>>> What to look at today - 8th of July 2025

Asian shares swung between small gains and losses as President Donald Trump left the door open for additional trade talks, providing a reprieve to markets after imposing new tariff rates on several countries. The MSCI regional stock benchmark traded in a tight range even as indexes gained in South Korea and Japan, countries that attracted a new level of levies. The yen held its losses. The won strengthened, while a gauge of the dollar dipped 0.2%. The euro gained on a report the US offered a deal to the European Union with a 10% tariff level. 
Late on Monday, Trump said he was still open to negotiations and pushed off increased duties until at least Aug. 1.  The comments eased concerns that higher tariffs are coming to several Asian nations and that will hurt the prospects of exports to the US. Despite falling on Monday on tariff angst, markets are hovering around record high levels. Stocks have recovered from their April plunge - when sweeping levies were first announced - fueled by expectations that the tariff deadline will be extended, based on Trump’s pattern of threatening first and backing down later. On Monday, Trump released the first in a series of tariff warning letters, just two days before agreements are due on countries facing his April 2 so-called reciprocal levies. Few nations successfully negotiated deals in the short time given. In the interim, Trump announced framework agreements with the United Kingdom and Vietnam and a trade truce with China. Meanwhile, Indian officials familiar with the matter said the nation had made its best offer on trade and the fate of an interim deal now lies in the hands of Trump. So far, the US economy has held up under the threat of a spiraling global trade war. Hiring is healthy and inflation has remained tame. The Federal Reserve is wary about tariffs and wants to see how they feed through to output in the next few months. The S&P 500 hit a record high last week, ahead of the July 9 deadline imposed by Trump. US After Hours Quiet after hours session; MMSI +4.8% named a new CEO and guided Q2 revs above consensus; PBBK +3% being acquired by NWFL.

Nikkei +0.20% Hang Seng +0.69% CSI +0.67% Shanghai +0.56% Shenzen +1.16%

Eur$ 1.1746 CNH 7.1722 CNY 7.1716 JPY 145.93 GBP 1.3640 CHF 0.7960 RUB 78.6125 TRY 40.0071 WTI$ 67.62 -0.46% Gold 3,330 -0.17% BTC 107,976 +0.07% ETH 2,541 +0.30%

S&P +0.07% Nasdaq +0.19% EuroStoxx +0.04% FTSE -0.16% Dax +0.03% SMI +0.11%

Macro :
- Wood’s Ark Funds Stage Surprise Comeback on Wall of Money (1)
- Goldman Sees Fed Cut in September, Earlier Than Prior Call
- Goldman’s Kostin Sees S&P 500 Rising 11% Over 12 Months
- Deutsche Bank Sees 2 Percentage-Point Tariff Hit on S&P Earnings
- Japan to Take All Possible Measures to Mitigate US Tariff Impact
- Pentagon Will Send Additional Defensive Weapons to Ukraine
- Hedge Fund Fermat Gets $1.7 Billion in Inflows After GAM Split
- *TRUMP TO IMPOSE 35% TARIFF ON GOODS FROM SERBIA
- *TRUMP TO IMPOSE 35% TARIFF ON GOODS FROM BANGLADESH
- *TRUMP TO IMPOSE 32% TARIFF ON GOODS FROM INDONESIA
- US to impose 30% tariffs on South Africa from August 1

