February 4, 2023

© Reuters. FILE PHOTO: Tesla CEO Elon Musk and his security detail depart the company’s local office in Washington, U.S. January 27, 2023. REUTERS/Jonathan Ernst/File Photo

By Jody Godoy and Hyunjoo Jin

SAN FRANCISCO (Reuters) -A U.S. jury on Friday found Tesla (NASDAQ:) Inc CEO Elon Musk and his company were not liable for misleading investors when Musk tweeted in 2018 that he had “funding secured” to take the electric car company private.

Plaintiffs had claimed billions in damages and the decision also had been seen as important for Musk himself, who often takes to Twitter to air his views.

The jury came back with a unanimous verdict roughly two hours after beginning deliberations.

Musk was not present in court when the verdict was read but soon tweeted that he was “deeply appreciative” of the jury’s decision.

“Thank goodness, the wisdom of the people has prevailed,” he said.

Nicholas Porritt, a lawyer for the investors, said in a statement, “We are disappointed with the verdict and are considering next steps.”

Shares of Tesla rose 1.6% in after-hours trading following the verdict.

“A dark chapter is now closed for Musk and Tesla,” Wedbush analyst Dan Ives said. Ives added that some Tesla investors feared Musk might have to sell more Tesla stock if he lost.

The world’s second-richest person has previously created legal and regulatory headaches through his sometimes impulsive use of Twitter, the social media company he bought for $44 billion in October.

Minor Myers, who teaches corporate law at the University of Connecticut and who had previously called the investors’ case strong, called the outcome “astounding.”

The U.S. anti-securities fraud law “has always been thought to be this great bulwark against misstatements and falsehoods,” he said. “This outcome makes you wonder if it is up to the job in modern markets,” he said, adding that Musk himself was likely to “double down” on his communication tactics after the verdict.

Musk’s attention has been divided in recent months between Tesla, his rocket company SpaceX and now Twitter. Tesla investors have expressed concerns that running the social media company has taken up too much of his focus.

‘BAD WORD CHOICE’

Tesla shareholders claimed Musk misled them when he tweeted on Aug. 7, 2018, that he was considering taking the company private at $420 per share, a premium of about 23% to the prior day’s close, and had “funding secured.”

They say Musk lied when he tweeted later that day that “investor support is confirmed.”

The stock price soared after the tweets and then fell again after Aug. 17, 2018, as it became clear the buyout would not happen.

Porritt during closing arguments said the billionaire CEO is not above the law, and should be held liable for the tweets.

“This case ultimately is about whether rules that apply to everyone else should also apply to Elon Musk,” he said.

Musk’s lawyer Alex Spiro countered that Musk’s “funding secured” tweet was “technically inaccurate” but that investors only cared that Musk was considering a buyout.

“The whole case is built on bad word choice,” he said. “Who cares about bad word choice?”

“Just because it’s a bad tweet doesn’t make it fraud,” Spiro said during closing arguments.

An economist hired by the shareholders had calculated investor losses as high as $12 billion.

During the three-week trial, Musk spent nearly nine hours on the witness stand, telling jurors he believed the tweets were truthful. He said he had lined up the necessary financing, including a verbal commitment from Saudi Arabia’s sovereign wealth fund, the Public Investment Fund. The fund later backpedaled on its commitment, Musk said.

Musk later testified that he believed he could have sold enough shares of his rocket company SpaceX to fund a buyout, and “felt funding was secured” with SpaceX stock alone.

Musk testified that he made the tweets in order to put small shareholders on the same footing as large investors who knew about the deal. But he acknowledged he lacked formal commitments from the Saudi fund and other potential backers.

The verdict is another victory for Musk and his lawyer Spiro after they won a defamation lawsuit against the billionaire in 2019 over his tweet calling a cave explorer a “pedo guy”.

© Reuters. FILE PHOTO: The logo of the Adani Group is seen on the facade of its Corporate House on the outskirts of Ahmedabad, India, January 27, 2023. REUTERS/Amit Dave

(Reuters) -Adani Enterprises Ltd has shelved a plan to raise as much as 10 billion Indian rupees ($121.65 million), Bloomberg News reported on Saturday.

