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Jan 22, 2020

UN calls for investigation into alleged Saudi crown prince involvement in Bezos phone hack

Natasha Turak




GP: Jeff Bezos Blue Origin US-SPACE-BEZOS
Amazon CEO Jeff Bezos announces Blue Moon, a lunar landing vehicle for the Moon, during a Blue Origin event in Washington, DC, May 9, 2019.
Saul Loeb | AFP | Getty Images
DUBAI, United Arab Emirates — UN experts have called for an immediate investigation into the “possible involvement” of Saudi Crown Prince Mohammed bin Salman in the hacking of Amazon CEO Jeff Bezos’ iPhone in 2018.
“The information we have received suggests the possible involvement of the Crown Prince in surveillance of Mr. Bezos, in an effort to influence, if not silence, The Washington Post’s reporting on Saudi Arabia,” UN special rapporteurs said in a statement Wednesday.
“The alleged hacking of Mr. Bezos’s phone, and those of others, demands immediate investigation by U.S. and other relevant authorities, including investigation of the continuous, multi-year, direct and personal involvement of the Crown Prince in efforts to target perceived opponents.”
The statement from UN’s human rights body centers on forensic investigations into the claim by Bezos — one of the world’s wealthiest men and owner of the Washington Post — that the Saudi government orchestrated a cyberattack against him to extract large amounts of data from his phone, including nude photos sent to his mistress.
The UN special rapporteurs, who are appointed by the world body but operate independently, made the statement after reviewing the 2019 forensic analysis carried out by Washington-based business advisory firm FTI Consulting on behalf of the American billionaire. Their statements follow earlier investigations into the killing and dismemberment of Washington Post journalist Jamal Khashoggi.
FTI consulting could not detail the specific spyware used in the attack, but said its experts had “medium to high confidence” that Bezos’ iPhone was hacked by malware coming from a Whatsapp account used by the Saudi crown prince.
“Based upon the results of a full forensic examination of the logical file system of Bezos’s phone, including network analysis, and an in-depth investigation conducted over several months, FTI reports with medium to high confidence that Bezos’s IPhone X was compromised via malware sent from a WhatsApp account used by Saudi Crown Prince Mohammed bin Salman,” the report said, according to an excerpt published by the Financial Times.
Riyadh has consistently rejected the accusations, and the Saudi embassy in Washington on Wednesday called the allegations “absurd.”
Bezos, through his security consultant Gavin de Becker, has flatly accused the Saudi government of wanting to do him harm. De Becker in March of 2019 alleged that the Saudis had “access to Bezos’s phone, and gained private information” and that the government was “intent on harming Jeff Bezos since . . . the Post began its relentless coverage” of the brutal murder in October 2018 of Khashoggi, a Saudi journalist critical of the kingdom’s monarchy. Khashoggi was a contributing writer for the Post with U.S. residency.
Riyadh said the killing was the result of a “rogue operation” that did not involve the crown prince, contradicting the CIA’s reported conclusion from late 2018 that implicated Bin Salman as being involved.

The hack: how experts believe it happened

According to the 2019 forensic analysis by FTI Consulting, Bezos’ phone was likely “infiltrated on 1 May 2018 via an MP4 video file sent from a WhatsApp account utilized personally by Mohammed bin Salman,” the UN statement read.
Bezos and the crown prince had exchanged numbers the month prior. Within hours of the video being sent from the crown prince’s account, “massive and (for Bezos’ phone) unprecedented exfiltration of data from the phone began” — the volume of data being transited to another location suddenly shot up by nearly 30,000% to 126 MB.
“Data spiking then continued undetected over some months and at rates as much as 106,032,045% (4.6 GB) higher than the pre-video data egress baseline for Mr. Bezos’ phone of 430KB,” the statement said.
The analysis pointed to a spyware product previously identified in other cases of Saudi surveillance, saying the intrusion was “likely undertaken” by a product like the Pegasus-3 malware created by Israeli-based NSO Group. Pegasus has been widely reported as having been purchased by Saudi officials, Saud al Qahtani, prince Mohammed’s former advisor who was implicated in the Khashoggi murder but ultimately not charged by the Saudi authorities.
“This would be consistent with other information,” the UN special rapporteurs wrote. “For instance, the use of WhatsApp as a platform to enable installation of Pegasus onto devices has been well-documented and is the subject of a lawsuit by Facebook/WhatsApp against NSO Group.”
NSO responded in a statement posted to its website Wednesday, saying “NSO is shocked and appalled by the story that has been published with respect to alleged hacking of the phone of Mr. Jeff Bezos,” and calling for a “full investigation” if the story is true.
“Just as we stated when these stories first surfaced months ago, we can say unequivocally that our technology was not used in this instance,” the company said.

Analysis | The Cybersecurity 202: Glenn Greenwald says Brazil charges are part of a global trend to criminalize journalism

