European small caps surged this year — and could have further to run, Goldman Sachs strategist says
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Boston Globe
22 minutes ago
- Boston Globe
Austria prepares to give up ‘dream' of disarmament
Advertisement His comments are the latest response from European leaders to a rapidly changing security situation on the continent, which has wiped out the so-called peace dividend many countries enjoyed after the Cold War. Countries across Europe have pledged to ramp up military spending in the face of Russia's three-year invasion of Ukraine and fears that the United States will pull back some or all of the troops, weapons, and other support that have for decades helped guarantee European security. Austria's neighbor, Germany, has pledged to spend 5 percent of its annual economic output on military and strategic infrastructure, an increase financed in part by additional borrowing. Its fellow NATO members committed to the same target last month, under prodding from President Trump. Austria is not a member of NATO. Its standing army is small. And it is in the thick of a budget crisis, which Stocker and his coalition government are beginning to tackle by reducing government spending and raising some taxes. Advertisement Yet the new governing coalition plans to raise military spending gradually from below 1 percent of gross domestic product last year to 2 percent by 2032. Austria's neutrality 'obligates us to national defense, comprehensive national defense in particular,' Stocker said. 'And given the developments we are seeing, we will do more here than we have done.' Austria's spending will still be well short of that of Sweden and Finland, which after years of neutrality, joined NATO after Russia's attack on Ukraine in 2022. The fact that Stocker is willing to push for more spending on defense, even while his own government has committed to controlling its enormous debt, is a sign of how worried Europeans have grown about security. The added money, around $5.8 billion, could buy air defense capabilities as part of the European Sky Shield Initiative, which coordinates such procurements. It could also buy heavy — and expensive — weapon systems, like helicopters and fighter jets, Stocker said. Austria's foreign minister, Beate Meinl-Reisinger, said in an interview Tuesday that Russia's invasion of Ukraine had worried Austrians — and that staying out of the fray would not ensure the nation's security. 'With the threats we are right now facing and seeing, neutrality doesn't protect you at all,' she said. 'So we have to invest in our readiness for defending ourselves.' The plan still faces skeptics inside the government and out. Many older voters, on whom Stocker relies, see military spending as anathema to Austria's vaunted neutrality, said Peter Filzmaier, a political scientist who teaches in a pair of Austrian universities. Advertisement Defense issues are growing more important in Austria, he said, 'in a new world order that is rapidly changing.' But military spending is linked to a debate in Austria about the neutrality clause written into the Austrian Constitution when four World War II allies — Britain, France, the United States, and the Soviet Union — gave up their joint occupation of Austria in 1955. To change or modernize the neutrality clause would take a two-thirds majority in the 183-seat Austrian parliament. The far-right Freedom Party, which has 57 seats but is not part of Stocker's coalition, has deep ties to Russia and has long campaigned on more neutrality, not less. Stocker sat for the interview in his wood-paneled, parquet-floored office in the Vienna chancellery, underneath a black-and-white photograph taken in 1955 when Austrians adopted their constitutional neutrality. In the discussion, he referenced Russia's moves in Ukraine, along with Trump's plans to impose widespread tariffs on allies, as part of a long list of recent developments rattling global politics. In keeping with Austria's neutrality, Stocker suggested that his country would be open to hosting peace talks between Russia and Ukraine, if they ever came to pass. 'The question of Ukraine is also a deeply European one,' he said. 'This war is taking place on our continent, and therefore there is a willingness to negotiate.' This article originally appeared in
CNBC
23 minutes ago
- CNBC
Bitcoin could pull back with equities in the coming weeks, warns Piper Sandler
