FT : Europe needs a bolder plan for capital markets

Europe needs a bolder plan for capital markets
From the green transition to the digital transformation, the requirement is enormous

How will Europe fund the huge sums needed to invest in energy transition, digital infrastructure and defence? Despite a vast €33tn pool of savings, Europe has a plumbing problem. Its capital markets are under-developed, while its banking sector is insufficiently sized to handle the growing demands for capital expenditure. To address the investment conundrums, deeper capital markets are needed.

The requirement is enormous: the European Commission has estimated that the green transition requires an additional €620bn each year to 2030, with another €125bn needed for digital transformation. Moreover, Vladimir Putin’s invasion of Ukraine, and the prospect of a second Donald Trump presidency in the US, are escalating demands for greater military expenditure.

Yet despite multiple bazookas from the European Central Bank, growth in lending to companies in the region since 2014 has been less than half that of the US. The gap in economic performance between the two has long nagged at Europe’s policymakers. A widening divide makes this angst acute.

“We need to mobilise private savings on an unprecedented scale, and far beyond what the banking system can provide,” former Italian prime minister and ECB president Mario Draghi argued ahead of publication of his upcoming report on enhancing Europe’s competitiveness. 

Despite some progress, there remains a vast gap in venture capital relative to GDP between Europe and the US. European companies have fewer funding options to help them invest and grow.

There is a growing chorus of calls to dust off the unfinished plans for a capital markets union, led by ECB president Christine Lagarde. Recent heavyweight reports by former Italian Prime Minister Enrico Letta and former French central bank governor Christian Noyer also argue the case.

But the idea of a single market for capital across Europe has been stalled for a decade. Bold ideas often get bogged down.

The recent European elections are likely to make things even more difficult, so perhaps it’s time to change tactics. To clear the system-wide blockages, policy architects should team up with financial plumbers, especially from the private sector.

Revitalising securitisation is the place to start, enabling insurers and pension funds to support Europe’s growth. Securitisation allows banks to transfer assets to investors, in turn freeing up their own lending capacity. This is particularly important as banks provide the majority of credit to European small and mid-sized businesses, which account for almost two-thirds of jobs.

Rules written in response to the financial crisis harshly penalised securitisations and the European market for them has never really recovered. An unintended consequence is that banks have resorted to complex synthetic transfers of risk, which only the largest can undertake, thus holding back regional banks.

Solvency II, the rule book for insurers, makes it economically unappealing to fund a long-term infrastructure project or buy a package of small business loans too, reducing potential returns and limiting available financing.

It’s time to recalibrate securitisation rules to better reflect the true risk profile of assets, keep pace with evolving capital markets and encourage investment for European growth. Reforms to Solvency II rules are also essential, along with system-wide tweaks to the banking framework and financial market standards.

The venture capital ecosystem must be nurtured, private credit harnessed and the cumbersome sustainability rules for funds recalibrated.

Above all, Europe needs a more flexible and diversified financial market. If capital markets union plans fail to deliver it may result in lower growth. It’s time to call in the plumbers.

FT : Dealmaking revival set to boost results for Wall Street banks

Dealmaking revival set to boost results for Wall Street banks
Investment revenue is expected to rise 30% over past year as lenders report earnings this week

The early stages of a long-awaited recovery in investment banking fees is set to boost Wall Street lenders when they report second-quarter earnings starting this week, with mergers and debt deals picking back up after a lacklustre two years. 

Analysts expect investment banking revenues at JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup will on average rise more than 30 per cent from a year earlier during the second quarter, according to estimates compiled by Bloomberg. 

“You’re beginning to see a nice rebound in investment banking activity,” said Oppenheimer analyst Chris Kotowski. 

JPMorgan, Citi and Wells Fargo report results on July 12. Goldman publishes earnings on July 15, followed by Morgan Stanley and BofA a day later. Overall, rising defaults are expected to contribute to muted earnings growth for many of the largest US lenders this quarter.

The resurgence of dealmaking, though, could be a bright spot. Analysts predict the bottom lines of Goldman and Morgan Stanley, whose businesses have the biggest exposure to investment banking, will benefit the most. Large deals that closed in the second quarter included ExxonMobil’s $60bn acquisition of Pioneer Natural Resources in May, which was brokered by Citigroup, Goldman and Morgan Stanley, and Aon’s $13bn purchase of insurance broker NFP in April, which was guided by Citi and BofA, among others.

In what has been a brutal reminder of the industry’s feast-to-famine swings, investment banking revenues fell last year from record highs in 2021 to their lowest level in years. Rising interest rates by central banks around the world have damped activity for M&A and new stock market listings. 

Wall Street bosses have been talking up a recovery for more than a year — the heads of Goldman Sachs and Morgan Stanley spoke about the “green shoots” of a recovery as far back as 12 months ago — but the business has taken longer to rebound than initially expected. 

In a jolt of optimism, JPMorgan told investors last month that the increase in revenues from investment banking during the second quarter was set to rise by as much as 30 per cent, double what the bank had initially anticipated.

Smaller rival Jefferies last week reported that investment banking revenues in the three months to the end of May rose almost 60 per cent from a year earlier. Its top management said it was “increasingly optimistic” about the second half of 2024 and 2025. 


The rebound has been aided by debt offerings, as confidence in the economy has made investors more willing to jump into riskier deals. In one of the biggest deals of the quarter, struggling fitness company Peloton refinanced $1.35bn in debt in May in a deal that was led by JPMorgan and Goldman.

Bankers are not anticipating a return to investment banking activity levels seen in 2021 and 2022 when rock-bottom interest rates and government stimulus during the coronavirus pandemic led to a surge in M&A and IPOs. 

Bankers have pointed to a need for private equity firms to exit existing investments and deploy trillions of dollars in dry powder, as well as corporations reviewing their supply chains and coping with rapid advancements in technology such as artificial intelligence. 

“We have capital markets activity still running below the normal trend line and it is in the process of ramping up,” said Betsy Graseck, a banking analyst at Morgan Stanley. “That tailwind, we think, will show up in the quarter and persist through the rest of this calendar year and into 2025.”

Investors have also been fretting that persistently higher interest rates could lead to more borrowers defaulting on their loans, with credit losses in recent years coming off of historically very low levels.

Analysts expect JPMorgan, BofA, Citi and Wells, the four largest US banks by deposits, to report more than $7bn in the second quarter of so-called charge-offs, which are losses on loans marked as unrecoverable. This would be up more than 50 per cent from a year earlier. 

