Oil hovers below $70 highs, clouded by rise in U.S. output

LONDON (Reuters) – Oil hovered below a three-year high near $70 a barrel on Monday on signs that production cuts by OPEC and Russia are tightening supplies, but analysts warned of “red flags” due to surging U.S. production.

International benchmark Brent crude futures LCOc1 were trading 12 cents lower at $69.75 by 1330 GMT, having risen above $70 earlier in the session.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were unchanged at $64.30 a barrel. Trading was relatively slow due to a national holiday in the United States.

A production-cutting pact between the Organization of the Petroleum Exporting Countries, Russia and other producers has given a strong tailwind to oil prices, with both benchmarks last week hitting levels not seen since December 2014.

Growing signs of a tightening market after a three-year rout have bolstered confidence among traders and analysts that prices can be sustained near current levels.

Bank of America Merrill Lynch on Monday raised its 2018 Brent price forecast to $64 a barrel from $56, forecasting a deficit of 430,000 barrels per day (bpd) in oil production compared to demand this year.

Other factors, including political risk, have also supported crude.

“Tighter fundamentals are (the) main driver to the rally in prices, but geopolitical risk and currency moves along with speculative money in tandem have exacerbated the move,” U.S. bank JPMorgan said in a note.

RED FLAGS

Still, a number of analysts have warned that the 13 percent rally since the start of the year could peter out in the short term due to global refinery maintenance and rising North American production.

U.S. energy companies added 10 oil rigs in the week to Jan. 12, taking the number to 752, energy service firm Baker Hughes (GE.N) said on Friday.

That was the biggest increase since June 2017.

In Canada, energy firms almost doubled the number of rigs drilling for oil last week to 185, the highest level in 10 months.

Vienna-based consultancy JBC Energy expects U.S. production to grow by 600,000 bpd in the first quarter of 2018 compared to a year earlier.

“From a fundamental perspective, the surge in U.S. managed money raises a clear red flag for us. We see the U.S. complex as decidedly bearish over the next two months.”

The surplus in crude is expected “to widen to levels that will overwhelm the market”, JBC said in a note. Seasonal refinery maintenance will further limit demand for crude, it added.

Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson and Louise Heavens

SoftBank considers IPO for Japan wireless unit, said to seek $18 billion

TOKYO (Reuters) – SoftBank Group Corp (9984.T) said on Monday it was considering listing its Japanese wireless business – a move that could reportedly raise $18 billion and would accelerate the conglomerate’s transformation into one of the world’s biggest tech investors.

A spin-off – potentially the biggest IPO by a Japanese company in nearly two decades – would give the unit more autonomy and help investors value the business as well as its parent which has myriad holdings across the tech industry.

SoftBank Group is aiming to sell about 30 percent of SoftBank Corp, Japan’s No. 3 wireless carrier, for around 2 trillion yen ($18 billion), the Nikkei newspaper said without citing sources. It added that proceeds will go towards investments in growth such as buying into foreign information technology companies.

“It makes sense to spin off the mobile-phone business using a public offering that would leave SoftBank in control and provide SoftBank with more cash to pursue its strategy of investing in companies with potentially high growth prospects,” Erik Gordon, a professor at the University of Michigan’s Ross School of Business.

“It is a way of obtaining capital without adding debt or diluting SoftBank’s equity interests in the growth companies.”

SoftBank Group plans to seek approval from the Tokyo Stock Exchange as early as spring, the Nikkei said, adding that it was aiming to list around autumn in Tokyo as well as overseas, possibly London.

The conglomerate said in a statement that a listing of the telecoms business was one option for its capital strategy but that no such decision had been made. Its shares finished 3 percent higher on the news.

An IPO of about 2 trillion yen would be one of the biggest offerings by a Japanese company, rivaling a 2.1 trillion yen listing by NTT DoCoMo Inc (9437.T) in 1998 and the 2.2 trillion yen raised by the government’s sale of Nippon Telegraph and Telephone Corp (9432.T) shares before its 1987 listing.

