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Jun 11, 2020

US Market | Futures Indicator Update: Dow futures drop 700 points on virus second wave concern, airline and retail shares fall

Fred Imbert,Yun Li





Stock futures fell sharply in early trading Thursday as coronavirus cases increased in some states that are reopening up from lockdowns. Shares that have surged recently on hopes for a smooth reopening of the economy dropped in premarket trading.
Futures on the Dow Jones Industrial Average dropped 721 points, or 2.7%. The move implied an opening decline of about 740 points. S&P 500 futures fell 2.2%. Nasdaq-100 futures dropped 1.6%.
Shares of United Airlines, Delta, American and Southwest all dropped more than 10% in premarket trading. Carnival Corp. and Norwegian Cruise Line shares fell more than 11%. Gap and Kohl’s shares also fell more than 8% each.
Concerns about a second wave of coronavirus cases have risen as U.S. states push deeper into reopening. Texas has reported three consecutive days of record-breaking Covid-19 hospitalizations. Nine California counties are reporting a spike in new coronavirus cases or hospitalizations of confirmed cases, AP reported Wednesday.
Overall coroanvirus cases in the U.S. topped 2 million, according to the latest figures from Johns Hopkins University.
The downdraft in futures followed two straight days of losses for the 30-stock Dow and S&P 500 as investors ditched reopening trades for the megacap tech names. The S&P 500 dipped 0.5% on Wednesday, and the Dow slid about 280 points. Meanwhile, the Nasdaq Composite climbed 0.7% to a record closing high of 10,020.35, also its first-ever close above 10,000.
The Nasdaq has risen for eight days in the past nine sessions, bringing its 2020 gains to nearly 10%. The S&P 500 is down 1.2% this year after briefly turning green for 2020 earlier this week. The Dow is down 5.4% for 2020.
Both the S&P 500 and the Dow are still up more than 45% from the coronavirus low. The incredible comeback started with investors betting on technology companies like Amazon that were doing well despite the pandemic, but in the last month reopening bets like airlines have been the biggest gainers. Now investors are rotating back into those tech names and taking profits in the rest of the market.
Crude oil lost 4% in early trading.
On Wednesday, investors assessed the Federal Reserve’s updates on the economy and monetary policy. The policymakers voted unanimously to keep interest rates unchanged and indicated no rate increases through 2022.
“The Fed understands we are just in the beginning phases of the economic recovery and making rash changes to policy or forward guidance is premature at this time,” Charlie Ripley, senior investment strategist for Allianz Investment Management, said in an email.
The Fed also said it will at least maintain the current pace of bond purchases for the coming months. Additionally, it expects the U.S. economy to contract by 6.5% in 2020 before expanding by 5% in 2021.
Investors are awaiting the new jobless claim data for the week ending June 6, which is set to come out at 8:30 a.m. ET on Thursday. Economists polled by Dow Jones expect filings for unemployment insurance claims to total 1.595 million last week, which is down from 1.775 million in the week before.


Analysis | The Cybersecurity 202: Two new developments challenge Justice Department arguments on encryption

By Joseph Marks


with Tonya Riley

Two new developments are complicating the roiling debate over whether law enforcement should have access to encrypted communications.
First, a blockbuster story from Vice’s Lorenzo Franceschi-Bicchierai’s details how Facebook — which the Justice Department has labeled public enemy No. 1 in its war against warrant-proof encryption — actually helped the FBI in 2017 to hack into the accounts of a notorious child predator and put him behind bars.
Second, Democrats in Congress are demanding information from Juniper Networks about an alleged backdoor in its encrypted products that might have been exploited by U.S. adversaries. That could shed light on the danger posed by such backdoors and how easy it is for bad guys to crack into them.
The pair of developments raise serious questions about when and how tech companies should voluntarily cooperate with law enforcement to gather evidence against their users and about their responsibility when those actions have unintended consequences. 
In the first case, Facebook paid another company at least $100,000 to develop a never-before-seen hacking tool the FBI used to catch the predator, Buster Hernandez, who pleaded guilty to multiple crimes and was sentenced to up to 30 years in prison.
It’s a rare public example of how law enforcement can use lawful hacking to gather incriminating evidence. It also helps beat back claims that police need backdoor access to encrypted communications for that information, which cybersecurity pros say would make everyone more vulnerable to malicious hacking.

