News Archive

Waymo testing self-driving car ride service in Arizona

SAN FRANCISCO Alphabet Inc’s Waymo autonomous vehicle group will begin testing a self-driving car program for hundreds of families in Phoenix, Arizona and is buying 500 Chrysler minivans to do so, the companies said on Tuesday.

Waymo, which along with Google is owned by Alphabet Inc(GOOGL.O), recently has been quietly testing the service for a handful of families, learning what potential customers would want from a ride service, the company said in a blog post.

It urged people to apply to take part in an expanded test, which is the first public trial of Waymo’s self-driving cars. The vehicles include human operators from Waymo behind the wheel, in case intervention is required and to take feedback.

Silicon Valley is racing to master self-driving technology, betting that it will transform the auto industry and be a gold mine for leading companies. Waymo has one of the best technology track records, and it has an alliance with Fiat Chrysler Automobiles (FCHA.MI).

Many companies expect that customers will use autonomous vehicles as a service, rather than owning them outright. Ride service Uber in particular expects to use autonomous cars.

The new Waymo test in Arizona is meant to help the company understand what people want out of self-driving cars and see how they use and integrate the service. Testers will get access every day at any time.

Waymo already has with 100 Chrysler Pacifica minivans and is acquiring five times more, partly to be able to support the service.

(Reporting by Peter Henderson; Editing by Mary Milliken)

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Mitsubishi and Nissan full merger is not an option: chairman

BEKASI, Indonesia A full merger between Japanese car makers Mitsubishi Motors Corp (MMC) (7211.T) and Nissan Motor Co Ltd (7201.T) is not on the table, Carlos Ghosn, chairman of both firms, said on Tuesday.

“Full merger is not on the table. We want Mitsubishi to reform itself,” said Ghosn, who was attending the opening ceremony of Mitsubishi’s new factory on the outskirts of Jakarta.

He added though that it made sense for Mitsubishi to produce MPV parts for Nissan in Indonesia.

Last year, Nissan bought a controlling stake in MMC for $2.3 billion after the smaller Japanese company admitted to cheating on mileage tests.

(Reporting by Eveline Danubrata; Writing by Fransiska Nangoy; Editing by Muralikumar Anantharaman)

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LVMH, Arnault to simplify Christian Dior business structure

PARIS Luxury goods group LVMH (LVMH.PA) and billionaire businessman Bernard Arnault announced on Tuesday a deal to simplify their relationship with Christian Dior by buying out its minority shareholders, a transaction aimed at boosting LVMH’s earnings.

Arnault’s family company said the deal was also aimed at reinforcing its fashion and leather goods division.

It would offer 172 euros in cash and 0.192 shares in Hermes (HRMS.PA), in which Arnault also has a stake, to buy each remaining Christian Dior (DIOR.PA) share it does not currently hold.

LVMH will also buy the Christian Dior couture brand from the Christian Dior holding company for an enterprise value of 6.5 billion euros ($7.1 billion). Arnault has controlling stakes in both the current Dior structure and LVMH.

“The corresponding transactions will allow the simplification of the structures, long requested by the market, and the strengthening of LVMH’s Fashion and Leather Goods division thanks to the acquisition of Christian Dior Couture, one of the most iconic brands worldwide,” Bernard Arnault said in a statement.

The initial cash-and-Hermes-shares offer for Christian Dior would be followed by another secondary offer, valuing each Dior share at 260 euros – a premium of 14.7 percent compared to Dior’s closing price of 226.85 euros on April 24.

LVMH added in a statement that the overall deal would boost its earnings-per-share within the first year of its completion, with the transaction expected to be closed during the second half of 2017.

(Reporting by Sudip Kar-Gupta and Gilles Guillaume; Editing by Christopher Cushing and Andrew Callus)

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Credit Suisse investors prepare to grill chairman Rohner over pay

ZURICH Credit Suisse (CSGN.S) Chairman Urs Rohner faces his toughest shareholder meeting to date this week following an investor revolt over bonuses and losses totaling 5.65 billion Swiss francs ($5.7 billion) since 2015.

