Reuters News - CIA unveils new rules for collecting information on Americans

The lobby of the CIA Headquarters Building in McLean, Virginia, August 14, 2008. REUTERS/Larry Downing

By Jonathan Landay | LANGLEY, VA.

The Central Intelligence Agency on Wednesday unveiled revised rules for collecting, analyzing and storing information on American citizens, updating the rules for the information age and publishing them in full for the first time.

The guidelines are designed "in a manner that protects the privacy and civil rights of the American people," CIA General Counsel Caroline Krass told a briefing at the agency's headquarters in Langley, Virginia.

The new rules were released amid continued public discomfort over the government's surveillance powers, an issue that gained prominence following revelations in 2013 by former government contractor Edward Snowden that the National Security Agency (NSA) secretly collected the communications data of millions of ordinary Americans.

The guidelines were published two days before President elect-Donald Trump is sworn into office and may be changed by the new administration. Trump has said he favors stronger government surveillance powers, including the monitoring of "certain" mosques in the United States.   

The CIA is largely barred from collecting information inside the United States or on U.S. citizens. But a 1980s presidential order provided for discrete exceptions governed by procedures approved by the CIA director and the attorney general.

Known as the "Attorney General Guidelines," the original rules over time became a "patchwork of policies and procedures" that failed to keep pace with the development of technology that can store massive amounts of digital data, said Krass.

In 2014, legislation gave U.S. intelligence agencies two years to develop procedures limiting the storage of information on U.S. citizens.

The new procedures, under development for years, were signed on Tuesday by CIA Director John Brennan and Attorney General Loretta Lynch.

While the 1982 guidelines were made public two years ago, sections were blacked out. The updated procedures were posted in full for the first time on the CIA's website on Wednesday.

The updated procedures include what the CIA must do when it clandestinely obtains a computer hard drive holding millions of pages of text, hours of videos and thousands of photos containing information on foreigners and U.S. citizens.

Because extensive time and many analysts are required to assess such large volumes of data, the new rules regulate the handling of material whose intelligence value cannot be promptly evaluated.

They also regulate how such data can be searched and create strict requirements for dealing with unevaluated electronic communications, which must be destroyed no later than five years after the are first examined.

The rules were unveiled a week after civil liberties groups decried new guidelines approved by the Obama administration expanding the NSA's ability to share communications intercepts with other U.S. intelligence agencies, including the CIA.

(Additional reporting by Warren Strobel; Editing by Jonathan Oatis)

BBC News - Why is the pound so twitchy about Brexit?

It's only gone and done it again. Like an unworldly maiden, sterling has fallen into a swoon after reports suggested that Theresa May was aiming for a hard Brexit. That means the prime minister is prepared to swap the UK's free movement of goods and services with Europe in return for controls over immigration.

Yet the government has been consistent in implying that Mrs May wants a "red line" on border controls. It's impossible to know how deep that line will be, let alone any other plans for the thousands of issues affected by Brexit - so why does the pound keep falling given the message has largely stayed the same?

After all, the only real surprise was the vote for Brexit itself. Amid the shock and mass confusion the pound fell 10% to $1.34, its biggest slide. Uncertainty about policy or the health of the economy always spooks the markets, which do not like surprises.

Sterling is now trading at about $1.20 - the level it fell to during the "flash crash" of October 7. That, in thin overnight trading, was said to have been partly sparked by a newspaper headline about "hard Brexit".

Currency dealers - and the rest of us - hope that Theresa May's speech on Brexit on Tuesday will finally shed some light on the way ahead and help sterling to a less febrile state.

Meanwhile here, a range of experts give their views on why the pound seems to be living in Groundhog Day.

---

'Bad news for the pound is ingrained'

Kathleen Brooks, research director, City Index

Some have wondered why the foreign exchange market continues to be "shocked" by news about a hard Brexit; after all the UK's exit from the single market has always been on the cards and is not a new concept. I would argue that the 'Brexit theme as bad news for the pound' is such an ingrained trend at this stage that it really doesn't matter what Mrs May says or fails to say on Tuesday.

Instead, it's all about market dynamics, and right now the balance of market participants are shorting the pound. It's a bit like a tipping point - once a trend gets critical mass, then news headlines can have big impacts, as they generate another wave of selling.

Tuesday's speech in London could trigger a "material drop" in the value of the pound, according to one of the PM's aides, but is Mrs May calling the market's bluff? There is an outside chance that her speech, if it includes details on what will replace single market access, could actually benefit the pound next week.

