JPMorgan Chase, Citi and Wells Fargo earnings to follow relative strength in their stocks
U.S.’s largest banks draw investor support as havens from sector headwinds from commercial real estate woes.
U.S. presidential election highlights biggest risk to a bond-market rally in the second half
Of all the wild cards in the months ahead for the $27 trillion Treasury market, an increasing U.S. government deficit is regarded as perhaps the greatest long-term risk facing the market right now because of its potential to translate into higher volatility through the Nov. 5 presidential election.
His-Tory
His-Tory
By Stefan Koopman, Senior Macro Strategist at Rabobank
To no one’s surprise, Labour won the UK election. Less than five years after Boris Johnson’s decisive win over Jeremy Corbyn, the Conservatives experienced their worst defeat in history.
Constituencies that were once considered secure Tory bastions have turned away from them. At the same time, a surge of smaller parties and independents has created a complex and divided political landscape. Indeed, Labour’s victory looks to be largely driven by a widespread desire to oust the Tories rather than a strong endorsement of its own policies. Nonetheless, Keir Starmer’s efforts to make Labour electable again after the years of Corbyn have worked out in their favour. In less than five years, he has restored trust in Labour on a number of key issues, including fiscal policy.
With 34% of the vote, Labour looks to have secured almost 64% of the 650 seats in the UK parliament. It’s clear they understood the central truth of the British electoral system: the popular vote is less important than the geographic distribution of the vote. The Tories, ending up at just c. 120 seats, warn that such a “super majority” would give Starmer’s Labour unchecked power. It is, however, important to note that the UK has no such thing as a super majority. Parliament is sovereign and can enact any legislation through the normal legislative process, regardless of whether the majority is 10 or 200. Britain has no special categories of legislation beyond the reach of a regular majority and even then, a simple majority would suffice to scrap such legislation. The real issues lie in the over-empowerment of the executive, the lack of constitutional checks and balances, and the distortions caused by the electoral system. However, a majority is a majority.
That said, landslides like this can be risky, with potential opposition emerging from within an overly large parliamentary party. Many Labour MPs will have little hope of promotion due to the limited number of government positions available, and numerous junior MPs will likely realize they are at high risk of losing their seats in 2028/29. This outcome is unlikely to be repeated. Labour has secured such a broad and geographically efficient vote that maintaining this coalition of voters seems impossible. At the constituency level, seats are tighter than at any point since 1945. This could lead to policy inertia, especially given Starmer’s cautious and calculated approach. This, we think, may also limit significant progress on EU-UK trade relations.
Labour mostly looks inward when it tries to tackle the pressing issue of economic growth. The current planning system, which allows local communities to block development, has hindered the construction of much-needed housing and infrastructure and is up for deep reform. Labour now has the parliamentary majority to do so, but the relatively slim majorities on a constituency level suggest that there is not as much political headroom as some polls have suggested.
Despite its plans to boost economic growth through political stability and expedited investment, growth may not come quickly enough to avoid difficult fiscal decisions. The pressure on real departmental spending is already very high, as the Tories had postponed many tough decisions to a post-election Budget, knowing they were likely to lose the election and thus not have to own these cuts. As the population ages, many budgetary choices will become more challenging, not easier. This makes it hard to envision Labour making cuts to balance the books and meet the rule that debt should be declining as a share of national income after five years. Consequently, it will be difficult to achieve Labour’s ambitious goals, including reducing NHS waiting lists and hiring more public sector workers, without raising taxes or changing the fiscal rules.
However, the shadow of Liz Truss – who has lost her seat – still looms over Westminster. Her policies of unfunded tax cuts are not ones that other politicians want to be associated with. Shadow Chancellor Reeves has emphasised the importance of market-friendly and prudent budget management and has been reluctant to discuss any changes to the fiscal rules. It’s also why this election was, from the market’s perspective, a non-event. A lot of water will flow through the Thames before politicians in Westminster dare to take bold fiscal action. Eventually, however, this will become inevitable to lift the UK out of its low-productivity, low-growth quagmire.
