© Reuters. FILE PHOTO: Empty shelves show a shortage of baby formula at a CVS store in San Antonio, Texas, U.S. May 10, 2022. REUTERS/Kaylee Greenlee Beal
By Doina Chiacu and Susan Heavey
WASHINGTON (Reuters) -The U.S. baby formula shortage should improve dramatically in weeks, the Food and Drug Administration director said on Friday as the Biden administration scrambled to reverse a shortfall that hits lower-income Americans particularly hard.
Commissioner Dr. Robert Califf said the FDA will announce plans next week detailing how manufacturers and suppliers abroad will be able to import their products into the United States, as well as new options for U.S. companies.
The FDA is aiming for a streamlined process that will get more products on U.S. shelves while meeting safety, quality and labeling standards, he said. The $4 billion U.S. baby formula market is dominated by domestic producers, with imports limited and subject to high tariffs.
“We believe these and other ongoing efforts will help dramatically improve the supply in the U.S. in a matter of weeks,” Califf said on Twitter (NYSE:TWTR). “Our data indicates that in stock rates in retail stores are stabilizing but we continue to work around the clock to further increase availability.”
The Biden administration this week has come under increasing pressure to address the problem, which has roots in a February recall of some formulas by one of the nation’s main manufacturers, Abbott Laboratories (NYSE:ABT).
U.S. parents rely on baby formula. Fewer than half of babies born in the United States were exclusively breast-fed through their first three months, according to the Centers for Disease Control and Prevention 2020 Breastfeeding Report Card.
Abbott’s recall affected formulas, including certain Similac products, made at a Michigan plant after complaints about bacterial infections in infants who had consumed the products.
The shortages have been compounded by supply-chain snags and historic inflation, leaving about 40% of baby formula products out of stock nationwide, data firm Datasembly said.
President Joe Biden met on Thursday with executives from infant formula manufacturers and retailers, pressing them to do everything possible to get families access.
The retailers told Biden their top ask is more flexibility on the types of formula they can sell, while consumers need more flexibility on the types they can buy, particularly through the WIC program for low-income families, the White House said.
The nutrition program for Women, Infants and Children is a federal assistance scheme administered by U.S. states.
Abbott said on Friday it has shipped millions of cans of infant formula powder into the United States from its Ireland facility, particularly to serve consumers who use the WIC program for low-income families.
In states where Abbott has the WIC contract, the company said it will pay rebates on competing products if Similac is not available through August.
About half of infant formula nationwide is purchased by participants using WIC benefits, the White House said, and rules set by individual states have a big effect on the availability and distribution of infant formula.
“The shortage has taken an especially dangerous toll on women and children from underserved communities,” U.S. House Speaker Nancy Pelosi said.
The House of Representatives next week will bring up a bill to grant emergency authority to the WIC program to address supply-chain disruptions and recalls by relaxing non-safety-related regulations, she said in a statement on Friday.
Pelosi also said an emergency spending bill to address the infant formula shortage would advance in the House.
In other measures on Capitol Hill, the House Oversight Committee said it plans to investigate the four largest manufacturers of baby formula and seek answers on how to ramp up production and avoid any future shortage.
The committee said on Friday it sent letters seeking information to Abbott Nutrition, Mead Johnson Nutrition, Nestle USA and Perrigo.
The shortage poses a threat to families throughout the country, the letter said, “particularly those with less income who have historically experienced health in equities.”
Two other House committees – House Energy and Commerce and Appropriations – planned hearings on the issue.
Musk suggests that he could seek to cut price for Twitter buy
© Reuters. FILE PHOTO: A 3D-printed Twitter logo on non-3D printed Twitter logos is seen in this picture illustration taken April 28, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
By Katie Paul, Krystal Hu and Hyunjoo Jin
(Reuters) -Elon Musk suggested on Monday that he could seek a lower price for Twitter Inc (NYSE:TWTR), saying that there could be at least four times more fake accounts than what the company has said.
“You can’t pay the same price for something that is much worse than they claimed,” he said at a conference in Miami.
Musk, who on Friday said his $44 billion deal to buy Twitter was on hold pending information on spam accounts, said that he suspects they make up at least 20% of users – compared to Twitter’s official estimates of 5%.
When asked at the conference whether the Twitter deal is viable at a different price, Musk responded, “I mean, it’s not out of the question.”
“The more questions I ask, the more my concerns grow,” he said at the All-In Summit 2022 conference.