By Joseph Marks




Journalist Glenn Greenwald. (Evaristo Sa/AFP/Getty Images)
THE KEY
American journalist Glenn Greenwald says the Brazilian government's charges against him are the latest strike in a global campaign by governments across the world to use anti-hacking laws to punish and silence journalists. 
“Governments [are] figuring out how they can criminalize journalism based on large-scale digital leaks,” Greenwald told me.  
Greenwald, who won a Pulitzer Prize for reporting on leaked documents from former National Security Agency contractor Edward Snowden in 2014, says the charges are baseless. “Even in democracies let alone in the authoritarian world there’s a real struggle to make the law fit criminalizing leaks of this sort,” he said.  
Greenwald, who lives in Rio de Janeiro, is facing charges stemming from his reporting on leaked cellphone messages that raised doubts about a corruption investigation that aided the rise of Brazil's far-right President Jair Bolsonaro. Greenwald is accused of being part of a "criminal organization" that allegedly hacked into public officials' cellphones last year to copy messages that were published on his news site, the Intercept Brazil, as my colleagues Miriam Berger and Paul Farhi report.
Greenwald compared the Brazilian charges against him to the Trump administration’s controversial decision to prosecute WikiLeaks founder Julian Assange last year under the main U.S. anti-hacking law, the 1986 Computer Fraud and Abuse Act. 
“I’ve been particularly concerned given the Bolsonaro government’s subservience to and admiration for the Trump government that they’d look to the precedent the Trump government used to indict Julian Assange,” he told me, “trying to concoct a dubious or tenuous theory that he went beyond passing information to participating in the crime itself.”
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The charges come as officials in the United States and elsewhere have faced years of criticism for not updating decades-old hacking laws, which critics say are overly broad and can be used to criminalize innocuous work by anyone who deals with computer networks or large digital files including security researchers and journalists. 
Brazilian prosecutors allege Greenwald crossed a line by encouraging his anonymous sources to delete their copies of stolen messages to evade detection. That explanation drew quick criticism from press freedom advocates in the United States and Brazil who said it criminalized reporters advising their sources on how to work securely. Greenwald told me he’d scrupulously followed Brazilian law and called the charges “an obvious attempt to attack a free press.”
In the Assange case, meanwhile, U.S. prosecutors say he violated the law by offering to help then-military intelligence analyst Chelsea Manning decipher a password so she could get greater access to a military database and pass more secrets to WikiLeaks. Cybersecurity experts at the time criticized the Trump administration for stretching the 34-year-old CFAA law to fit a situation its authors never could have envisioned.
Press freedom advocates were less eager than Greenwald to draw a comparison between the charges against him and Assange. Gabe Rottman, technology and press freedom director at the Reporters Committee for Freedom of the Press, said that Assange's offer to help a source crack a password could be deemed illegal under a reasonable reading of the CFAA, while Greenwald's alleged advice to sources on security does not violate ethical or legal principles. Rottman, who’s written extensively about the Assange charges, says he takes this view even though he considers the CFAA so out of pace with modern technology that it can be applied in an unconstitutional manner in many cases.
Greenwald acknowledged there may be important distinctions between his actions and Assange’s, but he described the two cases as on the same “slippery slope.” Greenwald also warned they could lead to reporters being prosecuted for common journalistic practices such as urging sources to contact them using encrypted apps or accepting document leaks through online tools that anonymize the sender
“There’s a general aversion to defending Assange by press freedom groups because they don’t see Assange as a journalist and they do see me as one,” he said. “But there’s no question the [Assange] indictment encourages governments to criminalize a person in the role of a journalist.”
Greenwald added in a statement that he hasn’t been detained and plans to keep publishing.
Though Greenwald has ruffled some feathers in Washington with his reporting on leaked information, he is getting strong support from many lawmakers. 
Rep. Ro Khanna (D-Calif.) said the charges will have a “chilling effect” on journalism and said he’s crafting legislation to protect journalists from prosecution.
Prosecuting reporters for doing their work will have chilling effect on journalism across the world.
I'm crafting legislation to protect journalists from being prosecuted over their published work. https://t.co/vh9cS3eLi0
— Rep. Ro Khanna (@RepRoKhanna) January 21, 2020
Rep. Don Beyer (D-Va.) called the charges “a step backwards that hurts Brazil.”
I've been criticized, I think unfairly, by Greenwald – but public officials deserve scrutiny and criticism. That's what happens under a free press, which is vital in a democratic society. The alternative is far worse.
Persecuting critics is a step backwards that hurts Brazil. https://t.co/r9aRqU2ty3
— Rep. Don Beyer (@RepDonBeyer) January 21, 2020
“No journalist should face prosecution for reporting critical facts about the government or politicians,” Sen. Ron Wyden (D-Ore.) said in an emailed statement reported by the Intercept.
Advocacy groups also came to Greenwald’s defense.  
The American Civil Liberties Union called the charges an “outrageous assault on the freedom of the press.”
Our government must immediately condemn this outrageous assault on the freedom of the press, and recognize that its attacks on press freedoms at home have consequences for American journalists doing their jobs abroad, like Glenn Greenwald. https://t.co/fHycUBq3Dq
— ACLU (@ACLU) January 21, 2020
The Electronic Frontier Foundation called them “a threat to democracy” that “discourages journalists from using technology to best serve the public.”
"@EFF is dismayed to learn of the decision by Brazilian prosecutors to charge journalist Glenn Greenwald under the country’s computer crime law... It is a threat to democracy...and it discourages journalists from using technology to best serve the public." https://t.co/SOT2MUSPVF
— Freedom of the Press (@FreedomofPress) January 21, 2020
Even some former intelligence community officials jumped in. Here’s former NSA attorney Susan Hennessey, a senior fellow at the Brookings Institution who runs the Lawfare blog:
Glenn Greenwald has called me a "deceitful" mouthpiece of the national security state and I assure you I've rarely had a nice thing to say about him. But this is an outrageous assault on press freedom that should alarm every American. https://t.co/7LUKHAtPud
— Susan Hennessey (@Susan_Hennessey) January 21, 2020

PINGED, PATCHED, PWNED

House impeachment managers and President Trump’s defenders agreed early this morning on ground rules for his historic Senate impeachment trial. That trial’s sure to delve into conspiracy theories the president embraced that cast doubt on Russia’s hacking and disinformation campaign against the 2016 election and hacking threats facing 2020. Here’s other big cybersecurity news to start your day.