The flagship firm of Indian billionaire Gautam Adani’s empire had planned the public note issuance for January, working with Edelweiss Financial Services Ltd, AK Capital, JM Financial, and Trust Capital, but activity has now stopped, the report said, citing people familiar with the matter.

Adani Enterprises called off its $2.5 billion share sale in a dramatic reversal on Wednesday this week, after a rout sparked by a U.S. short-seller’s criticisms wiped billions more off the value of the Indian tycoon’s stocks.

The Indian markets regulator is already investigating the matter, including the crash in the company’s shares, any irregularities in the now-shelved share sale and any possible price manipulation, Reuters reported this week.

A spokesperson for Adani Group did not immediately respond to Reuters request for comment. Edelweiss, AK Capital also did not respond to requests for comment, while JM Financial and Trust Capital could not be reached.

A report by Hindenburg Research last week alleged improper use of offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about high debt and the valuations of seven listed Adani companies.

($1 = 82.2060 Indian rupees)

Stock Markets 2 hours ago (Feb 04, 2023 08:17AM ET)

© Reuters. FILE PHOTO: A BMW logo is seen the wheel of a car in Mexico City July 3, 2014.REUTERS/Carlos Jasso

By Kylie Madry

SAN LUIS POTOSI, Mexico (Reuters) -German automaker BMW will invest 800 million euros ($866 million) in the central Mexican state of San Luis Potosi to produce high-voltage batteries and fully electric “Neue Klasse” models, the carmaker said Friday.

The expansion, set to add around 1,000 new jobs at its operations in the Mexican state, is BMW’s latest push into electric vehicles (EVs) as it looks to convert more than half of its sales into all-electric cars by 2030, it said.

More than half of the funds to be invested in Mexico – 500 million euros – are earmarked for the battery assembly center on the carmaker’s existing plant grounds, BMW said, and some 500 additional employees will work there.

Another 500 jobs will be created in other areas, it said.

The remaining 300 million euros will go to adapting and extending the body shop and building a new assembly line to install the battery packs, plant head Harald Gottsche told Reuters.

“We will start building, constructing the extensions and the new battery assembly in the beginning of 2024, and we will start (to ramp up) production at the beginning of 2027,” he said.

The announcement follows several other major expansions from the automaker in recent months, including a $1.7 billion investment in the United States and a 2-billion-euro push to build an EV factory in Hungary.

The plant in Hungary has been pitched as the first of BMW’s to be completely fossil-free. Gottsche added the Mexico plant was in the process of increasing its solar production on-site and swapping out for biomethane.

“We want to beat the Hungary plant, of course,” Gottsche said.

The push comes as manufacturers worldwide shift to comply with more stringent environmental regulations to mitigate their impact on climate change.

Mexico has also increasingly made the push for EVs as it looks to turn half of auto production electric by 2030.

While some industry leaders have cast doubt on that goal, Gottsche said BMW’s sales in Mexico were already 30% hybrid or fully electric.

“We will need much more renewable energy” to make the switch, Gottsche said.

($1 = 0.9236 euros)

Stock Markets 9 hours ago (Feb 04, 2023 09:40AM ET)

MUMBAI (Reuters) -India’s market regulator moved to calm investor concerns on Saturday, saying that its financial markets remain stable and continue to function in a transparent and efficient manner, despite recent dramatic stock falls in Adani Group companies.

Shares in Adani Group firms, controlled by billionaire tycoon Gautam Adani, have dropped by $100 billion, or half their market value, since U.S-based short-seller Hindenburg Research made allegations of stock manipulation and unsustainable debt.

“During the past week, unusual price movement in the stocks of a business conglomerate has been observed,” the Securities and Exchange Board of India (SEBI) said in a statement, without naming any specific entity.

The Adani Group denies all Hindenburg’s allegations, but the fall in the value of its stocks led it to call off earlier this week a $2.5 billion share sale by Adani Enterprises.

Mechanisms were in place to address excessive volatility in specific stocks, SEBI said, adding these were automatically triggered under certain conditions of stock price volatility.