“We’re still in a phase where I would characterise things as normalising rather than deteriorating more visibly,” said Scott Siefers, banking analyst at Piper Sandler. “Virtually every bank investor on the planet is just acutely focused on commercial real estate in particular.”

Miss Tweed : A new era begins at Richemont

A new era begins at Richemont
Cyrille Vigneron steps down as CEO of Cartier on Sept. 1, parent Richemont announced this week. That’s six months earlier than the Frenchman planned to retire, several industry sources said. Miss Tweed had reported in December that Vigneron was preparing to exit next year. Richemont Chairman and controlling shareholder Johann Rupert saw things differently.

Many people within the Richemont group and Cartier were shocked to hear the news. They expected Vigneron to continue running Richemont’s biggest brand and cash cow until next year. “This was a surprise,” one senior manager who recently left Cartier said. “We all knew he was going to leave but not so quickly.”

Tensions were running high between Vigneron and the South African billionaire. They clashed regularly and did not see eye to eye on several aspects of the business, as Miss Tweed wrote late last year. Vigneron is an aesthete, a Japanophile and a lover of philosophy, music and literature. Rupert is more into testosterone-driven passions such as collecting vintage cars and buying wild beasts in South Africa. Vigneron is an intellectual who likes to express himself with abstract images – which Rupert complains few people understand - while the chairman of Richemont is widely known to be rough and verbally abrasive which can strike fear into his underlings.

Rupert internally denies there has been any friction between the two men, but people close to the chairman and Vigneron have witnessed it, Miss Tweed found out.

START NOW
Since Rupert had found a replacement for Vigneron he decided to move to replace him immediately, several sources close to the group said. Richemont announced this week the nomination of Louis Ferla as Cartier’s new CEO. Ferla takes command of the world’s No. 1 jeweler as the luxury industry is going through a downturn, with Chinese consumption hit especially hard. There is no time to lose to get Ferla hitting the ground running.

Ferla, who ran Vacheron Constantin for seven years, is considered among his peers to be a strong, commercially minded manager whose mission will be to continue building Cartier’s desirability and brand equity following on from the legacy of Vigneron.

Ferla won Rupert’s trust by successfully developing Vacheron Constantin. In the last fiscal year, he won “the CEO of the year” prize for bringing Vacheron Constantin’s annual sales to €1 billion. Rupert and other Richemont managers fêted him in the chairman’s homeland in South Africa.

“Rupert decided time was up for Vigneron,” one of the sources said. “But he’s allowing Vigneron to save the face and stay on board to look after cultural projects that are dear to his heart like a Cartier exhibition he has been planning in Japan for a long time.” Several sources predict Vigneron will quietly retire next year.

They also think Rupert agreed for him to be well paid again this year in return for accepting to leave early with a handsome pension. In Richemont’s annual report for the year to March 31, there is no mention of Vigneron’s remuneration or that of Nicolas Bos, the former Van Cleef & Arpels boss, who became the group’s CEO on June 1st with extended powers.

Richemont CFO Burkhart Grund received 9.5 million Swiss francs for the year to March 31, while outgoing CEO Jérôme Lambert received 7.11 million Swiss francs, the annual report says. It’s expected that Bos and Vigneron received total remuneration of a similar order – as they have in the past - but since they are no longer part of the executive committee, which they left nearly three years ago, the group no longer needs to make public how much money they make.

No doubt Rupert consulted with Bos about Ferla’s nomination and Bos thought it made sense to announce the change quickly and the appointment of his own replacement at the same time. On Tuesday, Richemont announced Ferla’s promotion and the nomination of Catherine Rénier as the new CEO of Van Cleef & Arpels (VCA).

In the first sentence of the statement about her appointment, it says Rénier will report to Bos – making clear that she will implement his vision and strategy. Hence, Bos will indirectly have oversight of VCA even though he is now in charge of the whole group. This is fundamentally a good thing since Bos has turned VCA into a jewelry powerhouse and knows it well after spending 24 years at the French jeweler. Hence, one should expect more of the same at VCA.

Bos’ influence over the group’s key players is not new. He was the one who recommended Rénier became CEO of Jaeger-LeCoultre in 2018. It was again Bos who recommended Nicolas Luchsinger who in February was appointed CEO of Buccellati, Richemont’s rising star. Luchsinger used to be in charge of VCA in Asia. He has a rare talent for retail – which will be key for Buccellati’s expansion. He’s also genuinely passionate about jewelry, colleagues say.

SPREADSHEET JUNKIES
Industry sources expect that Bos will progressively remove from power top executives who are known for being “spreadsheet junkies” with little sensibility about product design and connection to the world we live in. Jérôme Lambert, Richemont’s former CEO who is regarded as a financier, has already been demoted and given back his old job of chief operating officer.

Another manager on Bos’s target list could be Emmanuel Perrin, currently CEO of Richemont’s Specialist Watchmakers division and chairman of the Fondation de la Haute Horlogerie, which helps organize the annual trade fair Watches & Wonders at Palexpo in Geneva.

Perrin is the nephew of Alain-Dominique Perrin, a legend at Richemont who was the group’s CEO and led Cartier for many years. ADP, as people in the industry call the 81-year-old former executive, remains an influential figure. He still works as a consultant for Richemont “ensuring that matters related to communication, products and distribution are appropriate and consistent with the identity and strategy of the Group’s Maisons” and for which in the year ending March 31, 2024 he was paid 4.5 million Swiss francs, according to Richemont’s latest annual report.

ADP lobbied hard for his nephew to be given the top job at Cartier. However, Emmanuel Perrin is not the most loved boss at Richemont and has been developing a climate of fear among the managers of the group’s specialist watchmakers, say people who spoke on condition of anonymity. Miss Tweed has been blacklisted by Richemont for three years in part for writing this.

Bos is aware of Perrin’s reputation and may well replace him with someone who is more a “people person,” and who like Luchsinger is passionate about products and knows how to tell a good story, say people inside the group. For more than two years now, Richemont has not replied to Miss Tweed’s requests for comment.

Bos, who marries both the left and right brain skills of creativity and business acumen, should also help the development of Richemont’s fashion brands. On June 24, he came to the opening of Chloé’s refurbished boutique on rue Saint-Honoré to show his support. Hosted by the brand’s new designer Chemena Kamali and CEO Laurent Malecaze, the event was a success, attended many important fashion journalists and buyers.

