NASDAQ Tumble Through Just 5 Stocks.

When it comes to the ongoing technology beat-down in the stock market, it appears not all shares are created equal.

Indeed, just five names account for nearly 75 percent of the drop in the Nasdaq Composite Index, which has fallen more than 2.1 percent since June 7. Meanwhile, the Dow Jones Industrial Average and S&P 500 Index are roughly unchanged over the same time frame.

Much of this dynamic is due to giants like Apple Inc., Microsoft Corp. and Goggle parent Alphabet Inc. falling as much as 6.5 percent. Add Facebook and Amazon to the mix and those companies account for nearly 30 percent of the index’s weighting, and their outsize impact has driven the gauge lower even though the bulk of the stocks are doing fine.

This selloff was “way overdue given the extreme out-performance and positioning in technology shares,” Morgan Stanley analyst Michael Wilson wrote in a note to clients Monday, Shares of Apple, for instance, are still up 25 percent this year, giving them room to fall.

But while Wilson expects the drubbing to continue in the short-term, he doesn’t think the market has seen a peak in tech shares.

“We would be surprised if this is the end for technology stocks given the very strong earnings growth we are witnessing,” he wrote.

Analysts now believe performance in technology will depend on the economic outlook. And if conditions change, finance will be the likely beneficiary.

“If the current economic ‘Goldilocks’ environment persists, technology and other growth stocks should continue to outperform, despite today’s price declines,” Goldman Sachs Group Inc. analysts led by David Kostin wrote in a note to clients late Friday. “However, if investors recalibrate expectations for inflation and Fed policy to match the growth optimism suggested by the S&P 500 level, higher rates should lead to financial sector outperformance.”

Cheerio.

The Pinstripe and Bowler Club shares information with MF Solutions Ltd.

 

UK Election : What Could It Mean To You.

U.K.’s citizens have just voted their next set of Parliament members.

What were the results and why should traders care? Here are a couple of answers:

Why did Theresa May call for snap elections anyway?

Back in mid-April, Prime Minister Theresa May called for a snap election despite her promises to wait for the May 2020 scheduled elections. The plan was to capitalize on her (and her party’s) popularity and strengthen their numbers ahead of the crucial Brexit negotiations.

Back then the Conservative Party held 330 seats, just a smidge above the 326 required to form a majority in the 650 seats of the Lower House. The Labour Party came in second (229 seats), followed by the Scottish National Party (54) and the Liberal Democrats (9).

The pound rallied at her announcement as market players and their cats had bet on a landslide win for the Tories, with polls attributing double-digit leads against the next party.

Did May’s gamble pay off?

Not even a little bit. In the weeks that followed, May’s hard stance on Brexit, two terror attacks in the U.K., a few REALLY unpopular bits in the Conservative Party manifesto, and hard campaigning from her opponents have pulled the Tories’ lead down to uncomfortable levels.

Fast forward to Election Day and now May’s party has…more regrets than seats in the Parliament.

With a voter turnout of 68.7% – the highest since 1997 – and only one more constituency left undeclared, Theresa May’s Conservative Party is expected to snag 318 seats in the Parliament, 12 fewer than when she called for the elections.

The Labour Party is expected to get 261 seats (+31 seats) while the Liberal Democrats (12) and Democratic Unionist Party (10) also added to their numbers. The Scottish National Party (35) also lost seats, though.

What does this mean for the government?

In a word, trouble. With no party reaching parliamentary majority, the U.K. officially has a “hung Parliament.”

Basically, having a hung Parliament means that it will be harder for the MPs to reach decisions. But as leader of the party with the most seats, May will be given a choice if she wants to (a) form a coalition or (b) run a minority government.

Forming a coalition means teaming up Survival-style to get the required 326 votes. In this scenario the Tories would sign a formal coalition as PM David Cameron did with the Liberal Democrats in 2010. The Tories would have to give up control, though, and likely give Cabinet positions to the other party.

Or they could choose to run a minority government and enter into “confidence and supply” agreements, wherein a small party or independent MPs will “supply” their votes on bills and “confidence” votes in exchange for progress for their pet causes.