Large companies seeking to list in Tokyo are required to float at least 35 percent of their shares although these rules can be eased when the company is also listing overseas.

COMPLEX STRUCTURE

SoftBank Group has a vast range of holdings including stakes in British chip designer ARM Holdings ARM.L, struggling U.S. wireless service provider Sprint Corp (S.N) as well as Alibaba Group Holding Ltd (BABA.N).

It has with other investors also set up a $93 billion Vision Fund that is investing in a range of firms to capitalize on a tech future expected to be driven by artificial intelligence, robotics and interconnected devices.

That complicated structure and constant stream of new investments has made valuing the company extremely difficult and analysts often note that its market value does not accurately reflect the value of its massive holdings.

SoftBank Group’s market capitalization currently stands at around $92 billion. By contrast, its near 30 percent stake in Alibaba is worth around $140 billion.

An IPO could lead to softness in SoftBank Group shares for a while as some telecoms-focused investors sell their holdings to buy shares in the newly listed entity, said Chris Lane, an analyst at Sanford C. Bernstein.

“What SoftBank will ultimately have to do, and they would have to do this in any case, is attract investors who are looking at this as a tech focused investment co(mpany),” he said.

The domestic telecoms unit posted a 4.5 percent rise in operating profit to 720 billion yen in the year ended March on sales of 3.2 trillion yen.

While it has been SoftBank Group’s most profitable source of income, it faces headwinds including an aging population, a shift by consumers to cheaper carriers and plans by e-commerce firm Rakuten Inc (4755.T) to enter the market.

With SoftBank’s founder Masayoshi Son reluctant to sell stakes in investments seen as having large upside potential such as Alibaba, listing the telecoms business could provide a place to park some of the conglomerate’s large debt burden.

“If the desire is to be able to raise capital for future vision funds, pushing as much of the debt into the telco as possible makes sense,” said Lane.

SoftBank’s debt pile stood at around $100 billion in the financial quarter ended September.

Reporting by Yoshiyasu Shida and Sam Nussey; Additional reporting by Chris Gallagher and Minami Funakoshi and William Mallard; Editing by Edwina Gibbs

Exclusive: China’s JD.com targets $2 billion fundraising at logistics unit

HONG KONG (Reuters) – China’s second-biggest e-commerce firm JD.com (JD.O) has kicked off a fundraising round at its logistics unit with a target of at least $2 billion, and eventually plans to list the business overseas, people with direct knowledge of the matter said.

JD.com, which only trails Alibaba Group Holding Ltd (BABA.N) in China’s e-commerce market, has invited a select group of investors to join the funding round that values its logistics business, JD Logistics, at around $10 billion, two of the people told Reuters.

The move comes as China’s major e-commerce companies are looking to bulk up their logistics businesses to support their global expansion ambitions and boost revenues by offering services to third-party entities.

Chinese investment firm Hillhouse Capital Group and Sequoia Capital China will likely be lead investors of JD Logistics’ funding round, while a number of state-owned and international investors have also shown strong interest in the deal, according to the people.

Demand could be strong enough that smaller investors putting up just $100 million – the floor for investments, according to two people – would have to prove they could help the logistics unit to bring in new business, one of them said.

JD.com declined to comment. Hillhouse and Sequoia did not respond to requests for comment. The sources could not be named as the information is confidential.

JD Logistics is currently 100 percent owned by JD.com. It is not clear when and where the IPO process will be undertaken.

Hillhouse Capital is the second-biggest equity investor in JD.com, according to Thomson Reuters data. Alibaba rival Tencent Holdings (0700.HK) is also a top-10 investor in JD.com, the data shows.

The fundraising and any ensuing spin-off would give JD Logistics – set up as a separate entity within the company last April – some independence and help it offer services to third-party clients as well as to compete with Alibaba’s logistics network Cainiao and delivery services firms such as SF Express, the people said.

