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BBC News
34 minutes ago
- BBC News
Germany's Merz admits Europe was free-riding on the US
German Chancellor Friedrich Merz has accepted US accusations that Europe was doing too little to fund its own defence and security, but now believes they are on the same page."We know we have to do more on our own and we have been free-riders in the past," he told the BBC's Today Programme, "they're asking us to do more and we are doing more."Merz was in the UK to boost defence ties with Germany, as part of a historic friendship treaty that also aims to tackle irregular migration and promote youth war with Ukraine has framed the early weeks of his chancellorship, as has US President Donald Trump's threat to impose 30% import tariffs on European Union exports from 1 August. Merz told Nick Robinson, in his first UK broadcast interview as chancellor, that he had now met Trump three times and they were on good speaking terms: "I think President Trump is on the same page; we are trying to bring this war to an end.""We are on the phone once a week; we are co-ordinating our efforts. One issue is the war in Ukraine, and the second is our trade debates and tariffs."Merz was a vocal supporter of Ukraine on the campaign trail, and visited Kyiv months before he took Germany's centre-right Christian Democrats to victory in elections in days after he was sworn in early in May, he was on a train to Kyiv in a show of solidarity with Prime Minister Sir Keir Starmer and President Emmanuel Macron of France."We are seeing a big threat, and the threat is Russia. And this threat is not only on Ukraine. It's on our peace, on our freedom, on the political order of Europe," he the run-up to the German elections, US Vice-President JD Vance shocked an audience at the Munich Security Conference with a list of accusations against European allies, including the on the remarks, Merz said the government "had to draw our consequences out of that". The message from Vance's "very open manner" had, in other words, been heard loud and clear. Canan Atilgan of the Konrad Adenauer Foundation in London which is closely affiliated to Merz's party believes that had a profound effect on the incoming chancellor: "I think in Munich he thought we lost the Americans - we have to look after ourselves - and then Zelensky in the Oval Office happened." Even before he had been sworn in, the chancellor steered through a change in the German constitution to enable a huge rise in defence spending, saying the rule now for German defence was to do whatever it takes."We are not strong enough, our army is not strong enough, so that's the reason why we are spending a lot of money," he said in his BBC the UK, Germany and France are working on a triangular alliance of major European powers, dubbed the E3, which Merz says will focus not just on security and foreign policy but on economic growth as chancellor said he was now "very close with Keir Starmer" and with the French president too. Macron is due to visit him in Berlin next French leader signed a wide-ranging treaty with Germany in Aachen in 2019, and last week he agreed a deeper defence pact during a state visit to the UK, so the UK-German friendship treaty completes a triangle of bilateral in the plush surroundings of the German embassy, Friedrich Merz was about to head to the Victoria and Albert Museum to sign the pact with the Prime Minister. Merz said the bilateral treaty renewed the two allies' commitment to defend each other - which is not just part of the Nato treaty but was also previously part of their alliance when the UK was in the and German firms already collaborate in making products such as Typhoon Eurofighter jets and Boxer armoured vehicles, and the two governments have agreed to launch joint export campaigns that Downing Street believes could attract billions of are also developing a missile with a range of 2,000km (1,250 miles) and the chancellor later told a press conference that Ukraine would soon receive substantial additional support in "long-range fire".Merz, 69, is regarded as a strong believer in the transatlantic alliance and knows the US well from his years outside politics working for an American investment on the night of his election victory he declared that the Trump administration was "largely indifferent to the fate of Europe", a remark seen at the time as undiplomatic for a if he had since changed his mind, he said he had not, as Trump was "not as clear and as committed as former US presidents were, former US administrations were". The Americans were moving away from Europe and turning to Asia, he observed, and that was why it was important to look at greater independence from American UK has largely escaped the turbulence surrounding US tariffs on its exports, but the European Union is facing a deadline less than two weeks away, and the threat of 30% tariffs on all its trade negotiator Maroš Šefčovič travelled to Washington this week in search of a deal that would spare all 27 member states from a surge in US import sees the high tariffs as unacceptable and killing Germany's export industry."My observation is that the president himself is seeing the challenges and that he is willing to come to an agreement. He gets it." Another important element of the UK-German treaty is Berlin's agreement to change the law to criminalise smugglers storing small boats in Germany for use in illegal Channel crossings. The storage of boats in Germany was revealed by a BBC investigation last chancellor said his government would "do our homework immediately" and expected it would not take long to push through parliament after the summer are also plans for a direct rail link from London to Berlin, and for British and German students to take part in exchanges, which have declined since said he very much hoped that the first people who might see a practical difference from the friendship treaty would be students, so that the younger generation could drive relations between the two allies in the future.