What does this mean for Brexit negotiations?

More trouble. Remember that May wanted to reinforce their numbers to improve her bargaining position with the EU and increase chances of a “good deal” for Britain. If you recall, she has said that “no deal is better than a bad deal.”

But with the Conservative Party not even getting majority, things just got a lot harder for May. Not only does she have to soften some of her stances (not all Tories are in favor of a hard Brexit), but she might have to scrap some of her plans altogether.

The lack of majority could also lead to delays in the Brexit negotiations. Formal talks was scheduled to start on June 19 but already EU’s Chief Brexit negotiator Michel Barnier tweeted:

“Brexit negotiations should start when UK is ready; timetable and EU positions are clear. Let’s put our minds together on striking a deal.”

Recall that Britain has already officially triggered Article 50 of the Lisbon Treaty. This means that they have two years to negotiate their way out of the EU. Tick tock.

Any other surprises?

As you can see on the chart above, Nicola Sturgeon’s Scottish National Party also lost bigly. More importantly, Alex Salmond – Sturgeon’s deputy, mentor, and a key SNP member, has lost his seat in Gordon.

This means that we won’t see a second Scottish referendum anytime soon. Already Sturgeon has shared that she would “properly think” about whether to press ahead with Referendum 2.0 after the Tories enjoyed their best performance in Scotland since 1983.

Nick Clegg, THE leader of the Lib Dems in 2010 and former Deputy Prime Minister, also lost his seat in Sheffield Hallam to Jared O’Hara of the Labour party. Yikes!

How did the markets react?

The pound took its hardest hit when exit polls – which have been good predictors of actual results – pointed to a hung parliament.

The currency also dropped by its sharpest since the EU referendum and made new lows while the final tallies were shaping up. However, it also saw retracements at the start of the London session.

FTSE 100, which includes companies that would profit from a weaker pound, opened higher today. Meanwhile, FTSE 250, which has more local companies, are marginally lower on the day.

It’s also interesting to note that utilities companies are among the biggest winners today. One possible reason is that the lack of majority would mean that the Labour Party won’t likely push through with nationalizing them while Theresa May can’t cap their bills either.

What now?

PM May revealed that she has seen the Queen and has formally asked permission to form a government.

Apparently, she’s now teaming up with the Democratic Unionist Party (DUP) to form a coalition in time for the start of Brexit negotiations AND the opening of the new Parliamentin 10 days.

Thing is, the DUP isn’t a fan of a “hard Brexit.” DUP founder Arlene Foster once shared that “No one wants to see a hard Brexit,” adding that “no one wants to see a hard border.”

This means that, unless May convinces Foster and her gang to come over to the “hard” side, then we’ll likely see a toned down version of May’s initial Brexit plans.

Cheerio

The Pinstripe and Bowler Club shares information with MF Solutions Ltd.

 

UK OK ?

The U.K. could suffer another ratings downgrade after a General Election led to a hung parliament, Moritz Kraemer, sovereign chief ratings officer at S&P Global, said on Friday.

The U.K. lost its triple A rating after the country voted to leave the European Union in June of last year. S&P said at the time that it was worried the decision would lead to a deterioration of the U.K.’s economic performance and institutional framework.

Kraemer said on Friday that the latest election outcome proves the rating update was correct and further ones could be on the way.

“We have the outlook on the ratings still on negative indicating that further downgrade or downgrades could be in the wings going forward,” he said.

“This depends pretty much on the further outcome of the Brexit negotiations and the reality that the U.K. will face outside the EU, which is still uncertain,” Kraemer added.

Brexit talks, which were due to begin in a couple of weeks, are set to be delayed until the U.K. has a new government in place. The associated uncertainty could hurt the country’s economy by further derailing investment decisions.

Kramer noted that this was the second unnecessary referendum/election in the U.K. “This is quite a track record,” he said.

The upcoming decisions of U.K. lawmakers will be closely watched. Kathrin Muehlbronner, a Moody’s senior vice president and lead U.K. sovereign analyst, said via email: “Moody’s is monitoring the U.K.’s process of forming a new government and will assess the credit implications in due course.”