Rohner, 57, is facing calls to stand down after six years as chairman, during which time the share price of Switzerland’s second-biggest bank has more than halved to around 15 francs.

“Trust in the bank actually is at rock bottom if we look at the share price since Urs Rohner took office in 2011,” said Vincent Kaufmann, whose Swiss shareholder advisory group Ethos opposes Rohner’s re-election at Friday’s annual general meeting.

Ethos members represent an estimated 3-4 percent of shares in Credit Suisse, where the controversy over bonuses for top managers comes after raids at three of its offices in a Dutch-led tax investigation and uncertainty over plans to sell part of its domestic banking business.

Its decision to pay 78 million francs in bonuses to top executives and raise board compensation, amid a costly restructuring under Chief Executive Tidjane Thiam and billions of dollars in U.S. legal penalties, sparked an investor revolt.

Switzerland’s economy minister said the pay packets were a sign of recklessness and senior managers eventually offered to cut their bonuses by 40 percent, with the board also freezing its pay.

The investor discontent took Rohner by surprise.

“It was more than I expected, and particularly among UK and professional or institutional investors and proxy advisers,” he told the Financial Times in an interview published on Sunday.

Despite the criticism, which has rumbled on even after the concessions, a source familiar with Rohner’s thinking said he is confident of winning all agenda item votes at the AGM, including a binding vote on bonuses and board pay, and his re-election.

Rohner’s supporters say he offers stability as Thiam shifts Credit Suisse’s focus toward wealth management, while cutting back the investment bank, with the loss of thousands of jobs.

“There’s been a lot of chopping and changing,” said Macquarie Research analyst Piers Brown, who rates Credit Suisse’s stock “underperform”. “I think at the minute probably stability is better than having another u-turn.”

Investors will get an update on the restructure when Credit Suisse reports first-quarter results on Wednesday.


Others believe Rohner, who did not enter banking until 2004, is the wrong man alongside Thiam, a former insurance executive who is even newer to banking.

“He (Rohner) is not a banker,” said Hans Geiger, a retired Zurich University banking professor and a former Credit Suisse senior executive. “That could be OK, but then he shouldn’t appoint a non-banker as CEO.”

Rohner’s path to the top at Credit Suisse was an unusual one. A former Swiss 110-metre hurdles champion, he ran in the 1982 European Athletics Championships while studying law.

After graduating from the University of Zurich in 1983 he became a partner at one of the city’s most renowned securities law firms, Lenz Staehelin.

Rohner, an avid film buff, took the job of CEO and chairman at German broadcaster ProSiebenSat.1 (PSMGn.DE) in 2000 and joined Credit Suisse in 2004 as chief lawyer.

His big move as chairman was appointing Thiam in 2015 to replace Brady Dougan, a low-profile U.S.-born investment banker.

But investors are still waiting for this to pay off.

“I don’t feel,” said Ethos’s Kaufmann, “that Swiss pension funds are really happy with what’s happening at Credit Suisse with the share price performance, controversies around the bank, (the) high levels of compensation.”

For a graphic on Credit Suisse share price performance under Chairman Urs Rohner vs. UBS, click here

(Additional reporting by Oliver Hirt; editing by Alexander Smith)

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Asia stocks near two-year high, euro steady as French vote lifts mood

SINGAPORE Asian equities hit a near two-year high on Tuesday, buoyed by a jump in risk appetite following the centrist victory in the first round of the French presidential election that also lifted the euro and pressured safe-haven assets.

The Canadian dollar CAD= slid after the U.S. announced new duties averaging 20 percent on Canadian softwood lumber imports. The U.S. dollar strengthened 0.4 percent to C$1.3549.

European stocks also look set for a strong start, with financial spreadbetter CMC Markets expecting Britain’s FTSE 100 .FTSE to open up 0.2 percent and Germany’s DAX .GDAXI to start the day 0.3 percent higher. France’s CAC 40 .FCHI, which jumped 4.1 percent to post its biggest one-day gain in almost five years on Monday, is set to open up 0.4 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.6 percent, hovering near the highest level since June 2015 hit earlier in the session, on its fourth straight day of gains.