Any matters related to specific entities will be examined and appropriate action will be taken, the regulator added.

Reuters earlier reported that SEBI was examining the recent crash in the Adani Group’s shares and looking into any possible irregularities.

The comments follow a similar assurance from the central bank which said that the banking sector remained stable.

Shares of the group’s flagship company stabilised somewhat on Friday and closed 1.4% higher, after earlier slumping 35% to hit their lowest level since March 2021. That low took its losses to nearly $33.6 billion since last week, a 70% fall.

Earlier on Saturday, India’s Finance Secretary TV Somanathan said that from a macroeconomic perspective, the Adani issue is a “storm in a teacup”, while Finance Minister Nirmala Sitharaman said regulators are independent and will take their own action.

Meanwhile, Anand Mahindra, Chairman of Mahindra Group, another of India’s biggest conglomerates tweeted on Saturday that investors should “never, ever bet against India” despite “current challenges in the business sector”.

Mahindra did not directly mention Adani Group.

© Reuters. FILE PHOTO: The sun sets behind behind the European Central Bank (ECB) in Frankfurt, ahead of the ECB council meeting later this week, Germany, January 30, 2023. REUTERS/Kai Pfaffenbach

By Valentina Za and Andrea Mandala

MILAN (Reuters) -The European Central Bank (ECB) can take a cautious approach to raising interest rates given that short-term inflation expectations have dropped sharply and longer-term ones remain under control, a top Italian policymaker said on Saturday.

ECB Governing Council member Ignazio Visco, who is also the Bank of Italy’s governor, warned an excessive tightening of policy would have “serious implications” for economic activity and financial stability.

He reiterated he saw this as a risk that carried the same weight as a too gradual tightening when it came to balancing rate decisions.

The ECB this week raised its key rate by 50 basis points to 2.5% and said it would replicate the move in March.

“The policy tightening can now continue with the due caution, carefully assessing the implications for the economy and inflation prospects of the measures that have already been adopted,” Visco told the annual conference of Italy’s Assiom-Forex financial markets association.

The ECB has kept its options open about subsequent steps after March, raising doubts among investors about the extent of further increases.

Investors and economists have focused on a peak in the deposit rate of between 3.25% and 3.5%, which suggests just one or two moves after the March hike and an end by mid-year.

Politicians in Italy have expressed concerns about the impact of rising interest rates given the country’s huge debts.

LOAN WRITEDOWN FEARS

In the text of his speech on Saturday, Visco said the bulk of corporate debts in Italy paid a floating interest rate, which exposed companies to the increase in borrowing costs.

“Looking ahead, a significant increase in loan writedowns cannot be ruled out: … they could rise, in relation to total loans, from less than half a percentage point to nearly one point this year and in 2024,” he said, adding that was still half the peak reached in 2013-2014.

For now, however, new inflows of impaired loans remained low at around 1% of total lending.

Banking supervisors are specifically monitoring credit risks, as well as liquidity and refinancing risks, Visco said, adding there was a danger that higher rates fed into banks’ funding costs more rapidly than in the past.

Supervisors have asked banks to submit their refinancing plans, also in light of the need to replace longer-term ‘TLTRO’ funds banks have borrowed from the ECB and are gradually repaying, Visco said.

In this respect, Italian banks intend to tap markets and boost deposits to get alternative funds, Visco said, while also planning to use excess reserves deposited with the ECB and the sale of liquid assets to repay the TLTRO money.

© Reuters. FILE PHOTO: A European Union flag flutters outside the EU Commission headquarters, in Brussels, Belgium, February 1, 2023 REUTERS/Yves Herman

PARIS (Reuters) – France and Germany’s economy ministers will tell senior U.S. officials not to try to actively poach green investments from Europe when they visit Washington next week to raise concerns about U.S. green tech subsidies, two French officials said.

France’s Bruno Le Maire and Germany’s Robert Habeck are due to press concerns in Washington about tax credits under the United States’ Inflation Reduction Act that subsidises products from electric cars to solar panels as long as they meet requirements on being locally produced.