Bos will also likely help the growth of Alaïa which this year did not take part in the fall-winter Haute Couture Fashion Week in Paris. Sources close to Alaïa say the brand recently renewed its contract with designer Pieter Mulier who was interviewed by LVMH to replace Hedi Slimane at Celine, as Miss Tweed reported in April.

Executives at Richemont say behind closed doors that the parent company has taken greater control over the internal affairs of each brand, even big ones like Cartier. Executives from the group pull strings on important matters such as finance and human resources, limiting the power of executives at the brands themselves. It’s possible that Bos reverses this trend as it has been a demotivating factor for many managers since it disempowers them and limits their ability to take initatives and pursue ambitious projects, current and former staff at Richemont told Miss Tweed.

CARTIER
Once Ferla starts at Cartier, executives expect a shake up of personnel there too. Among those who could leave soon is Renaud Litré, Cartier’s Chief Commercial Officer, who like Perrin, was angling for top job. “Ferla is probably not going to keep Litré as he will want people who are loyal to him,” one former senior Cartier manager said.

Litré created his own barony within Cartier. His allies include Grégoire Blanche, who is in charge of Europe, and Pauline Novara, a commercial director based in Geneva, where Richemont’s headquarters are located. If Litré leaves, their career progression may take more time.

Regarding the Farfetch tie-up and use of its e-commerce platform and technology – which fell through last year due to the company’s financial collapse, Litré was in direct contact with Rupert and Lambert, bypassing Vigneron, insiders tell Miss Tweed. Modernizing Cartier’s e-commerce platform will be one of Ferla’s top priorities. Cartier, which is estimated to generate more than €10 billion in annual sales, makes more than €1 billion online and its biggest Internet boutique is in the United States. Hence the stakes online are high.

Ferla has solid experience at Cartier. Before Vacheron Constantin, he spent more than 11 years at the French jeweler, where he was International Director Clients and Business Development and a member of the executive committee. Ferla is an affable man, loved by his teams at Vacheron Constantin and is known for taking decisions quickly.

Ferla is likely to preserve several things Vigneron changed at Cartier such as making sure every major boutique looks different and the creation a club of Grand Vendeurs, those who focus on selling pieces costing several millions to the ultra-rich. Vigneron has given them the freedom to build relations with billionaires, spend time on their yachts and ski with them in high-end resorts. Cartier owes its success not only due to the popularity of its best-sellers such as Juste un Clou, Love and Trinity but also to the success of its Grands Vendeurs selling high jewelry pieces which can cost upwards of several tens of millions of euros. Vigneron has also introduced more accessibly priced products for the brand’s iconic lines and these are likely to stay in the current difficult trading environment.

TRINITY
On the product side of things at Cartier, knowing how risk-averse Rupert is and how Bos has been managing VCA, it’s likely that Ferla will continue Vigneron’s strategy which has been to focus on regularly putting out new versions of best-sellers and classics. This year, Cartier introduced a new version of the Trinity ring for its 100th anniversary.

The new version of the famous ring called Trinity cushion is made up of three intermingling bands, one in pink gold, one white gold and one yellow gold, which are square instead of round. The Trinity ring was first commissioned by French writer and film-maker Jean Cocteau in 1924 for him and his lover, the young writer Raymond Radiguet, famous for his book Le diable au corps. Cocteau wore it on his pinky.

Vigneron has pruned Cartier of products that did not sell well and invested in the constant renewal of iconic products, both in jewelry and watches. For example,Cartier’s Drive watch, launched in 2016, turned out to be a commercial flop and is no longer available in most of the brand’s boutiques.

Recently, Cartier has successfully launched new versions of the Tank and the Pasha watch as well as a new model of the Baignoire with an oval dial called Baignoire Bangle which is fixed on a gold bracelet and not a traditional watch strap making it a jewelry watch. Promoted by Lou Doillon, daughter of the late actress and singer Jane Birkin, Baignoire Bangle is a new best-seller regularly out of stock, Cartier retailers say.

Jewelry and watches, commonly referred to as “hard luxury” are different from fashion or “soft luxury” in that success depends slow evolution. If in fashion consumers expect new designs and collections every three to six months, in jewelry and watches things need to move much more slowly. What works is focusing on best-sellers. Putting out too many new collections risks blurring a brand’s message. More of the same is what consumers want, just with a new twist, experts say.

The only place where jewelers and watchmakers can freely express their creativity is with one-of-a-kind or limited edition pieces. That’s where the innovation is concentrated and it’s great for a brand’s image and desirability. Some brands present their new High Jewelry collections just before or during Haute Couture week in Paris.

Under the reign of the new triumvirat composed of Bos, Ferla and Rénier, expect more changes from a corporate culture point of view than from a product collection point of view. That’s actually good news. When a recipe works, why change it?

FT : The maverick TV host amping up France’s far right

The maverick TV host amping up France’s far right
Cyril Hanouna is a key player in Vincent Bolloré’s Fox News-like media empire

One way to understand the political turmoil and tension that have seized today’s France is to watch TV and radio presenter Cyril Hanouna.

The 49-year-old hosts a live show called Touche Pas a Mon Poste! (Don’t Touch My TV Channel!) — a populist cocktail of rowdy, political infotainment that attracts a daily viewership of a few million, and which critics have accused of boosting the far right.

Behind the hit show is Vincent Bolloré, a billionaire media baron who has become a Rupert Murdoch-like figure in France by pushing a conservative agenda across his media assets, including TV channel CNEWS, Sunday paper Journal du Dimanche, and Europe 1 radio.

Hanouna, once a jester-like figure who got his start as a comic, has become the soft power arm of Bolloré’s empire, reaching a younger, working class audience that often does not vote.

Politicians flock to his show to target that population segment in a more informal, unconventional setting than traditional media. 

The show holds up a mirror to French society, and is not all about politics. On an electric blue or bright yellow set, the charismatic Hanouna leads a chorus of commentators and guests who dissect the day’s events, often focusing on what is trending on social media — gory crimes, a crackdown on Muslim-inspired garb at schools, or a celebrity involved in a deadly car crash.   

But when President Emmanuel Macron unexpectedly called snap elections last month, Hanouna pivoted to an all politics-themed, special daily radio show called On marche sur la tête (It’s all gone topsy-turvy).

France’s broadcast regulator soon afterwards issued an official warning for bias: more than half of the 29 politicians interviewed were from the far right, it said, while the left was “systematically treated critically and virulently, often in pejorative and outrageous terms”.

