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This is like the ‘Cold War’: Europe fumes over US spying

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

 Listen to the Article (6 Minutes)

Summary

Claims by European leaders on US National Security Agency (NSA) bugging the European Union (EU) offices and hacking into their computer network could derail talks as the controversy over US spying got bigger.

European leaders warned on Monday that claims the US National Security Agency (NSA) bugged European Union (EU) offices and hacked into its computer network could derail major trade talks, as the controversy over US spying snowballed.


Germany’s foreign ministry summoned the US Ambassador to seek clarification and German Chancellor Angel Merkel will also discuss the issue with President Barack Obama, her spokesman said.


Also read: Snowden: A tale of security lapses and other US errors


“If it is confirmed that diplomatic representations of the European Union and individual European countries have been spied upon, we will clearly say that bugging friends is unacceptable,” Merkel’s spokesman said.


“We are no longer in the Cold War.”


Reports published over the weekend by The Guardian newspaper and Germany’s Der Spiegel, claimed the NSA had run an extensive program to spy on the EU representative’s office in Washington as well as the EU office to the United Nations in New York. Der Spiegel also reported one spying operation had targeted an office that housed the EU Council of Ministers in Brussels.


The revelations threatened to derail an EU-US free trade deal worth billions of dollars.


France’s President Francois Hollande said Europe would hold off on any negotiations with the US on the trade deal, until it was sure the US spying had ended.


“There can be no negotiations or transactions in all areas until we have obtained these guarantees, for France but also for all of the European Union,” Hollande said.


In a strongly worded statement, the chairman of the European Parliament’s Economic and Monetary Affairs Committee said the spying allegations were a “disaster” ahead of the trade talks.


“Upcoming EU-US trade talks will certainly be under strain in the wake of this scandal. There will be an enormous elephant in the room which will be impossible to ignore,” said Chairman Sharon Bowles.


“I will be leading a delegation of my Committee to the US in a couple of weeks and the issue of bugging is bound to come up. The last time I was in Washington I was briefed in a coffee shop, although this was due to a very early start. That said, it might now be safer to conduct all our business in coffee shops.”


Stephen Booth, the research director of Open Europe, an influential think tank, said the politics of the issue could well be significant for the trade talks.


“Some of the EU countries allegedly targeted by US agencies, such as France for example, have already been resistant to opening up trade in certain sectors and this could harden their stance in those talks.”


But in a sign the allegations have not yet derailed the trade deal, European Commission (EC) spokesperson Pia Ahrenkilde Hansen said that rather than concentrating on the trade deal’s future, the EC was “looking for a clear statement from our US partners.”


“These are disturbing reports if proven true and they demand full clarification,” she said, adding that the EU’s foreign policy chief, Catherine Ashton, had spoken to US Secretary of State John Kerry about the allegations.


In the meantime, the president of the European Commission, Jose Manuel Barroso, has also ordered an “ad-hoc” security sweep of European premises and computer programs.


Martin Schulz, president of the European Parliament, reacts to reports that the US is allegedly spying on EU countries and says that he feels treated “as an enemy”.


The latest leaks came from a “top secret” document that The Guardian and Spiegel, said they acquired from former NSA contractor Edward Snowden. The documents apparently revealed 38 NSA surveillance “targets”, including European and international embassies, and EU offices.


“Partners do not spy on each other,” Viviane Reding, vice-president of the European Commission and EU Commissioner for Justice, said on Sunday, at a meeting at the European Commission.


“We cannot negotiate over a big transatlantic market if there is the slightest doubt that our partners are carrying out spying activities on the offices of our negotiators. The American authorities should eliminate any such doubt swiftly,” she added.


In the wake of the allegations, the Green parties in both France and Germany have called on their governments to offer asylum to Snowden. The US, which has charged Snowden with espionage, has put heavy pressure on foreign governments not to shelter him. Snowden is believed to be stuck in the transit area of Moscow airport, having fled from Hong Kong.


Meanwhile, the EU’s economic affairs chief, Olli Rehn, said he was “very saddened” by the reports and said the EU must first establish the facts before issuing a response.


‘Goliath will be fighting Goliath’


European President Martin Schulz said that if the allegation were true, the US was treating Europe as an enemy, not an ally.


“I’m shocked in case it is true. I feel, treated as a European and as a representative of a European institution, like the representative of an enemy. Is this the basis of a constructive relationship on the basis of mutual trust?” Schulz asked on Sunday.


The allegations have also fueled data protection concerns, already a thorny issue in Europe.