Jeff Bezos, founder and chief executive officer of Amazon. (Anindito Mukherjee/Bloomberg News)
PINGED: The crown prince of Saudi Arabia, Mohammed bin Salman, may have personally helped to hack the phone of Amazon CEO Jeff Bezos in 2018, a United Nations report to be released Wednesday will find, my colleagues Marc Fisher and Steven Zeitchik report
The report details a forensic investigation that found Bezos’s cellphone was hacked in 2018 after he got a WhatsApp message containing a malicious file that came from an account purportedly belonging to MBS, as the crown prince is known. The Guardian was first to report the findings, which appear to confirm suspicions raised by Bezoss private investigators that Saudis were involved in leaking intimate text messages between Bezos and his girlfriend to American Media Inc., which owns the National Enquirer tabloid, in early 2019.
The hack occurred just five months before the killing of Washington Post contributing columnist Jamal Khashoggi, a veteran Saudi journalist who was highly critical of the royal court.
“Bezos, who owns The Washington Post, has alleged through his security consultant, Gavin de Becker, that the Saudi government had ‘access to Bezos’s phone, and gained private information,’" my colleagues reported. De Becker wrote in the Daily Beast that the Saudis were “intent on harming Jeff Bezos since . . . the Post began its relentless coverage” of Khashoggi's murder.
The revelation could put pressure on the White House, which has maintained friendly ties with the Saudi royal family despite concerns about its human rights record. Bezos's spokesman Jay Carney declined to comment.

Former secretary of state Hillary Clinton speaks at a panel for the Hulu documentary “Hillary.” (Mario Anzuoni/Reuters)
PATCHED: Hillary Clinton had some potent advice for this year’s candidates in a Hollywood Reporter interview yesterday: If your emails havent been stolen yet, they will be. 
Clinton’s campaign was upended in 2016 after Russian hackers stole troves of emails from her chairman, John Podesta, and dribbled them out to cause as much damage as possible. 
Youve got to deal with the theft of your personal information, particularly your emails,” she said in the interview connected with an upcoming documentary about her campaign. Then you've got to worry about the propaganda, the fake news, the made-up stories. Now you have the additional worry of the deepfakes, and people putting words in your mouth.
Clinton also warned that Russia is already trying to manipulate the 2020 contest, referring to a suspected Russian hack into computers at Ukrainian gas company Burisma that may have been aimed at digging up dirt on former vice president Joseph Biden, a 2020 candidate, and his son Hunter.
Clinton said she has given the warning about emails personally to most of the 2020 Democratic contenders, including Sens. Amy Klobuchar (Minn.) and Elizabeth Warren (Mass.)
PWNED: Apple reversed plans to allow iPhone users to encrypt backups of their data on iCloud two years ago after the FBI complained that it would hamper investigations, people familiar with the matter tell Joseph Menn at Reuters. The decision demonstrates Apples willingness to help U.S. law enforcement despite its public refusal to build police backdoors into its encryption system.
The people he talked to offered varying reasons for why Apple dropped the plan.
“They decided they weren’t going to poke the bear anymore,” one person said, referring to Apple’s court battle with the FBI in 2016 over access to an iPhone used by one of the suspects in a mass shooting in San Bernardino, Calif. Another said Apples legal team killed the plan, though the FBIs criticism was never explicitly cited as the cause.
Apple most recently gave the FBI the iCloud backups of two phones belonging to a gunman behind a shooting at a Florida military base last month but refused to help the bureau hack into messages on the phones themselves.
An Apple spokesman declined to comment. The FBI did not respond to Reuters’s requests for comment.

PUBLIC KEY

The software industry group BSA launched a Global Data Alliance today to lobby governments around the world to promote policies that safeguard companies’ ability to transfer data across borders without legal constraints.
Founding members include Microsoft, American Express, AT&T, Cisco, Mastercard, Panasonic, United Airlines, Verizon and Visa.
— More cybersecurity news from the public sector:

Rep. Jim Banks (R-Ind.) introduced a bill Tuesday aimed at barring the United States from sharing intelligence with any countries that permit Huawei to operate their 5G networks.
The Hill

It took the Federal Bureau of Investigation about two months to unlock the Apple iPhone 11 that was seized from Lev Parnas, the indicted associate of Rudy Giuliani.
Bloomberg

Respondents describe barriers ranging from a lack of resources to intelligence agencies’ classification decisions.
Nextgov

The Trump administration fears Chinese universities are exploiting ties to U.S. businesses and universities to promote Beijing’s economic and military goals. Chinese intelligence services are seeking specific pieces of technology that fill gaps in research.
The Wall Street Journal

PRIVATE KEY

— Cybersecurity news from the private sector:

The Trump administration wants Apple to create a backdoor into the iPhone. District Attorney Cy Vance Jr. has spent millions trying to find other ways in.
Fast Company

THE NEW WILD WEST

— Cybersecurity news from abroad:

New Delhi is inching closer to recommending regulations that would require social media companies and instant messaging app providers operating in the nation to help law enforcement agencies identify users who have posted content — or sent messages — it deems questionable.
TechCrunch

ZERO DAYBOOK

— Today:
  • The Senate Commerce Committee will host a hearing on “The 5G Workforce and Obstacles to Broadband Deployment” at 10 a.m.
Coming up:
  • New America’s Open Technology Institute will host an event titled “Privacy’s Best Friend: How Encryption Protects Consumers, Companies, and Governments Worldwide” on Feb. 4 at 12 p.m.
  • RSA Conference 2020 is scheduled for Feb. 24-28 in San Francisco.
     

Analysis | The Finance 202: Have Trump's economic promises been fulfilled?