Keep an eye on :
- ADYEN NA : Adyen Launches Loan Product for Canadian Platform Customers
- Altice : Blackstone Said to Explore Potential Joint Bid for Drahi’s SFR
- ALO FP : Alstom to Provide 316 Commuter Rail Cars to New York MTA
- ALO FP : Alstom, EFE in Pact for Santiago Signalling System Maintenance
- AAPL US : Apple Loses Its Top AI Models Executive to Meta’s Hiring Spree
- ARAMI FP : Aramis Sees Lower Growth Than Expected in 2H
- BSLN SW : Basilea Gets $39M Milestone Payment From US Health Department
- BNP FP : BNP Paribas Bank Polska Holder Offers 2.35m Shares: Terms
- BP/ LN: BP Names Simon Henry as Non-Executive Director
- CWR LN ; Ceres Power Holder Robert Bosch Offers 6.4M Shares: Terms
- DTG GY : Daimler Truck Announces Fresh Share Buyback Program, Daimler Truck’s Buyback Seen as ‘Positive Use of Cash’ by RBC
- EBUS NA : Ebusco Reports Agreement to Restructure Loans Due Mid-August
- ENSU NO : Ensurge Micropower Offers 40m Shares at NOK1.25/Share
- XOM US : Exxon Sees Up to $1.9b Earnings Hit from Oil and Gas Prices
- GALP PL : Galp 2Q Average Working Interest Production Beats Estimates
- IONQ US : Susquehanna Affiliate Buys $1 Billion IonQ Stake at 25% Premium
- IPS FP : Ipsos Buys InMoment’s Healthcare Division; No Terms
- KLG US : WK Kellogg Shares Rise on Betaville Report of Takeover Interest
- MC FP : LVMH to Sell Santa Barbara’s El Encanto Hotel for $82.2 Million
- MC FP : Michael Burke to Head LVMH Americas
- MC FP : Roberto Cavalli’s Owner Mulls Sale of Fashion Assets: Sole
- META US : Apple Loses Its Top AI Models Executive to Meta’s Hiring Spree
- 7201 JP : *NISSAN ADRS FALL AS MUCH AS 7.6%, MOST INTRADAY SINCE FEB. 12
- NOVB DC : WeightWatchers to Name Kim Boyd as Medical Chief on Tue.: Rtrs
- RIO LN : Rio Tinto New CEO May Be Announced As Soon As Late July: Reuters
- 005930 KS : Samsung’s Profit Halves in Deepening Chip Business Crisis
- SCATC NO : Egypt, Scatec Sign Deal to Set up Solar Power Plant: Ministry
- Shein IPO : Shein Confidentially Files for Hong Kong IPO, FT Reports (1)
- SPIE FP : Peugeot Invest Starts Sale of Remaining 2.5% Stake in Spie, Spie Holder Peugeot Invest Offers 4.25m Shares: Terms, placed @ 45.40/ Share - 3.85% Discount
- TGS NO : TGS Prelim 2Q Produced Revenue About $306M
- TKA GY : Thyssenkrupp, Germany Agree on TKMS Spinoff’s Key Security Terms
- UBSG SW : UBS Offers ‘Goodwill Payments’ Over Tariff-Linked Losses: FT
- VK FP : Vallourec Wins Contracts in Iraq With CNOOC, PetroChina

>>> Europe : Brokers Upgrades & Downgrades - 8th of July 2025

>>> Up
* Coloplast Raised to Buy at Jyske Bank; PT 750 kroner
* Givaudan Raised to Equal-Weight at Barclays
* SGS Raised to Sector Perform at RBC; PT 86.50 Swiss francs
* SolarEdge Raised to Sector Weight at KeyBanc
* Sunrun Raised to Sector Weight at KeyBanc

>>> Down
* Aker BP Cut to Sell at Norne Securities; PT 260 kroner
* Arkema Cut to Equal-Weight at Barclays; PT 80 euros
* Bank of America Cut to Hold at HSBC; PT $51
* Coinbase Cut to Sell at Punto Casa de Bolsa; PT $269.83
* Goldman Sachs Cut to Reduce at HSBC; PT $627
* Handelsbanken Cut to Underweight at Morgan Stanley
* JPMorgan Cut to Reduce at HSBC; PT $259
* Man Group Cut to Neutral at Citi; PT 185 pence
* Norwegian Air Cut to Hold at Arctic Securities; PT 16 kroner
* Signify Cut to Neutral at Oddo BHF; PT 26 euros

>>> Initiation
* 3i Rated New Hold at Kepler Cheuvreux; PT 4,100 pence
* Brunello Cucinelli Rated New Hold at Baptista Research
* Buzzi SpA Rated New Hold at Baptista Research; PT 49.50 euros
* Galderma Rated New Overweight at Barclays; PT 133 Swiss francs
* Glencore Resumed Overweight at JPMorgan; PT 360 pence
* Just Group Rated New Buy at Berenberg; PT 209 pence
* Metlen Rated New Outperform at BNPP Exane; PT 58 euros
* NTG Nordic Transport Group Rated New Overweight at Barclays
* Oxford Biomedica Rated New Buy at Jefferies; PT 566 pence
* Recordati Rated New Hold at Baptista Research; PT 60 euros
* Zealand Pharma Rated New Overweight at Barclays; PT 560 kroner