Brexit certainty could prove to be the pound's tonic.

---

'From emotional anger to acceptance'

Jordan Rochester, foreign exchange strategist, Nomura

Imagine you're dealing with a Remain voter in five stages of Brexit grief - the market is in that state of mind and it flips from emotional anger and denial to acceptance. It tends to forget the direction of domestic politics and, in any case never fully prices something in until it is 100% certain.

We all have known about Theresa May's two "red lines" - immigration and sovereignty - but the market has been hoping she will soften her views. The big question the market is asking is what level of access to the EU the UK will get: will she go for the customs union, as Turkey has, or a full clean break?

If the prime minister confirms on Tuesday a "hard Brexit", the market pricing of that scenario will be much firmer - about 90% to 100% priced in.

Even so, sterling will still fall. As Bank of England governor Mark Carney says, we rely on the kindness of strangers to pay our debt in the imbalance of the current account and the trade balance in goods. For the UK to remain attractive to foreign investors it needs higher yields [higher interest rates] and or a lower currency - we will argue it will probably need a mixture of them both.

'The markets have nothing better to do'

Michael Hewson, chief market analyst, CMC Markets

It has been apparent for some time that if the UK wants to control immigration and its laws it would have to step out of the single market and customs union; Theresa May said as much last October. But the markets have nothing else better to do than focus on the value of the pound at the moment.

The last two weekends have been about what Theresa May will say on Tuesday and I'm surprised at how moderate the movement was this time: every time the pound has faced these headlines before it has thrown up its breakfast.

The markets are pricing in bad news in case - but how much of a hard Brexit is priced in? We could even see a bounce upwards if the market gets information it likes.

We haven't been able to sustain the move below $1.20 and considering the lurid headlines that's a surprise. Half of the decline is in any case down to dollar strength, with expectations of higher interest rates there and rising inflation.

---

'Down to $1.10 on a 'diamond hard' Brexit?'

Dominic Bunning, foreign exchange strategist, HSBC

Since the referendum there has not been a clear sign of what type of relationship the government is trying to pursue. The kind of phrase we've heard - "we want the best possible deal" - tells us nothing.

For a long period of time, the market was still of the belief the government would try to maintain some sort of membership of the single market.

We're only partly priced in, as the plans have not been fully communicated. But we're getting the sense now we will not stay in the single market and now even the customs union; the market now seems to be expecting a fully hard Brexit.

So sterling could still rise if we get a softer deal. But equally, in the very short time, it could even go down to $1.10 if it is a "diamond hard" Brexit.

BBC News - UK inflation rate jumps to 1.6%

Rising air fares and food prices helped to push up UK inflation to its highest rate since July 2014 in December.

Consumer Prices Index (CPI) inflation rose to 1.6% last month, up from 1.2% in November, the Office for National Statistics (ONS) said.

And higher costs for imported materials and fuels pushed up producer prices.

The fall in the pound since the Brexit vote was starting to feed into the economy, said the BBC's economics editor, Kamal Ahmed.

ONS head of inflation Mike Prestwood said: "This is the highest CPI has been for over two years, though the annual rate remains below the Bank of England's target and low by historical standards.

"Rising air fares and food prices, along with petrol prices falling less than last December, all helped to push up the rate of inflation.

"Rising raw material costs also continued to push up the prices of goods leaving factories."

Inflation means inflation, but who wins?

Separate producer price inflation figures showed that the price of goods bought from factories rose 2.7% in December compared with a year ago, as manufacturers started to pass on the higher input costs they are facing following the fall in the pound.

The prices paid by factories for raw materials and energy jumped by 15.8% over the year, the largest increase since September 2011.

Consumer inflation as measured by the Retail Prices Index (RPI), which includes housing costs, rose to 2.5% in December from 2.2% the previous month.

Analysis: Simon Gompertz, BBC personal finance correspondent

Air carriers usually push up their fares in December in advance of Christmas and the New Year, so the overall 49% take off in the price of flights this time isn't a big surprise to statisticians.

They track dozens of fares - short-haul, long-haul and domestic - and create a mini-index for each category.

And what they tend to detect every year is that discounts creep in in the early months, then prices gain altitude for Easter and the summer before dropping again in the autumn.

More ominous is that years of falling food prices appear to be coming to an end.

Also worrying is that UK manufacturers are having to pay 16% more for raw materials and fuel, the result of the drop in the pound.