“They claim that they’ve got this complex methodology that only they can understand … It can’t be some deep mystery that is, like, more complex than the human soul or something like that.”
Twitter shares extended losses in late afternoon trading following Musk’s comments.
The stock dropped more than 8% to close at $37.39, lower than its level the day before Musk revealed his Twitter stake in early April, sowing doubts that the billionaire entrepreneur would proceed with his acquisition of the company at the agreed price.
Twitter Chief Executive Officer Parag Agrawal tweeted earlier on Monday that internal estimates of spam accounts on the social media platform for the last four quarters were “well under 5%,” responding to days of criticism by Musk of the company’s handling of phony accounts.
Twitter’s estimate, which has stayed the same since 2013, could not be reproduced externally given the need to use both public and private information to determine whether an account is spam, he added.
Musk responded to Agrawal’s defense of the company’s methodology with a poop emoji.
“So how do advertisers know what they’re getting for their money? This is fundamental to the financial health of Twitter,” Musk wrote.
Musk has pledged changes to Twitter’s content moderation practices, railing against decisions like the company’s ban of former President Donald Trump as overly aggressive while pledging to crack down on “spam bots” on the platform.
Musk has called for tests of random samples of Twitter users to identify bots. He also said, “there is some chance it might be over 90% of daily active users.”
Independent researchers have estimated that anywhere from 9% to 15% of the millions of Twitter profiles are bots.
Twitter does not currently require users to register using their real identities and expressly permits automated, parody and pseudonymous profiles on the service.
It does ban impersonation and spam, and penalizes accounts when the company determines their purpose is to “deceive or manipulate others” by engaging in scams, coordinating abuse campaigns or artificially inflating engagement.
Musk’s comments to a private audience could add to concerns about his disclosures of market moving information.
Musk, known for his candid Twitter posts, has a long history of skirmishes with the U.S. Securities and Exchange Commission; recently, a U.S. judge slammed him for trying to escape a settlement with the SEC requiring oversight of his Tesla (NASDAQ:TSLA) tweets.
Iraq balks at greater Chinese control of its oilfields
© Reuters. FILE PHOTO: Iraqi Oil Minister Ihsan Abdul Jabbar walks during a Lukoil energy event, in Baghdad, Iraq November 11, 2021. REUTERS/Thaier Al-Sudani
By Sarah McFarlane and Aref Mohammed
LONDON/BASRA (Reuters) – Iraq’s oil ministry thwarted three prospective deals last year that would have handed Chinese firms more control over its oilfields and led to an exodus of international oil majors that Baghdad wants to invest in its creaking economy.
Since the start of 2021, plans by Russia’s Lukoil and U.S. oil major Exxon Mobil (NYSE:XOM) to sell stakes in major fields to Chinese state-backed firms have hit the buffers after interventions from Iraq’s oil ministry, according to Iraqi oil officials and industry executives.
Selling a stake to a state-run Chinese company was also one of several options being considered by Britain’s BP (NYSE:BP), but officials persuaded it to stay in Iraq for now, people familiar with the matter said.
China is Iraq’s top investor and Baghdad was the biggest beneficiary last year of Beijing’s Belt and Road initiative, receiving $10.5 billion in financing for infrastructure projects including a power plant and an airport.
But when it comes to further Chinese investment in major oilfields, Baghdad has drawn a line in the sand.
Iraq’s government and officials at state-run firms are concerned that further consolidation of fields in the hands of Chinese companies could accelerate an exodus of Western oil companies, a total of seven Iraqi oil officials and executives with companies operating in Iraq told Reuters in interviews.
Supported by state-run oil company officials, Iraq’s Oil Minister Ihsan Abdul Jabbar dissuaded Lukoil last year from selling a stake in one of the country’s largest fields, West Qurna 2, to Chinese state firm Sinopec (NYSE:SHI), three people familiar with the matter said.
Iraqi officials also intervened last year to stop Chinese state-backed firms buying Exxon’s stake in West Qurna 1 and to persuade BP to stay in Iraq rather than offloading its interest in the giant Rumaila oilfield to a Chinese company, people familiar with the matter said.
Combined, Rumaila and West Qurna produce about half of the crude coming out of Iraq, which sits on the fifth-largest oil reserves in the world.
Iraq’s oil ministry did not respond to requests for comment about the deals or the minister’s role in any interventions.
