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Quartz Daily Brief—US embassy closures, Tunisian troubles, TCI pressures EADS, China milk powder ban

What to watch for today

Diplomatic lockdown. The US extended the closure of embassies in the Middle East and Africa by a week, citing an unidentified terrorist threat and chatter between suspects that looks “very reminiscent of what we saw pre-9/11.” US security forces are on alert and a worldwide travel alert has been issued. Several other countries have also closed their Yemen embassies.

Trouble in Tunisia. Tensions are rising after the police shot dead an Islamist militant and two soldiers were killed in a blast near the Algerian border. Competing rallies over the weekend by the supporters of the moderate-Islamist government and the secular opposition have also raised concerns over the growing political crisis.

Services sector gaining strength. Service industries, which account for almost 90% of the US economy, are forecast to have expanded at a faster pace in July than in June, due to improvements in the jobs market and the rebound in the housing industry. Service sector data from the euro zone will also be closely watched.

HSBC on the mend. First-half earnings are expected to have risen 13% due to a reduction in losses from its US operations. The bank has been selling assets in the US to focus on more profitable markets.

EADS under pressure. Activist hedge fund TCI demanded that the company, which is changing its name to Airbus, sell its €4 billion ($5.3 billion) stake in French defense firm Dassault Aviation.

Over the weekend

China’s service sector grew. The official non-manufacturing index showed the first pick-up in growth since March, rising to 54.1 in July from 53.9 in June. A figure above 50 indicates expansion. Meanwhile, Taiwan reported inflation at a surprise three-year low in July, driven by deflating food prices.

Berlusconi stood by his coalition. The former Italian prime minister relieved some political tension amid fears that his tax fraud conviction would drive a wedge in the country’s fragile ruling coalition. In an emotional statement on Sunday, he assured a party rally that the government must “forge ahead.”

Hassan Rouhani sworn in as Iran’s president. The moderate cleric who won a landslide victory in the June 14 elections called on the West to abandon the “language of sanctions” in dealing with his country. The US responded saying that it would be a “willing partner” if Iran engages seriously on the international concern over its nuclear program. Rouhani’s appointment of a US-educated foreign-minister has encouraged skeptics.

Obama administration came to Apple’s rescue. The White House overturned the International Trade Commission’s ban on the import and sale of some iPhones and iPads, handing Apple a significant victory in the patent battle with South Korea’s Samsung. The administration said its ruling was due to the ban’s “effect on competitive conditions in the U.S. economy and the effect on U.S. consumers.”

A fire sale for print publications. The New York Times Company sold the Boston Globe to John Henry, the principal owner of the Boston Red Sox baseball team. The Globe was sold for $70 million, a fraction of the $1.1 billion New York Times paid for it 20 years ago. IAC/InterActive Corp agreed to sell Newsweek to IBT Media, the publisher of the International Business Times website. The deal comes less than a year after Newsweek’s print edition was stopped and the iconic magazine was relaunched as a digital-only publication.

China banned the import of milk powder from New Zealand. The move came after New Zealand’s biggest dairy exporter, Fonterra, found in some of its products a strain of bacteria that can cause botulism. The ban could trigger a shortage of dairy products in China as it depends on New Zealand for almost 90% of its milk powder imports.

A contested verdict in Zimbabwe. Robert Mugabe won his seventh term as the president of Zimbabwe, winning 61% of the vote. But the US and UK expressed concern over the verdict after the challenger, Morgan Tsvangirai, denounced the voting, saying it had been rigged.

Quartz obsession interlude

Christopher Mims on why Google must come to grips with how it enables the surveillance state. “Google, more than perhaps any other company, is aggressively putting sensors and the software to activate them into our environment. The just-unveiled Moto X phone from Google subsidiary Motorola has a custom microchip that allows it to listen for voice commands literally all the time, even when the phone is “asleep”. Google’s Chrome web browser now supports voice commands; that means it’s also rolled into every Chrome OS notebook computer, which run Google’s answer to Windows. Google’s face-based computer, Google Glass, responds to voice commands. Even though it was Apple that took voice control mainstream with the Siri system on its iPhone, voice is a dominant theme in the future of Google, and is clearly slated to make its way into every product the company makes.” Read more here.

Matters of debate

The state, not the private sector, drives innovation. History shows that government-funded early-stage research produces the biggest breakthroughs.

The $7 trillion in forex reserves are complicating economic policy making in Asia. It’s time to consider ways to bring more of those funds home.

Millionaire teachers and a bidding war for education. Lessons the world must learn from South Korea’s rise as an academic superpower.

Management lessons from Real Madrid. Focus on building a balanced team, and not acquiring individual superstars.

Surprising discoveries

Shakespeare invented over 1,700 commonly-used words. They include “bedroom,” “torture,” “rant” and “amazement.”

Some politicians start young. A four-year old boy won the race for mayor in a small Minnesota town—for the second time.

EADS and Rolls Royce are working on hybrid aircraft. The “Prius of the skies” is some way off, but getting closer.

The human brain has a GPS. Scientists identify the cell grid that helps people to keep track of their location while navigating an unfamiliar environment.

Nice guys finish first. A study suggests that cooperation is actually the best overall evolutionary tactic.

Our best wishes for a productive day. Please send any news, comments, Shakespearean lexicographic innovations and underage politicians to hi@qz.com. You can follow us on Twitter here for updates during the day.

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