Reuters
2 hours ago
- Reuters
Meta hires two Apple AI researchers for Superintelligence push, Bloomberg News reports
July 17 (Reuters) - Meta Platforms (META.O), opens new tab has hired Apple (AAPL.O), opens new tab artificial intelligence researchers Mark Lee and Tom Gunter for its Superintelligence Labs team, Bloomberg News reported on Thursday, as it intensifies its pursuit for top AI talent. The social media giant is among several technology companies that have struck high-profile deals and doled out multi-million-dollar pay packages to fast-track development of machines that could surpass humans intelligence. Lee recently left Apple and has started at Meta, while Gunter is set to join soon, the report said, citing people familiar with the matter. Their exit follows Ruoming Pang, who previously left Apple for a multi-million-dollar compensation package at Meta, according to a media report earlier this month. Lee and Gunter both worked closely with Pang, the Bloomberg report said on Thursday. Pang was the head of Apple's Foundation Models team and responsible for advanced AI features, sources have told Reuters. A Meta spokesperson declined to comment on the report, while Apple did not immediately respond to a Reuters request for comment. Meta CEO Mark Zuckerberg said on Monday that his social media platform would spend hundreds of billions of dollars to build several massive AI data centers. In recent weeks, Zuckerberg has personally led an aggressive talent raid in the pursuit to create a division called Superintelligence Labs.
Reuters
2 hours ago
- Reuters
Trading Day: Econ surprise, Wall Street's new highs
ORLANDO, Florida, July 17 (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist Another batch of upbeat U.S. economic data including solid retail sales boosted risk appetite on Thursday, pushing to the back of investors' minds President Donald Trump's attacks on Fed Chair Jerome Powell and lifting the S&P 500 and Nasdaq to fresh record highs. More on that below. In my column today I pose the question: Would Powell's enforced departure, a monumental event in Fed history, crater markets or is such an eventuality actually largely priced in already? If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Econ surprise, Wall Street's new highs Amid the frenzied Trump-Powell drama and heightened uncertainty around tariffs, U.S. economic data has quietly been coming in on the strong side. Thursday's figures reinforced that view, with the Philly Fed business index, producer price inflation, import prices and retail sales all pointing to an economy humming along at a solid clip with little sign of accelerating inflation. The Atlanta Fed GDPNow model estimate is signaling 2.4% growth in the second quarter, comfortably above blue chip consensus forecasts of 2.0%. Perhaps expectations were set so low following the post-Liberation Day chaos and market scare, but Citi's economic surprises index is now the highest since late May. Either way, the data broadly appears to be holding up, and the early indications from the earnings season getting under way are that U.S. corporate profits continue to beat expectations too. The highlights on Thursday were from United Airlines and PepsiCo. Friday's spotlight falls on American Express. That's the backdrop against which U.S. rates traders are pushing out the expected timing of the first rate cut to October from September. San Francisco Fed President Mary Daly on Thursday signaled two rate cuts this year are a reasonable projection. The global equity picture was also brightened on Thursday by Taiwan's TSMC, the world's main producer of advanced AI chips. It posted a record quarterly profit and said demand for artificial intelligence was getting stronger. TSMC's domestic shares hit a six-month peak, and its U.S.-listed shares leaped over 4% to a new high. On the trade front, Trump says a deal with India is "very close" and one with Europe is "possible", while Commerce Secretary Howard Lutnick held a 45-minute phone call with Japan's top trade negotiator Ryosei Akazawa on Thursday. Treasury Secretary Scott Bessent will travel to Tokyo to meet with Prime Minister Shigeru Ishiba on Friday for a separate event, but trade will surely be discussed, if not formally. Japan is very much on investors' minds ahead of Sunday's Upper House election which could see the Liberal Democratic Party ruling coalition lose its majority, heightening calls for the government to boost spending and cut taxes. The prospect of further fiscal slippage in the world's most indebted major economy and complications that would bring for the Bank of Japan have pushed the yen to a three-month low against the dollar and long Japanese