>>> Call
* Daimler Truck’s Buyback Seen as ‘Positive Use of Cash’ by RBC
* Deutsche Bank Sees 2 Percentage-Point Tariff Hit on S&P Earnings
* Goldman’s Kostin Sees S&P 500 Rising 11% Over 12 Months
* Signify’s Lack of Growth ‘Unacceptable,’ Downgraded at Oddo BHF

>>> Stoxx 600 Pre-Market Indications

  • Arkema (V1S TH) +2.1%
  • Zealand Pharma (22Z TH) +2%
    • Zealand Pharma Rated New Overweight at Barclays; PT 560 kroner
  • Rolls-Royce (RRU TH) +1.4%
  • Nexi (N0XA TH) +1.3%
  • Engie (GZF TH) +1.1%
  • Thales (CSF TH) -1%
  • Bilfinger (GBF TH) -1%
  • Stellantis (8TI TH) -1%
  • Hochtief (HOT TH) -1%
  • Carnival Plc (POH1 TH) -1.1%
  • Aker BP (ARC TH) -1.5%
    • Aker BP Cut to Sell at Norne Securities; PT 260 kroner
  • Handelsbanken (SVHH TH) -2.4%
    • Handelsbanken Cut to Underweight at Morgan Stanley
  • Rexel (E7V TH) -3%

FT : The markets just don’t believe Trump on tariffs

The markets just don’t believe Trump on tariffs
And that might become a problem

Ninety deals in 90, no wait, 113 days, and we’re serious this time
The deadline, to absolutely no one’s surprise, was no deadline at all. Countries were meant to negotiate a trade deal with the US by tomorrow, or face the reciprocal tariffs at a level detailed on that famous bit of poster board back in April. Now the big day has been moved back to August first. Or it might be: Treasury secretary Scott Bessent, whose main job is turning pronouncements into policy, often mentions September first. Like the president himself, the administration’s deadlines have to be taken seriously but not literally. “Seriously” because if Trump should decide to enforce a deadline, the impact could be seismic. “Not literally” because he probably won’t. 

What will the next three and a half weeks (and probably more) be like? We got a taste of that today, when the president announced Japan and South Korea would face 25 per cent tariffs as of the first of the month, subject to change “depending on our relationship with your Country”. This sounds scary. The pair are the US’s biggest trading partners after Canada, Mexico and the EU. They made up nearly 9 per cent of US imports and 7 per cent of US exports in 2024. 

But the market, rather than panicking, gave the equivalent of a depressed shrug. The S&P 500, already in a declining pattern when the announcement hit, fell another fifth of a per cent. The dollar strengthened 0.7 per cent against the Korean won and one per cent against the yen. In Tokyo and Seoul, equities opened on an upswing: the Korean Kospi index rose over 1.4 per cent in the first few two hours of trading, while the Japanese Nikkei 225 index rose by a more restrained 0.4 per cent. The modest moves are perfectly rational. For one, the new rates would not increase the effective tariff rate on either country very much. Paul Ashworth of Capital Economics explained in a note to clients that the new rates  

don’t apply to goods subject to Trump’s product-specific tariffs, with autos accounting for 34 per cent of imports from both countries, which are already subject to a 25 per cent levy that Trump has more than once threatened to raise to 50 per cent. Add in exempt electronics and pharmaceuticals and . . . if Trump follows through on his threat, the overall effective tariff rate on US imports would rise from 15.5 per cent to 16.6 per cent.

And why would markets panic about any administration pronouncement at this point? Even the agreements that have been made appear wide open to further negotiation. As Liz Ann Sonders of Charles Schwab put it to us, for the most part, they “are frameworks, not trade agreements”. Trade deals have historically taken 18 months to sign bilaterally, and another 40 to 45 months to implement, she points out. The rare earth exports “deal” with China was really just a de-escalation — the Trump administration has not released any details of the agreement, and China is still withholding exports to US companies, according to the Wall Street Journal. 

The China negotiations are admittedly a special case. The deals with the UK and Vietnam might tell us more about what other countries can hope for. But, again, the US-UK agreement was just a framework. It lowered the levies on British carmakers and exempted aerospace products from tariffs, in exchange for more beef, ethanol and industrial imports. Our colleague Alan Beattie deflated it as follows:

Politically, you can see why a relatively small open economy with military and security dependencies on the US would take a chance on a legally nonbinding agreement, and trade off some smallish beef and bioethanol quotas for protecting its niche but politically salient car and steel exporters.