The government worried that China’s dominance could make Iraq less attractive for investment from elsewhere, two government officials said.
China’s strengthening relationship with Iran has helped its position in Iraq due to Tehran’s political and military influence there, but the oil ministry is wary of ceding more control over the country’s key resources, some officials said.
“We don’t want the Iraqi energy sector to be labelled as a China-led energy sector and this attitude is agreed by government and the oil ministry,” another Iraqi official said.
The interventions over BP, Exxon and Lukoil’s positions in Iraq come after British oil major Shell (LON:RDSa) decided in 2018 to withdraw from Iraq’s vast Majnoon oilfield.
The interventions also mark a shift in stance after Chinese companies won most energy deals and contracts awarded over the past four years. Iraqi oil officials said Chinese firms have accepted lower profit margins than most rivals.
“All the rules regarding tenders were formulated jointly by the Chinese and Iraqi sides and were conducted under transparent and fair principles,” said state-owned China National Offshore Oil Corporation (CNOOC (NYSE:CEO)) in an emailed statement.
Pushing back against further Chinese investment is a risky strategy, though, as there’s no guarantee others will step up and the government needs billions of dollars to rebuild the economy after the Islamic State insurgency was defeated in 2017.
Over the past decade, oil revenue accounted for 99% of Iraq’s exports, 85% of the country’s budget and 42% of its gross domestic product, according to the World Bank.
While oil majors jostled to get access to Iraq’s vast oilfields after the U.S.-led invasion in 2003, they are increasingly focused on the energy transition and more profitable plays elsewhere. They also want better terms to develop fields, oil executives said.
China is among the biggest buyers of Iraq’s crude and Chinese state firms have built up a dominant position in its oil industry.
But when Lukoil notified the government last summer that it was considering selling some of its stake in West Qurna 2 to Sinopec, the oil minister intervened, people familiar with the matter said.
It has not previously been reported that Sinopec was the potential buyer of Lukoil’s stake. The Chinese company did not respond to a request for comment.
To encourage Lukoil to stay, Iraq offered a sweetener, a person with direct knowledge said.
A few months after Lukoil signalled it was considering a sale, Baghdad finally approved its plan to develop a field known as Block 10, where the Russian company had discovered an oil reservoir in 2017. Afterwards, Lukoil dropped the idea of selling its stake in West Qurna 2, the source said.
Lukoil did not respond to a request for comment.
BP AND EXXON
Over the past few years BP has also spoken to the government about its options – including leaving Iraq altogether – before settling on spinning off its stake in Rumaila into a standalone company last year, two people familiar with the matter said.
Oil minister Abdul Jabbar led efforts to convince BP not to leave as the government was concerned its partner in the field, China National Petroleum Corporation (CNPC), would buy BP’s stake, the people said. Baghdad was also keen to keep such a high-profile international oil major in the country, they said.
BP declined to comment.
When Exxon flagged its intention to leave Iraq in January 2021, meanwhile, U.S. officials told Exxon they were unhappy with the prospect of the biggest U.S. oil major pulling out – for reasons that echoed Iraqi concerns.
State department officials said Exxon’s departure could create a vacuum for Chinese companies to fill, a person familiar with the conversations said. U.S. officials then asked Exxon what it would take to stay in Iraq, the person said, declining to give further details.
A State Department spokesperson said: “We regularly engage with our Iraqi counterparts on fostering an environment conducive to private sector investment.”
Exxon had signed an agreement for the sale of its interest in West Qurna 1 to CNOOC and PetroChina, the listed arm of CNPC, people familiar with the matter said.
Neither CNOOC nor CNPC responded to requests for comment about the deals.
Exxon’s stake was valued at $350 million to $375 million, said people familiar with the matter. Iraq has veto power over oilfield deals, however, and did not approve the transaction.
Exxon filed for arbitration with the International Chamber of Commerce against Basra Oil Co., arguing that it had followed the terms of its contract for West Qurna 1 and had a good deal on the table, people familiar with the matter said.
The oil ministry then took the unusual step of trying to broker a deal on Exxon’s behalf. The ministry offered Exxon’s stake to other Western companies including Chevron Corp. (NYSE:CVX)
No one was interested. Rather than let the stake go to the Chinese companies, Baghdad said the state-run Iraq National Oil Company (INOC) would take it instead, though INOC is still in the process of being revived after being defunct for many years.
“(Exxon) will continue to work closely and constructively to reach an equitable resolution,” said a spokeswoman.