Attorney General William P. Barr announces results of an investigation of the shootings at the Pensacola Naval Air Station in Florida. (J. Scott Applewhite/AP)
The Facebook case is just the most recent example of innovative hacking delivering information otherwise shielded from police. 
The Justice Department has been arguing since 2014 that encryption and similar protections make it too easy for child predators and other criminals to hide online from law enforcement. They say government should compel companies to give them special access to those communications with a warrant.
More recently the Senate has begun considering a bill that might force tech companies to provide that access if they can’t find another way to turn over more evidence about who’s spreading child pornography online. An industry group including Facebook, Google and Microsoft unveiled a program this morning aimed at improving and standardizing disclosures about child exploitation in an effort to combat the push to limit encryption.
Cybersecurity pros and most tech companies, meanwhile, say any special access for police with a warrant could also be exploited by hackers and would make everyone else less secure. They also say police should embrace other methods to get the information.
Indeed, in two high-profile cases where Apple refused to help the FBI crack into encrypted iPhones, investigators ultimately gained access by working with secretive hacking tool brokers.
Those phones belonged to Syed Farook, who killed 14 people and injured others during a workplace shooting San Bernardino, Calif., in 2015 and Ahmed Mohammed al-Shamrani, who killed three people and injured eight others in a shooting at a Pensacola, Fla., military base in 2019. Information on the phone later linked him to the terrorist group al-Qaeda in the Arabian Peninsula.
In the San Bernardino case, then-FBI Director James B. Comey suggested the price tag for the access was more than $1 million.
The Facebook case would seem to bolster the idea police can secure most of the evidence they want provided they’re willing to pay big bucks for it. But those high price tags also mean it might be a solution that’s only available in the most prominent cases.
In the case of Juniper Networks, lawmakers who oppose weakening encryption want to gather information to show what happens when such protections are subverted. 

The National Security Administration (NSA) campus in Fort Meade, Md. (Patrick Semansky/AP)

Juniper announced in 2015 that it had found “unauthorized code” someone had placed inside its widely used security software. That code made use of an encryption tool that documents from leaker Edward Snowden suggested was secretly designed by the National Security Agency and was widely believed to contain a backdoor for NSA spying.
In other words, it looked like a spying tool created by the good guys might have been retooled and exploited by the bad guys — precisely the sort of attack opponents of encryption back doors warn about.
Juniper and the FBI both launched investigations but haven’t released any results. Sens. Ron Wyden (D-Ore.), Mike Lee (R-Utah) and other lawmakers wrote a letter demanding to know where that investigation stands and whether Juniper’s actions made it easier for foreign hackers to undermine the company’s security and spy on its customers.
“Congress and the American people must understand the serious national security risks associated with weakening the encryption that protects Americans’ personal data, as well as government and corporate systems,” Wyden told Reuters’s Joseph Menn.
Facebook’s action was a one-time operation launched against a user employees believed was reprehensible and might not get caught otherwise because he used strong security protections. 

Facebook founder Mark Zuckerberg. (Photo by Andrew Caballero-Reynolds/AFP/Getty Images)

Facebook employees considered Hernandez “the worst criminal to ever use the platform,” Vice reported.
His crimes generally consisted of falsely telling dozens of underage girls on Facebook that he had nude photos of them and then blackmailing the victims to send him increasingly explicit photos and videos. He also threatened to kill and assault the victims and their families.
Hernandez hid his actions from investigators by using a privacy-enhanced operating system called Tails that’s popular among journalists and targets of surveillance. It automatically routes all Internet traffic through an anonymizing network called Tor so police can’t trace a computer’s IP address.
The only acceptable outcome to us was Buster Hernandez facing accountability for his abuse of young girls,” a Facebook representative told Vice. “This was a unique case, because he was using such sophisticated methods to hide his identity, that we took the extraordinary steps of working with security experts to help the FBI bring him to justice.”
But the action also raised ethical concerns inside the company.
Facebook contracted with another company that found a previously undiscovered bug in Tails’s software known as a “zero day.” It then shared the bug with the FBI, which used it to identify Hernandez’s and gather evidence against him. The FBI declined to comment on the story and Tails said it was not aware of Facebook’s actions, Vice reported.
Zero day bugs are highly valuable because the company whose technology is being hacked doesn’t know about them. That means hackers can use them freely until they’re discovered. Researchers who discover them often sell them for tens of thousands of dollars or more — either to the companies themselves so they can patch them or to intelligence agencies or criminals who plan to exploit them.
It’s rare for a company to learn about a zero day bug in another company’s technology and not alert them to it.
In this case, Facebook officials justified the move because they knew Tails was about to update its software in a way that would prevent the bug from being exploited long term, Vice reports.
There was absolutely no risk to users other than this one person, for which there was much more than probable cause,” a former employee with knowledge of the case told the publication. “Since there were no other privacy risks, and the human impact was so large, I don’t feel like we had another choice.”
But the decision still worried some employees who feared the FBI might use the bug multiple times before it was patched or that it might be discovered and exploited by criminals or foreign intelligence agencies.
The precedent of a private company buying a zero-day to go after a criminal…It’s sketchy as hell,” another source who was aware of the situation told Vice.