When Jordan Bardella, the far-right Rassemblement National’s party chief, came on, Hanouna asked him softball questions and they chuckled over callers’ questions. In contrast, the host repeatedly interrupted Arthur Delaporte, a socialist running for re-election, criticising him for forming an alliance with the far left.

Hanouna’s TV show, which went on summer hiatus last month, also showcased the far right on its last episode, featuring Sarah Knafo — a politician from Éric Zemmour’s smaller, extreme rightwing Reconquête (Reconquest) party — and Eric Ciotti, the head of the conservative Les Républicains, who had just defected to the far-right Rassemblement National.

Knafo pleaded on air for a coalition among all of them and said it would be up to Bardella to agree to it.

“Let’s call him right now,” said Hanouna, before dialling RN leader Bardella’s number. He did not pick up but Knafo left him a long voicemail about how they have a “unique opportunity” to team up.

Hanouna cracked a joke about Knafo’s long-winded message, but the moment had a serious subtext: the pitch was aimed at forging l’union des droites (union of the right), a long-held dream of Bolloré and an example of how his media outlets promote his worldview.

A devout Catholic and fervent believer in capitalism, Bolloré has transformed CNEWS into a 24-hour opinionated channel with rightwing undertones similar to Fox News.

In a sign of Bolloré’s clout, LR leader Ciotti consulted with him last month before his overture towards the RN, according to Le Monde newspaper. Ciotti appeared on several of Bolloré’s outlets to defend himself as his former party colleagues blasted him as a traitor.  

On Hanouna’s last TV show before summer break, the host asked Ciotti: “So did you negotiate with Bardella to be a minister?” Ciotti gave a long-winded non-answer.

During a parliamentary inquiry into TV licences in March, leftwing senators accused Hanouna of promoting Bolloré’s political agenda and giving disproportionate airtime to far-right politicians. Hanouna and Bolloré denied any bias.

Claire Sécail, an academic who studied Hanouna’s show for a critical book, said the programme had contributed to the polarisation of society by ramping up controversies and encouraging clashes between guests to boost ratings. 

The show “is a populist echo chamber,” said Sécail. “Initially you think Hanouna is a buffoon, but there is a real political project behind the show — that of Vincent Bolloré — that demonises the far left so as to normalise the far right.”

Hanouna denied before the Senate that Bolloré was wielding any influence on his show. “Vincent Bolloré never asked me to invite certain people or to talk about a specific topic. Never!” he said.

Hanouna cast his mission as giving voice to people from varied backgrounds, not just Parisien elites: he said his show had featured women who wear the Muslim veil, a rarity on French TV, along with taxi drivers and crime victims.

Politicians of all stripes were invited on to the show, he said, but many leftists and centrists had refused. 

In 2018, Hanouna was among the first hosts to invite gilets jaunes (yellow vest) protesters on TV, amplifying the amorphous, populist movement that was sparked by a carbon tax on petrol — a controversial policy enacted by Macron. Hanouna initially hosted a wide palette of politicians, including from the far left.

That openness ended in 2022 when Hanouna clashed with Louis Boyard, a former leftwing commentator on his show turned lawmaker for La France Insoumise (LFI), the party of anti-capitalist firebrand Jean-Luc Mélenchon.

When Boyard insulted Bolloré, claiming the media magnate’s company pillaged resources in Africa, Hanouna retorted that the leftwing MP was a “jerk”, a “shit” and a “loser”.

“I don’t bite the hand that feeds me and neither should you,” Hanouna said, in an apparent reference to Bolloré.

Arcom, the French broadcast regulator, hit the channel with a €3.5mn fine over the incident, saying it harmed Boyard’s reputation and ran counter to the broadcaster’s obligation to control what went out on its airwaves.

Further violations such as giving voice to conspiracy theorists, repeating fake news, and not respecting pluralism have cost Bolloré’s channel a total of €7.5mn.

Comedian Yassine Bellatar, who used to appear on the show and once considered Hanouna a friend, said the clash with Boyard meant far fewer guests were invited from Mélenchon’s party.

“It’s not a show where people give their opinions any more,” said Bellatar. “Cyril Hanouna has become the biggest sponsor of characters on the far right.” 

Bellatar also criticised Hanouna, who is Jewish of Tunisian descent, for “demonising the Muslim community in France” after the October 7 Hamas attack on Israel, as well as amplifying criticism of LFI for its staunch support for Palestinians.

Hanouna declined to comment. A Vivendi company executive said it was a “total fantasy” to think Hanouna was doing Bolloré’s bidding, adding that “there is no political or ideological project. It’s a business endeavour.” 

Christophe Barbier, a veteran journalist who co-wrote a book with Hanouna, said his show “was a symptom of the democratic malaise that plagues France today, not its cause.”

“French society is no longer infused with the nuanced spirit of Voltaire, Hugo, or Zola,” he said in reference to France’s emblematic philosopher and writers. “It is infused with Hanouna.”

