EU Proposes Joint Borrowing to Finance €400 Billion Crisis Tool
The European Union's executive branch's new budget instrument for the period 2028-2034 would provide loans to countries so they can react faster to adverse events, said the people, speaking on the condition on anonymity. Brussels told member states that it would borrow money on their behalf to raise money for the instrument, they said.
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Business Insider
10 minutes ago
- Business Insider
3 reasons the stock market could be overheating this summer
This summer has been a complicated time for financial markets. Despite constant speculation of turbulence ahead, major indexes have demonstrated an unshakeable ability to push past the noise and reach record highs. For investors, the summer stock market rally is a relief after months of tariff-fueled uncertainty. But it's also raising one uncomfortable question: Is the market getting ahead of itself? "One of the fastest sell-offs thanks to Liberation Day then one of the fastest rebounds," stated Jay Woods, chief global strategist of Freedom Capital Markets. "That rally back wasn't an overheated market, it was a recovery." In the months since the April sell-off and recovery, though, other market experts have raised concerns that stocks are showing signs of overheating. As Tom Bruni, editor-in-chief and VP of community at Stocktwits, said recently, the market has been flashing signs of tougher days ahead. Here are three signals market pros are watching to know how much steam the current rally has left. The market's reaction to tariffs Tariffs have been a key input for investors all summer, but the reaction to positive updates has been relatively tepid compared to the volatile swings seen a few months ago. The market moves in reaction to Trump's deals with Japan and the European Union were tiny, but indexes eked out record highs after the news. However, Dean Smith, chief strategist of FolioBeyond, warns that the market isn't out of the woods when it comes to the trade war. "The trade deals that are being announced are being viewed by many with some relief since 'it could have been worse,'" he told Business Insider. "I contend it will get worse for the real economy, both because deals fall apart, or the agreed-upon tariffs actually start to have an adverse impact." Smith added that it can take longer for supply shocks to cause real economic damage than people expect, but others also say the tepid response is itself a sign that markets are feeling fatigued after the latest rally to all-time highs. "News is not what's important; it's the market's reaction to the news that tells the real story. And right now, investors are saying that the recent 'good news' isn't good enough to keep prices moving higher after a record rally off the Liberation Day lows," Bruni said. Margin debt is rising Smith also pointed to record levels of margin debt among investors. The trend of investors borrowing money to buy stocks is often considered a sign of an over-extended market rally or a speculative bubble. According to data from Finra, margin debt has topped $1 trillion, an increase of 9.4% in the last month, and a jump of 25% in the last year. "Much of the new credit is to younger investors with fewer reserves," Smith said. "Any sort of hiccup could trigger a wave of selling due to margin calls. Leverage amplifies moves in both directions." This is likely partially fueled by the recent meme stock rally, which already seems to be running out of steam. Stocks like Opendoor, Krispy Kreme and Rocket Companies, which surged last week on retail-driven momentum, are already back in the red. "The broader meme stock rally will only be sustained if the market can maintain sideways trading or upward momentum," he stated. "If the broader equity and cryptocurrency markets begin to decline, it will be a significant headwind for meme stocks that thrive on risk-taking and retail speculation." The AI factor The artificial intelligence boom may have helped fuel the market rally in recent years, but Smith said that he sees it as an "uncontrolled experiment" that has the power to upend recent market momentum. "The role of fundamental investors in the market is rapidly declining in favor of fully automated quantitative strategies. AI is pushing that envelope, and is doing so with lightning speed, and zero regulatory guardrails." As Business Insider reported, quantitative hedge funds have indeed been struggling since June 2025 and are struggling to find answers. This growing reliance on AI is a pressing concern for Smith. "No one truly knows how these AI models will work in an environment of financial stress," he stated. "And no one knows what could set them off."