“Data protection is a fundamental right in the EU. I will fight for high data protection standards. The recent data protection scandals in the US and the U.K. have been a wake-up call. In future, Goliath will be fighting against Goliath,” Reding said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

 Daily Newsletter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

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index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
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Why we’re more gloomy about BRICs: Goldman

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

 Listen to the Article (6 Minutes)

Summary

Goldman Sachs says it has ended a recommendation to buy a basket of US stocks with the highest sales exposure to Brazil, Russia, India and China (BRIC) and instead prefers US firms with most exposure to the domestic market – just one more sign that sentiment towards emerging markets is fading fast.

Goldman Sachs says it has ended a recommendation to buy a basket of US stocks with the highest sales exposure to Brazil, Russia, India and China (BRIC) and instead prefers US firms with most exposure to the domestic market – just one more sign that sentiment towards emerging markets is fading fast.


Also read: Stay cautious; eyes on non-farm payroll: Benoit Anne


The US investment bank said its decision was based on revised expectations for slower growth in China, the world’s second largest economy. Goldman last week cut its 2013 China growth forecast to 7.4 percent from 7.8 percent.


“The contrast between accelerating US GDP [gross domestic product] growth and weakening and uncertain China growth represents a headwind to US firms with high BRICs [Brazil, Russia, India, China] sales relative to domestic-facing firms,” Goldman Sachs said in a note published on Monday.


It estimates that the median company in its basket of US stocks with the highest BRIC exposure will grow sales by 3 percent this year, compared with 6 percent for a basket of US stocks with most exposure to domestic sales.


Sentiment towards emerging markets has been hit hard in recent weeks by concerns about an unwinding in US monetary stimulus and signs that China’s economy is slowing faster than anticipated.


Goldman is just one of several banks to slash their China GDP forecasts over the past month or so, with data on Monday adding to the bearish sentiment towards the Chinese economy.


China’s official purchasing managers’ index (PMI) slipped to 50.1 in June from 50.8 in May, while the HSBC PMI fell to a nine-month low of 48.2, remaining below the 50-mark that divides expansion from contraction.


 In contrast, data released on Monday showed US manufacturing activity grew in June, rebounding from an unexpected contraction in May.


But China is not the only country in the BRIC grouping to have received gloomy news of late. A fall in the Indian rupee to record lows against the US dollar last month has raised concerned about India’s ability to finance its current-account deficit, while there is unrest in Brazil, which has struggled with mass protests on a number of issues such as corruption, fares on public transport and high crime levels.


Goldman said that its basket of US stocks with the highest BRICs sales exposure has returned 15.6 percent since it recommended the trade in late November last year. That is close to the 15.4 percent returns on the S&P 500 but below the 17.5 percent returns on its basket of U.S. equities with a greater exposure to US sales.


“We originally expected [US stocks with BRICs sales exposure] to outperform on increased confidence in the strength of EM [emerging market] economic growth relative to stocks with higher exposure to the US economy, where we expected a mid-year growth ‘hump’ as a result of fiscal policy headwinds,” Goldman said in the note.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

 Daily Newsletter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

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Oil Fluctuates as Traders Assess China’s Vow, Unrest in Libya

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today's market

index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
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Week ahead: Market’s next worry? Jobs report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

 Listen to the Article (6 Minutes)

Summary

Manufacturing data and jobs-related reports are the highlights of the US economic calendar in the week ahead and investors will be keeping a close eye on interest rates.

Choppy, thin trading will likely be the state of play in the coming week as traders await the important June jobs report Friday and fret about what the Federal Reserve might do.


Stocks start the second half of the year on a tentative note: The S&P 500’s 12.6-percent gain in the first half was the best since 1998 but the index lost 1.5 percent for the month of June amid a volatile bond market and soaring interest rates.


Manufacturing data and jobs-related reports are the highlights of the US economic calendar in the week ahead and investors will be keeping a close eye on interest rates.


“It’s almost like we’re in between tides. There’s a period called slack tide. That’s what next week is going to be like,” said Art Hogan of Lazard Capital Markets. “We’re right in between the tide moving in and the tide moving out, and we don’t know what the next environment is going to be. Meanwhile, we’re waiting for the most important economic report of the month.”


Friday’s employment report is crucial to trading in the next couple of weeks, since it is a key metric the Fed watches. The consensus is for 170,000 nonfarm payrolls in June, and the unemployment rate is seen dipping a tenth of a percentage point to 7.5 percent, according to Thomson Reuters. In May, the economy added 175,000 jobs.


Stocks closed out a skittish week with gains, as the bond market stabilized. The S&P 500 was 0.9 percent higher for the week at 1606, but it ended Friday on a sour note, with a loss of six points.


Bond yields topped out earlier in the week with the 10-year Treasury note, reaching a high of 2.66 percent, before moving back to a range around 2.50 percent. It was at 2.48 percent late Friday.