>>> Weekend Papers Summary

Weekend Papers Summary

FINANCIAL TIMES
-Joe Biden has defended his re-election bid despite calls from Democrats for him to bow out following a disastrous debate performance against Donald Trump. Biden told supporters at a campaign rally in Raleigh, North Carolina, that he was there to win the state in November. The crowd responded with a chant for "four more years". Biden acknowledged his poor performance in the debate and said he knows how to tell the truth and get back up when knocked down. Democrats reported widening panic in the party after the debate, with supporters concluding Biden would struggle to beat Trump in November. Biden's performance was met with skepticism from top Democratic lawmakers, donors, and party insiders, who were rattled by his frequent lapses in speech and rambling answers.
-Joe Biden's poor debate performance has sparked panic among Democrats, who are now considering replacing him with a stronger candidate to fight Donald Trump. The contenders include Kamala Harris, California's Gavin Newsom, and Michigan's Gretchen Whitmer. Democratic governors from traditionally Republican states, such as Kentucky's Andy Beshear and North Carolina's Roy Cooper, are longer shots. Transportation secretary Pete Buttigieg, commerce secretary Gina Raimondo, and Ohio Senator Sherrod Brown are also on activists' lists.
-Warren Buffett plans to donate the majority of his wealth to a new foundation led by his three children when he dies, ending a long history of donating to the Bill & Melinda Gates Foundation. Buffett's children, Susie, Howard, and Peter, will be the trustees of the new foundation, which will receive one of the largest wealth infusions of all time when he passes. Buffett, who turns 94 in August, disclosed he held roughly $130B of Berkshire stock on Friday. He also made clear that the Gates Foundation would not be a benefactor in his will. Buffett has gifted the foundation roughly $43B over the last two decades, including a $4B donation announced on Friday morning. His ties with the Gates Foundation date back to 2006, when he announced annual donations to it and four charities run by his family.
-The US Supreme Court has overturned the Chevron deference legal doctrine, which has given federal agencies significant latitude to set standards in areas such as environmental protection and securities regulation. The doctrine, based on a 1984 Supreme Court decision, allows courts to defer to agencies' interpretation of ambiguous rules and laws. Chief Justice John Roberts stated that courts cannot defer to an agency's interpretation of the law simply because a statute is ambiguous. Legal experts argue that overturning the Chevron doctrine could trigger litigation and push regulators to craft less sweeping rules to survive legal challenges. The decision, split along ideological lines, highlighted the far-reaching nature of the ruling, as it reshaped judicial review of agency action without grappling with the Administrative Procedure Act.
-Oliver Blume, former CEO of Volkswagen and Porsche, faces the challenge of preserving the achievements of his former professor, Wan Gang, who led China's electric vehicle revolution. Blume must ensure that German industrial giants like Volkswagen and Porsche continue to benefit from the advancements of his former professor, who also led to Chinese EV industry champions like BYD and CATL. Volkswagen has announced an investment of up to $5bn in Californian EV start-up Rivian, forming a joint venture to develop new software and gain access to Rivian's EV architecture.
-Activist hedge fund manager Boaz Weinstein has faced setbacks in his bid to manage a series of BlackRock closed-end funds. Saba Capital, led by Weinstein, submitted candidates to join the boards of 10 funds, arguing they underperformed competitors and managers failed to close the gap between the funds' prices and the value of its underlying assets. However, BlackRock announced that eight funds had retained the BlackRock directors, and five termination attempts failed. Two funds have delayed their voting deadline to July 16 to reach a quorum. Weinstein's campaign against BlackRock's management is part of a wider assault on the $250B closed-end fund industry.
-Hong Kong's exclusive private clubs have seen their membership prices drop by up to 20% on the secondary market in the past year, according to brokers. The decline is attributed to the city's slowing economy and the departure of well-educated expatriates and residents. Private membership clubs have been a significant part of the city's business community since the British colonial era, with some institutions enjoying cheaper rents under decades-old agreements. Memberships typically require a substantial payment and sometimes a long wait. The pandemic's zero-Covid policy drove many expats and residents away from the city, and prices have continued to fall even after the lockdown rules ended. For example, the Aberdeen Marina Club, a 40-year-old club with seven restaurants and sports facilities, saw its membership prices drop by nearly 20% to around HK$2.75M (US$350,000).
-US inflation eased to 2.6% in the year to May, according to the Federal Reserve's target for price pressures. The personal consumption expenditures index (PCE) data was in line with economists' expectations of a slight dip from 2.7% in April. The core PCE, which ignores food and fuel price changes, was 2.6%, the lowest reading since March 2021. The Fed's target for the headline PCE index is 2% a year. The month-on-month headline rate remained flat, while core prices edged up by just one-tenth of a percentage point, aligning with the 2% annual goal.
-Lambda Labs, a cloud computing start-up that rents out servers powered by Nvidia's artificial intelligence chips, is in talks to raise another $800M to capitalize on the AI market and the scarcity of advanced graphics processing units. The proposed deal would elevate Lambda into Silicon Valley's best-funded start-ups, as demand for computing infrastructure is increasing. The funding would add to the $320M raised in February at a $1.5B valuation. Lambda also secured a $500M loan using its Nvidia chips as collateral in April to fund its cloud services expansion. This rapid financing sequence highlights the increasing demand for Nvidia's GPUs, which are becoming a sought-after commodity as Big Tech companies and start-ups compete for compute capacity. Term sheets are expected in mid-July, and JPMorgan is helping coordinate the fundraising.
-Sales of olive oil in the product’s Mediterranean heartland have fallen due to steep price increases, with Spaniards and Italians turning away from the ingredient due to droughts and heatwaves. Deoleo, the world's largest olive oil seller, has reported falling sales of its brands like Bertolli and Carbonell. The price has led to a shift in consumer habits, with people consuming less olive oil or turning to seed oils when they cross the €8 per liter barrier. Droughts and heatwaves have impacted olive oil output in Spain, Italy, and Greece, leading to a global shortfall. For the past two seasons, only 2.4M tonnes of olive oil were produced globally, far short of the typical annual demand of 3.2M tonnes.

