Key Updates in Politics, Markets, and Corporate Moves
Political Gridlock in France
France is on the brink of political gridlock following a surprising victory by a left-wing coalition in yesterday’s election, resulting in no party securing a majority. Emmanuel Macron’s centrist alliance is projected to finish second, with Marine Le Pen’s National Rally, previously expected to win, in third place.
Jean-Luc Melenchon has pledged to fully implement the leftist New Popular Front’s spending program and has ruled out any coalition deal with Macron.
In related news, PM Gabriel Attal is set to resign today.
Financial Market Reactions
The election results have caused a dip in French bond futures and the euro due to concerns about post-election finances. However, European stock futures have risen, with Asian shares also edging higher. Conversely, US futures have fallen, and Treasuries have risen. Bitcoin experienced a decline due to renewed concerns about Mt. Gox distributions.
Corporate and Economic Updates
Boeing: The company has agreed to plead guilty to fraud following violations of a DOJ deal related to fatal 737 Max crashes.
Foreign Exchange: Traditional FX traders are increasingly being replaced by algorithms with names like Viper and Chameleon. Nearly half of hedge funds have adopted such technology, a significant increase from 22% before the pandemic.
UK Economic Plans: The UK’s new Chancellor, Rachel Reeves, will outline the government’s strategy to boost private investment in a speech today, focusing on green energy, housing, and infrastructure.
Paramount and Skydance: Paramount has agreed to merge with Skydance, granting control of a major Hollywood studio to David Ellison.
Burberry: The company is preparing to cut hundreds of jobs, primarily in the UK, according to the Telegraph.
Weather and Natural Events
Hurricane Beryl: Beryl has been upgraded to a hurricane again and is expected to strengthen before making landfall on the Texas coast today, posing a risk to natural gas and oil infrastructure.
Wall Street Investment Banking Rebound
Investment banking fees are set to boost Wall Street lenders as they report second-quarter earnings this week. Analysts predict a more than 30% rise in revenues for JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, and Citigroup, according to Bloomberg estimates.
Major deals like ExxonMobil’s $60bn acquisition of Pioneer Natural Resources and Aon’s $13bn purchase of NFP have contributed to this resurgence. While overall earnings growth may be muted due to rising defaults, investment banking activity is a bright spot, particularly for Goldman and Morgan Stanley.
JPMorgan, Citi, and Wells Fargo report on July 12, followed by Goldman on July 15, and Morgan Stanley and BofA on July 16.
Keir Starmer Takes Office in Britain
Keir Starmer, leader of the Labour Party, became Prime Minister on Friday, promising “national renewal” after a decisive election victory. Despite Labour’s strong majority with over 410 seats, low voter turnout and a fragmented electorate pose challenges. Starmer’s cabinet includes Rachel Reeves as Chancellor and Angela Rayner as Deputy Prime Minister.
Conservative Defeat
Former PM Rishi Sunak acknowledged voter anger and accepted responsibility for the Conservative Party’s historic defeat, securing fewer than 130 seats.
Rise of Reform U.K.
Nigel Farage’s Reform U.K. emerged as the third largest party with 14% of the vote and five seats, signaling a rise in right-wing populism.
Other Parties
The Liberal Democrats secured 71 seats, and the Green Party won four, both achieving historic results. Sinn Féin dominated Northern Ireland with seven seats.
Thank you for reading. Stay tuned for more updates in our next newsletter.