“It doesn’t surprise me at all if we stabilize around 2.50, which is where I think insurance companies and pension funds would come in and scoop up coupon,” said BlackRock senior managing director Peter Fisher, who is a member of BlackRock’s Global Executive Committee.


Fisher said the trajectory of the 10-year yield will depend on the employment picture and if it improves enough, yields would start to move toward 3 percent between now and year end. “We could rally from here if we see a few weaker employment reports,” said Fisher, speaking to the press on his mid-year outlook. He said employment reports will be key to rates.


According to Trim Tabs, investors pulled a record USD 61.7 billion from bond mutual funds and exchange-traded funds in the month of June, through June 24. Fisher said if the credit market stabilizes those type of flows should not continue. There has been some expectation that investors will become more disillusioned when they open their second quarter broker statements.


“I think in the last month, we’ve become very focused on what happens in mid-July,” Fisher said, adding that investors will discover the hit to their bond holdings after the Fourth of July holiday.


“They’re going to talk to their broker about what to do. They’re going to be caught between balancing income and volatility,” he said. “I don’ think we’re going to see massive redemptions out, especially if the bond market is stabilizing at these levels for the next few weeks.”


Rates bottomed in early May and then moved higher on improving data, but really ripped higher when Fed Chairman Ben Bernanke indicated after the Fed’s last meeting that the Fed could begin to slow its USD 85 billion in monthly bond purchases before the end of the year and complete the program by the middle of next year.


A flurry of Fed officials this past week were on the speaking circuit, and delivered a more consistent and seemingly more coordinated message to markets than usual. They re-emphasized that cutting back on bond purchases does not mean the Fed will be raising short-term interest rates any time soon. They also said that any plan to cut back on bond purchases would be made based on improvement in the economic data, and several said the markets have misread the Fed’s message.


“I don’t think he miscommunicated,” Fisher said of Bernanke. “I think they were overly ambitious with what they can do.”


New York Fed President William Dudley speaks on regional and national economic conditions in Stamford, Conn. Tuesday at 12:30 p.m.


Besides US data, markets will be watching China’s PMI data and Japan’s Tankan Survey. On Thursday, U.S. markets are closed for the Fourth of July, but both the Bank of England and European Central Bank meet Thursday.


Whither Stocks?


Citigroup chief equity strategist Tobias Levovich expects the market to continue trading in a bumpy fashion. Levkovich’s target for year end on the S&P 500 is 1615, so he does not see much upside immediately , but he sees the S&P above 1825 next year.


 He said the market is dealing with the Fed’s expected tapering of bond buying, which some investors fear will hurt market liquidity. There are also concerns that corporate earnings estimates, now reflecting gains of 10 to 11 percent for the second half, are too high and will have to come down. Levkovich said another problem is the slowdown in China and other emerging markets, and it’s not clear how much impact their will be on companies and the world economy.


“It’s really hard to argue for anything other than more volatility in the next three to six months. Historically, when the ISM is weak, like it has been for the past couple of months, three to six months later, industrials, materials and energy generally don’t do that well,” he said. The ISM manufacturing report is released Monday.


Levkovich said a lot of investors are moving to cyclical sectors, but he’s concerned that is not the right move. “In order to get this transition to global cyclicals, you may need confidence on Europe, China, Brazil and Turkey,” he said.


“This has not been a market about defensives and cyclicals. This has been a market about domestics and internationals. If you bought domestic cyclicals, any sector, they’ve all rallied hard,” he said, pointing to retailers and transports for instance.


“I’m negative on consumer discretionary. I think the stocks have run too far,” he said.


What to Watch


**Markets Closed Thursday for July 4 holiday


Monday


10:00 am Construction spending


10:00 am ISM Manufacturing


Tuesday


10:00 am Factory orders, May


Wednesday


07:00 am Mortgage Applications


08:15 am ADP, June


08:30 am Jobless Claims


08:30 am Trade Balance


10:00 am ISM nonmanufacturing


Thursday


Markets closed for Independence Day


Friday


08:30 am Employment report

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

 Daily Newsletter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Previous Article

Oil Fluctuates as Traders Assess China’s Vow, Unrest in Libya

Next Article

Shanghai residents turn to NFTs to record COVID lockdown, combat censorship

LIVE TV

today's market

index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
Quiz
Powered by
Are you a Crypto Head? It’s time to prove it!
10 Questions · 5 Minutes
Start Quiz Now
Win WRX (WazirX token) worth Rs. 1500.
Question 1 of 5

What coins do you think will be valuable over next 3 years?

Answer Anonymously

Should Elon Musk be able to buy Twitter?