“Asian markets appear to be still lingering in the glow of relief after the French election,” said Jingyi Pan, market strategist at IG in Singapore. “The jubilance in markets overnight has also added to the optimism.”

U.S. President Donald Trump’s promise of an announcement on a tax reform plan on Wednesday could offer further impetus to markets, she added.

Japan’s Nikkei .N225 rose more than 1 percent to a three-week high. South Korea’s KOSPI .KS11 also advanced 0.7 percent to the highest level since April 2015.

Chinese shares .CSI300 rose 0.1 percent, while Hong Kong’s Hang Seng .HSI gained 0.9 percent. The Chinese index posted its worst day in 2017 on Monday amid signs Beijing will tolerate further market volatility as regulators clamp down on shadow banking and speculative trading.

Indonesian stocks .JKSE opened at an all-time high, and Malaysian stocks .KLSE hit their highest level since May 2015.

Australia and New Zealand are closed for the Anzac Day holiday.

“The risk-on sentiment is resulting in foreign inflows into Asia supporting asset prices, and investors are putting North Korean tensions to one side for now,” said Khoon Goh, head of Asia research at Australia and New Zealand Banking Group.

North Korea conducted a massive live-fire drill on Tuesday on the 85th anniversary of the foundation of its army, media reports said on Tuesday. South Korea’s defense ministry could not immediately confirm the report.

Polls show Emmanuel Macron defeating anti-euro nationalist Marine Le Pen by as much as 30 percentage points in the second round of the French presidential election in two weeks.

Overnight, the MSCI World index .MIWO00000PUS surged 1.6 percent to touch an all-time high, and holding near that level on Tuesday.

The pan-European STOXX 50 index .STOXX50E soared 4 percent, its best day in nearly two years.

On Wall Street, all three major indexes jumped more than 1 percent, with the Nasdaq .IXIC closing at a record high.

The euro EUR=EBS was steady at $1.08645, retaining most of Monday’s 1.3 percent gain. On Monday, it posted its strongest one-day performance in 10-1/2 months, which lifted the common currency to a 5-1/2-month high.

The euro’s earlier gains had weighed on the dollar index .DXY, which touched a four-week low overnight. The index, which tracks the greenback against a basket of trade-weighted peers, was marginally higher at 99.134, failing to make up most of Monday’s 0.9 percent loss.

The dollar advanced 0.3 percent to 110.05 yen JPY=D4 on Tuesday, extending Monday’s 0.5 percent jump as investors sold off the safe-haven yen.

A strong earnings season in the U.S. has also lifted investors’ spirits, with 77 percent of the 100 SP 500 companies that have reported first-quarter results so far beating profit expectations.

This week is set to be the busiest in at least a decade, with over 190 SP 500 companies reporting first-quarter results, including heavy weights Alphabet (GOOG.O) and Microsoft .MSFT.O.

This week in Asia, investors await a raft of economic indicators, including first-quarter inflation data for Australia and Japan, the Bank of Japan’s interest rate decision, Japan’s March unemployment rate and first-quarter gross domestic product for Taiwan and South Korea.

In commodities markets, oil prices crept higher after six straight sessions of losses, although gains were capped by fears that pledged output cuts by major producers may not be able to rein in oversupply.

U.S. crude CLc1 gained 0.5 percent to $49.47 a barrel, but hovered close to the lowest level in almost four weeks hit on Monday.

Global benchmark Brent LCOc1 climbed 0.5 percent to $51.84 after also hitting a four-week low overnight.

Gold XAU= slipped 0.15 percent to $1,273.22 an ounce, remaining near a two-week low touched overnight.

(Editing by Sam Holmes and Jacqueline Wong)

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East Coast refiners eye Texas oil as North Dakota alternative

NEW YORK U.S. East Coast refiners are looking to buy increasing volumes of domestic crude oil from the Gulf Coast, two sources said, the latest twist in a trade flow upheaval in the wake of the opening of the Dakota Access pipeline.