THE NEW YORK TIMES
-President Joe Biden and Donald Trump faced off in the 2024 presidential debate, with Biden appearing hesitant and burdened by his 81-year career. This led to speculation of a new Democratic candidate. However, Biden's performance was marked by a lack of confidence and forcefulness. During the debate, Biden repeatedly stumbled when speaking, causing an immediate panic among those determined to see Trump lose in November. Some publicly broached the idea of a new candidate. Then, on Friday afternoon, appearing at a fairground warehouse in North Carolina, Biden was seen by far fewer people and seemed unlikely to quell the hand-wringing among Washington consultants, media pundits, and ordinary voters. However, Biden Two showed that, even after five decades in public life, he can still pump his fist in the air, stir a crowd to cheer, and perhaps inspire an unwieldy coalition to vote for him one more time. This contrasts with the tepid and weak debate performance by Biden One, which caused an immediate freak-out among those determined to see Trump lose in November.
-First Lady Jill Biden has expressed her commitment to President Biden's campaign, stating that she would be the most crucial figure in his decision to leave the race. Biden acknowledged that they had been counted out before the presidential debate, and she believes that her presence could make or break Biden's campaign. The first lady's embrace on stage with CNN logos behind them suggests their involvement in the decision.
-Two rulings by the conservative supermajority of the Supreme Court have been issued, highlighting the ongoing pursuit of weakening regulatory agencies' ability to impose rules on powerful business interests. The six Republican-appointed justices overturned the Chevron doctrine, a 40-year-old foundational part of administrative law, which will make it easier to challenge regulations in court by eliminating a requirement that courts defer to the expertise of federal agencies in interpreting their laws. The decision also struck down a key practice used by many agencies to enforce rules via in-house tribunals, rather than suing accused malefactors in federal court before juries. Both decisions pointed in the same direction: eroding the power of the federal regulatory bureaucracy. The current majority's pursuit of a deregulatory agenda will be part of its legacy.
-The Supreme Court has ruled that federal prosecutors misused a 2002 law in charging a pro-Trump rioter who entered the Capitol on January 6, 2021. This ruling could impact hundreds of other cases, including one against former President Donald Trump. The ruling may lead lower courts to dismiss charges against some Jan. 6 defendants, although most of those charged or convicted under the 2002 law also face other charges. The Justice Department had argued that the law applied to efforts to obstruct an "official proceeding" — the joint session of Congress that took place on January 6, 2021, to certify the Electoral College results. However, Chief Justice John G. Roberts Jr., writing for the majority, read the law narrowly, saying it applied only when the defendant's actions impaired the integrity of physical evidence.
-The United States Supreme Court declined to decide whether states that ban abortions, like Idaho, must comply with a federal law that requires emergency room doctors to provide abortions necessary to protect the health of a pregnant woman. Miller, who had been in the emergency room back home, said she needed to stay alive so she could be around for her two other kids. On Thursday, the Supreme Court declined to decide whether states that ban abortions, like Idaho, must comply with a federal law that requires emergency room doctors to provide abortions necessary to protect the health of a pregnant woman. This decision highlights the ongoing struggle for pregnant women in states that have banned abortions to access necessary medical care.
-Many young people in the northern English cities of Liverpool and Manchester are feeling disillusioned by politics, with polls suggesting that over half of voters under 35 plan to vote for Labour on Thursday, compared with 27% of voters over 65. The economic situation and the crumbling state of the National Health Service have led to many young people living paycheck to paycheck. Liam Kehoe, a 26-year-old worker in Liverpool, plans to vote for the center-left Labour Party on Thursday, citing the economic situation and the crumbling state of the National Health Service. Kehoe believes that young people have been left with worse prospects after 14 years of a Conservative-led government, with houses being more affordable and life being easier. The extent of the split in Britain in recent years is exceptional, with support for the governing Conservative Party dropping sharply in all but the oldest age group, according to recent polls.
-Stephen K. Bannon, a former ally of former President Donald J. Trump, will begin serving four months in federal prison on Monday after the Supreme Court rejected his appeal to delay his sentence for contempt of Congress. The court rejected Bannon's request to remain free while he challenges his conviction on charges of defying a subpoena from the House committee investigating the Jan. 6, 2021, attack on the Capitol. Bannon had filed a last-ditch petition to Chief Justice John G. Roberts Jr. last week, asking for permission to hold off on surrendering to the authorities. In July 2022, Bannon was found guilty of ignoring the subpoena, which sought information about his role in the events of Jan. 6.
-The Biden administration has reportedly opposed gender-affirming surgery for transgender minors, following a report in The Times that a federal health official had urged the removal of age minimums from treatment guidelines for minors. The White House announcement came in response to an article reporting that staff in the office of Adm. Rachel Levine, an assistant secretary at the Department of Health and Human Services, had urged an influential international transgender health organization to remove age minimums for surgery from its treatment guidelines for minors. The draft guidelines would have lowered the age minimums to 14 for hormonal treatments, 15 for mastectomies, 16 for breast augmentation or facial surgeries, and 17 for genital surgeries or hysterectomies. The final guidelines, released in 2022, removed the age-based recommendations altogether.
-NASA and Boeing officials have confirmed that astronauts Butch Wilmore and Suni Williams will remain on the International Space Station for several weeks longer as teams on the ground study malfunctioning thrusters on the Starliner spacecraft. The astronauts are not stranded or stuck on the spacecraft, and there is no talk of a rescue mission. Mark Nappi, the program manager at Boeing for Starliner, said that the crew is not in any danger. Steve Stich, the manager of NASA's commercial crew program, also tried to allay worries by stating that the vehicle at the station is in good shape and that the right time to return them home would be after additional analysis on why five of Starliner's 28 maneuvering jets behaved oddly as the spacecraft approached the space station.
-The United States is pursuing a diplomatic push to prevent a full-on war between Israel and Hezbollah forces in Lebanon, as the risks of either side initiating a broader regional conflict increase. US officials have pressed Israeli counterparts and passed messages to Hezbollah's leaders to avert a wider regional conflict that they fear could draw in both Iran and the United States. Israel's defense minister, Yoav Gallant, met with several Biden administration officials in Washington to discuss escalating tensions along Israel's northern border with Lebanon. Israel's national security adviser, Tzachi Hanegbi, and its minister of strategic affairs, Ron Dermer, also visited to discuss the situation. A senior White House official, Amos Hochstein, who has assumed an informal diplomatic role mediating between the two sides, visited Israel and Lebanon, warning Hezbollah, which is supported by Iran, that the US would not be able to restrain Israel if it commits to an all-out war with the militia group.

THE NEW YORK POST
-Washington officials discovered a kinkajou, also known as a honey bear, crawling along a stretch of desert along Interstate 82 southeast of Yakima. The kinkajou, which is a nocturnal rainforest (native to southern Mexico through Brazil) animal, was found at the Selah Creek Rest Area over the weekend. Animal experts suspect that the weasel-like critter was obtained through the illegal pet trade before being abandoned and left to fend for itself in the arid climate. The kinkajou was found to be "very thin”. Officials are still pending full results of the young animal, but officials say the kinkajou is in fair overall health and is recuperating at the zoo as officials look for a permanent home for the tiny beast. Kinkajous, which have prehensile tails, live in tropical rainforests.
-Joe Biden is attending two fundraisers in the Hamptons this weekend after a disastrous performance at Thursday's debate. Donors are expected to take his pulse and perform a blood pressure check, as they cannot return their money as there are no refunds. The specter of Donald Trump winning is a unifying force for Democrats, and donors are aware of the stakes. Biden will attend an event thrown by billionaire hedge funder Barry Rosenstein and his wife Lizanne, along with co-hosts including Broadway producer Stacey Mindich, Eric Mindich, Nicole and Michael Fox, Sarah Jessica Parker, Matthew Broderick, and Michael J. Fox.
-The Federal Aviation Administration and the National Transportation Safety Board are investigating a Southwest Airlines flight that departed from a closed runway at Portland International Jetport in Maine. The FAA reported that an airport vehicle exited the runway just before the takeoff roll. A preliminary report on the incident will be available in 30 days, but a probable cause and contributing factors will not be disclosed until the final report is issued in 12 to 24 months. Southwest is working with both agencies to understand the circumstances of the early morning Southwest departure.