The keys
A bipartisan group of senators wants to devote $20 billion to competing with China on semiconductor manufacturing and research. 

Sen. Mark R. Warner (D-Va.). (Andrew Harnik/Pool/AP)

The legislation is part of a broader plan to reduce U.S. reliance on Chinese technology over national security concerns, Jeanne Whalen reports.
While U.S. companies account for 47 percent of global computer chip sales, they represent only 12 percent of production. That's because chip manufacturing is often prohibitively expensive. The new legislation would reduce those costs with a tax credit for investors, a $10 billion fund to match state and local incentives and $12 billion in federal research funds. 
“America’s innovation in semiconductors undergirds our entire innovation economy,” said Sen. Mark R. Warner (D-Va.), who introduced the bill with Sen. John Cornyn (R-Tex.) “Unfortunately, our complacency has allowed our competitors — including adversaries — to catch up. This bill reinvests in this national priority.”
Reps. Doris Matsui (D-Calif.) and Michael McCaul (R-Tex.) plan to introduce the legislation in the House on Thursday.
Drones deployed during recent protests weren’t used for surveillance, CBP says.

The remnants of buildings burned down during demonstrations. (Lucas Jackson/Reuters)
The drones were used to help local and state law enforcement ensure the safety of people protesting police brutality and did not “provide any resources to surveil lawful peaceful protesters,” acting Customs and Border Protection Commissioner Mark Morgan told ABC News.
Democratic lawmakers have grilled the agency for more detailed answers on its use of drones during the protests following the police killing of George Floyd. Some have called for CBP and other agencies to immediately cease surveillance of peaceful protests.
The surveillance has troubled some conservatives, as well, the Wall Street Journal reports.
It’s disturbing to see tools built to gather military intelligence being used to watch U.S. citizens,” Billy Easley II, a senior policy analyst at Americans for Prosperity, a conservative organization, told the Journal. “Drones should not be used by the government to monitor or collect data on First Amendment activity. ”
Hacktivists are spreading the personal information of law enforcement officers amid protests over police brutality. 

Police officers are seen during a protest against racial inequality in Boston on Wednesday. (Brian Snyder/Reuters)

The online activists have shared the personal information including phone numbers, email addresses and home addresses of high-ranking police officials in cities including the District of Columbia, Atlanta, Boston and New York, according to a Department of Homeland Security memo obtained by Michael Balsamo and Colleen Long at the Associated Press.  The sharing of the information, known as “doxing, could lead to attacks by violent extremists, the memo warns. 
Some of the information may have been stolen from compromised email accounts, the report warns, though doxing often happens with information that’s already public but not readily available. The department is warning officers to use strong email security measures such as using multiple security checks before logging into accounts.

Government scan

Democrats are raising concerns about the possible use of facial recognition technology during recent protests against police brutality. 

Demonstrators wear masks during a protest against police brutality in Boston. (Steven Senne/AP)

The use of such technology has a chilling effect on all our protected First Amendment activities, Sens. Cory Booker (D-N.J.), Sherrod Brown (D-Ohio) and Ron Wyden (D-Ore.) wrote in a letter to Attorney General William P. Barr and acting Department of Homeland Security secretary Chad Wolf.
They're asking for the dates and locations where facial recognition was used as well as what systems were deployed. The letter also requests answers about any personally identifiable information the agencies have gathered about protesters.
The letter comes as tech companies are reevaluating police use of their facial recognition technology. Amazon announced yesterday it would put a one-year moratorium on police use of its facial recognition software. The company has not clarified if the same restrictions will apply to federal law enforcement. IBM announced earlier this week it would stop all development and use of facial recognition. (Amazon chief executive Jeff Bezos owns The Washington Post.)
More government news:
Brian Benczkowski supervised several high-profile cases, including the successful prosecution of the Mexican drug lord known as ‘El Chapo.’
Matt Zapotosky

Cyber insecurity

Contact-tracing apps are at risk from malicious actors flooding them with fake reports.