The two are due to meet White House officials on Tuesday in addition to Treasury Secretary Janet Yellen, Trade Representative Katherine Tai and Commerce Secretary Gina Raimondo, the officials from France’s economy ministry said.

EU governments are worried the tax credits not only put European producers at an unfair disadvantage but could be actively used to lure investment away from Europe to the United States.

“One of the ministers’ messages will be to not approach European companies about moving plants to the U.S. There will be enough room for everyone to invest both in Europe and the U.S.,” one official said. The second official said the aim was to avoid “aggressive pitches” to EU firms to invest in the United States.

The first official said there was little scope for new concessions from Washington for better treatment of EU companies after the European Commission already secured a partial win on electric vehicles built outside North America qualifying for tax credits if leased by consumers.

Nonetheless, the ministers are hoping to convince U.S. officials to allow more leniency over local production requirements for critical materials used in electric vehicle batteries, the first official said.

They will also seek a U.S. commitment to be transparent about subsidies companies receive under the Inflation Reduction Act, both officials said.

That is key because it could determine how much state support European companies can receive under a European Commission proposal to allow third-country subsidies to be matched in Europe.

Stock Markets 10 hours ago (Feb 04, 2023 01:15PM ET)

© Reuters.

(Reuters) -A train derailed near the border of Ohio and Pennsylvania on Friday night, causing a massive fire in the area, local media reported.

Multiple train cars can be seen on fire in images posted on social media from East Palestine, a town northwest of Pittsburgh. Smoke can be seen rising from the blaze and filling the atmosphere.

Emergency crews had been evacuating residents from their homes within a mile (1.6 km) of the fire, according to several media reports.

It was not immediately clear if there were any casualties. The East Palestine police department did not immediately respond to a Reuters request for details.

Norfolk Southern Corp (NYSE:) freight railroad was “coordinating closely with local first responders while mobilizing our own teams”, a company spokesperson said in an emailed statement.

The person did not immediately respond to queries about what the train was carrying or what caused the derailment.

© Reuters. U.S. President Joe Biden answers a question from a reporter before getting into his vehicle after disembarking from Air Force One at Hancock Field Air National Guard Base in Syracuse, New York, U.S., February 4, 2023. REUTERS/Elizabeth Frantz

By Randall Hill, Phil Stewart and Jeff Mason

SURFSIDE BEACH, S.C. (Reuters) -A U.S. military fighter jet shot down a suspected Chinese spy balloon off the coast of South Carolina on Saturday, a week after it first entered U.S. airspace and triggered a dramatic — and public — spying saga that worsened Sino-U.S. relations.

President Joe Biden said he had issued an order on Wednesday to take down the balloon, but the Pentagon had recommended waiting until it could be done over open water to safeguard civilians from debris crashing to Earth from thousands of feet (meters) above commercial air traffic.

“They successfully took it down, and I want to compliment our aviators who did it,” Biden said.

Multiple fighter and refueling aircraft were involved in the mission, but only one — an F-22 fighter jet from Langley Air Force Base in Virginia — took the shot at 2:39 p.m. (1939 GMT), using a single AIM-9X supersonic, heat-seeking, air-to-air missile, a senior U.S. military official said.

China strongly condemned the military strike on an airship that it says was used for meteorological and other scientific purposes, and which it said had strayed into U.S. airspace “completely accidentally” — claims flatly dismissed by U.S. officials.

“China had clearly asked the U.S. to handle this properly in a calm, professional and restrained manner,” China’s foreign ministry said in a statement. “The U.S. had insisted on using force, obviously overreacting.”

The balloon was shot down about six nautical miles off the U.S. coast of the Atlantic Ocean, over relatively shallow water, potentially aiding efforts to recover elements of the Chinese surveillance equipment over the coming days, U.S. officials said.

One U.S. military official said the debris field was spread out over seven miles (11 km) of ocean, and multiple U.S. military vessels were on site.

The downing of the balloon came shortly after the U.S. government ordered a halt to flights in and out of three airports in South Carolina — Wilmington, Myrtle Beach and Charleston — due to what it said at the time was an undisclosed “national security effort.” Flights resumed on Saturday afternoon.