There is a signal in the agreement, though. The US had a trade surplus with the UK last year, and yet the agreement did not remove the 10 per cent universal tariff. So other countries should expect the floor doesn’t go below 10 per cent.  

The recent agreement with Vietnam is the closest thing we have to a “proper” deal: a straight 20 per cent tariff on Vietnamese exports, no duties on US exports, and a 40 per cent rate on transshipped goods, meant to target China. The caveat is that the Vietnamese economy is very different from those of South Korea and Japan. It is smaller and poorer, and only imported $13bn of US goods last year. By contrast, South Korea and Japan are richer and accounted for a greater share of US exports; the sum for each country alone is more than five times that of Vietnam. That, and the important US military alliances with each country, gives these countries a stronger negotiating position. 

The tariff game, in short, is still — somehow — in its preliminaries. It begins in earnest only when agreements are made with large trade partners that the market believes will persist; the market responds to those agreements; and the president responds to the market’s response. It has long been the thesis of this newsletter that Trump will back down from any tariffs that evoke a sustained negative response from the markets. Only when the markets have been convinced that a given deal is set to stick are they going to force the issue with him. We remain a long way from there. 

The US stock and bond markets seem to have reached the conclusion that moderate tariffs — 10 per cent on all trading partners, a bit more on China and a few specific sectors — won’t matter much to economic growth or profits, or they will be softened if they do. And they have simply ignored Trump’s ongoing threats of more severe tariffs. The big question, then, is whether investors have set themselves up for a big disappointment when Trump — emboldened by the markets’ indifference and the economy’s resilience — suddenly shows resolve. 

Sonders of Charles Schwab wonders if in addition to the Trump put (also known as the Taco trade) there might also be a “Trump call”: 

With the market having done as well as it has since April 9, with economic data and inflation data perhaps not yet showing the full effect of tariffs, but not imploding to any degree . . . Is that the set-up for the administration’s willingness to just continue to press things from a tariff perspective?

We think this is worth worrying about.

FT : Can New York’s boutique banks break Lazard and Rothschild’s grip on Paris?

Can New York’s boutique banks break Lazard and Rothschild’s grip on Paris?
The two houses dominate French dealmaking. Centerview and Evercore are among those trying to change that

In France’s rural areas, one veteran Parisian dealmaker notes, politicians are grappling with shortages of doctors so acute they are termed “medical deserts”. Paris faces a different problem, he observes. “We have an overpopulation of bankers.”

The French capital is among the most competitive marketplaces for dealmakers in the world, where the prestige houses of Lazard and Rothschild & Co with their centuries-old pedigrees vie against the institutional heft of Wall Street’s biggest banks and their domestic French counterparts.

But in recent years, a new breed of competitor has swept into the city: American boutiques with a narrower focus on mergers and acquisitions advice, igniting a fierce battle for talent — and for mandates on deals involving some of Europe’s largest companies, from LVMH to TotalEnergies.

The defection of Matthieu Pigasse, Lazard’s celebrity dealmaker, in 2019 to Centerview Partners, sent shockwaves through Paris business circles, where Lazard and Rothschild have a long-established dynastic dominance.

Many of the major businesses of the CAC40 turn to Lazard’s bankers by instinct, returning repeatedly to debate deals in the wood-panelled rooms of its lavish Parisian headquarters. Lazard started out in the US and has a long heritage there. Unlike in New York, however, in Paris, Lazard is an undisputed market leader.

Relationships between Lazard, Rothschild and the business empires run by families such as the Arnaults of LVMH, the Pinaults behind Kering, or the Saadés, who run shipping giant CMA CGM, stretch back decades. A former Rothschild banker, Emmanuel Macron, inhabits the Élysée Palace.

When Pigasse made his move, Centerview Partners was an American upstart in Paris. Today, it is a force in French dealmaking, taking on clients from Danone to L’Oréal. Other deep-pocketed boutiques have arrived, including Lazard’s New York arch-rival Evercore. PJT Partners, Perella Weinberg and Moelis are also building a presence. 