Iraq’s oil industry is mostly based on technical service contracts between the state-backed Basra Oil Co. and foreign companies that are repaid costs plus a fee per barrel to develop fields, while Iraq retains ownership of the reserves.
Oil majors typically prefer deals that allow a share in profits rather than a set fee.
The priority for Chinese firms, however, is achieving secure oil supplies to feed China’s growing economy, rather than returns for investors, said a Chinese oil executive with direct knowledge of CNPC’s global investments.
There are some signs, however, that Iraq is attempting to make its terms more appealing.
France’s TotalEnergies signed a $27 billion deal in September that included payment of 40% of revenue from one field. The deal has stalled, however, due to disputes over terms and it still needs approval from some Iraqi government agencies, Reuters reported in February.
TotalEnergies said it was fully committed to the project.
One oil company executive said they were sceptical Iraq would introduce more attractive terms. But unless they improve significantly, analysts say it is hard to imagine Iraq will be able to stem the exodus as the energy transition accelerates.
“Many of the energy majors are looking at the carbon emissions, their ability to generate cash flows if commodity prices are low, and they’re looking at improving returns,” said Ian Thom, research director at consultancy Wood Mackenzie. “As the priorities of the energy companies are changing, the relative attractiveness of Iraq is changing.”
Walmart stores expected to post high shopper traffic amid deepening inflation pain
© Reuters. FILE PHOTO: A worker and a shopper are seen wearing masks at a Walmart store, in North Brunswick, New Jersey, U.S. July 20, 2020. REUTERS/Eduardo Munoz
By Arriana McLymore and Aishwarya Venugopal
NEW YORK, NY (Reuters) – Walmart (NYSE:WMT) Inc is expected to show a steady rise in gross margins and revenue when it reports first-quarter results on Tuesday as price conscious shoppers, feeling the strain of persistent inflation, increase visits to the low-cost retailer.
Walmart has averaged a 4.9% increase in monthly visits since the start of 2022 compared to the same period in 2021, Placer.ai data showed, despite supply chain challenges and pricier fuel that have led shoppers to make fewer grocery store trips.
Analysts have also been upbeat about Walmart’s ability to diversify its revenue base through advertising and to keep prices low when compared with rivals that are struggling.
“What we found is pricing is still lowest at Walmart and they’ve done a very good job of keeping prices low to maintain and widen the price gaps with the competition and providing the best value for the consumer, even in an inflationary environment,” Telsey Advisory group analyst Joseph Feldman said.
Guggenheim analysts said Walmart is a “top pick” during inflationary times, in a note on Monday.
“We believe Walmart will continue to deliver impressive top- and bottom-line performance amidst the evolving pandemic environment regardless of tougher consumer spending patterns.”
Investors are already piling in. Walmart’s stock is up about 2% on the year to Friday, in contrast to the S&P 500‘s nearly 16% decline.
Grocery prices shot up 10.8% in April, the largest year-over-year jump since 1980, while the cost of a gallon of gas fell 6.1% but was still up nearly 44% from a year ago.
Walmart Chief Financial Officer Brett Biggs in March said that consumers were keeping their eyes on inflation and that rising fuel prices would cause consolidation in shopping trips.
“You’ll tend to see fewer trips. You’ll tend to see bigger baskets, which again, bigger baskets is really our sweet spot,” Biggs said at a Bank of America (NYSE:BAC) Conference.
Refinitiv estimates the Bentonville, Arkansas-based retailer will eke out gross margins of 24.55% in the quarter, up from 24.43% in the previous quarter, with revenue rising 0.4% to $138.883 billion. Earnings per share are estimated to be $1.48, down from $1.69 last year.
“Walmart stands to benefit from increasing trip consolidation, a healthy price gap to national chains, and accelerating inflation trends,” Gordon Haskett analyst Chuck Grom said.
The company has set its sights on growing its $12.99-a-month Walmart Plus membership to challenge Amazon (NASDAQ:AMZN)’s Prime, priced at $14.99 monthly. Walmart Plus, which launched in September 2020, offers delivery services and gas discounts but is still struggling to make ground against Amazon.
A recent report by eMarketer citing Bizrate showed that only 15% of U.S. adults used Walmart’s Plus service compared to 62% for Amazon’s Prime.
(This story corrects last name of Walmart CFO to “Biggs” from “Briggs” in paragraph 9 and 10)
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