“As previously stated, the future path of the U.K. sovereign rating will be largely driven by two factors: first, the outcome of the U.K.’s negotiations on leaving the European Union and the implications this has for the country’s growth outlook; Second, fiscal developments, given the country’s fiscal deficit and rising public debt,” she added.

The outcome of the election also seemed to indicate that voters are tired of austerity policies.

Cheerio

The Pinstripe and Bowler Club shares information with MF Solutions Ltd

Russian Grain Gain

Russia’s wheat fields are expected to see warm, dry weather in the next two weeks, a relief for farmers that have struggled with a cold and soggy planting season.

Wet fields of winter wheat will start drying out, which would benefit the crop to be harvested next month, according to Commodity Weather Group. Later in June, most models show rain will return, which would replenish soil moisture and keep the crop in good shape, said David Streit, a forecaster for the Bethesda, Maryland-based firm.

“Russia has a good soil moisture supply in place going into this drier spell that the wheat can tap into,” Streit said, adding that the dry weather will help prevent disease.

Bad weather has lowered expectations for Russia’s total grains production, and traders are closely watching weather forecasts ahead. Earlier this month, the Agriculture Ministry cut production estimates to as low as 100 million metric tons from a previous forecast of 110 million tons, according to a report from Tass news service, which cited an interview with the minister.

Cold, Wet

Earlier in the year, cold weather in central and southern Russia, the main areas for winter wheat, raised the risk of delays to the wheat and barley harvest. It’s also possible that central and eastern Ukraine, and central portions of Russia’s North Caucasus could see lower yields, said Kyle Tapley, a senior agricultural meteorologist at MDA Weather Services.

“I don’t see major problems for the winter wheat except for some falling behind with vegetation, but it is not the major issue,” said Dmitry Rylko, director general of Institute for Agricultural Market Studies in Moscow.

The weather could be a bigger problem for spring crops, such as wheat, barley and corn, which are falling behind in planting and development, he said.

In the spring-wheat areas of Volga region and the Urals, the fields will likely remain cold and wet over the next 10 days, which could slow planting and early crop growth, said Tapley of MDA. However, conditions could improve later in the season, he said.

Sowing of spring wheat, the smaller of the two main wheat harvests in Russia, are lagging behind last year’s pace. Plantings account for 12.5 million hectares (30.9 million acres) as of June 2, compared with 13.3 million hectares a year before, according to the Agriculture Ministry.

Spring wheat, mainly grown in Siberia, usually accounts for a third of Russia’s total harvest.

Cheerio

The Pinstripe and Bowler Club shares information with MF Solutions Ltd.

Who Needs Oil

Last year saw 161 gigawatts (GW) of renewable power capacity installed, a new report from the Renewable Energy Policy Network for the 21st Century (REN21) says.

According to the Renewables 2017 Global Status Report, released on Wednesday, solar photovoltaic represented roughly 47 percent of capacity added, followed by wind power and hydro, which accounted for 34 and 15.5 percent respectively. Global capacity grew by nearly 9 percent compared to 2015, hitting almost 2,017 GW.

While the investment of $241.6 billion in renewable power and fuels – excluding hydropower projects bigger than 50 megawatts – was a 23 percent reduction compared to 2015, this decline “accompanied a record installation of renewable power capacity worldwide,” REN21 said.

“The world is adding more renewable power capacity each year than it adds in new capacity from all fossil fuels combined,” Arthouros Zervos, REN21’s chair, said in a statement.

Zervos went on to add that as the share of renewables grew, investment in infrastructure would be needed in addition to tools such as integrated transmission and distribution networks; measures to balance supply and demand; sector coupling such as the integration of power and transport networks; and the deployment of “enabling technologies.”

When it comes to the environment, REN21 said that worldwide energy-related CO2 emissions from fossil fuels and industry were stable, despite the global economy growing three percent and greater demand for energy. This, it added, was primarily down to the decline of coal as well as improvements in energy efficiency and the growth of renewable capacity.

“The world is in a race against time. The single most important thing we could do to reduce CO2 emissions quickly and cost-effectively, is phase-out coal and speed up investments in energy efficiency and renewables,” Christine Lins, executive secretary of REN21, said.

