Saturday, 10 June 2017

Weekend Update 10/06/17 The Aftermath.

"Après moi, le déluge"

Prime Minister Pompadour, with apologies.

Prime Minister May , came, she saw, and she failed miserably to get a parliamentary majority. Britain and the EUSSR now face about the worst of all worlds as they set out to negotiate Brexit. We now have a weak UK government that could fall at any time, trying to negotiate with 5 jealous, meddling, EU Presidents, Juncker’s Barmy Barnier, the EU Parliament, and 27 national Parliaments, plus the Belgian Walloonatics. Why bother?

In Britain on Thursday, fuelled by the BBC propaganda arm of the New Communist Labour Party (NCLP), Britain’s youth vote bought into an unfunded NCLP dream, that they can have a free lunch for life. Pensioners bought in to higher pensions and no means tested Winter Fuel Allowance. The hard left and the communists among the NCLP, bought into the wealth envy dream of renationalising the railways and Post Office, pouring lots more money into schools and the National Health System, building a hundred thousand of subsidised homes, and that it would be partly paid for by taxing “the rich,” raising corporation tax, and ending corporate tax avoidance. Somehow Britain’s magic money tree will provide for all of the rest,

After seven years of austerity budgets, GB’s young and old were seduced by a Communist Pied Piper’s dream.  Having almost worked at getting the NCLP into power on Thursday, at the next election, everyone will be standing on free everything for all. Time to add to fully paid up holdings of physical gold and silver. UK Sterling anyone?

Below, how snake oil nearly carried the day. Now it’s on to the French Parliamentary elections on June 18.

"a company for carrying out an undertaking of great advantage, but nobody to know what it is".

The South Sea Bubble 1720

Sat Jun 10, 2017 | 1:24am BST

May seen fighting for survival after election failure

British Prime Minister Theresa May faces a slew of criticism after a failed election campaign left her short of a parliamentary majority and fighting for survival as the clock ticks down to the start of Brexit talks.

May's gamble that she could capitalise on Britons' desire to quit the European Union and perceived weakness in the opposition Labour Party backfired on Thursday as voters stripped her of her parliamentary majority.

The surprising outcome, which sent the pound tumbling GBP=, forced May to form a minority government, leaving her reliant on a small group of Northern Irish parliamentarians, just nine days before Britain is due to begin negotiating a deal to leave the EU.

Britain's typically right-wing press savaged May over the election outcome, questioning whether she will be able to remain in power after a result that leaves her reliant on uniting rival factions within her party to deliver Brexit.

"May stares into the abyss," said The Times' Saturday edition while the Daily Mail led with "Tories Turn On Theresa". The Telegraph said senior Conservatives including Foreign Secretary Boris Johnson, interior minister Amber Rudd and Brexit minister David Davis were taking soundings over whether to replace her.

"As I reflect on the results I will reflect on what we need to do in the future to take the party forward," May said on Friday in a televised statement.

Britain's best-selling Sun newspaper said senior members of her party had vowed to get rid of May, but would wait at least six months because they were worried that a leadership contest now could propel Labour leader Jeremy Corbyn into power.

Sat Jun 10, 2017 | 12:34am BST

A chastening Canterbury tale for PM: young inflict revenge

In an election full of nasty shocks for Britain's governing Conservative Party, none was more surprising than its first defeat in Canterbury since the constituency was created in 1918.

But the story behind the swing to the opposition Labour Party in this quiet corner of England, forever associated with The Canterbury Tales of Middle Ages poet Geoffrey Chaucer, helps explain why the Conservatives lost their parliamentary majority.

Young voters in the historic cathedral and university city appear, like elsewhere, to have taken revenge on Prime Minister Theresa May over what they see as her pursuit of a hard Brexit -- a clean break from the European Union's single market.

Many turned in frustration in Thursday's election to the opposition Labour Party which, led by veteran leftist Jeremy Corbyn, favours a "softer" Brexit and has promised an end to austerity and university tuition fees.

Conservative Julian Brazier lost the seat he had held for three decades to Labour's Rosie Duffield -- by 187 votes. He had won the previous election by a huge margin, with 42.9 percent of votes to Labour's 24.5 percent.

"Everyone who voted Labour did an excellent job. The youth vote was incredible. I'm ecstatic," said 19-year-old Toby French, who is studying politics and international relations at the University of Kent, which has a Canterbury campus.

He had initially planned to vote Conservative but said he was put off by May's Brexit plans, what he saw as the party's arrogance and a feeling he was being taken for granted.

"I voted with my heart and my head. I didn't feel Theresa May and the local Conservative representative for Canterbury were up to the job. They were outdated. Brexit negotiations will suffer with a Conservative government," French said.

Sat Jun 10, 2017 | 4:15am BST

EU fears Brexit delay, uncertainty after shock UK vote

European Union leaders fear Prime Minister Theresa May's shock loss of her parliamentary majority raises the risk of failure in Brexit negotiations due to start this month that will usher Britain out of the EU in March 2019.

There was concern that a weak minority administration and a possible leadership challenge to May after her electoral gamble backfired might mean further delay to the start of talks scheduled for June 19. But the prime minister said her new government would now prepare for discussions in 10 days time.

However, Guenther Oettinger, the German member of the EU executive, was among those warning that a weak British leader may be a problem once talks start. "We need a government that can act," he told German radio. "With a weak negotiating partner, there's a danger the negotiations will turn out badly."

