Europe Car Sales Rise for Third Straight Month on EV Demand
New-vehicle registrations rose 7% to 1.15 million last month, the European Automobile Manufacturers’ Association said Wednesday. Sales expanded in major markets including Germany and the UK, with EV deliveries jumping 38%. (…)
EV sales are growing as more affordable models are available both from domestic manufacturers including Volkswagen AG and Stellantis NV, as well as Chinese brands led by BYD Co. In Germany, Europe’s largest market where a new subsidy is in place, EV sales jumped 41%. (…)
Deliveries of hybrid cars also rose in the region last month, while sales of petrol and diesel vehicles fell, pointing to a continued structural shift of the market toward cars with a battery.
Tesla Inc. continued its recovery in Europe after a painful 2025, with the US manufacturer’s European sales jumping 47% in April. Volkswagen, Stellantis, Mercedes-Benz Group AG and BMW AG also posted higher deliveries.
Chinese brands continue to make inroads in Europe, providing relief from a brutal price war back home, with Geely and BYD among the top sellers from the country. Chery Automobile Co. was among the fast-growing with a 322% rise. Its Jaecoo sport utility vehicles are proving particularly popular with British buyers.
The Trump administration reached an agreement with Volvo Car AB that will allow the automaker to avoid a US ban on connected vehicles tied to China.
Volvo, which is majority-owned by China’s Zhejiang Geely Holding Group, received a specific authorization from the US Commerce Department allowing it to continue importing and selling connected passenger vehicles in the US, the automaker said Tuesday, confirming an earlier report by Bloomberg News.
The agreement spares Volvo from one of the US barriers that have effectively walled off the American market from Chinese cars over national and economic security concerns. Along with the Commerce Department’s ban on Chinese connected vehicle technology, Chinese cars also face punitive tariffs, including a 100% import tax on electric vehicles from the country.
Volvo builds vehicles in the US at a plant near Charleston, South Carolina, where it has invested more than $1.3 billion. The company also imports models from Sweden, where it’s headquartered, and started assembling one of its better-selling electric SUVs in Belgium last year in part due to the US raising tariffs on cars manufactured in China.
The US ban on connected vehicles and related hardware and software technology with ties to China takes effect starting with the 2027 model year. Many modern cars contain an array of sensors such as cameras that can collect data, as well as systems that can wirelessly transmit information beyond the vehicle, raising concerns that automobiles could become targets for hackers or foreign adversaries. (…)
Volvo’s approval does not appear to extend to Polestar, the EV maker that also is effectively controlled by Geely’s billionaire founder, Li Shufu. Polestar said in a statement that it continues to work with US authorities to meet the requirements of the regulations. (…)
The authorization followed “constructive discussions with the US Department of Commerce and other US officials regarding Volvo Cars’ governance, technology and data security,” the carmaker said in its statement. (…)
The timing of the decision comes as the company awaits shipments of 2027 model-year vehicles. It is unrelated to Trump’s recent visit to Beijing, nor is it a sign that his administration is considering approvals for other Chinese-owned carmakers, said US officials familiar with the matter, who asked for anonymity to discuss the decision. (…)
“It is about showing how we handle data, that US customer data isn’t transferred to China,” Samuelsson said in a March interview. “These are basic requirements, and our setup is no different from other Western manufacturers.”
Germany, Spain Push Back on Europe’s Plans to Ban Huawei Gear
Germany and Spain are leading opposition to European Commission plans to ban Chinese technology suppliers from telecom networks as part of new cybersecurity rules, according to people familiar with the negotiations.
Officials from the countries want to keep state-level control, and have expressed concerns that banning products from Huawei Technologies Co. and other Chinese suppliers at the EU level risks retaliation from Beijing, the people said, asking not to be identified as the discussions aren’t public. The states also warned that a ban risks making the bloc’s plans to build out artificial intelligence infrastructure more expensive, they said.
The commission has labeled Huaweiand compatriot ZTE Corp. “high-risk suppliers” for telecom networks, and Brussels has urged member states to exclude the two companies from connectivity infrastructure. While infrastructure decisions are made by national governments, the EU’s executive governing body is pushing for stronger oversight via a revision to its Cybersecurity Act.
The changes would expand cybersecurity assessments to include the risks of foreign state influence and dependency on particular suppliers, and would make the commission’s recommendations legally binding across the EU.
European governments are caught in the middle of a power struggle between the US and China, balancing the benefits of trading with the Asian nation and the need to scrutinize foreign sources of critical infrastructure. German Chancellor Friedrich Merz, previously critical of over-reliance on China, said this year that he’ll push ahead with a new effort to strengthen Sino-German ties. The EU is also planning to propose temporarily lifting sanctions on a Chinese chip supplier to shore up the automotive supply chain.
