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Photograph: X/@OpusObscuraX/via REUTERS Jun 3rd 2025 ( published 1m ago)
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Germany's Merz says some US lawmakers have 'no idea' of scale of Russia's rearmament
BERLIN, June 6 (Reuters) - Some U.S. lawmakers do not understand the scale of Russia's rearmament campaign, German Chancellor Friedrich Merz said on Friday, a day after he held talks with U.S. President Donald Trump in the White House. "I met with some senators on Capitol Hill and told them to please look at the rearmament Russia is doing," Merz told a business conference in Berlin. "They clearly have no idea what is happening there right now," he said, without identifying the senators. Russia has shifted defence plants to round-the-clock production since the start of its full-scale invasion of Ukraine in February 2022 and has signed arms deals with North Korea and Iran, prompting European officials to warn that Moscow could soon be in a position to attack NATO territory. Russia denies any such intention and says it is waging a "special military operation" in Ukraine to protect its own security against what it casts as an aggressive, hostile West. Merz, a conservative who took power in May, is the latest European leader to visit Trump hoping to convince him of the need to back Ukraine against Russia's invasion and continue to help underpin Europe's security through the NATO alliance. Merz said he had been reassured by the words Trump had uttered during their public encounter in the Oval Office, especially the U.S. president's "resounding no" to a question on whether the United States had plans to withdraw from NATO. European countries have been boosting defence spending since the start of Russia's full-scale invasion of Ukraine, in the continent's bloodiest conflict since World War Two. Merz has backed Trump's demand for NATO members to commit to a target of more than doubling defence spending to 5% of economic output in the future. Trump welcomed that commitment on Thursday and told Merz that U.S. forces would remain in Germany. "Whether we like it or not," Merz said on Friday, "we will remain dependent on the United States... for a long time to come."
Reuters
4 hours ago
- Reuters
India vows to keep up development in Kashmir after tourist attack
NEW DELHI, June 6 (Reuters) - India is committed to efforts to develop its restive territory of Jammu and Kashmir, Prime Minister Narendra Modi said on Friday, accusing neighbour Pakistan of seeking to destroy livelihoods there with April's deadly attack on tourists. He was speaking on his first visit to the Himalayan region since Islamist attackers targeted Hindu tourists in the popular Pahalgam area, killing 26 men, triggering hostilities between the nuclear-armed neighbours that ended in ceasefire last month. "The atmosphere of development that emerged in Jammu and Kashmir will not be hindered by the attack ... I will not let development stop here," Modi said in remarks after inaugurating infrastructure projects. Key among these was a $5-billion rail link between the Kashmir Valley and the rest of India, which has been more than 40 years in the making and features the world's highest railway arch bridge. Others include highways, city roads and a new medical college. India has accused Pakistan of backing the April attack, a claim denied by Islamabad, and they engaged in four days of fierce fighting last month before agreeing to a ceasefire. Pakistan aimed to disrupt the livelihoods of the poor in Kashmir, who rely heavily on tourism, Modi said, adding that he would face down any obstacle to regional development. Pakistan's foreign ministry did not immediately respond to a request for comment on Modi's remarks. Last month, Islamabad said a just and peaceful resolution of the Kashmir dispute was essential to ensure lasting peace in the region, known for its snow-topped mountains, scenic lakes, lush meadows, and tulip gardens. The region, which drew more than 3 million visitors last year, is at the heart of the hostility between the old foes, both of which claim it in full, but rule it in part and have fought two of their three wars over it. India also accuses Pakistan of supporting Islamist militants battling security forces in Jammu and Kashmir, but Islamabad denies the accusation. Trains run in the Kashmir Valley but the new link is its first to the wider Indian railway network. Apart from boosting the regional economy, it is expected to help revive tourism, which plummeted after the April attack. ($1=85.7500 Indian rupees)
Reuters
4 hours ago
- Reuters
Morning Bid: Trump-Musk bust-up smolders