But their entrance has yet to dislodge Lazard and Rothschild at the top of Paris’s dealmaking league tables. A downturn in mergers and acquisitions has hampered expansion efforts: M&A revenues in France fell to $1.3bn in 2024, down from $1.4bn in 2023 and $1.6bn in the bumper year of 2022, according to Dealogic data.

Speaking to the Financial Times from his central Parisian office, Pigasse said: “It’s a Darwinian world: only the strongest will survive.”

The US boutiques have already proven their advice-focused model domestically. In New York, Evercore has displaced Lazard. Along with Centerview, it is challenging Wall Street’s largest banks in the top tier of the dealmaking league tables.

With Evercore, PJT, Perella Weinberg and Moelis publicly listed and their share prices close to record highs, the US banks have had to search for new sources of growth. Paris — along with Milan — may be the answer.

Although London has long been the natural first European outpost, in the wake of Brexit a Parisian office also provides the American arrivistes with a base from which to conduct the rest of their EU operations — and the capacity to service the private equity industry’s heightened interest in the continent.

But it is a complicated market to break into.

They are arriving more than two centuries after the Rothschild family first established banking operations in Paris in the 1810s, while Lazard Frères launched in the French capital in 1854. Wall Street’s biggest players have been in the city for decades, and have been beefing up their presence: JPMorgan has rapidly expanded since Brexit to more than 1,000 bankers in Paris. And then there is France’s homegrown investment banking champion, BNP Paribas.

Still, the four public boutiques and their private rival Centerview Partners have recruited more than 150 bankers in Paris since 2018, when Perella opened its offices, people familiar with the banks said. That is just 30 shy of the number Lazard employs; Rothschild has 240.

But one boutique banker notes that there are far from 150 new bankers in Paris. Despite the banks’ American roots, the hires are almost entirely French and come from competitors well-versed in the etiquette of Paris’s business elite.

Lazard has become the prime target: many of Rothschild’s senior staff are long-standing and it has not suffered the same exodus of talent. Now Pigasse and other bankers at Centerview and Evercore are trying to tempt away the clients they previously serviced at Lazard.

The upstarts are capturing an increasing share of the advisory business. Together, Centerview, Evercore, PJT, Perella and Moelis collected 6 per cent of French M&A fees last year, according to estimates from Dealogic — up from little more than 1 per cent in 2019.

Centerview has upgraded its Paris offices from its original home shared with Radio Nova, a radio station owned by Pigasse on the outskirts of the city, to the eighth arrondissement, a stone’s throw from Rothschild and Lazard — as well as PJT and Moelis.

But the raids have yet to put a serious dent in the business of Lazard and Rothschild, each of which has held its market share steady at about 12 per cent. “Even with the recent departures, the [Lazard] team in France has really done well at holding their ground and not losing many clients,” one New York-based Lazard banker said.

The boutiques insist they do not want to become volume players. Yves Ayache, the former Morgan Stanley banker who now leads PJT Partners’ Parisian operations, was one of several to say the boutiques were not “chasing market share”.

Boutiques can make good returns on a handful of high-value transactions, bankers insist. Centerview advised L’Oréal on the acquisition of luxury cosmetics brand Aesop, and says it wants to work with a small number of clients. “We’re not a bee that goes from one flower to the next: our only honey is that of the client,” said Pigasse.

And even if they have not seized substantial share from Lazard and Rothschild, there are other targets to take business from. A number of big banks are a diminishing presence in French M&A, including Société Générale, UBS, Deutsche Bank and Barclays.

The newcomers’ biggest competitors may yet be each other.

The high number of banks in Paris already keeps fees for dealmakers lower than elsewhere in Europe and the US, said one senior banker, with the arrival of new entrants likely to exacerbate the problem.

Each boutique also said it was interested in cultivating strong relationships with France’s largest businesses, and offering specialist services. PJT has made inroads in the restructuring market, for example, while Evercore and Centerview are looking to hire in the area, people familiar with the matter said.

With sluggish M&A deal flow to date this year and continued economic uncertainty, many boutiques will have to put up with limited business in Paris for the years ahead. 

“If you’ve opened an office in Paris, it’s long-term,” said one boutique Parisian banker. “But people are going to realise the French market is far from being an El Dorado.”

