painful trade fight.

“As I’ve said from the beginning, China will back off its industrial plans only when U.S. trade measures are large and lasting enough to threaten the influx of foreign exchange. Not due to announcements,” he said.

Reporting by Eric Beech and David Lawder in WASHINGTON; Michael Martina and Ben Blanchard in BEIJING; Additional reporting by Lee Chyen Yee in Singapore Writing by Tony Munroe; Editing by Cynthia Osterman, Sandra Maler Kim Coghill

Asia stocks skid to four-month low as Trump raises stakes in China trade war

TOKYO (Reuters) – Asian stocks sank on Tuesday and Shanghai shares plunged to near two-year lows as U.S. President Donald Trump threatened new tariffs on Chinese goods in an escalating tit-for-tat trade war between the world’s two biggest economies.

FILE PHOTO: A man looks at an electronic board showing Japan’s Nikkei average outside a brokerage at a business district in Tokyo, Japan August 9, 2017. REUTERS/Kim Kyung-Hoon

U.S. and European equity markets looked set to follow Asia into the red. SP 500 futures ESc1 were off 1 percent and Dow Jones futures 1YMcv1 were 1.1 percent lower.

Spreadbetters expected Britain’s FTSE .FTSE to open down 0.3 percent, with Germany’s DAX .GDAXI seen shedding 0.7 percent and France’s CAC .FCHI losing 0.8 percent.

Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods, prompting a swift warning from Beijing of retaliation, as the trade conflict between the world’s two biggest economies quickly escalated.

It was retaliation, Trump said, for China’s decision to raise tariffs on $50 billion in U.S. goods, which came after Trump announced similar tariffs on Chinese goods on Friday.

China warned it will take “qualitative” and “quantitative” measures if the U.S. government publishes an additional list of tariffs on its products.

The trade frictions have unnerved financial markets, with investors and businesses increasingly worried that a full-blown trade battle could derail global growth.

“Trump appears to be employing a similar tactic he used with North Korea, by blustering first in order to gain an advantage in negotiations. The problem is, such a tactic is unlikely to work with China,” said Kota Hirayama, senior emerging markets economist at SMBC Nikko Securities in Tokyo.

  • Ex-Japan Asian shares hit four-month low as Sino-U.S. trade tensions escalate

“A U.S.-China trade spat alone won’t hurt global growth. But there is always potential for Trump to keep increasing his threats which could have broader implications. Increasing trade has helped growth in emerging markets and this could be negatively affected.”

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 1.5 percent to its lowest since early February, with losses intensifying through the day as the rout deepened in China.

The Shanghai Composite Index .SSEC slumped nearly 5 percent at one point to its lowest level since mid-2016, while Hong Kong’s Hang Seng .HSI shed 3 percent.[.SS]

“China’s economy has already been clouded by a sharp slowdown in fixed asset investment growth due to the government’s deleveraging drive, a problematic property sector, a mounting debt burden and rising credit defaults,” economists at Nomura wrote.

“The rising risk of a disruptive trade conflict makes a bad situation tentatively worse.”

Japan’s Nikkei .N225 lost 1.8 percent, South Korea’s KOSPI .KS11 retreated 1.3 percent while Australian stocks bucked the trend and added 0.1 percent helped by a depreciating currency and an overnight bounce in commodity prices.

DOLLAR, YUAN WEAKEN

The dollar fell 0.75 percent to 109.715 yen JPY= following Trump’s tariff comments. The yen is often sought in times of market turmoil and political tensions.

The euro was steady at $1.1622 EUR=.

China’s yuan CNY=CFXS skidded to a five-month low. The Australian dollar AUD=D4, often seen as a proxy to China-related trades, brushed a one-year low of $0.7381.

In commodities, crude oil markets remained volatile ahead of Friday’s OPEC meeting at a time when Russia and Saudi Arabia are pushing for higher output.

Brent crude futures LCOc1 fell 0.8 percent to $74.76 a barrel after rallying 2.5 percent overnight, while U.S. light crude futures retreated 0.9 percent to $65.27.[O/R]

Lower-risk assets gained on the latest round of trade threats.

Spot gold XAU= was up 0.35 percent at $1,282.26 an ounce.

The 10-year U.S. Treasury note yield US10YT=RR touched 2.871 percent, its lowest since June 1.

Reporting by Shinichi Saoshiro; Editing by Kim Coghill and Jacqueline Wong

The bigger Cryptocurrencies get, the worse they perform: BIS

LONDON (Reuters) – Cryptocurrencies are not scalable and are more likely to suffer a breakdown in trust and efficiency the greater the number of people using them, the Bank of International Settlements (BIS)said on Sunday in its latest warning about the rise of virtual currencies.

Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 14, 2018. REUTERS/Dado Ruvic/Illustration

For any form of money to work across large networks it requires trust in the stability of its value and in its ability to scale efficiently, the BIS, an umbrella group for the world’s central banks, said in its annual report.

But trust can disappear instantly because of the fragility of the decentralized networks on which cryptocurrencies depend, the BIS said.

Those networks are also prone to congestion the bigger they become, according to the BIS, which noted the high transaction fees of the best-known digital currency, bitcoin, and the limited number of transactions per second they can handle.

“Trust can evaporate at any time because of the fragility of the decentralised consensus through which transactions are recorded,” the Switzerland-based group said in its report.

“Not only does this call into question the finality of individual payments, it also means that a cryptocurrency can simply stop functioning, resulting in a complete loss of value.”

The BIS’ head of research, Hyun Song Shin, said sovereign money had value because it had users, but many people holding cryptocurrencies did so often purely for speculative purposes.

“Without users, it would simply be a worthless token. That’s true whether it’s a piece of paper with a face on it, or a digital token,” he said, comparing virtual coins to baseball cards or Tamagotchi.

The dependency of users on so-called miners to record and verify crypto transactions is also flawed, according to the BIS, requiring vast and costly energy use.

It has issued a series of warnings this year after an explosive rise in cryptocurrency values attracted a wave of followers.

Agustin Carstens, general manager of the BIS, has described bitcoin as “a combination of a bubble, a Ponzi scheme and an environmental disaster”. [nL8N1PV5KS]

The BIS has told central banks to think hard about the potential risks before issuing their own cryptocurrencies.

No central bank has issued a digital currency, though the Riksbank in Sweden, where the use of cash has fallen, is studying a retail e-krona for small payments.

The BIS also said in its annual report that effective regulation of digital coins needed to be global, targeting both regulated financial institutions as well as companies offering crypto-related services.

Reporting by Tommy Wilkes

Theranos founder Holmes, former president indicted for fraud

(Reuters) – Theranos Inc founder Elizabeth Holmes and the embattled blood-testing company’s former president were indicted on charges that they engaged in schemes to defraud investors, doctors and patients, the U.S. Justice Department announced on Friday.

The charges against Holmes, 34, and Ramesh “Sunny” Balwani, 53, were announced shortly after the privately held company said that she was stepping down as its chief executive.

Prosecutors said that Holmes and Balwani used advertising and solicitations to encourage doctors and patients to use its blood testing laboratory services despite knowing the company could not produce accurate and reliable results consistently.

“This conspiracy misled doctors and patients about the reliability of medical tests that endangered health and lives,” FBI Special Agent in Charge John Bennett said in a statement.

The indictment also alleged that Holmes and Balwani made numerous misrepresentations about Theranos’ financial condition and prospects. Balwani, who worked at Theranos from September of 2009 through 2016, had also served as chief operating officer and was a member of the board.

In a statement, Theranos said Holmes would remain chair of the company’s board and David Taylor, the firm’s general counsel, had been appointed CEO.

Each defendant faces two counts of conspiracy to commit wire fraud and nine counts of wire fraud. Prosecutors said both entered pleas of not guilty on Friday during a hearing before a federal magistrate judge in San Jose, California.

The criminal charges came after Holmes in March settled civil fraud charges brought by the U.S. Securities and Exchange Commission under which she was barred from serving as an officer or director of a public company for 10 years.

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Lawyers for Holmes did not respond to requests for comment. Jeffrey Coopersmith, Balwani’s attorney, said his client had committed no crimes.

“Mr. Balwani looks forward to trial because he did not defraud anyone, and it will be an honor to defend him vigorously,” Coopersmith said in a statement.

Holmes, who started Theranos at the age of 19, was celebrated as a rising star of Silicon Valley until it became clear that many of the claims about the company’s supposedly revolutionary blood test were bogus.

The company reached a $9 billion valuation based on its promise to disrupt the laboratory testing business.

In presentations to potential investors, to doctors at medical meetings and to the media, Holmes claimed the Theranos analyzer could perform a full range of clinical tests using tiny blood samples drawn from a finger stick, and that it could produce results that were more accurate, reliable and faster than those from conventional blood tests. 

The indictment alleges that Holmes and Balwani knew their analyzer had accuracy and reliability problems, performed a limited number of tests, was slower than some competing devices, and, in some respects, could not compete with existing conventional machines.

They told investors that Theranos could generate about $1 billion in revenues in 2015 when in fact the company had generated just a few hundred thousand dollars in 2014 and 2015, the indictment said.