A member of the internal medical team checks India's virus contact-tracing app on a mobile phone at the entrance of the Ahmedabad One Mall. (Sam Panthaky/AFP/Getty Images)
Fake reports are just one of several potential vulnerabilities posed by the growing number of contact-tracing apps being used around the globe to check the spread of covid-19, researchers at Check Point found. They're urging developers to encrypt data to make sure it can't be intercepted by hackers.
Users should also only install contact-tracing apps that are sanctioned by government agencies, researchers say. Scammers have been using fake contact-tracing apps to steal personal information including banking credentials, CyberScoop reports.
More cybersecurity and industry news:

The incidents are reviving concerns about the fast-growing Silicon Valley company’s susceptibility to Chinese government influence.
Gerry Shih
The FBI on Wednesday warned that malicious cyber actors were targeting mobile banking apps in an attempt to steal money as more Americans have moved to online banking during the coronavirus pandemic.
The Hill
Microsoft fixes a very old bug affecting the Windows Group Policy feature that could let an attacker disable antivirus.
ZDNet


Daybook

  • The House Administration Committee will hold a hearing on the impact of covid-19 on voting rights and election administration Thursday at 1 p.m.
  • The House Financial Services committee will host a hearing on how cybercriminals are exploiting the covid-19 pandemic on June 16 at noon.

Secure log off

Bookmark for your confused relatives: We made this video explaining how mail-in-voting will work in 2020.

Market Insider | Biggest Moves Premarket: Stocks making the biggest moves in the premarket: Target, Regeneron, Amazon, Eli Lilly & more

Peter Schacknow



Take a look at some of the biggest movers in the premarket:

Target (TGT) – The retailer announced a 3% dividend hike, increasing the quarterly payout by 2 cents a share to 68 cents per share.
Regeneron Pharmaceuticals (REGN) – The drugmaker began human testing of an experimental Covid-19 antibody cocktail designed as a treatment for the disease. Chief Scientific Officer George Yancoupolos said the company should know within a month whether the treatment is effective.
Amazon.com (AMZN) – The European Union is set to file formal charges against Amazon over its treatment of third-party sellers, according to people familiar with the matter who spoke to The Wall Street Journal. Amazon has been accused of using data from those sellers to compete against them, charges that Amazon has denied.
Eli Lilly (LLY) – Lilly could have a Covid-19 treatment authorized for use as early as September. The drugmaker’s chief scientist told Reuters that a timeline could be met if either of the two antibody therapies currently in testing proves successful. Lilly also has a third antibody treatment in pre-clinical studies.
Grubhub (GRUB) – Grubhub agreed to be acquired by European food delivery firm Just Eat Takeaway.com in a $7.3 billion all-stock deal. The transaction would create the world’s largest food delivery company outside China. The agreement comes after acquisition talks between Grubhub and Uber (UBER) fell apart.
Apple (APPL) – Bank of America Securities raised its price target on Apple stock to a Street high of $390 a share from the prior $340 a share, while maintaining a “buy” rating. The firm cited a number of positive factors including the upcoming 5G iPhone cycle and projected 20% growth in hardware sales next year.
Children’s Place (PLCE) – The children’s apparel retailer lost $1.96 per share for its first quarter, smaller than the loss of $2.14 per share that analysts had predicted. Revenue did come in below forecasts, with stores closed due to the pandemic. Children’s Place also said online demand had quadrupled over a year ago, and that it planned to have the majority of its stores open by July 1.
Unilever (UN, UL) – Unilever plans to combine its Dutch and British entities into a single holding company based in Britain. The consumer goods giant said the plan would not affect staffing or operations either in Britain or the Netherlands.
Tesla (TSLA) – Tesla won Chinese government approval to build Model 3 vehicles with cobalt-free “LFP” batteries.
Walmart (WMT) – Walmart will stop keeping beauty products aimed at people of color in locked display cases. The practice had drawn complaints saying it suggested that customers of those products cannot be trusted.
Walt Disney (DIS) – Walt Disney plans to begin a phased reopening of its Disneyland resort in California in July. The plan must still receive approval from state and local officials.
Tailored Brands (TLRD) – Tailored Brands said it may have to seek bankruptcy protection if sales continue to slump. The parent of the Men’s Wearhouse and Jos. A. Bank clothing chains said it was taking “decisive actions to manage liquidity.”
Tyson Foods (TSN) – Tyson said it was cooperating with a Justice Department probe into poultry price-fixing. The meat and poultry producer is participating in a program that shields Tyson and its employees from prosecution or fines.
Beyond Meat (BYND) – Beyond Meat announced the expansion of its manufacturing capabilities in Europe. The plant-based burger maker acquired a new factory in the Netherlands that should be in operation by the end of the year, as well as opening another Netherlands manufacturing plant in partnership with Dutch meat producer Zandbergen.
Delta Air Lines (DAL) – Delta will seek concessions from lenders, in order to prevent the carrier from falling out of compliance with certain debt requirements. Under current conditions, Delta said it would be out of compliance by early next year.
Oxford Industries (OXM) – Oxford lost $1.12 per share for its latest quarter, compared to forecasts of a 27 cents per share loss. The apparel maker’s revenue also came in below forecasts. The maker of Tommy Bahama and other apparel brands was hurt by virus-related lockdowns, and instituted heavy discounting and promotional activity during the quarter.

