Strong economy does little to lift department store sales
By ANNE D’INNOCENZIO and MICHELLE CHAPMAN
AP Business Writers
Thursday, January 10
NEW YORK (AP) — It was supposed to be a great holiday shopping season. Many investors had expected department stores to enjoy robust sales in light of a U.S. economy buoyed by low unemployment, higher wages, strong consumer confidence and cheap gas.
So when Macy’s and Kohl’s reported lackluster numbers on Thursday, they were taken aback, sending retail stocks into a tailspin and calling into question whether such mall-based chains can compete in a changing landscape where shoppers are shifting more of their spending online.
Macy’s saw only a slight increase of 1.1 percent in sales during November-December at stores opened at least year. And while sales were strong during Black Friday and Cyber Monday, the company said sales fell off noticeably until the week of Christmas.
Meanwhile, Kohl’s reported a small sales growth that showed a dramatic slowdown from a year ago. Comparable sales rose 1.2 percent, versus 6.9 percent in the previous year.
Shares of Macy’s plummeted nearly 18 percent Thursday, suffering its worst one-day decline. Kohl’s stock closed down nearly 5 percent. Even Target’s stock took a hit, falling nearly 3 percent despite showing strong holiday sales.
Earlier this week, J.C. Penney, one of the stragglers in the department store sector, reported a drop in comparable store sales of 3.5 percent for November and December. But because Macy’s is considered a barometer of spending, particularly for the middle class and for mall spending, investors may be looking for deeper meaning in its performance.
“Macy’s report spooked investors because investors expected it to be a great holiday season across the board,” said Neil Saunders, managing director at GlobalData Retail, a retail research firm. “Now, they’re questioning how good the holiday season was. There is a lot of uncertainty out there.”
Adding to the uncertainty is that investors will not be getting December’s monthly retail sales data next week from the Commerce Department if the government shutdown is still in effect, as most observers expect. Saunders said investors are also worried that a recovery among traditional stores like Macy’s is losing momentum, raising concerns that they might have to ramp up investments even more to increase sales.
Analysts say factors like a shift to online spending and consumer preferences for so-called experiences like spas and restaurants have hurt impulse spending that likely put a dent in December’s figures for Macy’s and Kohl’s.
Online sellers are relentlessly growing their share of retail sales. In November, e-commerce and catalog sales jumped 10.8 percent from a year earlier, according to Commerce Department data, more than double the overall sales increase of 4.2 percent. Department store sales slipped 0.2 percent during the same period.
And Marshal Cohen, chief industry adviser at NPD Group, estimates that as much as 40 percent of shoppers bought experiences as gifts this holiday season, up from 25 percent just a few years ago.
Analysts also point to factors that hit Macy’s in particular. Some believe, for instance, the company may not have done enough to make its merchandise and marketing compelling for customers as it tried to compete against online players like Amazon.
Target, on the other hand, bucked the trend by posting strong online growth in November and December. Sales for merchandise ordered online and picked up at stores surged 60 percent. That is key to Target’s campaign to hold online retailers like Amazon at bay, particularly during the competitive holiday season, because shoppers can dodge shipping fees.
Target Corp. said Thursday that sales at stores open at least a year increased 5.7 percent in the period, up from 3.4 percent a year earlier. Comparable online sales climbed 29 percent.
The company still expects full-year adjusted earnings in a range of $5.30 to $5.50 per share. Analysts polled by FactSet foresee $5.39 per share. The maintained outlook may have disappointed investors.
Macy’s on Thursday lowered its fiscal 2018 earnings outlook to $3.95 to $4 per share from its prior per-share earnings for $4.10 to $4.30 per share. That’s well below the per-share projections of $4.23 from industry analysts.
AP Economics Writer Chris Rugaber contributed to this report in Washington.
Virginia’s uranium mining battle flips traditional views of federal and state power
January 11, 2019
Author: Cale Jaffe, Assistant Professor of Law and Director, Environmental and Regulatory Law Clinic, University of Virginia
Disclosure statement: Cale Jaffe served as counsel of record before the Supreme Court for the Members of the Southern Virginia Delegation to the Virginia General Assembly, Local Chambers of Commerce, Civic, Trade, and Economic Development Associations, and Municipalities, who filed an amicus brief supporting Virginia’s uranium mining ban. He previously served as director of the Virginia office of the Southern Environmental Law Center (SELC), and currently volunteers as chair of the board of directors for the Virginia Conservation Network (VCN). SELC and VCN also support Virginia’s prohibition on uranium mining.