Oettinger's boss, European Commission President Jean-Claude Juncker, said his Brexit negotiating team under Michel Barnier was ready: "The clock is ticking," Juncker said.

Barnier sounded conciliatory: "Brexit negotiations should start when UK is ready," he tweeted. "Timetable and EU positions are clear. Let's put our minds together on striking a deal."

Donald Tusk, the former Polish premier who will oversee the process as chair of EU national leaders' summits, also stressed there was "no time to lose" and a need for London and Brussels to cooperate to minimise disruption for people, businesses and governments across Europe when Britain walks out in 22 months.

"Our shared responsibility and urgent task now is to conduct the negotiations ... in the best possible spirit, securing the least disruptive outcome," said Tusk, who warned last month that emotions stirred up on either side of the English Channel during the British election campaign were jeopardising agreement.

French Prime Minister Edouard Philippe was quick to scotch a suggestion Britain might do a U-turn and ask to stay in the bloc - something that would need EU agreement - and a Commission spokesman resisted a barrage of questions at a press briefing on whether the Union might agree to extend the two-year deadline.

----German conservative Markus Ferber, an EU lawmaker involved in discussions on access to EU markets for Britain's financial sector, was scathing: "At the most untimely point," he said, "The British political system is in total disarray. Instead of strong and stable leadership we witness chaos and uncertainty."

May, who had campaigned against Brexit last year, delivered her terms for withdrawal on March 29 that included a clean break from the EU single market. She then called a snap election hoping for a big majority to strengthen her negotiating hand.

That was also the broadly desired outcome in Brussels, where leaders believed that a stronger May would be better able to cut compromise deals with the EU and resist pressure from hardline pro-Brexit factions in her party to walk out without a deal.

In markets news, a tech stock stumble or the start of something more? Mere market sector rotation or the start of the race to get out of Mount Everest priced stocks? Either way a summer of storms seems to lie ahead.

Fri Jun 9, 2017 | 11:37pm BST

Tech stocks tumble, taking down Nasdaq as big names sink

Technology stocks sold off sharply on Friday, taking a toll on the Nasdaq and dragging on other major Wall Street indexes, which touched record highs earlier in the day.

The technology sector .SPLRCT, which soared this year and led the market's rally, finished down 2.7 percent, after paring declines.

But financials .SPSY and energy .SPNY, which have lagged the broader rally this year, were strong. Energy gained 2.5 percent and financials rose 1.9 percent.

"It is a rotation today and it is out of tech into some of the other sectors," said Mark Kepner, managing director of sales and trading at Themis Trading in Chatham, New Jersey.

The Nasdaq Composite .IXIC dropped 113.85 points, or 1.8 percent, to end at 6,207.92.

The Dow Jones Industrial Average .DJI rose 89.44 points, or 0.42 percent, to 21,271.97, while the S&P 500 .SPX lost 2.02 points, or 0.08 percent, to 2,431.77.

Apple Inc (AAPL.O) shares fell 3.9 percent in their biggest daily percentage decline since April 2016 and were the biggest weight on the three major indexes, after a report that iPhones to be launched later this year will use modem chips with slower download speeds than some rival smartphones.

Facebook Inc (FB.O) fell 3.3 percent, its biggest decline since November 2016, and Alphabet (GOOGL.O) ended down 3.4 percent, its worst day since June 2016. Microsoft Corp (MSFT.O) fell 2.3 percent. chipmaker Nvidia (NVDA.O) closed down 6.5 percent at $149.60 after Citron Research said the stock could trade back to $130.

Nasdaq Megacaps Go Careening Off Course

by Elena Popina and Lu Wang
A crack has finally formed in the foundation of the U.S. bull market. Now investors must decide if any structural damage has been done.

This year’s hottest stocks, companies from Facebook Inc. and Apple Inc. to Netflix Inc. and Nvidia Corp., buckled Friday, spurring losses that sent the Nasdaq 100 to its biggest rout relative to the Dow Jones Industrial Average since 2008. Accounts of what spurred it ranged from bearish tweets by a short seller to a cautious note from Goldman Sachs Group Inc.

In its most benign interpretation, the selloff was merely a rotation, counterbalanced by rallies in industries such as banks, energy producers and retailers. But the reversal was enough to spur soul searching among bulls who have watched the market value of Apple, Alphabet Inc., Microsoft Corp., Inc. and Facebook increase by $500 billion since December.

“We are probably going to see additional selling pressure on some high-momentum stocks that have spearheaded the rally,” said Chad Morganlander, a money manager at Stifel, Nicolaus & Co. “Stocks have become overbought.”

Even with the decline, the Nasdaq 100 remains up 18 percent in 2017, more than twice as much as the S&P 500, and trading at a significant valuation premium. The index’s price-earnings ratio was 26.1 as of Friday’s close, more than four percentage points above the broader gauge. That’s the widest gap in more than a year.

One recent bull withheld judgment on whether the rout foretold worse pain to come. Kim Forrest, a senior equity analyst at Fort Pitt Capital Group whose bullish call on semiconductor shares in April came true, said a single day of losses didn’t mean the market had turned.

“It’s too early to tell,” she said. “I am watching what happens on Monday.”

Friday’s losses were significant in the tech space. Even as the Dow eked out an 89-point gain in New York, the Nasdaq 100 slid 2.4 percent, trimming a decline that at one point reached 3.8 percent, the most in a year. The Philadelphia Stock Exchange Semiconductor Index slumped 4.2 percent and at one point was down 6.1 percent, the most since 2014.

“What me worry?”

Mad Magazine.

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