FT : ASML finds even monopolists get the blues

ASML finds even monopolists get the blues
Dutch company’s revenue is lumpy due to its exposure to thorny geopolitics and customers’ changing fortunes

Holding a virtual monopoly in a product on which the artificial intelligence boom relies should be a golden ticket. For chipmaker Nvidia, it has been. But ASML, which makes extraordinarily complex machines that etch silicon and is no less integral to the rise of AI, has found that ruling the roost can still be an up-and-down affair.

The €270bn Dutch manufacturer, which reports its earnings next week, is a sine qua non of technology; chips powering AI and even fridges are invariably etched by ASML’s kit. The flipside is its exposure to customers’ fortunes and politics.

Revenue is inherently lumpy, and a single paused purchase makes a big dent — a key difference from fellow AI monopolist Nvidia, which is at present struggling to meet demand for its top-end chips. ASML’s newest high numerical aperture (NA) systems go for €380mn; as an example of how volatile revenue can be for such big-ticket items, one delayed order would be akin to drivers holding off on buying 8,000-odd Teslas.

Initial hopes were high for robust spending on wafer fab equipment this year and next. Semi, an industry body, in December reckoned on an increase of 7 per cent this year and twice that in 2026. Jefferies, for example, now expects sales to flatline next year.

Mood music bears that out. Top chipmaker TSMC has sounded more cautious over the timing of the adoption of new high NA machines. Other big customers are reining in spending. Intel in April shaved its capital expenditure plans by $2bn to $18bn, while consensus numbers for Samsung Electronics suggest the South Korean chipmaker will underspend last year’s $39bn capex budget.


Politics is also getting thornier. Washington, seeking to hobble China’s tech prowess, has banned sales of ASML’s more advanced machines. Going further would hurt. China, which buys the less advanced but more profitable deep ultraviolet machines, typically accounts for about a quarter of sales. Last year, catch-up on orders lifted that to half.

Meanwhile, Chinese homegrown competition, given an extra nudge by US trade barriers, is evolving. Shenzhen government-backed SiCarrier, for example, claims to have encroached on ASML territory with lithography capable of producing less advanced chips.

The good news is that catch-up in this industry, with a 5,000-strong supplier base and armies of engineers, requires years if not decades. Customers, too, will probably be deferring rather than nixing purchases. The zippier machines help customers juice yields; Intel reckons it cuts processes on a given layer from 40 steps to just 10.

Over time, ASML’s enviable market position looks solid — and perhaps more so than that of Nvidia, whose customers are increasingly trying to create their own chips. Yet the kit-maker’s shares have been the rockier investment. In the past year, ASML has shrunk by a third while Nvidia has risen by a quarter; its market capitalisation is within a whisker of $4tn. That makes ASML the braver bet, but by no means a worse one.

FT : OpenAI clamps down on security after foreign spying threats

OpenAI clamps down on security after foreign spying threats
Artificial intelligence group has added fingerprint scans and hired military experts to protect important data

OpenAI has overhauled its security operations to protect its intellectual property from corporate espionage, following claims of having been targeted by Chinese rivals.

The changes in recent months include stricter controls on sensitive information and enhanced vetting of staff, according to several people close to the $300bn artificial intelligence company.

The San Francisco-based start-up has been bolstering its security efforts since last year, but the clampdown was accelerated after Chinese AI start-up DeepSeek released a rival model in January.

OpenAI claimed that DeepSeek had improperly copied the California-based company’s models, using a technique known as “distillation”, to release a rival AI system. It has since added security measures to guard against these tactics.

DeepSeek has not commented on the claims.

The episode “prompted OpenAI to be much more rigorous”, said one person close to its security team, who added that the company, led by Sam Altman, had been “aggressively” expanding its security personnel and practices, including cyber security teams.

A global AI arms race has led to greater concerns about attempts to steal the technology, which could threaten economic and national security. US authorities warned tech start-ups last year that foreign adversaries, including China, had increased efforts to acquire their sensitive data.

OpenAI insiders said the start-up had been implementing stricter policies in its San Francisco offices since last summer to restrict staff access to crucial information about technologies such as its algorithms and new products.

The policies — known as information “tenting” — significantly reduced the number of people who could access the novel algorithms being developed, insiders said.

For example, when OpenAI was developing its new o1 model last year, codenamed “Strawberry” internally, staff working on the project were told to check that other employees were also part of the “Strawberry tent” before discussing it in communal office spaces.

The strict approach made work difficult for some staff. “It got very tight — you either had everything or nothing,” one person said. They added that over time “more people are being read in on the things they need to be, without being read in on others”.

