Wall Street Breakfast: The Ballot Boxes

The urns

Fourteen years of Conservative rule have come to an end in the UK after Labour won a landslide victory in the UK general election, with Keir Starmer taking over as prime minister. He won a significant mandate with 411 seats out of 650 in parliament, including 211 in the last vote, according to the latest exit polls. It is a major shift for the British political landscape, which has faced a tumultuous decade of Brexit, a COVID-19 cost of living crisis and the war in Ukraine, as well as four Conservative prime ministers in the last five years.

Major change: Labour suffered its worst election result in almost a century in 2019, but it has since gained ground with the general public, faced with a sluggish economy and strained public services. The defeat also reflects a loss of trust in the Conservative Party, which has had its share of problems, from Liz Truss’s failed mini-budget to scandals under Boris Johnson. In fact, disenchanted Conservative members have helped to strengthen Nigel Farage’s Reform UK party, which has become the fourth-largest party in parliament and is aiming to build a mass national movement ahead of the next general election in 2029.

“The British people have delivered a sobering verdict tonight. There is much to learn and reflect on, and I take responsibility for this loss,” said outgoing Prime Minister Rishi Sunak before stepping down as Conservative Party leader. “Change starts now,” said Labour’s Keir Starmer, who was handed the keys to 10 Downing Street. “We said we would end the chaos… and today we begin the next chapter.” The FTSE 100 (UKX) rose after the long-awaited results, with another major European election coming up in France this weekend.

On today’s agenda: With net debt almost equal to annual economic output, the British Labour Party has pledged to close the public spending gap, but will need to find new funds to revive the economy and the national health system. It has also outlined supply-side reforms, such as making infrastructure easier and cheaper to build, as well as investment in green energy and a New Deal for workers. On trade, Starmer has ruled out joining the EU single market or customs union, although he will look at ways to remove some of the trade barriers with the bloc. (20 comments)

Bitcoin Accumulation

Cryptocurrency stocks are under pressure in premarket trading after Bitcoin (BTC-USD) extended its losses for the fourth straight session. The largest cryptocurrency has fallen from the $63,000 level to around $54,000 in recent days as the Mt. Gox exchange collapsed and prepared to distribute a large amount of BTC to its creditors. A 2011 theft netted up to 950,000 Bitcoins, but repayments will be made to many creditors this week, raising fears of dilution or many creditors cashing out their recovered investments. The German government also just sold thousands of Bitcoins, reportedly seized in connection with the defunct piracy site Movie2k. (79 comments)

Discover Saks Global

Strength in numbers could be the motto of the luxury sector as brick-and-mortar retailers continue to suffer the effects of e-commerce and inflation weighs on ambitious shoppers. Hudson’s Bay Company has confirmed its acquisition of Neiman Marcus Group for $2.65 billion, creating a powerhouse with $10 billion in annual sales and more than 150 stores, including Saks Fifth Avenue, Saks OFF 5th, Neiman Marcus and Bergdorf Goodman. As previously mentioned, Amazon (AMZN) will take a minority stake in the combined company, which will be called Saks Global. Salesforce (CRM) is another minority investor and is expected to help with artificial intelligence.

Current conditions

The jobs report, due out at 8:30 a.m. ET, is expected to be mixed, with growth expected to continue, albeit at a slower pace than in previous months. Economists estimate that 191,000 nonfarm payrolls were added in June, while the unemployment rate held steady at 4%. With inflation being the Fed’s primary focus, average hourly earnings data will also be important in the upcoming report. It is expected to increase 0.3% month-over-month and 3.9% year-over-year, down from 0.4% month-over-month and 4.1% year-over-year in May, with the labor force participation rate rising slightly to 62.6%.