Partners: University of Virginia provides funding as a member of The Conversation US.
The Supreme Court will decide in 2019 whether a Virginia law that bans uranium mining is preempted by the Atomic Energy Act, the U.S. law governing the processing and enrichment of nuclear material.
The case, Virginia Uranium, Inc. v. Warren, will require the court to interpret laws governing nuclear fuel production. But its most significant, long-term impact might be the glimpse it provides into the court’s view of the proper balance between federal regulatory power and the rights of states in setting their own policies.
I have been involved in this case in its various iterations for more than a decade. Before joining the faculty at the University of Virginia School of Law, I worked with the Southern Environmental Law Center, an environmental advocacy organization that had raised grave concerns about a proposed uranium mine near the city of Danville.
Inverting the states’ rights divide
Conventional wisdom holds that people on the political right distrust large federal bureaucracies and would rather allow state officials the freedom to regulate their own economies. Under this line of thinking, conservatives would be expected to side with the Commonwealth of Virginia and recoil at an intrusive application of the Atomic Energy Act that would prohibit the state from enforcing a ban on uranium mining in place since 1982.
Those on the liberal end of the spectrum, on the other hand, might be expected to see a strong federal hand as necessary to prevent states from deregulating and despoiling their own environments.
This case is one of several, recent environmental and public policy disputes to demonstrate how that thinking can be wrong.
Over the course of their political careers, conservative Republican Sens. Tom Cotton of Arkansas, Jim Inhofe of Oklahoma and Ted Cruz of Texas have each highlighted the 10th Amendment in advocating for a limited view of federal government power and deference to states’ rights. Yet all three of them signed on to an amicus brief in support of Virginia Uranium, Inc.‘s sweeping view of the Nuclear Regulatory Commission’s role in this instance.
On the flip side, environmentalists are gaining an appreciation for the value of state initiatives, like Virginia’s mining ban, which can provide a bulwark against environmental rollbacks from the Trump administration.
Before the Supreme Court, I co-authored, with former Virginia Attorney General Tony Troy, another amicus brief defending the state law. We filed it on behalf of six members of the Virginia General Assembly who represent affected communities and on behalf of local chambers of commerce; civic, trade and economic development associations; and municipalities.
Virginia Uranium claims that its proposed mining site, about 220 miles southwest of Washington, D.C., could generate US $4.8 billion in net revenue for Virginia businesses.
Uranium oxide, commonly known as yellowcake, can be enriched to produce the fuel that powers the nation’s nuclear reactors. But first it has to be extracted from the ground, which is a monumentally significant undertaking. Producing the 133 million pounds of yellowcake that the company thinks it can develop would require mining more than 267 billion pounds of raw ore, which is roughly 365 times the weight of the Empire State Building.
Green groups seized on a report published by the National Academy of Sciences, Engineering, and Medicine, which found that uranium mining increases the incidences of cancer, acidification of local waterways, and the emission of soot and smog-forming pollutants from industrial equipment.
Local businesses joined environmentalists in pushing back. The Danville Pittsylvania County Chamber of Commerce opposes the mining project, out of concern about the potential harm to agriculture, tourism and other economic development opportunities.
Agriculture and forestry-related industries provided the counties adjacent to the proposed mine site with an estimated $5.4 billion in total economic benefits in 2015, according to the Weldon Cooper Center for Public Service’s analysis.
Cognizant of the boom-and-bust nature of the uranium mining industry, economic development leaders in Southern Virginia have expressed fears that Virginia Uranium could leave behind a shuttered mine and a weakened local economy.
Under the Atomic Energy Act, states retain jurisdiction over conventional uranium mining. The federal government lacks authority over uranium ore “prior to removal from its place of deposit in nature,” when it is milled into yellowcake.
Virginia’s law speaks exclusively to state-controlled mining and bans only that activity. Mining proponents, however, insist that the state’s motive for enacting this ban was a concern about safety hazards associated with the storage of radioactive tailings from the milling process – issues traditionally addressed by the Nuclear Regulatory Commission.
The Supreme Court delves in
When the Supreme Court heard oral argument on the case, on Nov. 5, 2018, the court considered whether state legislators should be left free to prohibit mining if they find that the harms outweigh the benefits.