By Tory Newmyer



THE TICKER

President Donald Trump. (Kevin Lamarque/Reuters)
Just over three years ago, President Trump gazed beyond the west front of the Capitol and pronounced a nation in a state of “carnage.” It struck many both then and now as odd. At the time, the United States was in the middle of an economic recovery that was leading to steady job growth, lower unemployment and slightly smaller annual budget deficits.
Trump has often boasted that his economic record is a result of his actions alone. In his address to the World Economic Forum in Davos on Tuesday, the president contrasted the dismal state of his predecessor with “an economic boom the likes of which the world has never seen before.”
The president is correct that as of this point in his tenure, some economic indicators are at or near record highs, or improving for some people after remaining stagnant. The Dow Jones has posted record numbers, unemployment has continued its downward trajectory to a half-century low, and wages are starting to increase for the middle class. (Though as our colleagues and others have noted, Trump often exaggerates the unemployment rate for African Americans and Latinos).
But that’s not the full story. The upward trajectory of many economic metrics -- ranging from unemployment to the stock market --began under President Barack Obama. As our colleague Heather Long wrote last year, the “data shows a mixed picture in terms of whether the [Trump] economy is any better than it was in Obama’s final years.”
Trump will head into his reelection effort with a modernized North American Free Trade Agreement and an introductory deal with China. But to get there, “Tariff Mantook Wall Street on a dizzying ride, imposing tariffs on multiple U.S. allies and asking Congress, and therefore the American people, to foot the bill for a bailout of American farmers larger than the amount provided to save the auto industry. Even some of the president’s allies admit the trade wars smothered some of the gains from the Republican-led rewrite of the tax code, which as Tory has pointed out also failed to live up to its hype.
So on the heels of his Davos address and at the start of his fourth year in office, we decided to see how the Trump economy stacks up to the 2016 candidate’s promises, such as that he “alone could fix it.” (For our purposes, we are squarely focused on Trump’s economic record — though our colleague Glenn Kessler found that overall Trump has broken more key promises than he's kept).
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JOBS:
Promise: Create 25 million new jobs over the next decade. (This was this core of candidate Trump’s economic plan unveiled in September 2016).
Status: In progress, but unlikely to happen over the next decade based on the current trajectory. There have been almost 6.7 million jobs created since Trump took office, according to the Bureau of Labor Statistics (we used the agency’s preliminary numbers for December 2019 as the endpoint). That puts Trump off pace to create 25 million jobs by 2026, but also, as FactCheck.org pointed out, trailing the average monthly jobs gain from Obama’s second term.
The good news is experts say job gains, as Heather noted, remain surprisingly robust given the large number of baby boomers retiring and the difficulty business owners have in filling new jobs.

TRADE: 
Promise: Pull out of the Trans-Pacific Partnership on Day 1. Renegotiate the North American Free Trade Agreement (NAFTA) or leave the accord. As part of his “America First” approach, Trump also vowed to get a better deal for American consumers by toeing a tougher line with major world markets he says are routinely ripping off the United States, including China. Trump initially promised to impose a 45 percent tariff on Chinese imports.
Status: The president withdrew from the TPP on Day 3 of his presidency. He threatened repeatedly to end U.S. participation in NAFTA, but instead renegotiated what he said was a better deal with Mexico and Canada. The Senate passed the U.S.-Mexico-Canada Agreement last week in a sweeping bipartisan vote, which could help the president’s reelection chances.
On China: Trump never imposed a 45 percent tariff on imports, but he has repeatedly used, and imposed, tariffs against Chinese imports in a bid to stop what he views as discriminatory trade practices.
For now, the administration’s goal of a sweeping trade accord with China has remained elusive. Instead, both sides signed a limited phase one deal maintaining many tariffs as high as 25 percent. Some of Beijing's retaliatory tariffs remain in place, but the phase 1 deal does include a Chinese pledge to purchase tens of billions in U.S. agricultural products over the next two years.
GROWTH:
Promise: “Over the next 10 years, our economic team estimates that under our plan the economy will average 3.5 percent growth,” Trump told the New York Economic Club in September 2016, before adding the 25 million new jobs line that we already addressed.
Status: Very unlikely given that current average yearly economic growth is nowhere close. The GDP has failed to increase at an average of even 3 percent in any of Trump’s first three years in office. The latest estimate for 2019 calls for 2.2 percent growth, which would be the lowest so far during his administration. When Trump originally made the promise, economists, journalists, commentators and pretty much everyone pointed out the United States hadn’t reached 3.5 percent annual growth since 2004. Bill Clinton was the last president to post more than one year above that threshold.
In a press conference from Davos Wednesday morning, Trump economic adviser Larry Kudlow said trade deals like the USMCA and phase one China deal would inspire "a half point growth in GDP" in the year ahead.

DEBT
Promise: Reduce the federal debt by $19 trillion over eight years.
Status: Extremely unlikely as the debt is actually increasing. Trump has done the exact opposite of what he promised in this category, as the gross federal debt has risen about 16 percent since he’s taken office, according to PolitiFact. Under Trump’s watch, the annual increase in the national debt has continued to surpass the growth in the nation’s GDP. A big reason for the growing gap is the $1.5 trillion in tax cuts spread out across the next decade as part of the president’s tax overhaul, and the president's continued endorsement of huge spending plans for the government.
Not surprisingly, Trump has reportedly scoffed at torching the nation’s balance sheet. “Yeah, but I won’t be here, Trump said during a meeting last year, according to the Daily Beast’s Asawin Suebsaen and Lachlan Markay, referring to a spike he was shown in the debt following a possible second term in office.

MARKET MOVERS

— Trump hit a lot of economic notes in an impromptu news conference this morning from the WEF in Davos. Here are some of the highlights.
  • Trump said he would be negotiating a "whole new structure" for the WTO, and the trade organization head would soon be coming to Washington. "The WTO has been very, very unfair to the United States for many years," Trump complained, adding China wouldn't have certain economic advantages without it.
  • Trump said he has a date in mind as to when he would place heavy new tariffs on European cars, but didn't share it. "They are actually more difficult to do business with than China, just ask [UK leader] Boris Johnson," the president said, referring to the European Union.
  • When asked about whether human rights and Hong Kong protests would factor into dealings with China, Trump said this: "We would like to see if we can do something, but again we're doing a trade deal."
  • The president also said his administration would soon announce additional countries to be added to the U.S. travel ban.