Lawmakers and security experts in Europe and the US have for years raised concerns that Chinese companies could embed backdoors into their equipment that would allow unauthorized access to Europeans’ personal data. Both Huawei and ZTE have denied such claims. A Huawei spokesperson said a proposal to exclude Chinese suppliers based on their country of origin “violates the EU’s basic legal principles of fairness.” (…)
Spain has also become a more vocal proponent of Chinese interests in the EU in recent years. Prime Minister Pedro Sánchez has traveled to Beijing four times in as many years as he courts Chinese investment in sectors such as electric vehicles and renewable energy.
Germany has joined that effort even as there is disagreement within the ruling coalition and between the different ministries concerned with the process, some of the people said. While parts of the government generally agree with reducing reliance on China, others have been calling the idea a political bombshell, the people said.
The German government agreed in 2024 to strip Huawei and ZTE components from the core 5G mobile network by the end of this year for national security reasons.
German Economy Minister Katherina Reiche said the European Union should ensure that any measures it applies on Chinese trade don’t harm the bloc’s exports to the country.
In comments to reporters on Wednesday during her visit to Beijing, just days before Brussels officials consider whether to strengthen their stance on sales from the world’s second-biggest economy, she emphasized that any EU response shouldn’t get out of hand.
“As an exporting nation, we have two interests,” Reiche said. “We need to counter unfair competition, for example, in steel and ferroalloys, with appropriate measures, while at the same time ensuring that our companies can continue to export.” (…)
European firms in China are turning more upbeat about their business outlook, a new survey found, just as Brussels appears poised to take action against a swelling trade imbalance with Beijing.
About 35% of respondents reported being optimistic about their industry growing in China over the next two years, up from a record low of 29% in 2025. The annual poll, published on Wednesday by the European Union Chamber of Commerce in China, also showed that 47% of companies said the local business environment had become more politicized in the last year, the lowest share since at least 2023. (…)
About 68% of respondents said business had become more difficult in their industry over the past year, the second-highest proportion over at least the last decade. Less than a fifth of companies were optimistic about their profitability outlook over the next two years, the third-lowest level since at least 2013. (…)
Why Huawei’s New Chipmaking Plan Has Investors Buzzing
(…) Chinese tech giant Huawei Technologies Co. captivated industry watchers and investors on May 25 when its semiconductor chief, He Tingbo, outlined a new approach to chip design — a departure from the decades-long industry focus on shrinking transistors to improve performance.
The company’s vision for improving semiconductor efficiency, which it calls Tau Scaling Law, sparked a rally across China’s chipmaking sector the following day. Investors bet on Huawei’s ability to innovate within the constraints imposed by US trade curbs, pushing shares of its chipmaking partner Semiconductor Manufacturing International Corp. up nearly 6%.
Decades ago, Intel Corp. co-founder Gordon Moore predicted that advancements in semiconductor manufacturing would allow the number of transistors in an integrated circuit to roughly double every couple of years. This observation, which became known as Moore’s Law, held true for decades as smaller transistors on more densely packed circuits boosted performance while consuming less power.
Huawei’s proposed Tau Scaling Law seeks to move away from that model by improving performance not through ever-shrinking transistors, but by shortening the distance that data must travel inside a processor.
The company has called this technology LogicFolding: dividing what would typically be a flat chip layout into slices of computing blocks and stacking them atop each other so information can move more quickly. While the concept isn’t new — chip designers including industry leader Taiwan Semiconductor Manufacturing Co. already use advanced stacking technologies — Huawei is proposing a more aggressive redesign of chip architecture itself.
Such an approach could face significant engineering challenges, including manufacturing complexity, heat dissipation and power delivery. It also remains to be seen whether the technology can be deployed economically and at scale. Nevertheless, Huawei has outlined an ambitious roadmap for LogicFolding and said it plans to introduce the first such chips in smartphones later this year. (…)
Huawei is currently operating near the physical limits of the manufacturing technology available to it. The company is effectively constrained to producing chips at a geometry of 7 nanometers because US-led export restrictions have cut off its access to the extreme ultraviolet lithography systems needed to pattern ever-smaller transistors efficiently and at scale.
If successful, such a breakthrough could allow Huawei to work around these trade restrictions by improving chip performance through design and packaging innovation rather than through technology that it doesn’t have access to.
This could help narrow the technological gap with rivals such as TSMC. Using LogicFolding technology, Huawei says it aims to produce semiconductors with performance comparable to 1.4nm chips by 2031. That would still leave Huawei years behind TSMC, which is targeting similar advances by 2028, but it would represent a substantially narrower gap than what exists today. Huawei and its manufacturing partner SMIC are currently several generations behind the Taiwanese chipmaker.
