ANCELOTTI NO LONGER TURNS TO MORATA

Between the bench and a brick wall

HUGO CEREZO 01/08/2014

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Álvaro Morata finds himself trapped between the bench and a brick wall. The striker is going through a tough time, ignored by Ancelotti – who now prefers to bring on Jesé to shake things up – and forced to stay on at Real Madrid until June, despite playing an increasingly anonymous role.

There are plenty of clubs interested in signing him, either now or in June. Arsenal has been leading the pack for some time. In fact, it may even have offered €18 million to take him to London. Let us not forget that Walcott will miss the rest of the season. However, the latest side to have made a serious approach for the European under-21 champion is Liverpool, which is waiting to see how things pan out, because if a deal is to go through for this sort of money it will have trouble staying in the bidding.

The forward, meanwhile, is waiting for opportunities to play, which are few and far between at the moment. Whilst he was Ancelotti's go-to impact sub at the start of the season, in the last three league games – in which Madrid has entered the final stretch with the scoreline level – he has remained on the bench.

Long forgotten are his performances in the victory against Betis – when he replaced Benzema at 0-0 – and against Levante, when he made it 2-2 before Cristiano clinched the winner. Carletto also brought on the striker against Villarreal – in the 73rd minute at 1-1, once again replacing Benzema. Against Atlético he entered the fray with Real trailing 1-0 and revitalised the team, even coming close to scoring an equaliser.

Alonso signs two-year Madrid deal

The 32-year-old took to his official Twitter account to reveal the news that he has finally ended speculation over his future by agreeing terms with the club until 2016

Xabi Alonso has signed a two-year contract extension with Real Madrid, the midfielder revealed on Wednesday.

The Spain international's future had been shrouded in doubt in recent months as his previous deal was set to expire at the end of the season.

However, the former Liverpool man has finally committed his future to the Santiago Bernabeu outfit, signing fresh terms to keep him at the club until the summer of 2016.
Alonso took to his official Twitter account to reveal the news, stating: "I'll be continuing at my home for two more years. It's a pleasure to tell you this. I'm very very happy."



The club also confirmed the news, announcing that Alonso will face the press at the Santiago Bernabeu at 13:30CET on January 10.

Alonso, who joined the club in 2009, made it clear earlier this month that he was eager to win more trophies with Madrid - including the elusive 10th European title.

The 32-year-old has played 12 times in all competitions to date this season but is currently sidelined with an inner ear problem and was forced to sit out the win over Celta Vigo on Monday

Obama nears decision on NSA reforms as spy leaders meet at White House

• Decision on surveillance expected before state of the union

• Congressional leaders to join as president mulls NSA review

According to the White House, Obama has yet to decide which NSA and FBI authorities to restrict and which to ratify. Photograph: Brooks Kraft/Corbis

The leaders of the US intelligence agencies were holding talks at the White House on Wednesday as US president Barack Obama neared a decision on curbing the National Security Agency’s controversial bulk surveillance powers.

Obama was meeting the leadership of the US spy agencies and his privacy and civil liberties oversight board, to be followed on Thursday by additional meetings with key congressional leaders. 

Legislators critical of the NSA’s bulk domestic phone records collection, such as senators Ron Wyden and Mark Udall and congressman James Sensenbrenner, were expected to attend. The White House will also welcome surveillance skeptics from the private sector, including ACLU President Susan Herman.

According to the White House, Obama has yet to decide which NSA and FBI authorities to restrict and which to ratify. An announcement could come as early as next week, and the White House has said it will occur before the state of the union address on 28 January. 

“These meetings are an opportunity for the president to hear from key stakeholders as we near the end of our review,” said national security council spokeswoman Caitlin Hayden.

There is widespread expectation that Obama will embrace a recommendation from his surveillance review board that urged him in December to have the phone companies or another private entity store Americans’ phone data on behalf of the NSA. Obama nodded to the idea in a press conference on 20 December by saying “there may be a better way of skinning the cat”.

The bulk domestic phone records collection was first reported by the Guardian in June last year, based on documents leaked by NSA whistleblower Edward Snowden.

Opponents of bulk surveillance are waiting to see precisely how such a proposal would take shape. The intelligence agencies have said they can live with the transference of the phone records database outside the NSA, provided it remains a comprehensive trove of all Americans’ phone data, to be queried for potential links to terrorist groups. That would likely necessitate requiring the storage of phone data for longer than the phone companies currently keep it, which NSA critics worry would repackage the bulk surveillance instead of ending it.