Major U.S. East Coast refiners profited from railing hundreds of thousands of barrels of discounted Bakken crude to their plants daily from 2013 until 2015. But as more and more pipelines were built in North Dakota, the discount began to disappear, and so did the rail cars.

Now, at least two East Coast refiners, Phillips 66 (PSX.N) and Delta Air Lines Inc’s (DAL.N) subsidiary Monroe Energy, are looking to move more crude by ship from Texas into the Philadelphia area. The Dakota Access pipeline starts up in May, giving the Gulf access to the Bakken shale play, and will likely sap any lingering economic incentive for Bakken-by-rail, which is more expensive.

This option is more expensive than oil imported to the East Coast, typically from Nigeria. Analysts and traders expected that once the Dakota line came into service, East Coast and West Coast refiners would rely on foreign barrels.

In 2016, 13 million barrels of crude went from the U.S. Gulf to the East Coast, according to the U.S. Energy Information Administration. By comparison, the East Coast took in 323 million barrels of imported crude last year.

Shipping sources say that costs could range between $2.60 to $3.50 a barrel for the two-week round trip on a U.S. flagged vessel. That is lower than the peak, brokers said, because a number of spare vessels are available. Taking a cargo of Nigerian Bonny Light to Philadelphia costs about $1.40 a barrel, brokers said.

Brokers interviewed said bringing U.S. oil via tanker to the East Coast gives refiners access to a variety of crude grades available in Texas, where most U.S. oil ends up now.

“It’s about optimizing assets. From Texas, you could bring up Eagle Ford, Permian or even Bakken crude,” said one source.

That journey could guarantee a steady supply of domestic crude, as both Phillips 66 and Monroe Energy already have U.S.-flagged Jones Act tankers contracted, brokers said, so bringing that crude would not be difficult. Phillips 66 and other refiners use their tankers to shuffle products to higher margin regions or to bring crude to their refineries.

Even with added Gulf shipments to the East Coast, refiners there should still receive the bulk of their supply from foreign sources due to economics, said Sandy Fielden, director of oil and products research for Morningstar.

West Africa produces crude that is “gasoline rich,” he said, important for East Coast refiners. He said he doubts sending Jones Act tankers makes a lot of sense financially because the spread between global benchmark Brent LCOc1 and U.S. West Texas crude CLc1 futures is not enough to justify the shift.

In an earnings call last year, Phillips 66 President Tim Taylor said the combination of the Dakota pipeline and water could potentially supply the 285,000 barrel per day Bayway refinery in Linden, New Jersey.

Moving crude by water from the Gulf up the Eastern Seaboard is not unheard of. Since October, NARL Refining LP has booked at least seven cargoes from Texas ports to its 130,000 bpd Come-By-Chance refinery in Newfoundland, in eastern Canada. In the previous 10 months, NARL booked just four Texas cargoes, according to Reuters Eikon shipping data.

(Additional reporting by Liz Hampton in Houston; Editing by Marguerita Choy)

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Not an inside job: How two analysts became SEC whistleblowers

WASHINGTON Four years ago, two analysts who liked to swap notes on numbers they thought looked odd took a fateful step and tipped off U.S. regulators about a company that one of them had watched for months.

Orthofix International NV (OFIX.O) caught one of the analysts’ attention in 2012. The Texas-based medical device maker kept hitting ambitious earnings targets and many analysts had “buy” recommendations for the stock.

But the analyst thought something was off. Its earnings reports showed it was taking longer than usual for the company to get paid by wholesale customers, invoices were piling up and executives struggled to offer a convincing explanation, saying logistical problems at foreign offices were partly to blame.

He spent months tracking quarterly reports and earning calls, and using algorithms to compare Orthofix’s ratios and patterns of sales and inventory turnover with financial data of its peers stored in databases such as Compustat.