Adding more layers to a chip stack significantly increases manufacturing complexity and raises the likelihood of defects, potentially reducing the yield of commercially viable chips.
The stacking approach could also create major thermal challenges, as densely layered chips tend to trap more heat and may require more advanced cooling systems. One major advantage of flat chips is the maximal surface area for heat dissipation.
(…) some US policymakers and industry executives — including Nvidia Chief Executive Officer Jensen Huang — have argued that restricting access could ultimately backfire by spurring Chinese rivals to accelerate their own technological development.
Goldman Strategists Lift S&P 500 Target to 8,000 on AI, Earnings
Strategists at Goldman Sachs Group Inc. joined peers at Morgan Stanley and Deutsche Bank AG in seeing a 17% return for the S&P 500 Index this year.
Earnings growth powered by the AI boom will drive further gains in stocks, the Goldman team led by Ben Snider said as they increased their year-end target for the US benchmark to 8,000 points, ditching a previous forecast of 7,600.
“Continued earnings growth should drive continued equity market upside,” the strategists wrote in a note. “The increased return forecast reflects increased estimates for S&P 500 earnings following an exceptionally strong first-quarter reporting season.” (…)
The Goldman strategists also increased their earnings-per-share forecast for companies in the S&P 500 to $340 for 2026, signaling year-on-year growth of 24%. They project a further increase of 13% for 2027.
Beneficiaries of artificial intelligence infrastructure investment should account for roughly half of S&P 500 EPS growth this year, the strategists said. Meanwhile, increases in valuations should be tempered by risks to the outlook, they said.
“The combination of decelerating earnings growth and continued uncertainty around both AI and the macroeconomic outlook should prevent a major increase in valuations,” the strategists wrote. “AI sentiment and interest rates create risks in both directions.”
More from Goldman Sachs:
The conditions that have marked the ends of high-valuation, high-concentration bull markets in the past remain mostly absent today, although some of those conditions appear to be drawing closer.
Two of those dynamics are speculative mania and deteriorating macro fundamentals. Despite the sharp recent market rally, measures of froth including our Speculative Trading Indicator remain well below prior highs.
Likewise, while IPO activity is increasing, recent issuance has been modest.
Fundamentally, earnings strength has been the key differentiator between the recent market run and similar narrow rallies in the past. However, the earnings-driven outperformance of AI infrastructure stocks also raises their hurdle going forward, and the oil shock threatens to create the conditions of disappointing growth and tightening financial conditions that have marked the ends of previous bull markets.
The recent equity market return has been narrow, but both its magnitude and composition have been driven primarily by earnings strength. Since the start of the war on February 27, the S&P 500 has returned 9%, S&P 500 stocks involved in the AI infrastructure build-out have returned 33%, and the equal-weight S&P 500 has returned just 1%. However, the 33% rally of S&P 500 AI infrastructure stocks has occurred alongside a 30% increase in consensus forward earnings for the group.
GS also warns that “recent inflation readings and corporate commentary have signaled the risk to profit margins from input cost pressures. Our top-down macro model for the median S&P 500 company points to limited margin expansion through 2027. However, we expect macroeconomic earnings headwinds will be more than offset by the powerful tailwinds from the AI investment boom.
We expect the beneficiaries of AI infrastructure investment will account for roughly half of S&P 500 EPS growth in 2026 and 2027.”
What about the rest?
Hmmm…
Meanwhile:
US Treasuries are experiencing the worst bear market in history: The US Treasury Total Return Index has now been in a drawdown for 69 consecutive months, the longest streak in over 100 years of data.
The previous record stretch that ended in 2019 lasted for ~30 months.
This is also only the 3rd time in history that a drawdown has exceeded 20 months. During the current drawdown, the US Treasury Total Return Index fell as much as -18% from 2020 to 2022. Since then, it has recovered some of its losses, but it is still down -6% since 2020. (@KobeissiLetter)
Iran’s Khamenei Says No Going Back for Middle East Rocked by War
Iran’s Supreme Leader Mojtaba Khamenei said US military bases in the Middle East will no longer be safe after the war, declaring victory and a new regional order even as talks to end the conflict continued.
“The clock cannot be turned back; the nations and lands of the region will no longer be a shield for American bases,” he said in a written statement marking the Islamic Hajj pilgrimage in Saudi Arabia, which he said had an important role in “narrating the victory” of the war against the US-Israeli alliance.
The comments indicate Iran’s view that the conflict has fundamentally changed the balance of power in the oil-rich Persian Gulf, weakening the US and establishing deterrence that will compel Gulf Arab countries to coexist with the Islamic Republic.
Khamenei cited Iranian pilgrims’ participation as a sign of Islamic unity — despite Iran’s strategy of attacking regional countries in retaliation against US-Israeli airstrikes — inviting all Muslim countries to “friendship and cooperation.”