The justices also probed whether the Atomic Energy Act could effectively mandate mining at the state level to provide ore for federally regulated milling operations.
As they delved into these questions, it became clear that conventional assumptions about federal authority and states’ rights might not apply.
Justices Sonia Sotomayor and Elena Kagan, both liberal justices appointed by President Barack Obama, voiced a reluctance to infringe on a state’s traditional lawmaking authority – the kind of concern typically raised by judicial conservatives. To that point, Justice Neil Gorsuch approvingly referred to Kagan’s observations and suggested that his view of the case shared a similar skepticism.
Justice Brett Kavanaugh departed from conservative orthodoxy and appeared to call for a pragmatic interpretation of Virginia’s law. He asked whether state-controlled mining and federally regulated milling might be inextricably interconnected.
Justice Stephen Breyer, who reflected on his 24 years on the Supreme Court bench, observed that “every judge, as far as I know, including Justice Scalia, whom we used to talk about this, sometimes will look to a statute’s purpose” and depart from the plain text.
Both Kavanaugh’s and Breyer’s comments and questions hinted at an expansive view of the Nuclear Regulatory Commission’s purview.
But as Breyer implied, it might be the legacy of Justice Scalia that looms large when the court announces its decision. Gorsuch had kicked off oral argument by citing a Scalia opinion explaining why federal courts should avoid an inquiry into state motives.
That Kagan and Sotomayor were also interested in this narrower inquiry into state legislative action suggests that conventional wisdom about judicial philosophies might not hold in this case.
A ruling is expected before the end of June 2019.
Poland charges Huawei manager, ex-spy with spying for China
By VANESSA GERA
Friday, January 11
WARSAW, Poland (AP) — Poland’s counter-espionage agency has arrested a Chinese manager at tech giant Huawei in Poland and one of its own former officers and informed them both that they face charges of spying on Poland for China, state television reported Friday.
The two men were arrested Tuesday, according to the Internal Security Agency. Polish security agents also searched the Warsaw offices of Huawei and Orange, Poland’s leading communications provider, where the former Polish spy had recently worked, seizing documents and electronic data. The homes of both men were also searched, according to TVP, the state broadcaster.
The development comes as the U.S. is exerting pressure on its allies to block Huawei, the world’s biggest maker of telecommunications network equipment.
A U.S. dispute with China over its ban on Huawei is spilling over to Europe, the company’s biggest foreign market. The company is a leader in the development of next-generation “5G” mobile networks and a key player in building them in Europe but some countries are starting to reconsider using Huawei’s equipment over data security concerns.
Some European governments and telecom companies are following the U.S. lead in questioning whether using Huawei for vital infrastructure for mobile networks could leave them exposed to snooping by the Chinese government.
Maciej Wasik, deputy head of Poland’s special service, said the operation that resulted in the arrests of the two suspects had been underway for a long time. He said “both carried out espionage activities against Poland.”
TVP said the men have proclaimed their innocence and are refusing to give testimony in the case.
TVP, which is close to the government, identified the arrested Chinese man as Weijing W., saying he was a director in Poland at Huawei. The broadcaster said the man also went by the Polish first name of Stanislaw and had previously worked at the Chinese consulate in Gdansk.
A LinkedIn profile for a man named Stanislaw Wang appears to match details of the man described by Polish television.
Wang’s resume said he worked at China’s General Consulate in Gdansk from 2006-2011 and at Huawei Enterprise Poland since 2011, where he was first director of public affairs and since 2017 the “sales director of public sector.” The resume said he received a bachelor’s degree in 2004 from the Beijing University of Foreign Studies.
State TV identified the Pole as Piotr D., and said he was a high-ranking employee at the Internal Security Agency until 2011, where he served as deputy director in the department of information security.
If convicted, the men could face up to 10 years in prison, the security agency said.
Huawei issued a statement from its Chinese headquarters saying it was aware of the situation and was looking into it.
“We have no comment for the time being. Huawei complies with all applicable laws and regulations in the countries where it operates, and we require every employee to abide by the laws and regulations in the countries where they are based,” it continued.
An official at the Chinese Embassy in Warsaw says China attaches “great importance to the detention” of the Chinese citizen in Poland and that Chinese envoys had met with Polish Foreign Ministry officials on the matter. The spokeswoman, who spoke on condition of anonymity, said China urged Poland “to inform China about the situation of this case and arrange a consular visit as soon as possible.”