The company now keeps a lot of its proprietary technology in isolated environments, meaning computer systems are kept offline and separate from other networks, according to people familiar with the practices. It also had biometric checks in its offices, where individuals could only access certain rooms by scanning their fingerprints, they added.

In order to protect model weights — parameters that influence how a model responds to prompts — OpenAI adopts a “deny-by-default egress policy”, meaning nothing is allowed to connect to the internet unless explicitly approved.

OpenAI had also increased physical security at its data centres, the people said. It was one of a number of Silicon Valley companies that stepped up their screening of staff and potential recruits because of an increased threat of Chinese espionage, the Financial Times reported last year.

Washington and Beijing are locked in a growing strategic competition, with the US imposing export controls to make it harder for China to obtain and develop cutting-edge technologies. However, concerns have also been raised about a rise in xenophobia at US tech companies given the prevalence of skilled workers of Asian descent.  

OpenAI hired Dane Stuckey last October as its new chief information security officer from the same role at Palantir, the data intelligence group known for its extensive military and government work.

Stuckey works alongside Matt Knight, OpenAI’s vice-president of security products. Knight has been developing ways to use OpenAI’s large language models to improve its defences against cyber attacks, according to a person with knowledge of the matter.

Retired US army general Paul Nakasone was appointed to OpenAI’s board last year to help oversee its defences against cyber security threats.

OpenAI said it was investing heavily in its security privacy programs, as it wants to lead the industry. The changes were not made in response to any particular incident, it added.

FT : Why driverless vehicles just can’t quit humans

Why driverless vehicles just can’t quit humans
Regulators need to ask more questions about the people in the shadows

“There’s nobody in the truck,” Sterling Anderson, co-founder of autonomous truck company Aurora, said in a podcast interview last year. “We’re not Wizard of Oz-ing this thing.” Anderson was referring to the company’s plans to begin a commercial delivery service using driverless trucks between Dallas and Houston in Texas. What he meant, I think, was this: our technology is not a parlour trick. Unlike in the Wizard of Oz, there won’t be a human hidden behind the curtain.

In May this year, Aurora announced its commercial driverless trucking service had officially begun. But a few weeks later, the company made another announcement: its truck manufacturing partner PACCAR “requested we have a person in the driver’s seat, because of certain prototype parts in their base vehicle platform” and “after much consideration, we respected their request and are moving the observer, who had been riding in the back of some of our trips, from the back seat to the front seat”.

Aurora insisted this wasn’t necessary to operate the truck safely, and that the observer would not operate the vehicle. Still, it was clearly a blow to its ambition to have “nobody in the truck”. Aside from the fear that it might look like they are “Wizard of Oz-ing this thing”, the investment case for driverless trucks doesn’t look so good if you need to pay someone to sit in each one.

Aurora isn’t the only autonomous vehicle company that hasn’t quite been able to quit humans. When Tesla launched its robotaxi service last month in Austin, Texas, the cars had human “safety monitors” in the passenger seats. Even the more established self-driving taxi services, which don’t have anyone inside the car, still have humans behind the scenes. In China, Baidu’s robotaxis launched with “remote human operators” who could take control of the cars if necessary. Waymo, in contrast, doesn’t have “remote drivers”, but it does have “human fleet response agents”. Confused Waymos remain in control but can ask these humans for advice.

If humans are such poor drivers (as many self-driving car companies allege), why can’t supposedly superior machines cope without them? Because machines and humans are good at different things. Machines don’t get tired, bored, drunk or distracted, but they struggle with real-world “edge cases” that require contextual awareness and intuition, such as how best to navigate a blockage on the road, or what a construction worker waving his arms around is trying to tell you. On top of that, every safe system should have a backstop in case of technical problems.

In that sense, the autonomous vehicle companies should be applauded for keeping humans around. It doesn’t mean they’re trying to pull off a parlour trick. But it does mean we should know much more about how these human roles actually work.

That’s because systems that rely on a combination of machines and humans can suffer from all sorts of well-documented problems. Humans asked to be safety monitors might suffer from “automation complacency”, which is the human tendency to lose concentration while supervising autonomous systems. Remote drivers might struggle with technical issues like connection problems and poor latency. Then there are questions of liability: if a human in a support centre somewhere gives bad advice to an autonomous vehicle that leads to an accident, who is to blame? The technology company? The employer? The individual? What if that human isn’t in the same state, or even the same country?

