FT : The danger of no Brexit deal to UK economy

The danger of no Brexit deal to UK economy
Risks are all on the British side, and EU leaders know this

What will happen to the British economy if the Brexit talks end with no deal being struck? This is an important question and one that few politicians and pundits try to address in detail. In a TV interview on Monday night, Theresa May again repeated her mantra that “no deal would be better than a bad deal” and that Britain has to be prepared to walk away from the table. But how likely is this to happen? And what would be the result?

There are two reasons why the UK-EU talks might collapse into a disorderly Brexit. First, some aspects of the negotiation are genuinely difficult to resolve. Britain is being asked by the EU to pay billions into the bloc’s budget, a demand London firmly resists. The EU also insists that the UK must maintain freedom of movement and subservience to the European Court of Justice during any transitional period after March 2019. These are concessions that Mrs May could find impossible to sell at home.

Second, a lot of Conservative politicians, and a few ministers, genuinely believe Britain can walk away from the talks without incurring much economic damage. Last week, Conservative Home, the leading website for Tory activists, ran a week-long series on what would happen if there were failure to reach an agreement. The tone of the series is captured by one contributor who suggests that shifting to World Trade Organisation rules would be “a walk to a beach, not a cliff-edge drop to destruction”.

Many business leaders and economists vehemently disagree with this assessment. As John Springford and Simon Tilford of the Centre for European Reform argue, there are three ways in which a “cliff edge” Brexit would severely damage the UK economy. EU tariffs would immediately be payable on imports from Britain, averaging about 4 per cent but varying hugely. British car exports would face a 10 per cent tariff. This would be hugely damaging for the motor industry, which relies on components crossing borders many times before a vehicle is assembled.

Second, the UK’s departure from the Customs Union would mean that rules of origin immediately come into force to determine the national origin of any product. “This process would be time-consuming and costly and many firms . . . would be unable to comply and would cease exporting to the EU,” say the CER authors.

Third, the UK would enter a regulatory no man’s land and many British products would no longer be accredited for sale across the continent. Sales of British pharmaceuticals or chemicals in the EU would not be authorised; UK-based financial firms would lose their passporting rights; airlines would not be able to fly between airports in the union. All this would happen overnight.

Britain’s threat to walk away from the negotiating table would carry weight if it risked damaging the European economy as well. But the pain for the EU would be nowhere near as great. Some central bankers argue that there will be substantial financial stability risks to the EU from a sudden end to the operation of EU law in Britain. But the CER’s authors think that Brussels could grant UK-based clearing houses temporary equivalence for a year to help contain the fallout.

Instead, the economic risks are all on the UK side. “British exports of goods and services would shrink very sharply,” say the CER authors. “The hit to exports and to the attractiveness of the UK as a place to invest would in all likelihood provoke a sharp fall in the value of sterling.” This would lead to a rise in inflation, the erosion of disposable incomes, a fall in consumption and a deep recession.

Mrs May’s threat to walk away with no deal is the political equivalent of Britain shooting itself in the foot — or worse. The EU’s leaders know this and, as a negotiating tactic, it does not trouble them at all. What is far more worrying is that many Conservatives continue to view a descent into WTO rules as an attractive option. The more Mrs May utters her mantra that “no deal is better than a bad deal”, the more emboldened these Conservatives will feel. 
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FT : EasyJet founder Stelios to give majority of wealth to charity

Stelios Haji-Ioannou, founder of EasyJet and easyhotelchain, has joined the ranks of super-rich philanthropists, having signed the Giving Pledge and dedicated the majority of his personal wealth to charity.

Sir Stelios, who according to the Sunday Times Rich List is worth an estimated £1.95bn, is one of 14 further additions to the pledge, with signatories hailing from China to Slovenia.

Half of today’s signatories are from the US, partly reflecting the network of founder members Bill Gates, founder of Microsoft, and his wife Melinda, and investor Warren Buffett.

However, new additions to the 168-list of global super-wealthy include Leonard H. Ainsworth, an Australian gaming industry tycoon, and Norwegian oil magnate Kjell Inge Røkke, and his wife, Anne Grete Eidsvig.

Melinda Gates, co-chair of the Bill & Melinda Gates Foundation, said:

Philanthropy is different around the world, but almost every culture has a long-standing tradition of giving back.
Bill and Warren and I are excited to welcome the new, very international group of philanthropists joining the Giving Pledge, and we look forward to learning from their diverse experiences.

>>> USGapping down

Gapping down
In reaction to disappointing earnings/guidance
:
  • DRWI -19.8%, AMWD -0.5%
Other news:
  • TGTX -5% (files for $300 mln mixed securities shelf offering)
  • CYCC -2.9% (files for $15 mln mixed securities shelf offering)
  • IMMY -2.1% (files for $75 mln mixed securities shelf offering)
  • SGMO -0.8% (files for $200 mln mixed securities shelf offering)
  • DMRC -0.6% (files for $100 mln mixed securities shelf offering)
Analyst comments:
  • AMBA -4.7% (downgraded to Sector Weight from Overweight at Pacific Crest)
  • WLL -3.8% (downgraded to Sell from Neutral at Goldman)
  • BBRY -1% (downgraded to Mkt Perform from Outperform at Raymond James)
  • ISRG -0.7% (downgraded to Hold from Buy at Canaccord Genuity)
  • HES -0.6% (downgraded to Neutral from Buy at Goldman)