Bitcoin has notched new records this year as more investors embrace its digital gold narrative – but Piper Sandler warns the crypto is still vulnerable to stock market moves and could stumble in the coming weeks should tariff or rate related worries hit risk assets. "We recommend taking profits on stocks that have benefitted most from relief rally since early April," Michael Kantrowitz, Piper Sandler's chief investment strategist and head of portfolio strategy, said in a note Tuesday. "Markets have flipped from pricing in an inflationary recession on April 8th to a Goldilocks backdrop today. The stocks most at risk after this move are those higher beta, lower-quality names that have seen huge multiple expansion without any improvement in the earnings outlook." With bitcoin, he added, "there remains a very tight directional correlation [with] equity market risk … thus, if we do get a sell-off in risk on assets, for any macro risk that gets priced in, bitcoin would likely decline as well over the near term." The flagship cryptocurrency has been one of the top performing assets since the market low on April 9, returning 54% since then and hitting an all-time high as recently as last week . The gains have been fueled by institutional adoption via bitcoin ETFs as well as corporate treasury buying. The S & P 500 has gained half that amount in the same period. Bitcoin investors are no strangers to big drops, but the coin's maturity has noticeably led to reduced volatility this year, with many of its moves in reaction to broader risk sentiment being smaller than the big swings that made it famous. For example, on April 3, just after President Donald Trump introduced his sweeping tariffs, bitcoin fell 5% compared to the S & P's 4% decline. Still, the move shows bitcoin nevertheless tends to move in tandem with stocks in periods of broad macro fear and risk-off selling. Piper Sandler says there's little risk priced in for the Aug. 1 tariff deadline, but surprise to the upside could disrupt the current Goldilocks environment – economic conditions are neither too hot nor too cold – and the firm expects modestly higher consumer price index readings in the next three to four months. That "could complicate the current narrative that interest rates are moving lower in the near term," Kantrowitz said. August also tends to be a weak month for bitcoin and markets in general, given lower volume amid the summer lull. To be sure, the firm's recommendation that investors trim their riskiest positions is "more of a contrarian and tactical call for risk management rather than a bearish call on U.S. equities," Kantrowitz said. "While valuations are expensive, we expect earnings to continue to propel equities higher, albeit with less speculative leadership." —CNBC's Michael Bloom contributed reporting.
Yahoo
26 minutes ago
- Yahoo
Wood Mackenzie sees extended ‘sunset' for costly coal power
This story was originally published on Utility Dive. To receive daily news and insights, subscribe to our free daily Utility Dive newsletter. Dive Brief: Rising electricity demand and a slowdown in the buildout of alternative sources of power generation could extend the use of coal globally and displace 2,100 GW of gas and renewables by 2050, Wood Mackenzie said in a report earlier this month. Under a high demand scenario, coal-fired power generation could peak in 2030, four years later than the analysis' 'base case' forecast. The economics and politics of coal are strongest in Asia. In the United States, coal is more expensive than gas or solar and storage, but the cost of building new gas power plants has nearly doubled and long-duration energy storage technology is not yet mature enough to convert solar and wind into true 'baseload' resources, the report said. Dive Insight: In Asia, national security concerns and economics favor coal for now, said Anthony Knutson, global head of thermal coal markets at Wood Mackenzie, although when it comes to just levelized cost, hybrid solar and storage remain cheaper than coal or gas. 'While the long-term trajectory towards renewables remains intact, the path is proving far more complex than many anticipated as countries grapple with energy security and affordability concerns,' Knutson said in a statement. Wood Mackenzie expects the levelized cost of unabated coal-fired power in the Asia and Pacific region to remain below $100/MWh in 2030, lower than the expected levelized cost of gas-fired power there. Coal-fueled power in the United States will cost about $230/MWh in the United States and about $270/MWh in Europe in 2030, according to the report. By then, gas-fired power will cost about $100/MWh in the United States and about $150/MWh in Europe, it said. Hybrid solar and storage will undercut coal and gas in all three regions, coming in around $60/MWh in Asia, $70/MWh in Europe and $80/MWh in the United States. Though the economics of gas-fired generation are more favorable in the U.S. than in Asian and European countries that rely on liquefied natural gas imports, its ability to match surging AI load growth forecasts is limited, the report said. While long-duration energy storage technology has advanced significantly in recent years, it cannot provide baseload power yet, it said. It's also becoming more expensive to replace aging coal plants with gas and renewables, causing 'sticker shock' for power producers looking to make the switch, the report said. It blamed tariffs, reshoring of production and infrastructure delays for pushing up the cost of new solar while noting a near-doubling of U.S. costs for new gas power plant builds.