Logistics groups have increasingly sought investments to fund work on solutions to supply-chain issues, including autonomous driving, automated warehousing, cross-border logistics and smart logistics services. JD.com, being aggressive in that push, was the first one in China to invest in drones.

Last year, JD.com invested in logistics infrastructure in Southeast Asia, expanding from existing commitments in Indonesia. It also announced a partnership with Japanese delivery firm Yamato Holdings (9064.T) last month to ship products from Japanese retailers to China.

JD.com posted net earnings of 1 billion yuan ($151 million), its highest-ever quarterly profit, in the three months to September 30, confounding analysts’ forecasts of a 213 million yuan loss.

The company has a current market cap of $66 billion.

Reporting by Julie Zhu and Kane Wu in Hong Kong; Additional reporting by Cate Cadell in Beijing; Editing by Jennifer Hughes and Muralikumar Anantharaman

Euro hits three-year high as Europe leads global optimism

LONDON (Reuters) – The euro shot to a three-year high on Monday as optimism around growth buoyed expectations of tighter monetary policy from European Central Bank, while the chance of a pro-European Union coalition in Germany also boosted confidence in the continent.

With the world in general and Europe in particular showing signs of sustained economic growth, global stock benchmarks jumped to new highs, even though investors are now pricing in the withdrawal of central banks’ stimulus.

That view was given further fuel last week by an account of ECB discussions that suggested policymakers may soon start preparing the ground for a reduction in support.

The single currency climbed as much as 0.8 percent to $1.22965 at one stage on Monday, a price last seen in December 2014, just before the ECB first announced its government bond purchase program.

In addition, Bank of Japan Governor Haruhiko Kuroda offered a positive view on his nation’s economy and inflation on Monday, sending the yen to a four-month high against the dollar.

“The latest leg up in the euro has clearly come from optimism that the German government is moving towards an agreement for a coalition government,” said Investec economist Victoria Clarke.

German Chancellor Angela Merkel’s CDU party and the Social Democrats (SPD) are moving towards formal coalition talks, soothing concerns around Europe’s largest economy.

The SPD’s pro-European stance – leader Martin Schulz recently argued for a “United States of Europe” – also strengthens the case for investment in the euro.

“This follows an earlier move triggered by the crucial line in the ECB account which has got people thinking about when the first move on rates will happen,” said Clarke.

Euro zone money markets now price in a 70 percent chance of a 10-basis-point rate increase by the ECB by the end of the year, up from 50 percent a week before.

The strength in the euro pushed European stocks a touch lower, as exporters were hit by the currency strength. An index of pan-European stocks was down 0.1 percent on the day, but still not far from multi-year high hit last week.

The slight decline comes in the wider context of boom for stocks so far in 2018, as investors bask in strong growth numbers from most of the world’s largest economies.

MSCI’s all-country index of world stocks soared to new records overnight and MSCI’s Asia ex-Japan index breached its 2007 high for the first time to set a new all-time record.

Stocks in Hong Kong jumped 0.9 percent from Friday’s record closing high. Investors were optimistic that Chinese gross domestic product data for the December quarter due on Thursday would show growth of at least 6.7 percent for the world’s second-biggest economy.

The momentum of global economic growth through the closing months of last year is being underlined by the early stages of the fourth-quarter earnings season.

Earnings for SP 500 companies are expected to increase on average by 12.1 percent in the quarter, with profit for financial services companies likely to increase 13.2 percent, according to Thomson Reuters I/B/E/S.

Wall Street stocks set records on Friday and looked set to rise again, with U.S. stock futures up 0.1 percent, but U.S. markets will be mostly closed on Monday for the Martin Luther King Day holiday.

DOLLAR DOWN

The dollar index dropped to fresh troughs on Monday, with strength in the euro helping to push it down half a percent against a basket of six major currencies, to its lowest in more than three years.

Though the Federal Reserve is expected to continue to raise U.S. rates this year, those increases have largely been priced in and investors are starting to position for central bank action in Europe and Japan instead.