“I am always on the lookout for something unusual, either just unusually good and under appreciated, or unusually bad,” the analyst told Reuters. “This one showed up as a company that looked like it had the potential to be unusually bad.”

In the spring of 2013, he e-mailed his spreadsheets to a fellow analyst and a friend of more than a decade, with whom he regularly chatted about companies and sectors.

“The way we work together is one person makes a suggestion and the other person challenges it,” that friend told Reuters.

“It is like a war game.”

Now both men stand to win as much as $2.5 million after Orthofix reached a $8.25 million settlement in January with the Securities and Exchange Commission and several former executives collectively paid $120,000 in penalties to resolve accounting fraud charges.

The award might even be bigger, if the SEC also credits the analysts’ tip for leading to a second civil settlement concerning foreign corrupt practices charges.

The pair declined to be publicly identified, citing concerns that it might jeopardize their current professional relations.

Referring to its January settlement with the SEC, Orthofix spokeswoman Denise Landry said the company had self-reported to the regulator and fully cooperated with the government during the investigation.

“We are pleased these matters are behind us,” she said, declining to comment further.

By entering the SEC whistleblower program the duo showed how outsiders with analytical skills and tools and time to spare can accomplish what is typically done by those with inside access to confidential information.

The program, established in 2011 under the Dodd-Frank financial reform law, aimed to bolster the SEC’s enforcement program by encouraging insiders to report potential fraud.

However, since its inception through Sept. 30, 2016, just over a third of the more than $111 million awarded to whistleblowers went to outsiders such as analysts or short-sellers, according to the SEC.

“Sometimes outsiders have a particular expertise and they are able to independently piece things together that might not be as obvious to those close to the matter,” said Jane Norberg, the head of the SEC’s Office of the Whistleblower.


In Orthofix’s case, what the two analysts pieced together suggested that Orthofix was goosing its earnings by “channel stuffing.”

If not disclosed to investors, the practice of flooding distributors with more products than they can use or pay for is illegal. It lets the company smooth earnings by prematurely recognizing revenue, and pushing shortfalls into the future.

As the SEC settlement later showed, Orthofix was sending various implants from its spine division to distributors in Brazil that either lacked regulatory approval, or lacked medical instruments needed to use the implants. It then was recording products that could not be resold as revenue, and also treating some of the price discounts as expenses instead of a revenue reduction, the SEC said.


Even without such details, the analysts felt they had enough to try the SEC’s program.

Their suspicions turned into near-certainty when in May 2013, Orthofix missed its first quarter earnings targets, reporting a 14 percent year-over-year drop in net sales that sent its share price tumbling 15 percent.

“That was when the light bulb really goes off,” the analyst who first started watching the company said.

By then the two had already contacted Jordan Thomas, an attorney at the law firm Labaton Sucharow, which specializes in class action litigation and also takes on a limited number of whistleblower cases.

The law firm gets paid for its services from a portion of the award, but it does not publicly disclose its share.


In June 2013, Thomas submitted a tip to the SEC on his clients’ behalf, promising to follow up with a more detailed submission, records show. To bolster their case the analysts kept picking through the Orthofix’s financial statements, while Labaton’s investigators, led by a former FBI agent, hit the phones and scouted industry message boards looking for former Orthofix employees.

One former employee they found revealed in an interview that in order for them to “make their numbers,” the company sent large orders to distributors, only to have them returned and then reshipped to other customers, according to the updated submission Labaton send to the SEC in August.

The update included the analysts’ estimates by how much Orthofix would need to lower their earnings and sales for 2011 and 2012. Those numbers later turned out to be right in line with what the company ultimately restated in 2014 and 2015.

The SEC still does not know the identities of the two analysts, but it will find out in May, when Thomas submits a claim on their behalf asking the SEC to consider giving them an award for their tip.

The analysts, who live in different cities, said that the day the SEC charged Orthofix, they were just too far apart to get together and celebrate, but that an award would justify the trip.

“If and when the actual award settlement is disclosed, then we can meet up for champagne,” one said.