US Market | Futures Indicator: Dow futures drop 650 points on virus second wave concern, airline and retail shares fall

Fred Imbert,Yun Li





Stock futures fell sharply in early trading Thursday as coronavirus cases increased in some states that are reopening up from lockdowns. Shares that have surged recently on hopes for a smooth reopening of the economy dropped in premarket trading.
Futures on the Dow Jones Industrial Average dropped 688 points, or 2.5%. The move implied an opening decline of about 700 points. S&P 500 futures fell 2.2%. Nasdaq-100 futures dropped 1.6%.
Shares of United Airlines, Delta, American and Southwest all dropped more than 10% in premarket trading. Carnival Corp. and Norwegian Cruise Line shares fell more than 11%. Gap and Kohl’s shares also fell more than 8% each.
Concerns about a second wave of coronavirus cases have risen as U.S. states push deeper into reopening. Texas has reported three consecutive days of record-breaking Covid-19 hospitalizations. Nine California counties are reporting a spike in new coronavirus cases or hospitalizations of confirmed cases, AP reported Wednesday.
Overall coroanvirus cases in the U.S. topped 2 million, according to the latest figures from Johns Hopkins University.
The downdraft in futures followed two straight days of losses for the 30-stock Dow and S&P 500 as investors ditched reopening trades for the megacap tech names. The S&P 500 dipped 0.5% on Wednesday, and the Dow slid about 280 points. Meanwhile, the Nasdaq Composite climbed 0.7% to a record closing high of 10,020.35, also its first-ever close above 10,000.
The Nasdaq has risen for eight days in the past nine sessions, bringing its 2020 gains to nearly 10%. The S&P 500 is down 1.2% this year after briefly turning green for 2020 earlier this week. The Dow is down 5.4% for 2020.
Both the S&P 500 and the Dow are still up more than 45% from the coronavirus low. The incredible comeback started with investors betting on technology companies like Amazon that were doing well despite the pandemic, but in the last month reopening bets like airlines have been the biggest gainers. Now investors are rotating back into those tech names and taking profits in the rest of the market.
Crude oil lost 4% in early trading.
On Wednesday, investors assessed the Federal Reserve’s updates on the economy and monetary policy. The policymakers voted unanimously to keep interest rates unchanged and indicated no rate increases through 2022.
“The Fed understands we are just in the beginning phases of the economic recovery and making rash changes to policy or forward guidance is premature at this time,” Charlie Ripley, senior investment strategist for Allianz Investment Management, said in an email.
The Fed also said it will at least maintain the current pace of bond purchases for the coming months. Additionally, it expects the U.S. economy to contract by 6.5% in 2020 before expanding by 5% in 2021.
Investors are awaiting the new jobless claim data for the week ending June 6, which is set to come out at 8:30 a.m. ET on Thursday. Economists polled by Dow Jones expect filings for unemployment insurance claims to total 1.595 million last week, which is down from 1.775 million in the week before. 

News | Automobile Industry | Germany: Germany's carmakers face a 'toxic mix' of challenges as they emerge from coronavirus crisis