While Saturday’s shootdown concludes the military dimension to the spying saga, Biden is likely to continue to face intense political scrutiny from Republican opponents in Congress who argue he failed to act quickly enough.

A senior administration official said after shooting down the balloon, the U.S. government spoke directly with China about the action. The State Department also briefed allies and partners around the world, the official said.

Questions remain about how much information China may have gathered during the balloon’s trek across the United States.

The balloon entered U.S. airspace in Alaska on Jan. 28 before moving into Canadian airspace on Jan 30. It then re-entered U.S. airspace over northern Idaho on Jan. 31, a U.S. defense official said. Once it crossed over U.S. land, it did not return to open waters, making a shootdown difficult.

U.S. officials did not publicly disclose the balloon’s presence over the United States until Thursday.

“It’s clear the Biden administration had hoped to hide this national security failure from Congress and the American people,” said U.S. Representative Mike Rogers (NYSE:), a Republican who leads the House of Representatives Armed Services Committee.

Biden’s emphasis on Saturday that — days ago — he ordered the balloon shot down as soon as possible could be an effort to respond to such critics.

Former President Donald Trump, Biden’s potential rival in the 2024 election, called earlier this week for the balloon to be shot down, and has sought to portray himself as stronger than Biden on China. The U.S. relationship with China is likely to be a major theme of the 2024 presidential race.

Washington had called the balloon’s appearance a “clear violation” of U.S. sovereignty and notified Beijing about the shootdown on Saturday, a U.S. official said.

Still, officials on Saturday appeared to play down the balloon’s impact on U.S. national security.

“Our assessment — and we’re going to learn more as we pick up the debris — was that it was not likely to provide significant additive value over and above other (Chinese) intel capability, such as satellites in low-Earth orbit,” the senior U.S. defense official said. A Reuters photographer who witnessed the shootdown said a stream came from a jet and hit the balloon, but there was no explosion. It then began to fall.

The Pentagon assesses that the balloon was part of a fleet of Chinese spy balloons. On Friday, it said another Chinese balloon was flying over Latin America.

“Over the past several years, Chinese balloons have previously been spotted over countries across five continents, including in East Asia, South Asia and Europe,” the U.S. official said. The suspected spy balloon prompted Secretary of State Antony Blinken to postpone a visit to China this week that had been expected to start on Friday.

The postponement of Blinken’s trip, which had been agreed to in November by Biden and Chinese President Xi Jinping, was a blow to those who saw it as an overdue opportunity to stabilize an increasingly fractious relationship between the two countries.

China is keen for a stable U.S. relationship so it can focus on its economy, battered by the now-abandoned zero-COVID policy and neglected by foreign investors alarmed by what they see as a return of state intervention in the market.

By Steve Holland, Michael Martina and David Brunnstrom

WASHINGTON (Reuters) -China’s flight of a suspected surveillance balloon over the United States appears to mark a more aggressive – albeit puzzling – espionage tactic than relying on satellites and the theft of industrial and defense secrets, security experts said.

Both the United States and China have for decades used surveillance satellites to keep an eye on each other from the air. But China’s recent balloons – a White House official said this week’s episode was not the first – have some in Washington scratching their heads.

“In a way, it’s more amateurish,” said former White House national security adviser John Bolton. “Do the cameras in their satellites not have high enough resolution that they have to send a balloon over?”

The uproar over the balloon comes as China has been building up its military capabilities and challenging America’s military presence in the Pacific. The United States also believes Beijing routinely seeks to capture proprietary information and knowledge from U.S. companies.

China said the balloon was for civilian meteorological and scientific purposes that strayed into U.S. airspace, on Saturday accusing U.S. politicians and media of taking advantage of the situation to discredit China. It has previously rebuffed accusations of espionage and said the United States holds a Cold War mentality and hypes up the ‘China threat.’

The balloon discovered this week appeared deliberately provocative, said Dean Cheng, senior advisor to the China program at the U.S. Institute of Peace.