Inflation's back. If it continues to be higher than expected, month by month, there is bound to be talk about the Bank of England's Monetary Policy Committee reconsidering its policy of keeping interest rates ultra-low.

But we are at the very early stages of the pick-up. Don't expect much change to savings and mortgage rates for now.

Reuters News - China will 'take off the gloves' if Trump continues on Taiwan, state media warns

U.S. President-elect Donald Trump speaks during a news conference in Trump Tower, Manhattan, New York, U.S., January 11, 2017. REUTERS/Shannon Stapleton

By Christian Shepherd | BEIJING

China will "take off the gloves" and take strong action if U.S. President-elect Donald Trump continues to provoke Beijing over Taiwan once he assumes office, two leading state-run newspapers said on Monday.

In an interview with the Wall Street Journal published on Friday, Trump said the "One China" policy was up for negotiation. China's foreign ministry, in response, said "One China" was the foundation of China-U.S. ties and was non-negotiable.

Trump broke with decades of precedent last month by taking a congratulatory telephone call from Taiwan President Tsai Ing-wen, angering Beijing which sees Taiwan as part of China.

"If Trump is determined to use this gambit in taking office, a period of fierce, damaging interactions will be unavoidable, as Beijing will have no choice but to take off the gloves," the English-language China Daily said.

The Global Times, an influential state-run tabloid, echoed the China Daily, saying Beijing would take "strong countermeasures" against Trump's attempt to "impair" the "One China" principle.

"The Chinese mainland will be prompted to speed up Taiwan reunification and mercilessly combat those who advocate Taiwan's independence," the paper said in an editorial.

Chinese Foreign Ministry spokeswoman Hua Chunying said the United States was clearly aware of China's position on "One China".

"Any person should understand that in this world there are certain things that cannot be traded or bought and sold," she told a daily news briefing.

"The One China principle is the precondition and political basis for any country having relations with China."

Hua added, "If anyone attempts to damage the One China principle or if they are under the illusion they can use this as a bargaining chip, they will be opposed by the Chinese government and people.

"In the end it will be like lifting a rock to drop it on one's own feet," she said, without elaborating.

TAIWAN MAY BE "SACRIFICED"

The Global Times said Trump's endorsement of Taiwan was merely a ploy to further his administration's short term interests, adding: "Taiwan may be sacrificed as a result of this despicable strategy."

"If you do not beat them until they are bloody and bruised, then they will not retreat," Yang Yizhou, deputy head of China's government-run All-China Federation of Taiwan Compatriots, told an academic meeting on cross-straits relations in Beijing on Saturday.

Taiwan independence must "pay a cost" for every step forward taken, "we must use bloodstained facts to show them that the road is blocked," Yang said, according to a Monday report on the meeting by the official People's Daily Overseas Edition.

The United States, which switched diplomatic recognition from Taipei to Beijing in 1979, has acknowledged the Chinese position that there is only "One China" and that Taiwan is part of it.

The China Daily said Beijing's relatively measured response to Trump's comments in the Wall Street Journal "can only come from a genuine, sincere wish that the less-than-desirable, yet by-and-large manageable, big picture of China-U.S. relations will not be derailed before Trump even enters office"

But China should not count on the assumption that Trump's Taiwan moves are "a pre-inauguration bluff, and instead be prepared for him to continue backing his bet".

"It may be costly. But it will prove a worthy price to pay to make the next U.S. president aware of the special sensitivity, and serious consequences of his Taiwan game," said the national daily.

(Additional reporting by Ben Blanchard and John Ruwitch; Editing by Michael Perry and Randy Fabi)

Bloomberg News - U.K. Bankers Make Fresh Appeal to May for Special Brexit Deal

by 

Gavin Finch

The U.K.’s finance industry made a fresh push for a special Brexit deal tailored to its needs, even after Prime Minister Theresa May again signaled she wouldn’t make any exceptions for the City.

"The U.K. and the European Union should conclude a bespoke agreement that delivers mutual market access, transitional arrangements to allow for enough time to implement the new relationship and access to talent," industry lobby group TheCityUK said in a report Thursday.

To avoid the need for preemptive staff moves outside Britain, the banks want an interim agreement soon after May triggers the Article 50 exit clause, which she plans for March. Such a deal would guarantee access to the EU single market beyond the end of the two-year Brexit negotiation period, in case trade barriers are erected at the end of that process if no deal is reached. That would ensure the status quo would hold until a lasting deal on financial services is struck between the U.K. and the EU. 