“The administration has not yet made the case that increased data retention is necessary, but I welcome any proposals that serve our national security interests without undermining constitutional rights,”Sensenbrenner told the Guardian after the review group delivered its recommendations.

Some of Sensenbrenner’s allies can accept phone records storage outside the NSA, provided the NSA can only sift through the records pursuant to an individualized court order tied to specific suspicions of wrongdoing. 

The phone companies have indicated they are skeptical about keeping the phone records data on behalf of the NSA, fearing it opens them to increased legal liability and burdensome costs. There are also questions about a private entity’s ability to secure the data against cyberattacks.

But Sensenbrenner and other architects of a bill to end bulk domestic surveillance, known as the USA Freedom Act, have so far embraced the review group’s findings to build political momentum for the bill. 

Ahead of Obama’s announcements, the political landscape on surveillance is “absolute chaos”, said Michelle Richardson, the ACLU’s surveillance lobbyist.

“It’s very confusing right now. We feel good about the House but have a problem in the Senate. We’re not getting a lot of people to budge on this issue,” Richardson said, particularly with moderate Democrats who will take their cues from Obama’s forthcoming address.

On Monday and Tuesday, a coalition of technology groups plan to lobby Capitol Hill on behalf of the bill. They are expected to focus on Republican members of the House judiciary committee, one of several committees that must discuss and possibly amend the provisions of the USA Freedom Act. 

Those Republicans “may be open to arguments from the perspective of commerce, productivity and business,” said Matt Simons of the software consulting firm ThoughtWorks, whose coalition also includes Reddit and broadband firm NetBlazr. (Disclosure: ThoughtWorks helped with a Guardian website rebuild.)

Obama has yet to take a position on the USA Freedom Act. Nor has he indicated support or opposition to a rival bill in the Senate, sponsored by intelligence committee chairwoman Dianne Feinstein, that would entrench and expand the NSA’s domestic surveillance capabilities. But Feinstein said in December that the bulk surveillance she has championed was “important” but not “indispensable” for preventing terrorist attacks, which added to a sense that the NSA might no longer retain its phone records database. 

Alexander has said that whomever holds the database, the expansive pool of phone records must exist, in order that security officials maintain a tool for spotting connections to terrorism. “There is no other way we know of to connect the dots,” Alexander told the Senate judiciary committee in December. 

Additionally, the office of the director of national intelligence said late Tuesday that three members of the review group – Geoffrey Stone, Cass Sunstein and Peter Swire – met NSA director James Clapper on Tuesday to discuss the group’s proposed spy changes.

US dollar holds steady after release of Federal Reserve minutes

Bolstered optimism from December job growth and the Fed's decision to reduce stimulus have helped strengthen the dollar

A television screen at a trading post on the floor of the New York Stock Exchange show the decision of the Federal Reserve. Photograph: Richard Drew/AP

The dollar held gains against the euro and yen on Wednesday following minutes from the Federal Reserve's December meeting, which showed the American central bank was on track to wind down its bond purchases at a steady pace. 

The Fed minutes laid out the central bank's rationale for cutting purchases of Treasuries and mortgage-backed securities to $75bn a month from $85bn starting this month. Those purchases have helped lower interest rates. As the economic outlook has improved, the expectation is for reduced stimulus. Better hopes for US growth have driven investors to the dollar, which reached a six-week high against a basket of six major currencies. The dollar index was last up 0.4% on the day at 81.145. 

"On balance, the fact that the minutes do not meaningfully alter the outlook for a gradual and steady reduction in Fed stimulus remains positive for the dollar," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "Indeed, as the tone of economic data improves, there is a risk that the Fed could become more aggressive in its reduction of monetary stimulus." 

Many members of the policy-setting Federal Open Market Committee wanted to proceed with caution in trimming the asset purchases, and most wanted to stress that further reductions were not on a preset course. 

According to CME FedWatch, the contracts show rates markets now assign roughly a 60% probability for the first Fed rate hike occurring as early as the April 2015 meeting of the Federal Open Market Committee.

 Three weeks ago, when the Fed announced plans to scale back its massive bond-buying stimulus but pledged to keep interest rates low for the foreseeable future, rate futures signalled expectations for the Fed to hold off on its first rate hike until July 2015 at the earliest. 