The dollar slipped to a six-week low against the yen at 110.67 yen, even as the head of the Bank of Japan reiterated his commitment to keeping yields low.

Oil prices dropped following six straight sessions of gains, with output cuts led by OPEC and Russia as well as healthy demand keeping crude near December 2014 highs. [O/R]

Brent crude futures fell 19 cents to $69.68 a barrel, while U.S. crude was lower 12 cents at $64.19.

Reporting by Abhinav Ramnarayan; Additional reporting by Wayne Cole in Sydney, editing by Larry King

Ford plans $11 billion investment, 40 electrified vehicles by 2022

DETROIT (Reuters) – Ford Motor Co (F.N) will significantly increase its planned investments in electric vehicles to $11 billion by 2022 and have 40 hybrid and fully electric vehicles in its model lineup, Chairman Bill Ford said on Sunday at the Detroit auto show.

The investment figure is sharply higher than a previously announced target of $4.5 billion by 2020, Ford executives said, and includes the costs of developing dedicated electric vehicle architectures. Ford’s engineering, research and development expenses for 2016, the last full year available, were $7.3 billion, up from $6.7 billion in 2015.

Ford Chief Executive Jim Hackett told investors in October the automaker would slash $14 billion in costs over the next five years and shift capital investment away from sedans and internal combustion engines to develop more trucks and electric and hybrid cars.

Of the 40 electrified vehicles Ford plans for its global lineup by 2022, 16 will be fully electric and the rest will be plug-in hybrids, executives said.

“We’re all in on this and we’re taking our mainstream vehicles, our most iconic vehicles, and we’re electrifying them,” Ford told reporters. “If we want to be successful with electrification, we have to do it with vehicles that are already popular.”

General Motors Co (GM.N), Toyota Motor Corp (7203.T) and Volkswagen AG (VOWG_p.DE) have already outlined aggressive plans to expand their electric vehicle offerings and target consumers who want luxury, performance and an SUV body style – or all three attributes in the same vehicle.

Mainstream auto makers are reacting in part to pressure from regulators in China, Europe and California to slash carbon emissions from fossil fuels. They also are under pressure from

Tesla Inc (TSLA.O)’s success in creating electric sedans and SUVs that inspire would-be owners to line up outside showrooms and flood the company with orders.

GM said last year it would add 20 new battery electric and fuel cell vehicles to its global lineup by 2023, financed by robust profits from traditional internal combustion engine vehicles in the United States and China.

GM Chief Executive Mary Barra has promised investors the Detroit automaker will make money selling electric cars by 2021.

Volkswagen said in November it would spend $40 billion on electric cars, autonomous driving and new mobility services by the end of 2022 – significantly more than when it announced two months earlier it would invest more than 20 billion euros on electric and self-driving cars through 2030.

Toyota is racing to commercialize a breakthrough battery technology during the first half of the 2020s with the potential to cut the cost of making electric cars.

Ford’s additional investments in electric vehicles contrasted with many of the vehicle launches at the Detroit show which featured trucks and SUVs. On Sunday evening, Daimler AG (DAIGn.DE) unveiled its new G-class SUV, a bulky off roader, in an abandoned movie theater in downtown Detroit once used as a set for the movie “8 Mile.”

Daimler CEO Dieter Zetsche hinted to Former California Gov. Arnold Schwarzenegger during an exchange on stage next to the G-class that Daimler would someday have an electric version of the vehicle.

SUVs figured in Ford’s electric vehicle presentation. The automaker’s president of global markets, Jim Farley, said on Sunday that Ford would bring a high-performance electric utility vehicle to market by 2020. The company will begin production of a hybrid version of its popular F-150 truck at a plant in Dearborn, Michigan, in 2020.

“What we learned from this first cycle of electrification is people want really nice products,” Farley said.

‘THINK BIG’

Ford’s shift to the electric vehicle strategy has been more than six months in the making after Hackett replaced former Chief Executive Mark Fields in May.