Nokia CEO Rajeev Suri at the World Economic Forum. (Jonathan Ernst/Reuters)
— CEOs remain optimistic at Davos: “Chief executives converged here hopeful that easing trade tensions around the world could give the economy a boost, despite some early dismal forecasts for global growth and business sentiment,” the Wall Street Journal’s Chip Cummins and Marie Beaudette report.
“A closely followed survey of CEO sentiment kicked off this year’s World Economic Forum on a somber note. Consulting firm PwC found that 53 percent of those it surveyed predict a slowdown in economic growth in 2020, up sharply from 29 percent in 2019 and 5 percent in 2018. It was the highest level of pessimism since 2012, the first year of the survey, PwC said. The OECD predicts global growth of 3 percent this year, up only slightly from its 2.9 percent forecast for 2019 — the weakest growth rate since the financial crisis.”
— Netflix shares rise despite some weak performance: “Shares of Netflix climbed as much as 2.3% in after-hours trading … after the company reported fourth-quarter results. The company beat on the top and bottom lines for the quarter, but gave disappointing guidance for the first quarter,” CNBC’s Annie Palmer reports.
“For the first quarter of 2020, Netflix expects to report earnings of $1.66 per share on revenue of $5.73 billion. That’s compared to analyst expectations for earnings of $1.20 per share and $5.76 billion in revenue. The company also expects to add 7 million paid customers in the first quarter, which fell short of analysts expectations for 7.86 million subscribers.”

TRUMP TRACKER

TRADE FLY-AROUND:

European Commission President Ursula von der Leyen and President Trump at the World Economic Forum on Tuesday in Davos. (Evan Vucci/AP)
— New year, new trade wars?: “Trump renewed his threat to put hefty tariffs on European cars Tuesday at the World Economic Forum, promising hardball tactics if trade negotiations do not go his way,” our colleague Heather Long reports from Davos.
“Just days after Trump scored wins with China, Mexico and Canada, the move highlighted how Trump is quickly pivoting to make Europe the next front in his protectionist trade war. As part of this push Tuesday, Treasury Secretary Steven Mnuchin warned Italy and Britain could face U.S. tariffs if they pursue taxes on large technology companies such as Facebook and Alphabet’s Google. French President Emmanuel Macron agreed in recent days to delay a similar tax to avoid Trump’s tariffs.”
  • An ocean apart: “After 70 years of being largely hand in hand in promoting democracy and capitalism around the world, the United States and Europe are now at odds over trade, climate change, taxation, privacy, Iran and defense funding,” Heather writes.
TRUMP WATCH:

Jared Kushner, left, Ivanka Trump, in green, and President Trump at the World Economic Forum. (Michael Probst/AP)
— Trump brags about himself at Davos: “Trump’s speech Tuesday at one of the financial world’s biggest events focused on his presidential accomplishments, in stark contrast with pretty much every other world leader at Davos who emphasized global cooperation and an urgent need to address climate change,” our colleague Heather reports.
“The president’s remarks were a noticeable break from key European leaders who spoke on the main stage minutes before Trump. They all urged global cooperation to tackle the world’s biggest challenges, especially climate change.”
IMPEACHMENT MINUTE: A speed read on the latest from the congressional impeachment process.
"Senate adopts ground rules for impeachment trial, delaying a decision on witnesses until after much of the proceedings." By The Post's Seung Min Kim, Felicia Sonmez and Mike DeBonis
"Chief Justice Roberts admonishes impeachment lawyers, telling them to ‘remember where they are.'" By The Post's Paul Kane and Elise Viebeck
"Collins and Romney hold the keys in the impeachment trial. Here’s what they signaled on Day One." By The Post's Aaron Blake

POCKET CHANGE


The Boeing logo. (Richard Drew/AP)
— 737 Max’s return delayed again: “In another setback in its effort to get its best-selling jet back in the air, Boeing on Tuesday said it does not expect U.S. regulators to begin ungrounding the 737 Max until mid-2020,” our colleague Lori Aratani reports.
“Company officials, however, said they remain confident the plane will fly again. … Boeing is scheduled to report its quarterly earnings Jan. 29. Trading of the company’s stock was briefly halted Tuesday for the company’s announcement. The company declined to be more specific about when it expected the Federal Aviation Administration to recertify the jets. Boeing had originally expected the Max to be cleared by U.S. regulators in December.”
— Apple dropped encryption plan: “Apple Inc dropped plans to let iPhone users fully encrypt backups of their devices in the company’s iCloud service after the FBI complained that the move would harm investigations, six sources familiar with the matter told Reuters,” Reuters’s Joseph Menn reports.
“The tech giant’s reversal, about two years ago, has not previously been reported. It shows how much Apple has been willing to help U.S. law enforcement and intelligence agencies, despite taking a harder line in high-profile legal disputes with the government and casting itself as a defender of its customers’ information.”
— Delta workers to receive payouts: “Delta Air Lines’ banner year — propelled by lower fuel prices, higher travel demand and no sidelined Boeing 737 Max planes in its fleet — led the carrier to beat earnings estimates and notch its 10th consecutive profitable year,” our colleague Jena McGregor reports.
“But those results won’t just pay off for shareholders: The carrier said last week that employees are set to receive $1.6 billion in cash payouts, its largest employee profit-sharing pool on record and one that handily tops what many other companies offer their employees.”

Former Nissan chairman Carlos Ghosn and his wife Carole Ghosn. (Mohamed Azakir/Reuters)
— Carole Ghosn against Japan’s legal system: “Carlos Ghosn’s arrest in November 2018 thrust his wife, Carole Ghosn, into battles she wasn’t expecting to fight: against Nissan Motor Co., the company her husband ran, and the Japanese justice system,” the Wall Street Journal’s Nick Kostov and Sean McLain report.
“It was Mrs. Ghosn, 53 years old, who visited the auto executive in a Tokyo jail, bringing him tangerines and reporting back on Japan’s spartan prison conditions. She lobbied world leaders, from President Trump to Emmanuel Macron of France, to demand her husband’s release. And when Mr. Ghosn made his daring escape from Japan last month, Mrs. Ghosn was there for his arrival in Beirut, ignoring an order from a Japanese court to have no contact with her husband.”
— Will people still call London after Brexit?: “Britain’s hulking financial sector presents a serious dilemma for both sides in the U.K.’s coming trade negotiations with the European Union. Whatever the outcome, British-based financial institutions are preparing to see their access to the trade bloc heavily curtailed after Brexit,” the Wall Street Journal’s Anna Isaac and Max Colchester report.
“EU governments have sought to lure financial business from London almost from the moment the U.K. voted to leave the bloc in 2016. But some worry that if they cut off London too abruptly, they may lose access to services that only London can currently provide, while increasing their vulnerability to financial shock.”