Barrons : Ford CEO Jim Farley Explains Why EV Sales Are Slowing as Hybrids’ Boom

Ford CEO Jim Farley Explains Why EV Sales Are Slowing as Hybrids’ Boom

Electric vehicle growth is waning, leaving the wider industry wondering if it’s spending billions of dollars wisely. Politics, vehicle affordability, and charging infrastructure have all been blamed.

Those issues matter—but according to Ford Motor CEO Jim Farley, battery-electric vehicles, or BEVs, face other headwinds, too.

“We’re entering new customers, the mainstream customers are not willing to pay a premium for EVs,” Farley told Barron’s. “They don’t know how to handicap the charging.”

Those are valid, well-understood points. Though all-electric car sales jumped 46% in 2023, sales grew just 3% in the first quarter of 2024.

It’s getting harder to find buyers willing to go all-electric—and pricing doesn’t help. The average new car in the U.S. cost about $48,500 in May, while the average new BEV cost roughly $55,0000, according to data provider Cox Automotive.

As for charging, the U.S. has about 176,000 public charging ports. China has about 15 times that amount.

There are other things troubling car buyers, too. They don’t have a good feel for EV resale value, says Farley, adding “insurance has gone up and they don’t know how to handicap that.”

EV resale values are a problem—and can be attributed to Tesla. The average price of a Tesla in the U.S. is about $50,000, down 20% from more than $62,000 a year ago. The EV company has cut prices repeatedly since late 2022 to help offset falling demand. Large price cuts impact the value existing Tesla owners can sell their vehicles for.

A car should have roughly 50% of its value at the end of three years. The value of a Tesla bought in 2021 is probably worth about 40% of what it was purchased for.

Insurance prices have also hit drivers across the U. S.—and make everyone more apt to look for a good deal. Insuring a car is now almost 50% more expensive than it was before the Covid-19 pandemic.

The situation with vehicle repair and maintenance isn’t much better. Average repair costs are up almost 40% compared with pre-pandemic levels.

As for EVs, they are cheaper to maintain than regular cars—they have fewer moving parts and no oil changes—but they are a little more expensive to repair on an apples-to-apples basis. Don’t forget that most EVs are considered luxury cars, so consumers shouldn’t compare the cost to repair, say, a Lexus with a Corolla.

What’s more, the number of EVs on the road also impacts repair costs: fewer EVs means fewer aftermarket parts available.

Going electric can be a daunting task. Car buyers “can do the math on a hybrid …they can figure out how much money they can save on the gas,” says Farley. “We cannot keep up with the capacity for hybrids.”

Through May, Ford sold about 74,000 hybrids in the U.S., up about 51% year over year. In the U.S. hybrid sales grew about 65% in the first quarter, after growing 56% year over year in 2023.

Ford’s strategy is to offer traditional, hybrid, and all-electric cars to buyers. And Farley sees higher BEV sales in the future, as cheaper models become available and buyers get used to them.

BEVs will also have to be reasonable to repair and hold their value—two issues the EV industry can work on to drive all-electric car sales.

Through Friday trading, Ford stock was flat year to date, underperforming the S&P 500 by about 12 percentage points.

Ford shares trade for just 6.3 times estimated 2025 earnings. The S&P 500 trades for closer to 19.3 times. Investors typically don’t award traditional car makers big valuations multiples—and uncertainty about how hybrid, EV, and traditional sales will develop is one reason for the discount.

Barrons : Ford Is Making a Comeback. It’s Time to Buy the Stock.

Ford Is Making a Comeback. It’s Time to Buy the Stock.
The U.S. auto maker is focused on returning capital to shareholders, which should boost performance in the months ahead.

If the stock market is a race, Ford Motoris losing. But it may be ready to start closing the gap with General Motors .

Ford’s shares have advanced 5.6% this year, trailing GM’s 30% gain and the S&P 500’s 16% rise. Not much separates the two U.S. auto makers. Sales are growing at both. Ford is expected to generate some $22 billion in operating profit over 2024 and 2025, while GM is expected to generate $26 billion. Both are growing electric vehicle sales faster than the market.

The big difference has been their plans for capital return to shareholders. GM has announced or completed some $16 billion in stock buybacks, amounting to roughly 30% of its total market value, after the initial $10 billion buyback was announced on Nov. 29. Ford has stuck to dividends, paying 15 cents per quarter plus an 18-cent special dividend in March.

Underperformance by one of America’s two largest auto makers relative to the other doesn’t happen very often. When it does, the underperformer usually closes the gap, Morgan Stanley analyst Adam Jonas noted in a recent report. There just needs to be a catalyst. For Ford, it’s simple: spend less on EVs, improve quality, focus on shareholder returns.

“We see an opportunity for Ford to narrow the gap by moving the needle toward capital discipline,” writes Jonas, who has a Buy rating and $17 price target on the stock, up 32% from Wednesday’s close of $12.87.

Don’t expect Ford to buy back stock the way GM has, says Freedom Capital Markets analyst Mike Ward. The Ford family still controls 40% of the voting power in the company’s shares, and Bill Ford Jr. is the executive board chair—and the Fords like to receive their dividends. Ford’s current plan is to distribute 40% to 50% of annual free cash flow as special dividends.

More special dividends should be coming. Ford could generate $21 billion in free cash flow over the next three years. Paying out 50% of that would amount to additional payments of up to $2.60 a share, or 20% of the current stock price. That money comes in addition to the quarterly 15-cent dividend. The stock market, though, doesn’t appear convinced. Ford shares are down 16% over the past 12 months. Ward remains hopeful, saying the company is focused more on total shareholder return.

In the past, management bonuses were based on a mix of stock performance, return on capital, profit margin, and free cash flow goals. Improved operating performance, however, doesn’t always lead to higher stock prices. Over the past decade, Ford’s operating profit margins are up about four percentage points compared with the prior 10 years. The result of all that work? Ford stock trades at 1987 levels. Now, management gets paid for total shareholder return, CFO John Lawler said at an investor conference in June.

Still, Ford needs to do more than just pay dividends and buy back shares. Its profit margins trail those of GM, something Ford plans to rectify by cutting $2 billion in costs. Part of the cost improvement starts with quality. Ford’s warranty expenses amount to about 3.5% of sales each year, higher than GM’s 3% and Toyota’s 1%. Improving to competitors’ levels could mean another $1 billion to $2 billion in annual operating profit, significant for a company expected to earn $11 billion in 2024. CEO Jim Farley acknowledged how important quality is to Ford in April, noting that quality in 2023 was 10% better than it was in 2022, and another 10% better in the current model year.