Holly Ellyatt



Germany’s economically-essential car manufacturing industry is emerging from a scathing period of lockdown, production halts and a slump in sales.
The sector supports tens of thousands of jobs in Germany and exports are vital to the whole country’s economy; but demand has fallen and the industry faces big challenges in the transition to greener technology, with experts telling CNBC they fear for its future.
“Carmakers contribute significantly to the German economy. Almost one million well-paid jobs depend on this sector, half of them in the prosperous south of Germany,” Economist Felix Roesel, who works at Germany’s respected Ifo institute, told CNBC Tuesday.
“The economic downturn now challenges thousands of jobs, income and tax revenues along the full supply chain,” Roesel said, warning that the auto industry faces big challenges.
“We will certainly see a decline in this industry for a couple of reasons. Many car makers cannot use their full capacities because many international supply chains are headily disrupted or public health restrictions still apply to factories. Car dealers had to close for many weeks during the shutdown. And consumers fearing unemployment and income cuts delay purchases. This is a toxic mix for carmakers.”
An employee wearing a protective face mask removes a cordon next to Opel Insignia and Opel Astra automobiles, manufactured by Adam Opel AG, as German states begin the phased reopening of certain businesses, at the Jacob Opel showroom in Ruesselsheim, Germany, on Monday, April 20, 2020.
Bloomberg
Berlin-based auto analyst Matthias Schmidt told CNBC that “the market was heading for a slow year – and (was) even on a downward cyclical trajectory before corona hit, with the German passenger car market seeing year-on-year falls in both January and February of 7.3 and 10.8 percent respectively,” he said.
“A trend I see playing out over the next few months could be a market that sees strong year-on-year gains in the summer months fueled by government purchase incentives (in whatever form these take) as manufacturers aim to take advantage of a summer window of car dealerships being open, a growing appetite for private mobility post-Covid (and) a push before a possible second corona wave impacts the closing months of the year.”
With fewer people likely traveling over the summer vacation period due to the pandemic, the usual slow summer months could look very different this year with consumers looking to take advantage of these new offers on the table, he added.
Nonetheless, carmakers could also take advantage of the crisis by using it to implement job cuts as the industry accelerates moves towards streamlining production and focusing on a new era of making electric vehicles.
“Manufacturers could even use this Covid climate situation to make much-required job cuts and become more efficient using the pandemic as the perfect excuse to get around powerful unions prepared to fight tooth and nail for their members,” Schmidt said.

Stimulus measures

The coronavirus pandemic in Europe saw all but essential businesses shut down for much of March and April, with gradual restrictions being lifted in mid-May in most economies. Germany, for example, allowed car dealerships to re-open in late April and auto giants like Volkswagen restarted production in early May.
Already under pressure from falling car sales, and then a complete slump during the coronavirus lockdown, the country’s car industry was hoping for aid from the German government. Last week, aid came, with the coalition of Chancellor Angela Merkel’s Christian Democratic Union (CDU), its Bavarian sister party, the Christian Social Union (CSU) and its Social Democratic Party (SPD) partners, announcing a 130 billion euro ($147 billion) stimulus package for the economy.
There was some disappointment at the measures that were announced for the car industry, however. While the  measures included a temporary VAT (value added tax) cut lowering the tax on all goods, including cars, from 19% to 16%, and a 6,000 euro purchase incentive for electric cars costing under 40,000 euros (an amount that excludes some premium electric models), industry leaders had also hoped for a scrappage scheme to incentivize the purchase of new cars. And while the industry is indeed transitioning to electric models, petrol and diesel models still make up the bulk of production, and purchases.
‘CarTowers’ next to the Volkswagen plant in Wolfsburg, Germany
Morris MacMatzen | Reuters
The biggest losers from the package, according to Naz Masraff, director of Europe at Eurasia Group, are the German automotive industry and auto-heavy regions, including Bavaria, Baden-Wuerttemberg and Lower Saxony, which are home to huge BMW, Daimler and Volkswagen production plants respectively.
BMW’s Group Plant in Dingolfing, a town in southern Bavaria, is the carmaker’s largest vehicle production site in Europe and has a workforce of around 18,000 people plus 800 apprentices. Meanwhile, VW’s plant in Wolfsburg is the world’s largest single car-manufacturing complex and the town itself has grown up around the plant; it employs around 20,000 people.
BMW, VW and Daimler, who are all behemoths in Germany’s carmaking industry, are all making inroads into producing many more electric vehicles though traditional models still make up the bulk of production. Eurasia Group’s Masraff noted that the German government measures showed a clear push towards electric vehicles.
“While the package excluded a general cash incentive for purchasing new cars, electric cars are promoted with a doubling of existing subsidies. In this respect, it confirms the government’s stance on the future trajectory of the industry, towards zero-emission vehicles. The lack of a car scrappage scheme for diesel and petrol cars, which the SPD was adamant should not be included in the final deal, quashes any idea that the combustion engine will be propped up during the recovery period,” Masraff said in a note following the package announcement.
“The doubled electric vehicle purchase premium - now €6000 - shows Berlin is betting on battery power, comfortable in the knowledge that its main auto titans VW and BMW have already began a substantial shift towards electric car production.”
Demand for electric vehicles is certainly growing. Data from the European Automobile Manufacturers Association (ACEA) in May showed that in the first quarter of 2020, the electrically-chargeable vehicle segment significantly increased its market share, rising to 6.8% from 2.5% in the same period last year, although petrol-powered cars still account for more than half of the EU market, and diesel cars almost 30% of the market.