DAYBOOK

Today:
  • Johnson & Johnson, Fifth Third Bancorp, Kinder Morgan and Las Vegas Sands are among the notable companies reporting their earnings.
Thursday:
  • Procter & Gamble, Comcast, American Airlines, Discover Financial Services, JetBlue Airways, Southwest Airlines and Union Pacific are among the notable companies reporting their earnings.
Friday:



Market Insider | Biggest Moves Premarket: Stocks making the biggest moves premarket: J&J, Moderna, Netflix, Boeing, IBM, Xerox & more

Peter Schacknow



Check out the companies making headlines before the bell:

Johnson & Johnson (JNJ) – Johnson & Johnson reported quarterly profit of $1.88 per share, 1 cent a share above estimates. Revenue was slightly below forecasts. J&J’s bottom line was helped by strength in medical devices and improved profitability in its consumer business.
Moderna (MRNA) – The drugmaker said it is working with health officials on a potential vaccine to address the current coronavirus threat. The virus has caused nine deaths, and the Centers for Disease Control and Prevention has confirmed the first U.S. case.
Fifth Third (FITB) – The bank reported quarterly profit of 96 cents per share, well above the consensus estimate of 72 cents a share. Revenue also came in above estimates. Strong fee revenue was among factors boosting Fifth Third’s results.
Netflix (NFLX) – Netflix added 8.76 million paying global subscribers during the fourth quarter, more than the 7.6 million that analysts had expected. The video streaming service did note increased competition in the United States, however, and that it will become more intense globally after Walt Disney’s (DIS) Disney+ service launches across Europe in March.
Boeing (BA) – Boeing remains on watch after falling 3.3% Wednesday. The jet maker’s stock fell after it said that it now estimates a mid-2020 return for its grounded 737 Max jet.
IBM (IBM) – IBM reported quarterly profit of $4.71 per share, 2 cents a share above estimates. Revenue also came in better than Street forecasts and broke a five-quarter streak of year-over-year declines. IBM also gave better-than-expected full-year 2020 earnings guidance.
United Airlines (UAL) – UAL beat estimates by 2 cents a share, with quarterly profit of $2.67 per share. The airline’s revenue was very slightly above expectations. United’s performance came despite numerous flight cancellations resulting from the grounding of Boeing’s 737 Max jet.
Toyota (TM) – Toyota said it would recall 3.4 million vehicles globally due to an electronic defect that could prevent airbags from deploying in a crash.
Xerox (XRX) – Xerox plans to nominate up to 11 directors to the board of computer and printer maker HP Inc. (HPQ), according to The Wall Street Journal, as it tries to move its unsolicited $33 billion takeover bid for HP forward.
Tesla (TSLA) – Tesla crossed the $100 billion market cap threshold in off-hours trading. A number of stock option bonuses for CEO Elon Musk will trigger if the market cap stays at $100 billion or more for an average of one month and six months.
Intel (INTC) – Intel named Medtronic (MDT) CEO Omar Ishrak as its new independent chairman effective immediately, after Andy Bryant stepped down from that role at the chipmaker earlier this month.
Apple (AAPL) – A new low-cost Apple iPhone will go into mass production in February, according to people familiar with the plan who spoke to Bloomberg.

Trump claims the EU has 'no choice' but to agree a new trade deal

Elliot Smith

3minutes - Source: CNBC



The European Union has “no choice” but to negotiate a new trade deal with the U.S., President Donald Trump told CNBC on Wednesday.
The president met with European Commission President Ursula von der Leyen at the World Economic Forum in Davos, Switzerland on Tuesday, and told CNBC’s Joe Kernen that the pair had a “great talk.”
Amid ongoing informal discussions, Trump has threatened to slap tariffs on European cars in a bid to strong-arm EU leaders. In yesterday’s meeting, he claimed to have told von der Leyen that absent a trade deal, he would need to “take action” in the form of “very high tariffs on their cars and other things.”
President Donald Trump speaks during a CNBC Exclusive interview at the World Economic Forum in Davos, Switzerland on Jan. 22nd, 2020.
Gerry Miller | CNBC
Trump said that Europe has been “very tough to deal with” and had “taken advantage” of the U.S., but suggested that the bloc now has “no choice” but to make a deal.
“We’ve had a tremendous deficit for many, many years — over $150 billion with Europe,” he said, adding that he would be “very surprised” if he did have to implement the tariffs.
The U.S. goods and services trade deficit with the EU was $109 billion in 2018, according to the Office of the U.S. Trade Representative.
U.S. exports of goods and services to the EU supported an estimated 2.6 million jobs in 2015, according to the latest available data from the U.S. Department of Commerce.

Juncker was ‘impossible’

Trump had agreed with von der Leyen’s predecessor Jean-Claude Juncker back in 2018 to start negotiations on a new trade deal to avoid imposing tariffs.
The EU has since agreed on a new negotiating mandate to begin those trade talks, but the U.S. has yet to signal a readiness to start those meetings.
“I wanted to wait until I finished with China, I didn’t want to go with China and Europe at the same time,” the president told CNBC.
“And quite frankly, Jean-Claude was a friend of mine but he was impossible to deal with. I wanted to do Mexico and Canada first. Now they’re all done and we’re going to do Europe.”
Trump also confirmed that negotiations are under way with U.K. Prime Minister Boris Johnson on a potential bilateral trade deal, with the U.K. set to leave the EU on January 31.
“Boris and I are friends, and he wants to make a deal and that’s okay with me. They want it, they need it,” Trump added.
Any trade agreement between the U.S. and the U.K. could only enter into force at the end of the transition period with the EU, currently set to last until the end of 2020.
—CNBC’s Silvia Amaro contributed to this article.

Analysis | Tuesday’s Senate trial debate, in 5 minutes

Amber Phillips





Okay, so President Trump’s impeachment Senate trial has started. Kind of. Think of what happened Tuesday, which we’ll break down below, as a practice round for the actual trial part of the Senate trial.