Then there is Ford Pro, which is everything the rest of the business isn’t. The division, which sells and services trucks, cars, and vans for businesses, reported a 16.7% operating margin during the first quarter. The performance generated questions from Wall Street about how Ford could monetize the division with a spinout or initial public offering. None of that is likely. What the Ford Pro segment can do is help convince investors that profits won’t evaporate in a downturn.

But the largest improvement to free cash flow will have to come from Ford’s EV business. Ford’s EV division, called Model e, lost $1.3 billion, even as the traditional car business and Ford Pro earned a combined $3.9 billion. Model e hasn’t achieved the scale or cost structure to generate consistent profits. Ford isn’t abandoning EVs, but it has to shrink those losses. That means less spending on EVs. When it released first-quarter earnings, Ford trimmed the top end of its capital spending guidance for 2024 to a range of $8 billion to $9 billion, down from a prior range of $8 billion to $9.5 billion. That might have gone unnoticed, but it amounts to slower EV spending.

Ford might also get some help from a stronger auto market. Americans are on pace to buy 16 million new cars in 2024, up from about 15.5 million in 2023. BofA Securities analyst John Murphy believes industry sales will peak around 2028 at 17 million to 18 million units. Murphy, who rates the stock a Buy, also projects Ford to pick up market share over that span. It will have newer offerings than the competition. His price target of $21 reflects a more than 60% gain in the shares.

Add it all up, and trimming the capital budget might be the best sign Ford is getting serious about its stock price. Investors should, too.

FT : How investors should play the UK, French and US elections

How investors should play the UK, French and US elections
Worry not if policies are discounted, they are sideshows versus fundamentals

When I was a pup, everyone driving to and from Sydney airport from the north would crawl through the beautifully wide, tree-lined roads of Surry Hills. Wouldn’t this suburb be bonza without the traffic, we all agreed.

And sure enough the cars vanished when the Eastern Distributor tunnel was opened in 1999 — just as everyone knew they would when the project was given the green light half a decade before.

Yet house values in the area leapt, as if surprised. They rose a bit in anticipation, but nothing like what followed. I often think about Crown and Bourke Streets when investors are advised to “buy on the rumour and sell on the fact”.

Often the opposite happens, it seems to me. Prices only wake up when the known future hits them in the face. This happens a lot in dealmaking, for example. Value is realised by the mere announcement of a hostile bid.

What is or isn’t discounted in asset prices is a hot topic, with markets digesting polls in the UK, France and the US. That’s a third of global output right there — and almost 80 per cent of the MSCI World index.

If I am wrong, and prices are efficient, then pondering who will win elections, and trying to work out which investments will out- or underperform based on manifesto pledges, is a fool’s game. There is no arbitrage to be reaped.

Labour promising a Green Industrial Revolution in the UK, say. But surely the implications have been baked into the share prices of National Grid and SSE for months, if not years. Haven’t concrete and steel suppliers already anticipated higher infrastructure spending?


On the other hand, what if the Crown and Bourke Effect (copyright 2024) dominates? Already it seems as if thousands of British investors woke up on Friday saying: “Blow me down, there’s been an election and Labour has won. We should buy some domestic housebuilder stocks.”

Of course, the investment research business also abhors an arbitrage. Every day sees another report showing the S&P 500 does better under Democrat administrations — so buy if Biden wins. Or that French equities underperform when the far right gains votes — so sell.

Such analysis would be redundant if clients believed in efficient markets. We aren’t talking about new information here — obviously that moves prices. But Labour said it would build more homes long ago. Housebuilder share prices shouldn’t move a penny come election day.

They will move over the coming months and years, however, if not much at first — just as all stocks do. For me the problem is not that investors fail to see what is right under their noses (like a huge tunnel being built), rather that price expectations rarely comply.

Hundreds of case studies come to mind, but in terms of sheer size and incorrectness (relative to what seemed like an obvious call beforehand) consider the oil and gas sector in the US over the past two administrations.

Before former president Donald Trump came to power in 2016, he invited 20 energy bosses to Mar-a-Lago and promised them massive tax and regulatory favours. Only by shooting the black stuff out of his ears could he have appeared more pro-Big Oil.

Worth a punt then, the average investor might have thought. And indeed the S&P 500 rose by more than half during Trump’s term, a better result than Barack Obama’s first four years in office. The oil and gas sector, though? Down by two-thirds.

Roll forward and president Joe Biden, seeking a second term, wants to transition the US away from fossil fuels. Once elected, his Inflation Reduction Act contained $783bn of green-related spending and incentives, according to the Congressional Budget Office.

So it wouldn’t have been ridiculous to suppose that the largest piece of legislation in global history to address climate change might be awkward for domestic oil and gas companies. Wrong again. The sector is the fourth best performing (out of 163) of Biden’s administration. Better even than tech, if you exclude Nvidia.

Why were investors wrongfooted on both occasions? After all, they had good knowledge of Trump’s and Biden’s plans for energy beforehand. The answer has nothing to do with what was in the price already. It is simply that policy was overwhelmed by larger forces.

Next to recessions, pandemics, the actions of Opec, demand rebounds or supply-side shocks following the invasion of Ukraine, the words and actions of Trump and Biden were irrelevant. So much so that prices did the exact opposite of what would be expected.

And if global issues can swamp the most powerful nation on earth, what chance is there that a UK-listed, yet global, pharma company such as AstraZeneca will outperform the FTSE 100 simply because Labour says it will spend more on healthcare?

Zero chance. Sure, Astra could beat the index because patents are extended, new drugs discovered and approved by regulators, or because management announces a radical cost reduction programme. A takeover rumour would also help.

But don’t pretend that Sir Keir Starmer has anything to do with it. That would be like saying the make-up of the French parliament has a bearing on luxury sales and hence LVMH’s share price, when Asia accounts for 40 per cent of revenues.

Even stocks thought to have skin in the game, such as British water utilities (Labour intends to put them under “special measures” if they’re failing), or French oil companies (Le Pen’s Rassemblement National wants to cut sales taxes on petrol this summer), have barely moved in the past month as polls neared.

My election advice for investors then? Prioritise valuation as ever, and if markets are shocked when a result comes in — as Sydneysiders were when Surry Hills went quiet — take advantage of prices that seem out of line. Ignore everything else.