While the prime minister has previously said she wants the best possible deal for banks, last week she indicated that regaining control of immigration was a priority, sending the pound plunging on speculation she’s prepared to depart the EU’s single market.

"Many customers benefit from the industry’s current unfettered access to the EU single market," TheCityUK said. "While respecting sovereignty and immigration control as prerequisites, the U.K.’s exit from the EU should aim to maximize access to EU markets for the products and services offered by providers in the U.K. to EU customers and vice versa."

For analysts’ outlook on an interim U.K.-EU deal, click here.

The lobby group also called on May to "urgently" clarify the status of EU citizens already living and working in the U.K. Future immigration policy should be designed to make it easier for banks to hire employees from all over the world, especially for specialist jobs, the report said.

BBC News - World Bank predicts 2.7% global economic growth in 2017

There will be only a moderate pick up in global economic growth during 2017, the World Bank has predicted.

Its Global Economic Prospects report is forecasting 2.7% growth compared with the 2.3% seen last year.

That slight strengthening will be driven mainly by improvements in emerging markets and developing economies, the Bank says.

But there is heightened uncertainty after the US Presidential election, according to the report.

The World Bank's new forecasts suggest we can expect the unconvincing global economic revival following the financial crisis to continue.

Last year's growth figure was described as a "post-crisis low", with "anaemic" levels of investment and a further weakening of global trade.

Growth acceleration

For emerging market and developing economies, the rise in interest rates in the US and the strengthening dollar also led to a "notable tightening of financing conditions" - which means credit that is either more expensive or harder to get.

But the Bank still expects growth to accelerate in these countries, partly due to higher commodity prices, such as oil and metals, which many of them export.

The Bank's economists also expect the slowdown in two large emerging economies, Brazil and Russia, to come to an end.

For the developed economies the Bank forecasts continued weak growth of around 1.8%. That would be slightly better than 2016, but still slow compared to the period before the crisis.

Uncertainty about future policies has increased following the British referendum on the European Union and, potentially especially significant for the global economy, Donald Trump's victory in the US Presidential election.

The report includes an analysis of why the US matters so much to the rest of the world in terms of extensive trade and financial links.

It notes that there is a great deal of uncertainty about just what policies Mr Trump's administration will pursue in office.

And it says there is the potential for stronger US growth if Mr Trump implements proposals to cuts personal and business taxes and stimulates infrastructure investment.

The report also looks at the possible impact of more barriers to international trade. This is not just about Mr Trump, though he has said he would increase some tariffs on imports and has suggested some existing trade agreements could be scrapped.

Poverty impact

The Bank says that globally, new trade restrictions reached a post-financial crisis high last year, and warns that emerging and developing economies would be most affected by more barriers.

This could hit the economies of some of the worlds poorest country's hardest, the report warns, saying growth has been the main driver of poverty reduction for the last two decades.

It says that if there was a return to the growth rates seen before the 2008 crisis, then extreme poverty could reduce to just 4% by 2030.

However weak growth like seen in 2015 would only bring down such poverty to 9%.

Next week, the International Monetary Fund will issue its economic outlook for 2017.

But it's important not to compare its headline figures for global economic growth with the World Bank's.

There are two different methods of adding together individual country growth rates to a get a global number and these institutions choose to headline different ones, thought they do report both.

By Andrew Walker

Bloomberg News - A Guide to the Year’s Biggest Divorce

The U.K. and the European Union’s divorce proceedings will begin this year, ending a four-decade relationship.

So how did we get here, and what comes next? British voters demanded the breakup in a June 2016 referendum, but without a blueprint of how to unwind the relationship. 

U.K. Prime Minister Theresa May set a self-imposed deadline of March 31 to formally serve notice to the EU, after which the two sides are supposed to have two years to come to a settlement. But that could drag on, even stretching into the next decade.

May hasn’t given specifics of what she wants to achieve, but she has sent signals that her priorities are regaining control of immigration, getting out from the jurisdiction of European courts, and cutting back or eliminating money paid to Brussels. She may even be willing to give up access to the bloc’s single market for goods and services.

On the other side of the fight, EU leaders have warned May that she won’t be able to “cherry pick” the best perks of membership—such as tariff-free trade—without accepting the bits she doesn’t like, such as allowing EU citizens to work and live in any country that’s a member of the club.

In a sign the government knows just what it's up against, Brexit Secretary David Davis has described the talks the most “complicated negotiation of all time.”

by 

Simon Kennedy