(Reporting by Sarah N. Lynch in Washington; Editing by Tomasz Janowski)

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For Wells Fargo directors, narrow wins may not be enough

A shareholder vote scheduled for Tuesday could throw Wells Fargo Co’s (WFC.N) leadership into question if many directors, criticized for their slow response to the bank’s phony-account scandal, fail to win solid majorities.

A dozen of the 15 directors on the ballot face negative recommendations from influential proxy adviser Institutional Shareholder Services (ISS), which argued the group, including Chairman Stephen Sanger, failed in their oversight duties.

Technically Wells Fargo’s guidelines require that directors offer to resign if they fail to receive a majority of votes cast. But in practice, directors who win with less than 80 percent support should consider exiting the board, said Charles Elson, a University of Delaware expert on corporate governance.

“If they’re below 80 (percent) I’d say they have a lot of soul-searching to do,” he said.

Spokesmen for the bank and Wells Fargo’s board said on Monday that they would not comment ahead of the meeting. But the country’s third-largest bank has struggled for months to move past revelations that thousands of employees created as many as 2.1 million accounts in customers’ names without their permission to hit lofty sales targets.

The bank’s board and management have said steps taken to fix problems and punish employees responsible for abuses show there is now strong oversight, and that directors nominated deserve to be elected. But the public firestorm that hammered its shares and led to the resignation of then-Chairman and Chief Executive John Stumpf last year is not forgotten.

At most SP 500 companies, director support averages around 95 percent of votes cast, according to pay consulting firm Semler Brossy. Typically a recommendation from ISS that investors vote “against” a director will reduce the support they receive by an average of 17 to 18 percentage points.

Not all of Wells Fargo’s critics are in lockstep, meaning some directors may do better than others. California’s two largest public pension funds, for instance, have said they oppose only nine Wells Fargo directors.

“We do want a core of directors left able to reconstitute the board,” said Anne Simpson, Calpers’ investment director of sustainability. “Simply declaring ‘off with their heads’ is not reasonable.”

Should Wells Fargo directors win narrow majorities – between 50 to 80 percent of votes cast – the board would have to decide whether to accept any individual director’s resignation.

University of Pennsylvania law professor Jill Fisch said a likely outcome, in the event of a close vote, would be for the board to bring in fresh faces over a period of months or longer.

“From a business perspective that may be the best response you could make,” she said. “You don’t want the whole leadership to be in flux.”

Banks can be sensitive to narrow wins. Goldman Sachs Group Inc (GS.N), for instance, revamped its pay structure this year after 33 percent of votes cast went against executive compensation packages in 2016.

Wells Fargo’s top investor Berkshire Hathaway Inc (BRKa.N) has already voted in favor of the bank’s board. Representatives for other top shareholders declined to comment.

If the whole Well Fargo board receives a narrow majority, Vining Sparks analyst Marty Mosby expects few changes, saying it would be impractical to get rid of a nearly full slate of directors. But low vote totals concentrated on certain directors would likely force them to step down soon, he said.

The board would have sent a stronger reform signal by naming former banking regulator Elizabeth Duke as chair when it split the chairman and CEO roles in October, Mosby said.

“The only thing they haven’t really changed substantially is the board,” he said. “That last step would have completed the whole process and made this vote much easier on them.”

(Reporting by Ross Kerber in Boston and Dan Freed in New York; Editing by Lauren Tara LaCapra and Tom Brown)

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Trump’s push to fund wall may be delayed as government shutdown looms

WASHINGTON U.S. President Donald Trump indicated an openness on Monday to delaying his push to secure funds for his promised border wall with Mexico, potentially eliminating a sticking point as lawmakers worked to avoid a looming shutdown of the federal government.

Trump, in a private meeting with conservative media outlets, said he may wait until Republicans begin drafting the budget blueprint for the fiscal year that starts on Oct. 1 to seek government funds for building a wall along the U.S.-Mexico border, the White House confirmed.

Trump, whose approval ratings have slid since he took office, is facing a Friday deadline for Congress to pass a spending bill funding the government through September or risk marking his 100th day in office on Saturday with a government shutdown.