LONDON, June 5 (Reuters) - What matters in U.S. and global markets today Donald Trump's hotly anticipated meetings with the leaders of the world's two other biggest economies ended up being sideshows compared to his online bust-up with billionaire backer Elon Musk. It's Friday, so today I'll provide a quick overview of what's happening in global markets and then offer you some weekend reading suggestions away from the headlines. Today's Market Minute * White House aides scheduled a call between Donald Trump and Elon Musk for Friday, Politico reported, after a huge public spat that saw threats fly over government contracts and ended with the world's richest man suggesting the U.S. president should be impeached. * U.S. President Donald Trump and Chinese leader Xi Jinping confronted weeks of brewing trade tensions and a battle over critical minerals in a rare leader-to-leader call on Thursday that left key issues to further talks. * China has signalled for more than 15 years that it was looking to weaponise areas of the global supply chain, a strategy modelled on longstanding American export controls Beijing views as aimed at stalling its rise. The scramble in recent weeks to secure export licences for rare earths shows China has devised a better, more precisely targeted weapon for the trade war. * By any measure, the recent resilience of U.S. stocks is remarkable, with Wall Street powering through numerous headwinds to erase all its tariff-fueled losses and move into positive territory for the year. Reuters columnist Jamie McGeever explains why the rally may still have some juice left in it. * There are some tentative early signs that weak thermal coal prices are starting to boost import demand among Asia's heavyweight buyers China and India. Read Reuters Columnist Clyde Russell to find out more. Trump-Musk bust-up smolders For markets trying to navigate everything from creeping signs of labor market weakness to the latest European Central Bank easing, the spat between the U.S. president and the world's richest man proved more than a distraction. It remains to be seen if it overshadows the May payrolls report later on Friday. The extraordinary sparring match drew in other major political and business figures and included potentially seismic accusations and threats. In turn, the share price of Musk's Tesla .TSLA plummeted almost 20% at one point, dragging Wall Street stock indexes and crypto tokens deep into the red. The public feud appeared to cool off somewhat overnight and allowed stock futures to regain some lost ground. But the fact that the spat overshadowed the other major events of the day was another marker of this administration's unpredictability. The substance of the row was over Trump's "one big beautiful" fiscal bill that Musk thinks is a "disgusting abomination" due to the amount of spending. The bill, which has yet to be passed by the Senate, is expected to add $2.4 trillion to the U.S. debt over the next decade, based on CBO estimates. The vast bulk of this will likely be incurred over the next four years. In the background, the call between Trump and China's President Xi Jinping delivered no breakthroughs in the trade row apart from warmer words and an agreement to resume talks. The Oval Office meeting with Germany's Chancellor Friedrich Merz was relatively positive about trade and diplomatic issues. Earlier in the day, the ECB cut rates again as expected and suggested that there may be a pause at its next meeting and that it could be near the end of its easing cycle now that 'real' inflation-adjusted rates are back near zero. The euro hit a six-week high on Thursday regardless, although it gave back those daily gains today. Rising weekly U.S. jobless claims, meantime, cast a shadow over today's release of the May employment report. Consensus forecasts are for a slowdown in payroll growth to 130,000. Treasury yields , which ebbed and flowed all day on the conflicting signals from the trade meetings and stock gyrations, are back hovering at the week's lows ahead of the jobs report. Even though Federal Reserve officials continue to signal caution about the uncertain outlook ahead, markets are now priced for a resumption of Fed cuts by September. Into the already confusing mix, the Treasury released its annual report on potential currency manipulation overseas, adding Switzerland and Ireland to its watchlist, which already includes China, Japan, Germany, South Korea, Taiwan, Singapore and Vietnam. The list likely carries more heft than usual amid multiple tense trade negotiations. Markets assume the U.S. may pressure other countries to let their currencies appreciate versus the dollar as part of deals to avert severe tariffs being re-imposed next month. The Swiss National Bank responded on Friday by saying it would intervene in currency markets where necessary to keep inflation on track. Intervention to cap a super-strong franc has been a critical monetary tool used over the past decade and may need to be tapped again now that Swiss inflation has returned negative just as the SNB's key interest rate is set to return to zero in June. Elsewhere, China's yuan slipped against the dollar while falling to a near two-year low versus its major trading partners on Friday as the Trump-Xi call fell short of many expectations. Stock markets overseas were mixed on Friday as Wall Street remained on edge and the U.S. jobs report loomed. In the euro zone, first-quarter GDP was revised higher to show twice the growth originally estimated: 0.6% quarter-on-quarter, leading to an annual rate of 1.5%. India's central bank cut key rates by a larger-than-expected 50 basis points to 5.5%, its steepest cut in five years. It also slashed its cash reserve ratio - funds that banks are required to hold - by 100 bps to 3% in a surprise move aimed at boosting lending and speeding up policy transmission. In single stocks, Tesla shares recovered around 5% in Frankfurt on Friday, having closed down 14% in New York yesterday amid the Trump-Musk spat. It lost about $150 billion in market value yesterday, which caused the erstwhile member of the 'Magnificent Seven' megacaps to drop to ninth in the list of most-valuable firms behind Broadcom and Berkshire