Still, the market showed minimal reaction as traders had already priced in the Fed's reduction in stimulus. The dollar last traded 0.3$ higher at 104.85 yen, below an earlier high of 105.12 yen, but above Monday's two-week low of 103.88. Last week, the dollar reached a five-year peak of 105.44 yen. 

The euro, meanwhile, was down 0.3% versus the dollar at $1.3568. Against the pound, the euro hit a one-year low, with the euro buying 0.8252 pound late on Wednesday. 

"Overall, I think this was in line with the markets expectation," said Brian Dangerfield, currency strategist at RBS Securities in Stamford, Connecticut. "The dollar reaction has been fairly muted to this, and I think that's because for the most part, the information that we've received is not significantly different from what the chairman has been saying over the past few weeks." 

Earlier in the session, a report by a payrolls processor showed US private employers added 238,000 jobs in December, more than expected and the best reading in 13 months. ADP's National Employment Report also revised November's job gains higher. The ADP report comes two days ahead of the government's non-farm payroll report, a measure of the labor market that is more comprehensive and includes both public and private sector employment. 

This is the year of make or break for Europe

As Greece takes over the EU chair, a fresh eurozone crisis is inevitable unless Germany changes its tune

Alexis Tsipras, the leader of Greece's Syriza party. Photograph: Gabriel Pecot/AP

There is something poignantly symbolic about the fact that it is under a Greek presidency that the EU faces 2014 – a year which could determine whether or not the post-second world war process of closer European integration not just halts but goes into reverse. But while Greek mythology provided many of the cultural icons for European unity, the fate of the European project will not be shaped by Greece alone.

There is no reason to suppose that the coming six months with Athens in the EU chair will be any less effective or efficient than any other presidency. The more productive ones in the past have come from the smaller EU countries.

The biggest immediate challenge to the goal of an ever-closer EU comes from the unresolved eurozone crisis. European leaders must execute a policy U-turn and abandon the present austerity strategy if a renewed crisis is to be avoided later this year, given the feeble economic recovery.

This is not some idealistic Europhile judgment, but something also recognised in the more cynical world of international finance. But has the penny dropped in Berlin? Unless the new German coalition accepts that without a new strategy based on progressive debt cancellation and a concerted drive to boost investment in the economically exhausted southern "periphery", there may be no way to avoid a second, potentially deadly crisis.

There are three reasons for some heavily qualified optimism that this may yet come to pass. First, growing numbers of German economists, impressed by the virtual disappearance of inflation, have come to see the crisis in a new light. Second, the German Social Democrats – now part of the government – fear that without a change of policy, fresh eurozone political and social turmoil could undermine a key German objective of the past 70 years: a politically stable Europe.

A third and possibly decisive factor is the evidence that, within the next year, the Greek people could elect a leftwing government determined to lead a revolt against the mindless policy of mass impoverishment, millions of Europeans and their societies.

The Syriza party's growing popularity is matched by its determination to fight for a new Europe-wide economic and social strategy and to reject any facile, nationalist or populist move to quit either the EU or the euro. That would make a future Syriza-inspired demand for a radical change of European policy all the more difficult for current rightwing political EU leadership to resist.

Indeed, the prospect of such a revolt may lead some in Berlin and Brussels to begin making these concessions while they still have their increasingly desperate conservative allies in Athens clinging to government. The precarious signs of slight economic recovery are unlikely to be enough in themselves to avert a future eurozone breakup – something from which the German economy might well emerge as the biggest loser.

Of course the eurozone crisis is only one expression of a deeper political challenge to the European cause. The rise of far-right nationalisms presents a potentially deadly challenge to the goal of a democratic, peaceful and socially just Europe. Anyone who doubts this need only await the results of the forthcoming European parliament elections.

Success for the far right will not, of course, bring them to power anywhere. But big gains will lend credibility to their increasingly strident campaign to block and then fragment the EU, and their determination to give expression to the kind of blind nationalism which has so often led Europe to disaster in the past.

On the other hand, success for a Syriza-led campaign for a fundamental change of EU policy could demonstrate that there is a better alternative to mindless hate, fear and bigotry. It could yet breathe life into the cause of a Europe of peace, democracy and social justice

Investors move to restrict power of Boots chairman Pessina

talian billionaire faces rebellion by shareholders over him 'having undue influence' over chemist chain

Stefano Pessina faces an investors' revolt. Photograph: Shaun Curry/AFP/Getty Images

Stefano Pessina, the Italian billionaire who made hundreds of millions engineering the sale of a 45% stake in Boots to US retailer Walgreen, will face a potential investor rebellion over concerns he could have "undue influence" over the company.