Geopolitical tensions over Huawei intensified after its chief financial officer, who is the daughter of company founder Ren Zhengfei, was arrested Dec. 1 in Canada in connection with U.S. accusations that the company violated restrictions on sales of American technology to Iran.
The United States wants Meng Wanzhou extradited to face charges that she misled banks about the company’s business dealings in Iran. She is out on bail in Canada awaiting extradition proceedings.
Huawei has been blocked in the U.S. since 2012, when a House Intelligence Committee report found it was a security risk and recommended that the government and private companies stop buying its network equipment.
Kelvin Chan in in London and Joe McDonald in Beijing contributed to this report.
The quiet threat inside ‘internet of things’ devices
January 11, 2019
They’re small and well-connected, but how safe are ‘internet of things’ devices? BeeBright/Shutterstock.com
Author: Charles T. Harry, Associate Research Professor of Public Policy; Director of Operations, Maryland Global Initiative in Cybersecurity; Senior Research Associate, Center for International and Security Studies, University of Maryland
Disclosure statement: Charles T. Harry is affiliated with the US Chamber of Commerce.
As Americans increasingly buy and install smart devices in their homes, all those cheap interconnected devices create new security problems for individuals and society as a whole. The problem is compounded by businesses radically expanding the number of sensors and remote monitors it uses to manage overhead lights in corporate offices and detailed manufacturing processes in factories. Governments, too, are getting into the act – cities, especially, want to use new technologies to improve energy efficiency, reduce traffic congestion and improve water quality.
The number of these “internet of things” devices is climbing into the tens of billions. They’re creating an interconnected world with the potential to make people’s lives more enjoyable, productive, secure and efficient. But those very same devices, many of which have no real security protections, are also becoming part of what are called “botnets,” vast networks of tiny computers vulnerable to hijacking by hackers.
Botnets have caused problems on the internet, from sending vast amounts of spam mail to disrupting websites around the world. While traditionally most botnets are comprised of laptop and desktop computers, the growth of unsecured devices such as industrial sensors, webcams, televisions and other smart home devices is leading to a growing disruptive capability.
Tiny computers everywhere
The “internet of things” includes countless types of devices – webcams, pressure sensors, thermometers, microphones, speakers, stuffed animals and many more – made by a vast array of companies. Many of these manufacturers are small and unknown, and don’t have popular brands or public reputations to protect. Their goals are to produce lots of devices to sell as cheaply as possible. Customers’ cybersecurity isn’t a real concern for them.
These devices’ variety means they’re useful for lots of things, but also means they have a wide range of vulnerabilities. They include weak passwords, unencrypted communications and insecure web interfaces. With thousands, or hundreds of thousands, of identically insecure devices scattered all over the world, they’re a wealth of targets ripe for the hacking.
If, for instance, a manufacturer has set an unchangeable administrative password on a particular type of device – it happens more often than you might think – a hacker can run a program searching the internet for those devices, and then logging in, taking control and installing their own malicious software, recruiting the device into a botnet army. The devices run normally until the hackers issue instructions, after which they can do more or less anything a computer might do – such as sending meaningless internet traffic to clog up data connections.
Blocking internet access
That type of attack when emanating from thousands of devices at once, called a “distributed denial of service,” can shut down companies’ servers or even block wide swaths of the internet from being publicly accessible. A major DDoS attack in 2016 interrupted connections to Amazon, Netflix and Paypal from customers on the east coast of the U.S.
That attack was linked to a botnet-control software program created by three teenagers seeking to use more than 100,000 hijacked webcams and other internet-connected devices from around the world to gain an advantage over other players of the “Minecraft” online video game.
The size and scale of these attacks – and the broad range of devices that can contribute to them – make this both a private problem and a public one. People want to secure the devices in their homes and pockets, of course. Yet the same networks that stream television shows and music also link burglar alarms to police, manage traffic lights in congested areas and let self-driving cars talk to each other.
All that activity can be drowned out if hackers flood the internet, or sections of it, with meaningless messages. Traffic would stall across towns, even counties, and police officers would have a hard time communicating with each other to try to straighten everything out. Even small devices, in their hundreds of thousands, all around the world, can work together to have huge repercussions both online and in the physical world.