Opening arguments didn’t start. Instead, we got a lengthy debate about the rules for how the Senate trial will work, with Senate Democrats introducing a number of amendments to call witnesses and documents at the outset of the trial. Senate Republicans have voted each one down, and they eventually approved rules for how the trial will work after the debate over amendments ended.
We also got a look at how Trump’s team will mount its first legal defense of his actions: It includes plenty of hyperbole and inaccuracies.
Let’s start with the rules, since they will govern what happens in coming days. It’s notable that as their amendments continue to get defeated, the battle over how to shape the trial included a relatively small, symbolic victory for Democrats. Here are three big things about the rules.
1. Each side will have 24 hours to present its case, just as each side did in the trial of President Bill Clinton.
The drama over that: Senate Majority Leader Mitch McConnell (R-Ky.) originally told each side to smush its testimony into two days. That would have forced Democrats to present their arguments well after midnight, instead of in prime time.
The Post’s Seung Min Kim and Elise Viebeck report that two Republican senators, Susan Collins of Maine and Rob Portman of Ohio, objected behind the scenes to that schedule. McConnell likely recognized it would look bad if any Senate Republican broke from him before the full trial even began.
So at the last minute, he changed the plan to allow each side to present their arguments over three days. That is more in line with what Democrats want.
2. The trial will punt the big vote on witnesses until a week or two in, after opening arguments and questions from senators.
The drama over that: Even though this vote was also delayed during the Clinton impeachment trial, Democrats point out that it was less consequential then. That trial had a separate grand jury investigation that thoroughly interviewed key people, so there weren’t any new witnesses to uncover.
McConnell isn’t completely ruling out witnesses, so what’s his end game in delaying the vote? He is likely hoping by that point, a majority of senators will be tired and want to move on. When the trial is in session, senators can’t talk or use their cellphones or do other senator-y stuff, like campaign or fundraise or legislate. I could see their inner monologue at this juncture going something like this: So, do you want to vote to extend this one or two more weeks? No, thank you.
3. The trial allows evidence House Democrats gathered to be presented at the outset — but only after a fight.
The drama over that: McConnell’s rules originally required the Senate to vote a few weeks into the trial on whether to allow evidence from both sides. That was a big departure from the Clinton trial, when senators sat down at their desks on the first day to pages and pages of evidence printed out by both sides.
But Republican pressure forced McConnell to change that, too. Now all evidence each side has gathered (think impeachment testimony, documents subpoenaed by the House) can be presented unless a senator objects.

Does designing a trial to benefit Trump break the rules?


No, impeachment expert Sarah Burns with the Rochester Institute of Technology tells me. The rules say that as long as McConnell has a majority vote, he has freedom to shape this trial in ways he wants. It might break the constitutional spirit of a Senate trial to be impartial, but that was always a lofty goal.
But on Tuesday, we saw how some pushback from just a small number of members of McConnell’s party can make a big difference in this trial. That’s something to watch for going forward. Will there be Republican pressure to force Trump’s top aides to testify?

About the White House’s defense of Trump


Trump’s defense team will give its opening statements later this week. But it participated in Tuesday’s debate on the Senate rules for the trial, and we got a preview of the tone planned for the president’s defense. So far it includes:
Multiple inaccuracies: Here’s a big one. White House counsel Pat Cipollone said that Republicans weren’t allowed into the depositions of impeachment witnesses. That’s wrong. Republicans on three relevant committees had access and did indeed participate.
Hyperbole: “Frankly it’s the kind of thing the State Department would criticize if they saw it in a foreign country.” That’s Cipollone, accusing Democrats of overreaching so much so that he compared them to an undemocratic country.
Attacking the Democratic impeachment prosecutors and senators running for president: Trump’s lawyers are trying to make this personal. That prompted lead House manager Rep. Adam B. Schiff (D-Calif.) to use a vulgarity on the Senate floor: “We don’t want to talk about how, pardon the expression, ass-backwards it is to have a trial and then ask for witnesses, and so we’ll attack the House managers, because maybe we can distract you for a moment from what’s before you.” In one instance, Sekulow severely overreached, misquoting one of the managers.

A parting thought: How the times have changed from the last modern impeachment trial


Former Senate historian Donald Ritchie told me that the top Senate Republican and Senate Democrat during the Clinton impeachment trial worked together closely and in as much of a bipartisan manner as possible to set up a trial both sides could be comfortable with. “They wanted the Senate to look good, to look dignified and to look serious,” he said.
That trial ended with a Senate divided on whether to remove Clinton from office. But every senator gave the two leaders a standing ovation for how peaceful and relatively nonpartisan the process was.
Two decades later, there are no backroom negotiations between McConnell and Senate Minority Leader Charles E. Schumer (D-N.Y.), the top Senate Democrat. Democrats didn’t even know about the rules until a day before the planned trial. Instead, both sides are choosing to fight each other in front of the cameras and on the Senate floor.
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What else you need to know about the Senate trial’s Wednesday session


It starts at: 1 p.m. Wednesday with House Democrats beginning their opening statements.
It ends at: Whenever the Senate and Chief Justice John G. Roberts Jr. decide it’s done for the day. (Ritchie told me recently that during the Clinton trial, Senate Republicans tried to wrap up one day by dinner time, and then-Chief Justice William Rehnquist told them to keep going.)
Also, some of you have asked whether this trial interferes with Roberts’s day job; the answer is yes. The Supreme Court is supposed to be hearing oral arguments for cases in the morning.
You can watch it at: www.washingtonpost.com, including a live Washington Post show I’ll be on at noon Eastern time analyzing the day ahead.
We expect the whole trial to last: Anywhere from two to six weeks is a good guess. The trial goes on for six days a week, with only a break on Sunday, until there are votes to convict or acquit Trump on each count of impeachment. Around two weeks in, the senators will vote on whether to call witnesses, which could lengthen the trial significantly.
There are a lot of big 2020 events this trial is bumping up against, including Trump’s State of the Union planned for Feb. 4.