Leading US investor CtW Investment Group has called on shareholders to back its proposals to limit Pessina's influence on the company.

Pessina, executive chairman of Boots owner Alliance Boots, controls 8% of Walgreen's shares and has a seat on the board. His stake will increase to 16% if Walgreen buys the rest of Boots, which it has the option to buy for $9.5bn by 2016.

In a letter to investors, CtW said: "The sudden concentration of ownership in a single individual marks a significant shift in Walgreen's governance structure, raising questions about whether Pessina could have undue influence.

"Walgreen has embarked on a dramatic and potentially risky transformation of its strategy, board and ownership structure, placing a high premium on the additional protections proxy access affords shareholders."

CtW, which represents union-sponsored pension funds that have $250bn of assets under management and are major investors in Walgreen, is calling for a change in the US company's governance rules to allow shareholders with just a 3% stake to nominate directors to the board.

The shareholder body, which owns 0.5% of Walgreen's publicly floated shares, said its proposals would safeguard against "potential abuse by special interests and short-term activists" and allow long-term small investors to act in the event of "costly transactional failure or other material governance failure".

Michael Pryce-Jones, senior governance policy analyst at CtW, said several big pension funds, including the California State Teachers' Retirement System (CalSTRS), had already said they will vote in favour of the motion at Walgreen's annual meeting in Chicago on Wednesday.

He said there was a "very good chance" that the proposal will get voted through. "We are concerned that he [Pessina] could have undue influence, and where will accountability come from."

Shareholder advisory groups ISS and PIRC have encouraged shareholders to back the proposal.

• This article was amended on Wednesday 9 January 2014. It is the California State Teachers' Retirement System (CalSTRS) - rather than the California Public Employees' Retirement System (CalPERS) - which has indicated it will vote in favour of the motion

Bentley sales reach record in 2013 despite China dip

The luxury manufacturer introduced its new Continental GT Speed Convertible, but sales in China shrank

The Bentley Continental GT Speed Convertible's world debut in Detroit, January 2013: the luxury car manufacturer posted record sales last year. Photograph: Joseph Heroun/Alamy

Bentley had a record year in 2013, with a 19% rise in global sales despite diminishing demand in China and a shrinking luxury car market.

The Crewe-based car manufacturer delivered 10,120 cars last year compared with 8,510 in 2012 and a touch above its previous peak of 10,014 in 2007.

Growth was achieved as Bentley introduced its new Continental GT Speed Convertible and the Flying Spur and came despite an estimated 6% contraction in the luxury car market as a whole last year.

Wolfgang Schreiber, Bentley's chairman and chief executive, said 2014 "will surely not be an easy year," but added that demand for its new and existing models should underpin further growth.

Bentley is part of Germany's Volkswagen group, and has the biggest share of the luxury car market, selling around one in four of all cars priced above €150,000 (£124,000). Bentley customers typically own seven or eight cars, and it is aiming to sell 15,000 cars in 2018.

Sales in the UK, Bentley's third largest market after the US and China, were up by a quarter at 1,381 cars in 2013. In Europe sales rose 11% to 1,480 cars.

Sales in the Americas were up 28% at 3,140, but sales were down 2.7% at 2,191 cars in China.

Kevin Rose, sales and marketing director, said there were a number of reasons for the drop in China sales, where it has experience rapid growth in recent years.

"There are pure economic reasons because a lot of the export business in China has suffered in the last year and a half.

"Equally there has been a lot of investment in infrastructure, in particular in real estate, which has not proven to be so successful so there's a little bit less cash around.

"Philosophically, it's less acceptable to show wealth at the moment and people are a little bit nervous about that. That I think will probably change. There is also some migration of high-net worth individuals moving out of the market, all of whom would be potential Bentley customers."

He said however that a high proportion of sales in places such as San Diego and Vancouver are made to Chinese nationals.

Bentley is hoping that new products, including the rollout of its Flying Spur, will help stimulate the market in the world's second largest economy in 2014. "I don't think we'll be helped much by the market," he added.

The company is planning to invest around £800m and create 400 jobs in Crewe as it develops the first Bentley SUV, the first of which are expected to hit the roads in 2016. It is estimated a further 600 jobs will be created in the UK supply chain.

A hybrid version of the SUV is likely to follow in 2017, Schreiber said.