Fast Company
39 minutes ago
- Fast Company
Spain's major export item is struggling under fresh tariffs from Trump
Spain's black olive exporters, subject to harsh tariffs since U.S. President Donald Trump's first term, are warning it will be difficult to survive an extra 15% they now face under the European Union's latest trade deal with the United States. EU goods now face import tariffs of 15% — half of Trump's threatened rate, but much more than Europeans had hoped for — after striking a trade deal with Trump on Sunday. Spain, the world's top table olive exporter, has seen its share of the U.S. black olive market plummet from 49% in 2017 to 19% in 2024 after Trump imposed tariffs of more than 30% at the request of Californian olive growers. The measures only affected black olives and don't apply to green olives, olive oil or semi-processed olives. Spanish farmers have taken steps to increase green olive sales and to diversify their markets since the tariffs were first imposed, but warn the additional increase will be hard to swallow. 'It would be unviable (for black table olives),' said Eduardo Martin, secretary of Asaja, a Spanish local farmers' association in southern Seville province, a region that produces the most olives. The initial trade measures coincided with a severe drought that forced Spanish producers to cut around 400,000 work shifts for pickers out of a total of 2.5 million, according to industry estimates. Sales of Spanish black olives to the U.S. dropped by 70% in the first year. 'The worst was the first year,' said Gabriel Cabello, president of Andalusia's Federation of Agricultural Cooperatives in Seville province. 'In the second year, we learned that this was here to stay and that we had to do things differently.' To mitigate losses, Spanish exporters shifted focus to Europe and the Middle East, regions with a tradition of consuming table olives. They also ventured into Asian markets, while switching to shipping more green olives to the U.S. because they are subject to lower tariffs. Tariffs also spurred innovation, with some Spanish exporters selling black olives stuffed with salmon or cheese for the first time, which helped boost sales in Europe and Asia, Cabello said. Still, the Spanish Ministry of Agriculture estimates it has lost 239.6 million euros ($278.51 million) in black olive sales since the tariffs were introduced, nearly a third of the 707 million-euro total export value from the last harvest. WEATHERED THE STORM Among the 25 Spanish exporters active before the tariffs, only four major players remain, according to Asemesa, Spain's Association of Table Olive Exporters. Agro Sevilla, one of the larger players with the financial resources to lobby the U.S. for lower rates, expanded green olive exports and managed to reduce black olive tariffs to 10% from 31%. The company successfully demonstrated that they received fewer European subsidies than the U.S. had estimated. Its U.S. sales have been gradually growing since 2023. 'We cannot give up on the world's largest consumer market for black olives,' said Agro Sevilla CEO Julio Roda. In a twist, Aceitunas Guadalquivir, another major Spanish olive producer, acquired Bell-Carter Foods, one of the two leading U.S. companies that had advocated for the tariffs, according to a statement issued in 2022. The company is among several Californian companies that have imported raw olives from Spain, which are exempt from the tariffs, according to Asemesa. Aceitunas Guadalquivir did not reply to a Reuters request for comment about such exports. 'When California has low production, they import raw olives to finish processing them in the United States, mostly from Spain,' said Asemesa's Secretary General Antonio de Mora. Spain exported 6,300 tonnes of semi-processed olives in 2024 alongside 36,000 tonnes of green olives and 9,800 tonnes of black olives. The U.S. measures failed to bolster domestic growers. Imports of table olives surged by 40% in the first eight months of 2024 compared to the same period in 2017, trade data shows, with Egypt, Portugal, and Turkey increasing exports the most. Spanish exports of green olives to the U.S. grew by 18% during the same period, partially offsetting a decline in black olive exports. However, Spanish producers remain concerned about the new tariffs. 'It's like adding rain to wet ground,' Asaja's Martin said. ($1 = 0.8603 euros)
Yahoo
43 minutes ago
- Yahoo
Vauxhall owner warns of €1.5bn tariff hit days after EU-US deal
The owner of Vauxhall has warned it is facing a €1.5bn (£1.3bn) bill for US tariffs just days after the European Union struck a trade deal with Donald Trump. Stellantis said on Tuesday it had already incurred tariff-related costs of €300m for April to June, although it warned these would rise by a further €1.2bn for the final six months of this year. The prediction assumes there is no change to tariffs currently being levied on cars shipped from Europe to the US, which have been in place since April. It reflects the uncertainty still surrounding Sunday's US-EU deal, and the staggering costs European companies face if the agreement is not finalised in the coming weeks and months. Stellantis reported a 23pc drop in shipments to North America in the first half of 2025 alone, prompting a 4.6pc fall in the company's share price in early trading. The tariffs have made European cars more expensive for consumers while denting profitability for manufacturers. The deal struck by Brussels and President Trump would cut the levies from 27.5pc to 15pc. That is up from 2.5pc before President Trump first launched his trade dispute, but still a significant reduction on current levels. 'Significant damage' However, Ursula von der Leyen, the European Commission president, is facing a backlash from member states over the deal – which France and other critics have claimed is a humiliation for the Continent. François Bayrou, the French prime minister, said the agreement marked a 'dark day' for the 'free peoples' of Europe, while Hungarian PM Viktor Orban complained Ms von der Leyen had been 'eaten for breakfast' by Mr Trump. Even Germany, which reluctantly supported the agreement, said it would still suffer 'significant damage' under the pact. It suggests that winning approval for the deal from member states will be a tricky process in the coming weeks. Another point of anger for European leaders is the improved terms secured by Britain, which negotiated a 10pc tariff with the president. That is also up from 2.5pc before the dispute. On Tuesday, Stellantis said it remained 'highly engaged with relevant policymakers, while continuing long-term scenario planning'. Exactly how much Stellantis itself would benefit from any deal remains uncertain. Analysts at Morningstar on Monday suggested the company shipped fewer cars from Europe to the US than rivals, choosing instead to assemble more cars in Mexico and Canada. As a result, Stellantis was likely to see no 'meaningful upside'. Instead, they argued Porsche, Mercedes, BMW and Volkswagen – in that order – would be 'the most significant beneficiaries of this trade deal'. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