How the car industry feels?

Daimler is a giant of Germany’s car industry, and its largest Mercedes-Benz plant is in the town of Sindelfingen in Baden-Württemberg, southern Germany. The plant has been in operation since 1915 and makes Mercedes-Benz’s flagship model, the S-Class, as well as the E-Class Saloon and Estate among other models. The plant employs around 35,000 people.
The plant is also a focal point for innovation and design and in the future, it will produce electric vehicles and batteries too, Daimler notes. But for now, the carmaker told CNBC it is focusing on overcoming the economic hit from the coronavirus crisis.
New Mercedes-Benz automobiles are transported on railway wagons near the Mercedes-Benz AG reopened assembly line, operated by Daimler AG, in Sindelfingen, Germany, on Thursday, April 30, 2020.
Bloomberg
“From today’s perspective, a significant decline in global economic output must be anticipated for the year 2020 as a whole. The situation is volatile, which is why we are working with different scenarios. We are adjusting our previous planning, depending on the scenario,” Birgit Zaiser, manager of Production & Supply Chain Management at Mercedes-Benz, told CNBC Tuesday.
“In view of the current spread of Covid-19, the economic impact on Daimler, in detail ... cannot yet be adequately determined or reliably quantified,” she said.
Asked if the German government could do more to help carmakers, she said: “We are in favor of measures that will create confidence among customers and strengthen market demand in these times of great uncertainty.”

News | Banks: HSBC, Standard Chartered criticized by top investor over support for China's Hong Kong security law

Elliot Smith




Standard Chartered headquarters and a HSBC building are pictured on March 16, 2020 in Hong Kong.
Standard Chartered headquarters and a HSBC building are pictured on March 16, 2020 in Hong Kong.
Zhang Wei | China News Service via Getty Images

A major shareholder in both HSBC and Standard Chartered has hit out at the banks over their support for China’s controversial new national security law in Hong Kong.
In a rare rebuke, Aviva Investors, a top 20 shareholder in both banks owning almost £800 million ($1.02 billion) of their shares, said on Wednesday it was “uneasy” with their public support for the proposed law, given the lack of detail around how it will operate in practice.
Aviva Investors Chief Investment Officer for Equities, David Cumming, said in a statement: “If companies make political statements, they must accept the corporate responsibilities that follow.
“Consequently, we expect both companies to confirm that they will also speak out publicly if there are any future abuses of democratic freedoms connected to this law.”
Both HSBC and Standard Chartered declined to comment when approached by CNBC on Wednesday.
The controversial law was passed by China’s National People’s Congress on May 28 and met with criticism from around the world. Senior U.S. and U.K. officials have accused Beijing of seeking to clamp down on the freedoms and autonomy of Hong Kong and its people.
Though details of its practical implementation are scarce, Chinese officials have said the bill will target acts of secession, foreign interference and acts of terrorism. It has therefore raised alarm in the aftermath of widespread pro-democracy protests in the special administrative region over the past year.
Both HSBC and Standard Chartered are headquartered in London but make the bulk of their profits in Asia.

Pompeo weighs in

Meanwhile, U.S. Secretary of State Mike Pompeo said the signing of a petition supporting the bill by HSBC’s Asia-Pacific CEO, Peter Wong, amounted to a “show of fealty” that would earn little respect in Beijing.
In a statement Tuesday, Pompeo accused HSBC of aiding China’s “coercive bully tactics” against the U.K. and claimed Beijing is using the bank’s business in China as “political leverage” against London.
“The CCP’s browbeating of HSBC, in particular, should serve as a cautionary tale,” Pompeo added.

News | UK | No deal Brexit and Virus After Covid-19: Firms can't cope with no deal Brexit and virus - CBI boss Warns