>>> US Early premarket gappers

Early premarket gappers
Gapping up:
  • ECYT +19%, ARRY +10.3%, CCN +9.9%, CYAD +6.4%, ADES +3.6%, FRO +2.8%, GLYC +2.3%, DBVT +2.1%, JUNO +2.1%, JD +1.6%, CSIQ +1.3%, FSLR +1.2%, CVE +0.9%, CROX +0.8%
Gapping down:
  • DRWI -19.8%, DB -2.6%, TGTX -2.1%, CYCC -2.1%, IMMY -2.1%, GOLD -1.4%, VOD -1%, SGMO -0.8%, CS -0.7%, DMRC -0.6%, BBRY -0.5%, AMWD -0.5%

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance
:
  • XTLY +13.4%, VDTH +13%, FRO +2.7%, BNS +1.1%
M&A news:
  • CCN +9.9% (to be acquired by First Data (FDC) for $15.00 per share)
Other news:
  • PTGX +42.9% (enters into a worldwide license and collaboration agreement with Janssen Biotech (JNJ), will receive an upfront payment of $50 mln; sees having financial resources to fund all ongoing and planned research and development activities until the middle of 2019)
  • BIOS +11.4% (to continue to provide certain core product lines to UnitedHealthcare (UNH) beyond September 30)
  • ECYT +8.1% (to announce updated data on EC1456 and EC1169 at ASCO)
  • NIHD +8.1% (continued strength)
  • ARRY +6.6% (Array Biopharma and Bristol-Myers Squibb (BMY) enter clinical research collaboration)
  • CYAD +6.4% (receives additional patent in US for TCR-deficient allogeneic CAR-T cells)
  • BHVN +4.2% (completes enrollment in its clinical study of trigriluzole; expects to submit a new drug application to the FDA in early 2018)
  • PME +3.7% (CEO announces intention to buy at least 1 mln shares of the co)
  • JUNO +2.1% (Director disclosed purchase of 20000 shares worth ~ $500K)
  • JD +1.2% (positive profile in Barrons)
  • CROX +0.8% (positive profile in Barrons)
Analyst comments:
  • PSDV +3.2% (initiated with a Buy at Rodman & Renshaw)
  • ZNGA +2.9% (upgraded to Overweight from Neutral at Piper Jaffray)
  • AZO +1.2% (upgraded to Buy from Neutral at Goldman)
  • T +0.5% (upgraded to Neutral from Sell at MoffettNathanson)

>>> Intel announcement of new chip....Apple implications...

Apple is rumored to be preparing a MacBook refresh and so today's announcements are likely going to fill in some of the blanks regarding processors available now and this fall that could be adopted for the iMac update this fall



Intel announced new Core CPUs at Computex 2017 including their Monster i9 X-Series with 18 Cores & 36 Threads

At Computex 2017 Intel introduced their new Intel Core X-series processor family. Intel's most scalable, accessible and powerful desktop platform ever, it includes the new Intel Core i9 processor brand and the Intel Core i9 Extreme Edition processor – the first consumer desktop CPU with 18 cores and 36 threads of power.





Intel noted in their press release today that "Creating rich, immersive experiences and bringing them to life takes a lot of compute power. Creators, gamers and enthusiasts have an insatiable demand for more power, more performance and more capability that lets them focus on what they want to do, not on whether their computer is up to the task. Intel is committed to continue giving them that extreme platform.

Introducing the new Intel Core X-series processor family: Intel's most scalable, accessible and powerful desktop platform ever. Ranging from 4 to 18 cores, it offers unprecedented scalability. With price points to match, there is an Intel® Core™ X-series processor that is sure to meet the needs for the widest range of enthusiast customers ever.


We're also introducing the entirely new Intel Core i9 processor brand, representing the highest performance for advanced gaming, VR and content creation. At the top of the lineup is the new Intel Core i9 Extreme Edition processor – the first consumer desktop CPU with 18 cores and 36 threads of power.

Select SKUs of the Intel Core X-series processor family brings extreme performance to enthusiasts with Intel Turbo Boost Max Technology 3.0 creating new levels of single-threaded and dual-threaded performance. The Intel® Core X-series processor family also delivers the first teraflop desktop CPU from Intel. And install Intel® Optane memory, a smart system accelerator to improve system responsiveness with large storage drives. Intel Core X-series processors use more cores and more threads to do more simultaneous workloads, like extreme mega-tasking. For our enthusiasts, we have new overclocking features including AVX 512 ratio offset, memory controller trim voltage control, and PEG/DMI overclocking to get more performance than ever before."

Extreme Performance for Single-Thread and Multithread Computing

  • Up to 10 percent faster multithread performance1 over previous generation
  • Up to 15 percent faster single-thread performance2 over previous generation
  • Massive 36-thread performance and quad-channel memory for content creation and extreme mega-tasking
  • Up to 44 lanes of PCIe 3.0 directly connected to the CPU, to expand your system with fast SSDs, multiple discrete graphics cards and ultrafast Thunderbolt 3 technology

Key Features:

  • New! Intel Core i9 Extreme Edition processor featuring 18 cores and 36 threads
  • New! Intel's most scalable high-end desktop platform ever with 18, 16, 14, 12, 10, 8, 6, and 4-core options
  • New! Intel X299 chipset with improved I/O capabilities

System from HP, Dell, Levnovo and Asustek will be ready for the holidays. The Asusteck's highend i9 system will be called "Kukuna."

Intel's Gregory Bryant, corporate vice president and general manager of the Client Computing Group who gave the Computex Keynote wrote a press release as well talking about today's announcements which also included news about Intel's Compute Card which offers the capabilities of a full computer but in the size of a credit card. The applications are endless – smart screens, interactive appliances, smart factories and more – and it's a perfect complement to everything else we are doing to bring more compute power and connectivity into the home and beyond. For more on news, click here.