Breakfast on Wall Street: Election Season

Inquiry Monday

The US elections are only five months away and will have profound impacts on many parts of the economy and markets. Who do you think will win in November?

· Joe Biden
· Donald Trump
· Other

Take the survey here and don’t forget to share what impact could this have on the markets in the comments section of the BMS.

Election season

The first one Breakfast on Wall Street The 2024 edition was called the Election year, and things are changing rapidly around the world as investors get closer to the middle of the year. Some political upheaval has been seen recently in India, South Africa and Mexico, while things are also starting to change in Europe. British Prime Minister Rishi Sunak has called a general election for July 4, while the results of this weekend’s European Parliament elections are still being digested.

How it works: European parties are essentially large tentpole movements, with national parties from the 27 EU member states joining together to form seven large European political groups with representation based on population. That’s a big deal since the European Parliament’s 720 lawmakers approve the bloc’s budget, negotiate EU laws and approve the president of the European Commission in a vote that takes place on July 8 (after all, it’s is the election year). ). The remaining 27 commissioners are chosen by their respective countries as part of the European Council, which sets the bloc’s political agenda, and will be approved by a new vote in Parliament on December 19.

The biggest winners in the last elections were the EPP, which will be the largest party in parliament with a projected 189 seats, as well as the Identity and Democracy group, known for its nationalism and euroscepticism (and would have even seen bigger gains if the German AfD was not excluded from the party several weeks ago). The biggest losers were the Greens, who defend environmental and climate protection, as well as Renew Europe, known for its pro-European and liberal stance. Politically, the EU as a whole has shifted more towards the center-right, conservatives and even the far right, which may lead to a major shift within the bloc.

Is this already happening? Immediately after the election, French President Emmanuel Macron called for early parliamentary elections, while Belgian Prime Minister De Croo resigned after a heavy loss (the right also recorded big gains in Germany and Austria). At the European level, centrist parties like the EPP, S&D and Renew Europe will still hold the majority of seats in the European Parliament, so the current coalition will likely continue, but priorities could change due to growing influences elsewhere. Energy and agricultural policies are already under pressure amid a cost of living crisis and low economic growth, national defense spending will be considerable due to migration fears and border security, while industrial policy is also in the center of attention due to increasing competition measures in the country. United States and China. Complete the WSB survey.

The AI ​​game

Apple (AAPL) will kick off its annual Worldwide Developers Conference today with a keynote that is perhaps the tech giant’s most anticipated keynote since the iPhone was introduced nearly 17 years ago . While the event isn’t typically a catalyst for the stock, the fact that the conference is likely to focus on Apple’s plans for generative artificial intelligence could prove important for investors. An AI-powered Siri upgrade, Apple’s OpenAI partnership and new features that will allow users to execute generative AI commands on the iPhone itself are expected to attract attention. Notably, Apple is not expected to unveil any new hardware at the event. (12 comments)

Activist airlines

Elliott Management has reportedly accumulated a nearly $2 billion stake in Southwest Airlines (LUV) and plans to push for changes, although the exact details are not known. The activist, who is expected to engage with Southwest’s top brass, is one of the carrier’s biggest investors. The news sent Southwest shares surge of 6% in premarket trading, but the stock has underperformed its rivals year-to-date, falling almost 4%compared to that of Delta (DAL) 25% gain and one 28% increase by United (UAL). Southwest, once considered the most profitable U.S. airline, suffered a larger-than-expected loss last quarter as operating expenses weighed on profitability. (12 comments)

Security scandal

Five Japanese automakers have been accused of falsifying safety test data when seeking certification for certain models, in a scandal reminiscent of Volkswagen’s (OTCPK:VWAGY) 2015 Dieselgate. Toyota (TM), Honda (HMC), Mazda (OTCPK:MZDAY), Suzuki (OTCPK:SZKMY) and Yamaha (OTCPK:YAMHF) were ordered to suspend deliveries of the models, sending their shares tumbling last week. Japan also raided Toyota’s headquarters, dealing another blow to the automaker which faces governance issues as well as safety testing problems at its Daihatsu subsidiary. While Dieselgate, which violated US clean air laws, ultimately led to $30 billion in fines and damages worldwide, the current scandal has fueled calls for an overhaul of the rules too strict.