Simon Jack



Dame Carolyn Fairbairn Image copyright Getty Images
British firms do not have the resilience to cope with a no-deal Brexit after the battering of the coronavirus crisis, according to the outgoing boss of industry body the CBI.
Carolyn Fairbairn said a CBI member had likened a no-deal to "setting the shed on fire" while the house was in flames.
Brexit trade negotiations have not been going well between the UK and the EU.
A government spokesperson said the UK wanted to reach an agreement with the EU this year.
Dame Carolyn Fairbairn told the BBC that any buffers to cope with the additional cost and planning of an exit from the EU customs union and single market without a deal had been exhausted by the Covid-19 pandemic.
"The resilience of British business is absolutely on the floor," she said.
"Every penny of cash that had been stored up, all the stockpiles prepared have been run down.
"The firms that I speak to have not a spare moment to plan for a no trade deal Brexit at the end of the year - that is the common sense voice that needs to find its way into these negotiations."
Those negotiations are not going well. They broke up last week with the EU's chief negotiator saying that very little progress had been made on key sticking points, including future fishing rights in UK waters, and commitments to maintain a "level playing field" over regulation and competition.
The devastating impact of Covid-19 and the fight for business survival has diverted management attention away from any Brexit contingency planning, according to Dame Carolyn, who worries that a political commitment to abandon the current transitional trading arrangements - come what may - will add to the burden on business at a critical moment.
"As one member put it to me - just because the house is on fire, it doesn't make it ok to set fire to the garden shed.
"If we have a political timescale that takes us to a brinksmanship deal in December that will be catastrophic for British business - they will not be ready.
"Small businesses were not ready last time there was a no-deal Brexit threat - this time they will not have had a moment to prepare for it."
Dame Carolyn's comments come as the CBI - the UK's most influential business group - confirmed she will be succeeded as director general by Tony Danker in November.
Mr Danker is currently chief executive of Be the Business, an organisation set up to improve the efficiency and productivity of UK businesses. A former media executive, he was also a policy adviser to the Treasury.

Brexit strain

Relations between business groups and the government have been strained ever since the campaign leading up to the EU referendum of 2016, when business groups, including the CBI, warned of economic damage to the UK economy whose biggest customer is the EU.
Dame Carolyn is hopeful that this crisis can help build bridges in the face of a common and deadly health and economic enemy.
"Government realises it needs business and business understands how much it needs government," she said.
She described the government's intervention to support workers wages during the lockdown as a "vital way for the economy to hibernate".
But the CBI on Thursday urged the government to focus on how the UK emerges from that hibernation.
In a letter to the Prime Minister, Dame Carolyn called on the government to make employment for young workers the government's top priority, as well as ensuring the UK emerges from the crisis with a focus on investment in environmentally sustainable industries.
Dame Carolyn was set to stand down this year anyway, but agreed to extend her term until the end of the year given the ongoing health and economic crisis.
This is not the swansong she would have wanted. The UK is forecast to experience the worst economic downturn of any major European economy according to figures out yesterday from the OECD.
A government spokesperson said: "We've been clear that we want to reach an agreement with the EU this year and we are prepared to work hard to accelerate talks. This was what both sides agreed to in the political declaration.
"If we don't negotiate a Canada-style FTA [free trade agreement], we'll leave with an Australia-style relationship. Whatever happens we will be leaving the single market and customs union at the end of this year.
"We have taken unprecedented action to support businesses through this pandemic and to ensure the UK's economic recovery is as strong and as swift as possible. Extending the transition period would simply prolong the negotiations and create more uncertainty for businesses."

News | Energy | UK: British Gas owner Centrica to cut 5,000 jobs

Simon Jack 



van Image copyright Getty Images
Centrica, the owner of British Gas, is to cut 5,000 jobs this year to "arrest the decline" of the company.
New chief executive Chris O'Shea said the energy giant would strip out three layers of management to slim down the business.
About half of the jobs to go will be among the company's leadership, management and corporate staff.
This will include half of the senior leadership team of 40 who will leave by the end of August.
The company has seen customers leave to go to smaller suppliers and, in February, blamed a big loss in 2019 on the energy price cap and falling gas prices.
The price cap on electricity and gas bills came into effect in January 2019 and was a flagship policy of former Prime Minister Theresa May to end what she called "rip-off" prices.
A number of energy companies have said the policy has affected their business and profits. Centrica made a loss of £849m in the last calendar year compared with a £987m profit the year before.

'Difficult decisions'

Mr O'Shea was officially appointed as Centrica chief executive in April, having previously been the company's finance director. He took over from Iain Conn, who had said last summer that he intended to leave the role.
"Since becoming chief executive almost three months ago, I've focused on navigating the company through the Covid-19 crisis and identifying what needs to change in Centrica," Mr O'Shea said.
"We've learnt through the crisis that we can be agile and responsive in the most difficult conditions and put our customers at the heart of our decision making.
"I truly regret that these difficult decisions will have to be made and understand the impact on the colleagues who will leave us. However, the changes we are proposing to make are designed to arrest our decline, allow us to focus on our customers and create a sustainable company."
The company also said it would be consulting with staff on "simplifying" terms and conditions for employees in the UK.
It said it had 80 different employee contracts, each with multiple variants, with many of the agreements more than 35 years-old.