“This is a way to test how does the other side respond, not in a military sense. But politically, what do you do about it? Do you keep it quiet? If there have been in fact many and this is not the first time, then it raises an interesting question. What happened to the previous ones? Did we shoot them down?” he said.

Mike Rounds, a Republican member of the U.S. Senate Armed Services Committee, told Fox News it would be good to recover the balloon to see “if it was designed to actually collect data or if it was designed to test our response capabilities.”

Andrew Antonio, co-founder of high-altitude balloon startup Urban Sky, said the wind currents high-altitude balloons depend on for steering on long-distance trips were least favorable in the winter, suggesting China’s intentions might not have been be to target any specific location in the United States.

“Specifically targeting a certain military base with that balloon from a launch in China, in January or February, in the northern hemisphere, is very difficult to do, if not impossible,” Antonio said, speculating that the balloon’s venture into U.S. airspace could have been the result of a failed experiment, or some failure in its self-termination system.

Adding to the questions on Friday night, a Pentagon statement said another Chinese balloon was observed over Latin America.

FBI Director Christopher Wray said in 2020 that the greatest long-term threat to U.S. information and intellectual property was “the counterintelligence and economic espionage threat from China.”

China’s alleged clamor for American trade secrets has been so sweeping that the FBI estimated last October that it was opening a new Chinese counter-intelligence operation every 12 hours.

A more common spying tactic by China in recent decades, experts say, has been to use graduate students and other individuals with ties to China to gain access to sensitive materials by studying at research universities, working at technology companies or hacking into their computer networks.

“The problem with China is far more in the academic, scientific world,” said Mark Zaid, a Washington lawyer who is involved in various national security cases.

“There is no doubt that that dynamic is changing and the Chinese are becoming more aggressive for whatever reason.”

The United States has been also been accused of spying by China.

Before the use of spy satellites, the United States used high-altitude aircraft that could not easily be shot down and flew them over the Soviet Union, China and Cuba, for example.

U.S.-China relations plunged in April 2001 when a U.S. Navy EP-3E signals intelligence aircraft collided with a Chinese fighter jet in mid-air over the South China Sea about 70 miles away from China’s Hainan province.

In 2009, the Pentagon said five Chinese ships including a naval vessel harassed U.S. Navy ship the USNS Impeccable, an unarmed ocean surveillance vessel, in international waters off Hainan. China said the U.S. ship was carrying out an illegal survey off the island province.

Please try another search

Stock Markets 13 hours ago (Feb 04, 2023 05:53PM ET)

4/4

© Reuters. Israelis protest against Prime Minister Benjamin Netanyahu’s new right-wing coalition and its proposed judicial reforms to reduce powers of the Supreme Court in Tel Aviv, Israel February 4, 2023. REUTERS/Ronen Zvulun

2/4

JERUSALEM (Reuters) – Tens of thousands of Israelis braved heavy rain on Saturday for a fifth week of protests against judicial reform plans by Prime Minister Benjamin Netanyahu’s new government that critics say threaten democratic checks on ministers by the courts.

The plans, which the government says are needed to curb overreach by judges, have drawn fierce opposition from groups including lawyers, and raised concerns among business leaders, widening already deep political divisions in Israeli society.

“I’m here tonight protesting against the transition of Israel from a democracy to an autocracy,” Dov Levenglick, 48, a software engineer told Reuters in Tel Aviv.

“It’s a disgrace, it shall not stand.”

Netanyahu has dismissed the protests as a refusal by leftist opponents to accept the results of last November’s election, which produced one of the most right-wing governments in Israel’s history.

The protesters say Israeli democracy would be undermined if the government succeeds in pushing through the plans, which would tighten political control over judicial appointments and limit the Supreme Court’s powers to overturn government decisions or Knesset laws.

“They want to tear up the judiciary system of Israel, they want to tear up Israeli democracy, and we are here every week in every weather … to fight against it and to fight for Israeli democracy,” Hadar Segal, 35, told Reuters in Tel Aviv.

Opposition leader Yair Lapid joined demonstrations in the coastal city of Haifa, where he said protesters “came to save their country, and we came to protest with them.”