Tyler Durden
Sat, 07/06/2024 – 07:00
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Taxpayer-Funded MSNBC? PBS Anchor Amna Nawaz Rips Trump as Lying Tyrant
The PBS News Hour crew is clearly heartsick that the Democrats are in a crisis over Joe Biden’s mental decline, and they know their liberal audience wants to change the subject back to Horrible Trump. Sounding like a taxpayer-funded MSNBC host, PBS anchor Amna Nawaz described the former president as an authoritarian full of lies in the Friday pundit roundtable with liberal David Brooks and more liberal Kimberly Atkins Stohr.
Can anyone imagine how Nawaz might explode in rage if anyone actually was allowed to voice a Republican view on PBS? Mock Democrats for not being democratic? For being incompetent at governing? After a few minutes of talking about the Biden crisis, Nawaz uncorked it:
NAWAZ: Biden backers have told me, look, they’re worried that the focus on this conversation takes the focus off of Trump, who is an antidemocratic candidate with authoritarian tendencies, who is now newly empowered by that Supreme Court immunity ruling.
The head of The Heritage Foundation, we should point out, that’s running this Project 2025 policy planning for a potential second Trump term, said this, this week. He said the country is in what he called the second American revolution-, and it could be — quote — “bloodless if the Left allows it to be.” There’s kind of this alarming language around a potential Trump presidency. Are we losing sight of the stakes here?
The Democrats seized on the comments of Kevin Roberts, who was describing the tendency of the Left to riot. In reaction, the Heritage Foundation tweeted a video full of Democrat talk of violence and support of the rioting in 2020. Like an MSNBC host, Nawaz can’t imagine she is using “alarming language” about the “antidemocratic candidate with authoritarian tendencies,” or that her friends relentlessly comparing Trump to Hitler is alarming or inflammatory.
But naturally, David Brooks agreed. He only made the ladies on set uncomfortable by citing bad poll numbers.
BROOKS: Yes, I think so. I mean, I — before he went to prison, I went over to see Steve Bannon and interviewed him. And I was scared out of my mind. Like, I just asked him, what’s going to happen if you guys win? And he said: It’ll be nothing like 2017. In 2017, we didn’t have staff. We had nothing. But now we have got people who have been vetted. We have got people who are trained and we’re just going to go after the deep state.
It looked like a dismantling of the civil service, basically. And that’s just the beginning. So I do think people are losing some focus on that. And I have been a broken record on this for, whatever, seven years.
But it is also true that every American pretty much has seen an elderly relative in decline. And they sort of know what that looks like. And if I could just do one bit just random polling, as I mentioned, 72 percent of Americans don’t think he should run again.
Brooks noted that Trump is leading by six points in several polls from “mainstream” outlets. Then Nawaz returned to another Democrat Party line of the week, of “asymmetry,” that somehow Democrats are having a debate about replacing Biden, while Republicans don’t budge on Trump. But Republicans had an actual primary race. Democrats suppressed primaries, and allowed no primary debates.
NAWAZ: I want to get back to this issue of how we’re talking about President Trump as well here, which is to say there seems to be sort of an asymmetry of expectations as well in terms of Trump’s performance in the debate, which was filled with misleading statements and lies.
He’s only three years younger than President Biden, often veers off-script when he’s not on prompter. Is — do you see that asymmetry? Is that affecting the conversation right now, Kim?
KIMBERLY ATKINS STOHR: I 100 percent see that asymmetry. Look, we can talk about mental cognitive tests that people might want the president to take, but we already know that Donald Trump has failed the moral test. He’s failed the democracy test. He’s failed the insurrection test.
And if we balance those things, it seems really clear. And I think one thing that this conversation makes us lose sight of is the fact the work of the Biden administration and other Democrats being already dismantled ever since the Supreme Court overturned Chevron just earlier this week.
We already have two federal judges, Republican-appointed federal judges, one that knocked down a rule that kept people from being bound by non-compete clauses that would prevent them from practicing their livelihoods, another rule that prevented federal coverage of transgender health care.
This is happening right now. This is happening this week. The dominoes are already falling, and we haven’t even gotten to Project 2025.
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