Hathaway. Broadcom's shares (AVGO.O), opens new tab, however, fell 4% in extended trading overnight as its forecast-beating earnings seemed to underwhelm the Street. In Bank of America's weekly tally of fund flows, U.S. stocks saw outflows of $7.5 billion, the third week of exits, while European shares saw inflows of $2.6 billion, the eighth week of inflows. Weekend reading suggestions * 'BLUE BONDS': European countries should seize the moment to boost the size and liquidity of jointly-issued euro sovereign debt, and a solution could be to replace a proportion of the stock of national bonds with senior Eurobonds, or 'blue bonds'., opens new tab So says a 'working document' from Peterson Institute senior fellow and former IMF chief economist Olivier Blanchard in a paper jointly written with Citadel's Angel Ubide. * NUCLEAR BLIND SPOTS: United Nations nuclear watchdogs appear to have lost track of some critical elements of Iran's nuclear activities since U.S. President Donald Trump ditched a 2015 deal that imposed strict restrictions and close supervision by the International Atomic Energy Agency. Reuters Francois Murphy and John Irish report on key blind spots that include not knowing how many centrifuges Iran possesses or where the machines and their parts are produced and stored. * OCEAN ECONOMY: Trade in the global 'ocean economy', opens new tab hit as much as $2.2 trillion in 2023, about 7% of total world trade, but this trade is increasingly threatened by climate change and environmental problems, the United Nations trade and development arm UNCTAD showed in a report this week. The ocean economy grew faster than the world economy at large in the five years to 2020 and an estimated 100 million jobs depend on it. * 'TRUMP DOCTRINE': The emerging foreign policy under President Donald Trump resembles a 'look the other way' doctrine, opens new tab or a 'none of our business' doctrine, argues former George W. Bush State Department official Richard Haass on Project Syndicate. "The U.S. sought to change the world, annoying some and inspiring others. Those days are gone, in some ways for better, but mostly for worse. The US has changed. It is coming to resemble many of the countries and governments it once criticized." * MAGNETIC FEW: A small team in China's Ministry of Commerce decides the fate of the global auto industry, one rare earth magnet export permit at a time. China holds a near-monopoly on rare earth magnets, a key component in electric vehicle motors, and it added them to an export control list in April as part of its trade war with the United States. Reuters' Laurie Chen and Lewis Jackson show how it falls to the Bureau of Industrial Security and Import and Export Control, part of China's Ministry of Commerce, to review export permits for the rare earth magnets, vital for car motors, wind turbines and even U.S. F-35 fighter jets. * FINANCE AND AI: Artificial intelligence advances in the financial sector, opens new tab offer enhanced data analysis, risk management and capital allocation, but there are problems too, according to a paper on CEPR's VoxEU website. As AI systems become more widespread, they introduce challenges for regulators tasked with balancing the benefits of innovation with the need for financial stability, market integrity, consumer protection and fair competition. * DRONE ATTACK: Ukraine's 'Operation Spider's Web', opens new tab last weekend used smuggled drones to attack bomber aircraft deep inside Russia, and the 'remarkable event' could affect the future of conflict, argues Council on Foreign Relations fellow Michael Horowitz. The attack "clearly shows that even targets deep in a country's territory could now be at risk". * IMF EUROPE: The case for closer European economic integration, opens new tab has become more compelling as external challenges multiply, according to Alfred Kammer, director of the International Monetary Fund's European Department. Stressing the need for the completion of the single market, Kammer said capital markets integration has been too slow and that cross-border flows have been frustrated by persistent fragmentation. "If history is a guide, Europe can turn adversity to advantage." * ALPINE TRUSTS: Liechtenstein is examining tightening control of scores of Russian-linked trusts abandoned by their managers under pressure from Washington. Reuters' John O'Donnell and Oliver Hirt cite sources in reporting that the country, one of the world's smallest and richest, is home to thousands of low-tax trusts, hundreds with links to Russians. Chart of the day Supply chain stress ticked up in May, data from the Federal Reserve Bank of New York said on Thursday. The bank noted that its Global Supply Chain Pressure Index for May rose to 0.19 from -0.28 in April, only the second time it stood in positive territory this year and the highest reading since the 0.20 seen in August of last year. Although the index remains subdued compared to the post-pandemic surge, growing concerns about the impact of the tariff war - particularly the impact of China's restrictions on rare earth and minerals exports on the global auto industry - will ensure policymakers keep a close eye on these pressures for any signs of re-emerging inflation. Today's events to watch * U.S. May employment report (8:30 AM EDT), April consumer credit (3:00 PM EDT); Canada May employment report (8:30 AM EDT) Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