The United Arab Emirates, which bore the brunt of Tehran’s attacks and struck Iran multiple times in response, has joined Saudi Arabia and Qatar in urging US President Donald Trump to negotiate an end to the war, Bloomberg reported last week. (…)
We seem to be moving toward a peace deal brokered by the GCCs, Pakistan and Turkey, creating a regional coalition with Iran with or without the participation of the US.
Why would the GCCs let Trump define their future given that he repeatedly said the US has no need for Middle East oil and does not care about Hormuz, “We’re now totally independent of the Middle East… We don’t need their oil, we don’t need anything they have”. “We don’t need the Strait of Hormuz”.
And on Monday, Trump displayed his total ignorance of the history and complexity of the region:
As the US and Iran try to come to terms on a peace deal to end their months-long war, US President Donald Trump this week has introduced a new demand – that other countries in the Middle East sign on to his Abraham Accords, normalising relations with Israel.
There are reasons for this. The US and Israel are militarily, strategically and economically weaker than they were on the eve of launching “Operation Epic Fury”, their joint military operation against Iran, in late February.
Their carefully built-up alliances with Persian Gulf countries are now being reevaluated, given these ties didn’t prevent Gulf states from being attacked by Iran. And Iran – despite losing many political and military leaders in months of devastating strikes – seems more powerful than ever.
In this context, both Trump and Israeli Prime Minister Benjamin Netanyahu desperately need a symbolic victory they can sell to their respective electorates before the US midterm elections and Knesset elections later this year.
This partially explains why Trump is trying to re-invigorate the Abraham Accords, which he has long touted as one of the biggest foreign policy successes of his first term in office.
In a phone call over the weekend with regional partners, including Saudi Arabia, Qatar, Pakistan, the United Arab Emirates (UAE), Bahrain, Turkey, Egypt and Jordan, he insisted their inclusion in any Iran deal depended on all joining the accords. This means establishing diplomatic ties with Israel. (…)
Since Israel’s devastating retaliatory war on Gaza began, Saudi Arabia has been a prominent advocate of Palestinian statehood. It has publicly refused to sign the accords without firm guarantees of Palestinian self-determination.
The remaining regional powers, such as Pakistan, Qatar and Turkey, must take account of their restive populations, who are overwhelmingly supportive of Palestinian self-determination. (…)
Pakistan, in fact, has already rejected Trump’s demands and Saudi Arabia is likely to follow.
So, while it might make sense to link Iran and Palestine together through a regional peace agreement, the Abraham Accords are simply too toxic in their current form for most countries to entertain. (…)
Saudi Arabia has reportedly floated a regional non-aggression pact (including Iran) along the lines of Europe’s Helsinki Accords that aimed to ease Cold War tensions in Europe.
Perhaps Trump is trying to re-invigorate the Abraham Accords as a way to counter the Saudi move. Undoubtedly, he is also trying to appease Netanyahu. The silence his demand has received, however, may indicate the region is no longer amenable to US persuasion, no matter how big the carrots are.
BTW: ‘Enemy state’: Israel turns sights to Turkey
Tensions between Israel and Turkey are rapidly deteriorating, with senior figures on both sides now openly framing the other as a future regional enemy.
The latest escalation came after Israeli culture minister Miki Zohar warned Turkey should be treated as an “enemy state” following the interception of a Gaza-bound aid flotilla that sailed from the Turkish city of Marmaris earlier this week.
“We must begin to treat Turkey as an enemy state,” Zohar said.
“If Turkey chooses the path of war with us, it will undoubtedly pay a very heavy price. There were Iranians who thought the same thing, and look where they are now.”
The comments reflect a much broader shift that has been building for months as the Gaza conflict, regional instability and the weakening of Iran reshape Middle East alliances.
Last month, Turkish foreign minister Hakan Fidan accused Israel of actively searching for a replacement enemy as tensions with Tehran evolve.
“After Iran, Israel cannot live without an enemy,” Fidan said.
“We see that not only Netanyahu’s administration but also some figures in the opposition … are seeking to declare Turkey the new enemy.”
“This is a new development in Israel … turning into a state strategy.”
Relations between the two regional powers have collapsed since the October 7 Hamas attacks and the subsequent Gaza war. Turkish President Recep Tayyip Erdogan has become one of Israel’s fiercest international critics, repeatedly accusing the Israeli government of genocide and openly supporting Hamas as resistance fighters.
Israeli officials have responded with increasingly personal attacks on Erdogan, with Prime Minister Benjamin Netanyahu accusing the Turkish leader of massacring Kurds, while Turkey’s foreign ministry recently labelled Netanyahu “the Hitler of our time”. (…)