The plan was finalized in recent months after an extensive review, a person familiar with the process said. In October, Ford disclosed it had formed a team to accelerate global development of electric vehicles, whose mission is to “think big” and “make quicker decisions.”

Some of the electric vehicles will be produced with Ford’s JV in China aimed at the Chinese market. One aim of Ford’s “Team Edison” is to identify and develop electric-vehicle partnerships with other companies, including suppliers, in some markets, according to Sherif Marakby, vice president of autonomous vehicles and electrification.

China, India, France and the United Kingdom all have announced plans to phase out vehicles powered by combustion engines and fossil fuels between 2030 and 2040.

Reporting by Nick Carey and Joseph White; Additional reporting by David Shepardson in Detroit; Editing by Peter Cooney and Muralikumar Anantharaman

Facebook’s Sandberg, Twitter’s Dorsey to leave Disney board

LOS ANGELES (Reuters) – Facebook Inc (FB.O) Chief Operating Officer Sheryl Sandberg and Twitter Inc (TWTR.N) Chief Executive Jack Dorsey will not seek re-election to Walt Disney Co’s (DIS.N) board because of growing conflicts of interest between the media giant and the technology companies, Disney said on Friday.

Disney is moving heavily into online delivery of its TV shows and movies as viewers abandon traditional cable, and at one point had explored an acquisition of Twitter. At the same time, Twitter and Facebook are trying to attract audiences to video content on their platforms.

“Given our evolving business and the businesses Ms. Sandberg and Mr. Dorsey are in, it has become increasingly difficult for them to avoid conflicts relating to board matters, and they are not standing for re-election,” Disney said in a statement.

Lead independent director Orin Smith, former CEO of Starbucks Corp (SBUX.O), also will leave Disney’s board, due to rules that specify retirement at age 74, the company said. Former Seagram Company vice chairman Robert Matschullat will depart because of a 15-year term limit.

The departures take effect in March at the time of Disney’s annual meeting, when shareholders will be asked to re-elect 10 other board members. They include General Motors (GM.N) CEO Mary Barra, Nike Inc (NKE.N) CEO Mark Parker and Oracle (ORCL.N) CEO Safra Catz, whose election in December to the board takes effect on Feb. 1.

The board will select a new lead independent director when it meets after the annual meeting, Disney said.

Representatives for Facebook and Twitter had no comment.

Disney also disclosed on Friday that compensation for its chief executive, Robert Iger, declined by 17 percent in fiscal 2017 to $36.3 million. Iger was awarded a smaller cash bonus due to the “absence of growth” in the year that ended Sept. 30, according to a regulatory filing.

Reporting by Lisa Richwine; Editing by Sandra Maler and Leslie Adler

Indonesia central bank warns over cryptocurrencies

JAKARTA (Reuters) – Indonesia’s central bank has issued a fresh warning about trading in cryptocurrencies like bitcoin because of the risk of losses to the public and even a potential threat to the stability of the financial system.

Bank Indonesia (BI) has previously said that cryptocurrencies were not recognized as a legal medium of exchange, so that they could not be used as a means of payment in Indonesia.

“The ownership of virtual currencies is high risk and prone to speculation because there is no authority who takes responsibility, there is no official administrator and there is no underlying asset to be the basis for the price,” BI spokesman Agusman said in a statement issued late on Friday.

He said that virtual currencies could also be used in money laundering and terrorism funding, and due to all these factors could have an impact on the stability of the financial system and causes losses for society.

“(Cryptocurrency) is not a legal medium of exchange. We remind (people of) its risks. When the risks occur, the losses will be borne by the public. We are obliged to protect consumers and protect them from a bubble,” Agusman said by telephone on Saturday. 

Asked whether such statements from authorities could stir panic among those who had already invested in cryptocurrencies, he said: “They didn’t consult with us when buying….please help us make the people understand.”

Indonesian authorities have been stepping up their warnings and last month BI issued a regulation banning use of cryptocurrencies by financial technology companies involved in payment systems, and said it is examining whether there’s a need to regulate trading on virtual currency exchanges.