Bryant Walker Smith, an associate professor of law at the University of South Carolina, told me the onus should be on the self-driving companies to explain exactly what they’re doing and why they think it is safe. “Regulators absolutely should interrogate every piece of that.”

Yet so far, many of these human roles have remained in the shadows. When I sent a list of basic questions to Waymo, Tesla and Aurora, only Waymo responded. The company declined to say how many people worked in its fleet response team, but it did say they were employed by Cognizant, an IT company, that they required drivers’ licences and that they were “seated in Arizona, Michigan, and in an offshore location”. When I asked about lines of accountability, the company said that “to the extent a Waymo vehicle was involved in a collision that caused property damage or injury, Waymo would be responsible for the liability imposed on it by law”.

It shouldn’t be viewed as a problem that self-driving cars still need support from humans behind the scenes. But nor should those roles be hidden away. It’s time for regulators to pull back the curtain.

FT : EU to ringfence billions of farming subsidies

EU to ringfence billions of farming subsidies
Brussels reworks plans to protect direct income for farmers in new budget after pressure from industry

Brussels is planning to ringfence hundreds of billions of euros of direct subsidies to farmers despite efforts to redirect its budget towards other objectives, such as boosting Europe’s defence and economic competitiveness.

The European Commission plans to merge several funding streams into a single envelope per country in its multiannual budget due in mid-July, giving capitals more leeway on how to spend the money. But most agricultural subsidies will be handed over in a separate, protected package, according to three officials with knowledge of the plans.

Under pressure from the EU’s powerful farming lobby, the commission has acknowledged that many small farms would go under if they lost the direct income support paid under the EU’s Common Agricultural Policy (CAP), the officials said.

“Farmers must have their direct payments,” one EU official said.

The CAP makes up around one-third of total EU spending in the current budget cycle. It is one of the EU’s oldest policies, first established in 1962, and was designed to protect the bloc’s food security and ensure farmers were paid a fair wage.

EU officials have said that overall the CAP budget is likely to fall compared with the current €386bn fund, over the seven-year period.

Income support for farmers currently amounts to €291bn of the fund, or around three-quarters.

The CAP has been mired in controversy over the amount of money going to large landowners. Farmers took to the streets in protest last year, burning hay and blocking roads with tractors — in part over the complex bureaucracy involved in accessing the funds.

The remaining quarter of the CAP is currently paid to farmers if they fulfil certain environmental criteria, such as preserving hedgerows and allowing land to lie fallow. After the protests, however, the commission cut back on the requirements that farmers must fulfil in order to access the funds.

Environmental groups have already complained that the commission’s efforts to simplify the CAP have weakened protections for natural ecosystems.

Célia Nyssens-James, policy manager for agriculture and food systems at the European Environmental Bureau, said that only protecting the CAP direct payments was “not acceptable” and that they were “broken subsidies” in need of a “genuine overhaul”.

The much-anticipated plan for the new EU budget, which will run from 2028 and is mostly funded by member state contributions, has caused deep divisions in the EU executive, as commissioners fight to preserve pots of money for the departments they are responsible for.

The proposal had been to combine funding streams, such as regional funds, social spending and agricultural subsidies, into one payment dubbed “national and regional partnerships”.

There has also been pushback from current beneficiaries, including farmers and regions that fear their funding streams will be lost in favour of new priorities like defence spending.

“The proposal to centralise EU funding into a single fund by the European Commission risks dissolving the CAP into a broader framework with less focus, fewer guarantees and no shared vision,” said a petition signed by more than 3,100 farming groups, including dairy multinational Arla Foods and the European Landowners Organisation.

The commission’s Romanian executive vice-president Roxana Mînzatu has, for example, been pressing to maintain social spending. “The next budget needs to have a strong social dimension, as strong as the competitiveness and security dimension,” she told the Financial Times.

A majority of EU countries, alongside regional and local governments, have called to preserve regional development funds — or cohesion policy — which make up over one-third of the current EU joint budget.

“Only a distinct and robust budget and a region-based allocation methodology” can ensure that the next budget “will deliver long-term unity, competitiveness and convergence across EU regions”, wrote 14 countries including Italy, Spain and Poland.

The commission declined to comment on the budget plans.