“Now the bipartisan and bicameral negotiators can continue working on the outstanding issues,” Senate Democratic leader Chuck Schumer said in a statement on Monday night.

Earlier on Monday, Schumer reiterated an assertion made last week that bipartisan negotiations in Congress were going well until the White House began demanding money for the wall as a condition for accepting a funding bill.

Although Republicans control both chambers of Congress, a funding bill will need 60 votes to clear the 100-member Senate, where Republicans hold 52 seats, meaning at least some Democrats will have to get behind it.

If no spending measure covering April 29 to Sept. 30 is in place before 12:01 a.m. (0401 GMT) on Saturday, government funds will halt and hundreds of thousands of the country’s several million federal employees will be temporarily laid off.

Those in jobs deemed essential such as law enforcement are expected to keep working in the hope they will receive back pay. Non-essential sectors such as national parks are liable to be closed and programs such as federally funded medical research will grind to a halt.

Failure to approve a government funding bill could also throw new doubts over Republicans’ ability to fashion a budget blueprint for the next fiscal year or to succeed in a major effort to cut corporate and individual taxes that Trump has touted.


Congressional leaders will likely have to decide by late on Tuesday whether negotiations are progressing enough to try to pass a spending bill funding the government through September, Senator Roy Blunt, a member of the Republican leadership and Senate Appropriations Committee, told reporters on Monday.

If negotiations have slowed or stalled, Congress could pursue a short-term extension of existing spending levels to avoid a government shutdown, giving lawmakers more time to reach a deal. Leading Democrats have said they would support such a measure only if talks are progressing.

Short-term funding measures, known as continuing resolutions that cover periods of days, have been used to avert government shutdowns in the past. But in 2013, conservative Republicans forced a 17-day shutdown in a failed attempt to repeal former President Barack Obama’s Affordable Care Act, popularly known as Obamacare.

A Republican effort to repeal and replace Obamacare imploded in Congress last month and the White House said on Monday that another vote could not come for weeks.

But Trump has dangled the prospect of funding some elements of the law, which enabled millions more Americans to secure healthcare coverage, in exchange for Democrats’ support in the spending talks.

The White House had offered to include $7 billion in Obamacare subsidies that allow low-income people to pay for healthcare insurance in exchange for Democratic backing of $1.5 billion in funding to begin construction of a barrier on the U.S.-Mexico border.

It was unclear on Monday whether delaying wall funding until later spending negotiations would invalidate the White House pledge to include Obamacare subsidy funding for low-income people in the current proposal funding the government through September.

Trump has argued that a wall along the U.S.-Mexico border is needed to stem the flow of illegal immigrants and drugs into the United States. In a Twitter message on Monday, Trump wrote: “If… the wall is not built, which it will be, the drug situation will NEVER be fixed the way it should be!”

Earlier on Monday, White House spokesman Sean Spicer said Trump’s demand that Congress include funds for the construction of the wall remained a White House priority.

“The president has made very clear that he’s got two priorities in this continuing resolution: No. 1, the increase in funding for the military and No. 2, for our homeland security and the wall,” Spicer told reporters.

The White House is confident in the direction of the talks and an announcement is expected soon, Spicer said, although he declined to say specifically whether Trump would sign a bill that did not contain money for border security and the wall.

Trump has said Mexico will repay the United States for the wall if Congress funds it first. But the Mexican government is adamant it will not provide any financing and Trump has not laid out a plan to compel Mexico to pay. Department of Homeland Security internal estimates have placed the total cost of a border barrier at about $21.6 billion.

Aside from inflaming relations with a major trading partner, the planned wall has angered Democrats. They showed no sign of softening their opposition on Monday and sought to place responsibility for any shutdown squarely on Trump and congressional Republicans.

(Additional reporting by Ayesha Rascoe, Julia Edwards Ainsley, Susan Heavey and Doina Chiacu; Writing by Paul Simao and Amanda Becker; Editing by Frances Kerry and Peter Cooney)

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