South Korean authorities this week sent global bitcoin prices temporarily plummeting and virtual coin markets into turmoil when the justice minister, Park Sang-ki, said regulators were preparing legislation to halt cryptocurrency trading.

Prices later rebounded on the Luxembourg-based Bitstamp, bitcoin BTC=BTSP to stand at $14,116 in latest trading after touching $12,800 this week.

Bitcoin.co.id, an Indonesian online cryptocurrency exchange, said on its website that bitcoin was trading at 217.44 million rupiah ($16,288) per unit.

Some Indonesian merchants, including an online babyware supplier, indicate on their websites that they accept payment in Bitcoin.

($1 = 13,350.0000 rupiah)

Reporting by Agustinus Beo Da Costa and Tabita Diela; Writing by Ed Davies; Editing by Simon Cameron-Moore

GM’s new Chevy Silverado bids for more U.S. pickup profits

DETROIT (Reuters) – General Motors Co on Saturday fired a new round in the battle for profits from one of the U.S. auto industry’s most lucrative segments when it showed a new generation of its Chevrolet Silverado pickup truck at Detroit’s auto show.

The new Silverado, a highlight of the show, is the successor to GM’s best-selling vehicle in North America. Sales of the current Silverado rose nearly 2 percent to 585,000 vehicles in 2017.

Analysts and company executives say the Silverado and the similar GMC Sierra are among the highest-profit models for the company, generating a significant share of its $9 billion in North American pretax earnings for the first nine months of 2017.

By adding luxury features to their pickups, automakers have pushed prices in the segment to an average $46,984 a vehicle, according to Cox Automotive. That is well above the industry’s average 2017 transaction price of $31,600 cited by GM.

Competition in the North American large pickup market will heat up as GM and rival Fiat Chrysler Automobiles NV begin selling their redesigned trucks later this year and Ford Motor Co invests in its best-selling F-series.

Speaking on stage flanked by several gleaming new Silverados, GM global product development chief Mark Reuss said the automaker had cut the pickup’s weight 450 pounds (204 kilograms) using lighter materials including aluminum doors, hood and tailgate.

But unlike Ford, which jolted the industry in December 2014 when it launched the current generation F-150 with an all-aluminum body, Reuss said the frame and above all the pickup truck bed – one of the most important parts of pickups used for work functions – were still made of steel.

“I don’t think you’d get much work done with an aluminum hammer,” Reuss said, in a dig at Ford.

Fiat Chrysler plans to unveil a new generation of its Ram pickup truck at Detroit’s auto show on Monday.

At a sneak preview in December, GM said it would offer eight versions of the new Silverado and more engine and transmission combinations than the current lineup.

Executives said the new Silverado would have a high-strength steel bed floor and use “mixed materials” to cut weight and improve fuel economy.

The F-series, which has an aluminum body, has been the best-selling model line in the United States for 41 years, with 2017 sales of nearly 900,000 vehicles.

Ford announced this month it will launch a diesel version of the F-150 that will achieve 30 miles per gallon highway fuel efficiency, a level comparable to some midsize cars as it seeks to gain an edge in this competitive segment.

When describing the fuel economy of the diesel version of the Silverado Saturday evening, Reuss said “I am confident that we have the best performing diesel in the segment.”

Last year GM sold a total of 947,972 of its four Chevrolet and GMC pickup models, two of which were mid-sized.

U.S. consumers are shifting away from smaller cars in favor of larger SUVs, crossovers and pickup trucks, a major boon for the Detroit automakers.

Light trucks accounted for 63.2 percent of U.S. new vehicle sales in 2017, up from 59.5 percent in 2016.

However, U.S. new vehicle sales fell 2 percent in 2017 after hitting a record high in 2016 and are expected to drop further in 2018 as interest rates rise and more late-model used cars come back to dealer lots to compete with new ones.