China Seeks to Contain Virus as Case Reported in Hong Kong

Bloomberg News



China ramped up efforts to contain a respiratory virus that’s killed nine people and infected hundreds, as the outbreak spread to Asia’s financial capital with the first reported case of the deadly illness in Hong Kong.
More cases of the pneumonia-causing virus emerged outside mainland China, with one diagnosis in the U.S. The Hong Kong patient is a 39-year-old man from Wuhan in central China, according to a government official.
Health officials around the world are racing to control the SARS-like virus that first appeared last month. The World Health Organization will decide Wednesday whether to declare the virus a public health emergency of international concern, a designation used for complex epidemics that can cross borders.
After volatility Tuesday, financial markets showed signs of calming Wednesday as China’s National Health Commission detailed actions to contain the disease. Asian stocks recovered some of Tuesday’s sell-off, while haven assets steadied following previous gains.


CHINA-HEALTH-VIRUS
Travelers in protective masks at the Daxing international airport in Beijing on Jan. 21.
Photogragrapher: Nicolas Asfouri/AFP via Getty Images
In a briefing in Beijing Wednesday, health officials said China has stepped up monitoring of transportation links and ordered a near-complete shutdown of Wuhan, where the virus originated. Officials acknowledged that they’re still grappling to understand the pathogen, which has infected multiple medical workers.
“We are still on a learning curve,” said Gao Fu, head of Chinese Center for Disease Control and Prevention. “The disease will continue to develop.” It has already changed from the early stages of detection, he said in the briefing.
More on the Mystery Virus
At Wednesday’s briefing, China said it had seen no evidence yet of “super spreaders,” infected people who pass on the disease rapidly to many other people, but could not rule out that some would emerge. Super spreaders played a key role in the SARS pandemic 17 years ago, which killed almost 800 people and hurt economies across the region.
There have been 473 confirmed cases of the virus in China, according to state broadcaster CCTV.
All of the deaths so far have been from Wuhan, a city of 11 million people. They include eight men, aged 61 to 87, and a 48-year-old woman -- and almost all of them had pre-existing illnesses.

Fever, Cough

That suggests the virus poses the greatest danger to people whose health is already compromised, while children and younger people are not as easily susceptible. The virus’ symptoms include fever, cough or chest tightness, and difficulty breathing.
Both the Wuhan virus, known as 2019-nCoV, and SARS belong to the family of coronaviruses, so called because of their crown-like shape. Many such viruses cross the barrier between animals and humans.
Gao said in the Beijing briefing that the source of 2019-nCoV was wild animals sold in so-called wet markets. Some of the first group of patients in Wuhan worked or shopped at a seafood market where live animals and wildlife parts were reportedly sold.
A declaration of a public health emergency is reserved for extraordinary circumstances, according to the WHO. It can help mobilize an international response and focus government attention. The body most recently declared such an emergency last year, as an Ebola outbreak worsened in Congo.
An emergency declaration for the Wuhan virus case could include recommendations to restrict travel or trade. Such a move would come as concern grows that the virus could spread rapidly during China’s Lunar New Year break, which starts at the end of this week. Hundreds of millions of people are poised to travel for the holidays in the biggest annual migration of humans on the planet.
The WHO has formed teams at its Geneva headquarters to study the virus, its spread and its symptoms and is sending experts to China to help gather information, according to David Heymann, an infectious disease researcher in the U.K. who advises the agency.


Threat Widens

Coronavirus has spread from China to at least seven other locations
Sources: National and municipal health authorities
As they did during the SARS and Ebola outbreaks, health officials and scientists globally are tracking patients and testing samples of saliva and other fluids to determine the exact cause and severity of their ailments. They’re identifying and monitoring people with whom the patients were in contact to see if the virus is spreading easily from person to person. And they are placing restrictions on travel to try to limit the exposure to scores of new people.
The U.S. Centers for Disease Control and Prevention, or CDC, expanded its inspection of airline passengers who had spent time in China to airports in Atlanta and Chicago on Tuesday, building on the 1,200 people who had been screened in California and New York over the weekend. No new cases were uncovered.

U.S. Patient

The U.S. case is a man in his 30s who was traveling in Wuhan and arrived back in the U.S. on Jan. 15, Washington state health officials said on a call with the CDC Tuesday. The resident of Snohomish, Washington, said he hadn’t spent any time at the live-animal market where the virus is believed to have originated and didn’t have contact with anyone who was sick.
The man sought care quickly after monitoring news about the virus and is in good condition, though he has been hospitalized out of an abundance of caution, the officials said.
President Donald Trump told reporters at the World Economic Forum in Davos that the U.S. has a plan to deal with the virus.
“The CDC has been terrific,” he said. “We’re in very good shape and I think China is in very good shape also.”
U.K. health officials are preparing to raise the risk level of the virus to low from very low and issue guidance to airports, according to a person familiar with the matter. The focus of concern is London Heathrow’s Terminal 4, where about three flights arrive a week from Wuhan, according to the person, who asked not to be identified because the information isn’t public.
Those flights will be met by Public Health England and airport officials who will check passengers for visible signs of illness and provide information as needed, with Chinese language speakers on hand, the person said.
So far, the virus has spread beyond China to the U.S., South Korea, Taiwan, Japan and Thailand, with the latter country reporting four confirmed cases. Macau, a Chinese territory that’s the world’s biggest gambling hub, also reported its first case on Wednesday.
“This is an evolving situation,” said Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases. “We do expect additional cases in the United States and globally.”
Chinese officials said Wednesday that Wuhan has been placed under heavy supervision. Chinese citizens from elsewhere should not go to the city unless necessary, and public gatherings through the New Year period have been canceled. Tour groups have also been banned from leaving.
Chinese citizens have been urged to take precautions, including opening windows to ventilate their homes, wash their hands regularly and wear protective masks.

— With assistance by Dong Lyu, Josh Wingrove, and Alex Morales
(Updates with Hong Kong patient details in second paragraph.)