Government Bond yields to record highs. The yen fell on Thursday, swept aside in the dollar's broad rebound, but bonds got a reprieve. The weakness in 20- and 30-year JGBs has added to the downward pressure on long-dated U.S. and European bonds. Sunday's vote will be key to whether the yen retests 150.00 per dollar and whether JGB yields make fresh highs next week. Trump has already crossed Fed independence Rubicon Whether Federal Reserve Chair Jerome Powell is fired next week, forced to resign in six months or allowed to muddle through to the end of his term next May, the supposedly sacrosanct notion of Fed independence has already been shattered. Yet what's nearly as remarkable as President Donald Trump's attacks on Powell for not cutting interest rates is financial markets' resilience in the face of this extraordinary degree of political interference in monetary policy, unprecedented in recent decades. Equity investors are known for being optimists, but today's Wall Street is veritably Teflon-coated. Of course, Trump's attacks on Powell have not been without consequence. The dollar has clocked its worst start to a year since the United States dropped the gold standard in the early 1970s. Long-dated Treasury yields are the highest in 20 years, and the "term premium" on U.S. debt is the highest in over a decade. Consumers' inflation expectations, by some measures, are also the highest in decades. Inflation has been above the Fed's 2% target for over four years, and the prospect of a dovish Fed under the stewardship of a new Trump-friendly Chair could keep it that way. But that's not solely down to Fed policy and credibility risks. The Trump administration's fiscal and trade policies, and unilateralist position on the world political stage, have also tempted some investors to trim their exposure to U.S. debt and the dollar. Still, Wall Street seems immune to all that, and it closed in the green on Wednesday after Trump played down a Bloomberg report that he will soon fire Powell, a step he says is "highly unlikely". Even at the point of maximum selling before that rebuttal, the big U.S. equity indices were down less than 1%. Given the magnitude of the news investors were reacting to, that's barely a ripple, especially when you remember that the S&P 500 and Nasdaq hit record highs only 24 hours earlier. Indeed, the S&P 500 is enjoying its third-fastest rebound from a 20% drawdown in history, according to Fidelity's Jurrien Timmer. Goldman Sachs analysts also note that the index's price-to-earnings ratio of 22 times forward earnings is in the 97th percentile since 1980. And the Nasdaq is up 40% in barely three months. Taking all this into account, there's plenty of space for a correction. What's needed is a catalyst. Threatening the foundation of the financial system would seem to qualify, but will it? One might argue that investors are simply skeptical that Trump really will oust Powell, even were it "for cause", ostensibly the Trump administration's ire over the $2.4 billion cost of renovating the Fed's building in Washington. But Trump has made it clear for months that he wants Powell replaced by someone more malleable, so whether it happens in the coming weeks, months, or May next year, the new Fed Chair will almost certainly be someone strongly influenced by the president. Of course, the Fed Chair is only one of 19 members of the Federal Open Market Committee and just one of 12 voting members at any given rate-setting meeting. He or she does not decide policy unilaterally. Still, the negative reaction to Powell leaving before his term is up could be powerful, even though you would expect it to be priced in to some extent by now. All else being equal, a more dovish-leaning Fed will reasonably be expected to weigh on short-dated yields, steepen the yield curve, and weaken the dollar as bond investors price in more rate cuts, and keep inflation closer to 3% than 2%. In the short term, stocks could benefit from expectations of a lower policy rate, although higher long-dated yields would increase the discount rate, which could be particularly negative for Big Tech and other growth stocks. JP Morgan CEO Jamie Dimon on Tuesday warned of the dangers of political interference in Fed policymaking, telling reporters on a conference call: "The independence of the Fed is absolutely critical. Playing around with the Fed can often have adverse consequences, absolutely opposite of what you might be hoping for." That Rubicon has already been crossed, and for now at least, markets appear to have accepted that. What could move markets tomorrow? Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here. 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.