Reporting by Nick Carey and Joseph White; Editing by Lisa Von Ahn and David Gregorio

GM executives defend NAFTA, Mexican truck plant

DETROIT (Reuters) – General Motors Co (GM.N) Chief Executive Mary Barra expressed optimism on Saturday that the North American Free Trade Agreement would survive, and other senior GM executives stood by the company’s plans to continue building trucks in Mexico.

At an event to tout GM’s 2019 Chevrolet Silverado pickup truck ahead of the Detroit auto show, Barra twice did not answer directly when asked if the automaker is reconsidering current production in Mexico in light of potential changes or the collapse of the trade deal between the United States, Canada and Mexico.

Company executives did not rule out future changes to its North American production plans depending on the outcome of ongoing NAFTA renegotiation talks, even though it would be costly to shift production of trucks.

Rival Fiat Chrysler Automobiles NV(FCAU.N) (FCHA.MI) said on Thursday it will move production of its next-generation heavy-duty pickup trucks to Michigan from a plant in Mexico, a move that reduces the risk that those trucks would be hit with a 25 percent tariff if NAFTA unravels.

Barra sidestepped a question about GM’s Mexican truck factory, saying, “When I look at our footprint, there is so much more work and negotiations to be done on NAFTA.”

Mark Reuss, GM’s product development chief, said the company is using its existing truck plants in North America, but would not elaborate when asked if GM could stop building trucks in Mexico.

“I‘m not sure that we would tell anybody that,” Reuss said. “I don’t think we’d be talking about our footprint in the future.”

In a separate exchange with reporters, Reuss said GM intended to use its North American factories, including those in Mexico.

Barra, who met in November with Vice President Mike Pence along with other U.S. auto executives, said GM has been working to educate the Trump administration about the complexities of the auto industry and its supply base.

“We’re going to continue to work constructively to get a modernized NAFTA agreement,” she said.

Barra said she was optimistic that NAFTA would survive. President Donald Trump has threatened to walk away from the 1994 accord unless major changes are made in negotiations with Mexico and Canada.

Other GM executives defended the company’s North American manufacturing strategy, saying 80 percent of the trucks sold in the United States are made in U.S. factories.

GM North America President Alan Batey said GM’s Mexican truck plant supports U.S. jobs.

“The truck we build in Mexico, the engines come from the U.S. Everything is interlinked,” Batey told reporters after showing off the new Silverado. [nL1N1P80GX]

Asked what GM would do if the United States pulls out of NAFTA, Batey said GM would “have to worry about that when we get there.”

Reporting by David Shepardson; Editing by Will Dunham

Exclusive: Current and former Uber security staffers cast doubt on spying claims

SAN FRANCISCO (Reuters) – The former security chief of Uber Technologies Inc. swore in a closed legal proceeding that he knew of no attempts to steal trade secrets from anyone, including Alphabet Inc’s self-driving unit Waymo, and would be “shocked” if that had occurred.

In a deposition taken in mid-December near San Francisco, Joe Sullivan, Uber’s security chief from 2015 to 2017, said that the most explosive claims made by another former Uber employee of unethical and illegal behavior by members of his security team were false.

The testimony, described to Reuters by people familiar with it, came in connection with a lawsuit brought by Waymo which accuses arch rival Uber of stealing trade secrets.

Sullivan’s testimony has not been made public. He has not spoken in open court or spoken publicly since leaving Uber in November, when he was fired following an investigation.

The previously unreported testimony from the onetime senior Uber official, as well as interviews conducted by Reuters with five current and former Uber employees, rebuts statements made in an explosive 37-page letter last year that triggered the internal probe and drew the attention of federal prosecutors, who are still investigating.

The letter was written by an attorney for Richard Jacobs, a security analyst who worked at Uber from 2016 to 2017 and was about to be fired, Jacobs has acknowledged.

Jacobs’ lawyer wrote that Uber’s security apparatus was engaged in stealing trade secrets, spying on rival executives and wiretapping, among other questionable behavior.