In 2015, the Wall Street Journal reported that Theranos’ devices were flawed and inaccurate, setting off a downward spiral for the company that had bagged investors including venture capital firm DFJ, Walgreens (WBA.O), media mogul Rupert Murdoch and Oracle (ORCL.N) co-founder Larry Ellison.

Reporting by Tamara Mathias in Bengaluru and Nate Raymond in Boston; Editing by Maju Samuel and Bill Berkrot

Foxconn announces North American headquarters in Wisconsin

SHANGHAI (Reuters) – Taiwanese electronics manufacturer Foxconn said it would establish its North American corporate headquarters in Milwaukee, Wisconsin, following the purchase of a building in the city’s downtown area.

FILE PHOTO – Visitors are seen at a Foxconn booth at the World Intelligence Congress in Tianjin, China May 19, 2018. Picture taken May 19, 2018. REUTERS/Stringer

In a statement, Foxconn said more than 500 people would work at the seven-story building in downtown Milwaukee.

The announcement comes almost a year after the company disclosed plans to invest $10 billion over four years to build a 20 million-square-foot LCD panel plant in Wisconsin that could eventually employ up to 13,000 people.

Taiwan-based Foxconn, known formally as Hon Hai Precision Industry Co Ltd (2317.TW), is the world’s largest contract electronics manufacturer and employs more than a million people.

Reporting by Andrew Galbraith, editing by Larry King

AT&T CEO says ready to invest, WarnerMedia rebranding unveiled

(Reuters) – ATT Inc is committed to spend as much as needed on the media business of newly acquired Time Warner Inc, Chief Executive Randall Stephenson told CNBC on Friday, with a plan to invest $21 billion to $22 billion in the combined company.

FILE PHOTO: Chief Executive Officer of ATT Randall Stephenson arrives at a U.S. District Court in Washington, D.C., U.S. April 19, 2018. REUTERS/Carlos Barria/File Photo

“We’re not going to be penny-wise and pound-foolish here,” Stephenson said in an interview on the financial news channel. “We intend to invest.”

The No. 2 U.S. wireless carrier closed its $85 billion acquisition of Time Warner on Thursday and now faces the task of integrating a media company into its operations as it seeks to rival Netflix Inc, Amazon.com Inc and other technology companies providing entertainment directly to customers.

Time Warner will be renamed WarnerMedia, according to a memo sent to employees by John Stankey, who will serve as CEO of WarnerMedia.

Turner CEO John Martin will leave the company, according to the memo, which was seen by Reuters.

Stephenson said on Friday ATT intends to preserve Time Warner’s creative culture, albeit under a new name.

He acknowledged differences in an email to ATT and Time Warner employees late on Thursday, a copy of which was seen by Reuters.

“As different as our businesses are, I think you’ll find we have a lot in common,” wrote Stephenson. “We’re big fans of your talent and creativity. And you have my word that you will continue to have the creative freedom and resources to keep doing what you do best.”

Stephenson told CNBC he expects ATT’s debt levels to come down quickly in about a year, returning to normal levels within four years at about 2.3 times earnings before interest, tax, depreciation and amortization.

Some analysts have raised concerns about the high level of debt the company took on to acquire Time Warner, about $180 billion at the close of the merger, Stephenson said.

ATT’s spending plans include investing more in HBO, the premium TV channel with the hit show “Game of Thrones,” and expanding HBO’s direct-to-consumer platform, Stephenson said.

Reporting by Sheila Dang; Additional reporting by Diane Bartz in Washington; Editing by Bill Rigby

GE should be fined if French job pledges not met: France

PARIS (Reuters) – U.S. company General Electric (GE.N) should be fined if it does not create as many jobs at Alstom as agreed when it purchased its energy subsidiary in 2015, a French government spokesman said on Sunday.

The General Electric logo is pictured on the General Electric offshore wind turbine plant in Montoir-de-Bretagne, near Saint-Nazaire, western France, November 21, 2016. REUTERS/Stephane Mahe

GE had committed to create 1,000 net new jobs by the end of this year when it bought Alstom’s energy business in 2015, but had created only 323 by the end of April, the Finance Ministry said last week.

GE Chief Executive John Flannery informed French Finance Minister Bruno Le Maire this week that the target was now “out of reach” because of difficult market conditions.

Le Maire urged GE to “take all necessary measures to comply to the best of its abilities” with the 2015 deal, under which GE will be fined 50,000 euros for each job not created.

“Sanctions must set an example. 50,000 euros should be applied by the end of the year if GE does not stick to its commitments,” government spokesman Benjamin Griveaux told France 3 television

“When you make commitments to the government, you respect them,” he added.

Reporting by Yann Le Guernigou; Writing by Leigh Thomas; Editing by Raissa Kasolowsky