Uber’s internal probe of Jacobs’ claims also uncovered something new, which was not mentioned in Jacobs’ letter: an undisclosed 2016 data breach and a $100,000 payout to a hacker in Florida. This discovery led to Uber firing Sullivan and legal deputy Craig Clark for failing to have the company disclose the breach to customers and regulators.

Waymo seized on the claims made by Jacobs because they explicitly mentioned that Uber had stolen Waymo trade secrets, and Waymo was already suing Uber in a federal court for theft of trade secrets.

Sullivan in his testimony and the other executives in interviews with Reuters questioned Uber’s decision to pay Jacobs a $7.5 million settlement and offer him a consulting contract in connection with his threats to expose Uber’s alleged wrongdoing.

An Uber spokesman did not comment on the implication of Sullivan’s testimony, but said that Uber had already substantiated some of Jacobs’ claims, although nothing related to Waymo. He added that the company is “changing the way we do business, putting integrity at the core of everything we do.” A spokeswoman for Waymo declined to comment.

Jacobs’ attorney in the Waymo case, Martha Boersch, who did not write the 37-page-letter, did not respond to requests for comment. Jacobs did not respond to a request for comment.

Attorneys for Waymo have said in court that over the nearly year-long case they have amassed a file of evidence against Uber and were ready to go to trial before the revelation of the Jacobs letter, which came days before the original trial date. On Friday, Waymo filed a court document that said it had corroborated some of Jacobs’ claims about Uber’s data-gathering efforts against rivals, but the specifics were redacted.

In interviews with Reuters, three current Uber executives repeated Sullivan’s rejection of Jacobs’ claims and said they were unaware of any of the lawbreaking allegations by Jacobs. They called false Jacobs’ statements that the security unit had misused attorney-client privilege or encouraged the use of ephemeral messaging services in order to cover up improper behavior.

Uber received the letter from Jacobs in May 2017, but it was not publicly disclosed until November, when federal prosecutors shared the letter with the judge overseeing the Uber-Waymo lawsuit. The judge delayed the trial to allow Waymo attorneys to question Sullivan and other Uber employees about the letter.

In his own recent court appearance in the Waymo case, Jacobs stood by his claims that Uber’s security team spied on and stole from competitors and tried to cover its tracks. But he admitted he was not aware of Uber stealing anything from Waymo, contradicting part of his letter. He attributed the contradiction to a miscommunication with the attorney who wrote it on his behalf.

Though the new accounts contest most of Jacobs’ claims, his letter played a major and previously undisclosed role in the bitter battle for control over Uber, according to the current and former top executives.

It landed in May as Kalanick and the board were clashing over his role at the company and directors were hearing the results of other investigations, including one into sex harassment.

Kalanick resigned under pressure the following month.

By then, a committee of directors had assumed oversight of the investigation into the Jacobs letter, led by law firm WilmerHale, which eventually uncovered an event that was not in the Jacobs letter: the 2016 data breach, the current and former executives said.

In interviews with Reuters, current and former members of Sullivan’s security team provided details of the hack that were previously unreported, and they defended the payout Uber made to the Florida hacker.

In the emails among Uber security staff and a representative for the hacker, Uber treated the breach as a ”bug bounty,” something normally reserved for hackers who discover weaknesses in a system without extracting data.

Investigations chief Mat Henley established the hacker’s identity and secretly obtained access to electronic records showing that the Uber data had been deleted, giving Sullivan and other members of the security team comfort that it had not reached any criminals, the security staffers said. With no data on the loose and a danger to customers, they felt Uber did not have to disclose the breach to regulators.

In addition, they said Sullivan was not responsible for Uber’s decision about whether to disclose data breaches to regulators since this decision was made by the legal department.

Uber declined to discuss the details of responsibility for disclosure decisions. But it has made clear that the Florida breach should have been disclosed under various regulations and in fairness to users and drivers.

Reporting by Joseph Menn and Heather Somerville; Editing by Jonathan Weber Shri Navaratnam