“When China announced in January that it was cancelling more than 100 coal plants currently in development, they set an example for governments everywhere: change happens quickly when governments act – by establishing clear, long-term policy and financial signals and incentives.”

Cheerio

The Pinstripe and Bowler Club shares information with MF Solutions Ltd

South Africa Recession

South Africa has entered recession for the first time in eight years, data showed on Tuesday, piling pressure on a government facing corruption allegations and credit downgrades.

Data from Statistics South Africa showed the first quarter contraction was led by weak manufacturing and trade, suggesting high unemployment and stagnant wages were dragging down South Africa’s long-resilient consumer sector, analysts said.

Political instability, high unemployment and credit ratings downgrades have dented business and consumer confidence in South Africa and the rand extended its losses against the dollar, while government bonds also weakened.

South Africa’s economy contracted by 0.7 percent in the first three months of 2017 after shrinking by 0.3 percent in the fourth quarter of last year, lagging market expectations of a quarter-on-quarter GDP expansion of 0.9 percent.

It was the first time two consecutive quarters showed contraction — a definition of recession — since the second quarter of 2009, although there have been individual quarters of so-called negative growth in more recent years.

A consumer frenzy helped the South African economy grow by an average 5 percent a year in the five years before the 2009 recession, but it has struggled to register much growth since.

“The slowdown in Q1 was due to much worse results from usually stable consumer-facing sectors that had been the key drivers of growth in recent years,” Capital Economics Africa economist John Ashbourne said.

The worst performing sector was trade, catering and accommodation, which contracted by 5.9 percent, while manufacturing – one of the key sectors – fell by 3.7 percent.

Standard Chartered Bank’s Chief Africa Economist Razia Khan said the “awful” data showed weakness where it was not expected.

“Economy in tatters”

The poor growth numbers will pile more pressure on the ruling African National Congress (ANC) to get the economy back on track faster as it tries to stave off further credit ratings downgrades and stem falling voter support.

Pressure on President Jacob Zuma, including from within the ANC, has risen since a controversial cabinet reshuffle in March that led to downgrades to “junk” status by S&P Global Ratings and Fitch and allegations of influence peddling.

Zuma has denied any wrongdoing over the allegations.

Corruption allegations escalated when local media reported this week on more than 100,000 leaked emails they say show inappropriate interference in lucrative tenders.

“Our economy is now in tatters as a direct result of an ANC government which is corrupt to the core and has no plan for our economy,” Mmusi Maimane, the leader of the opposition Democratic Alliance, said.

South Africa’s Treasury has said it would work to finalise policies critical for boosting confidence and economic growth.

S&P Global Ratings and Fitch last week said risks to South Africa’s ratings include weak economic growth and political uncertainty ahead of the ANC conference in December when a successor to Zuma as party leader will be chosen.

Zuma can remain as head of state until an election in 2019.

Moody’s — whose Baa2 rating is two notches above “junk” — is reviewing South Africa for a possible downgrade.

Cheerio

The Pinstripe and Bowler Club shares information with MF Solutions Ltd

Neighbours Slam Door On Qatar

Qatar’s markets received a battering as four of the country’s Middle East neighbors cut ties in a row over its stance on Iran and Islamist extremists.

The nation’s dollar bonds tumbled and contracts used to bet the Qatari riyal will weaken surged the most since 2009. More than two-and-a-half times the daily average of shares changed hands on the key stock index in Doha, where many Muslims are fasting for the holy month of Ramadan, as the gauge slipped the most in more than seven years. With Monday’s selloff, the country’s main equity benchmark became the worst performer globally this year.

 

The disagreement marks an unprecedented low in the relationship between the Arab nations, and for relations in the six-nation Gulf Cooperation Council in particular. It’s a stark reminder to investors of the potential volatility and geopolitical risks associated with the region, at a time when markets like Saudi Arabia and Egypt are intensifying efforts to lure foreign cash.

“For people that don’t know the region very well, they have an image of the Middle East, including the GCC, to be a somewhat unstable region, and I think this maybe confirms what they had feared,” said Tarek Fadlallah, chief executive officer of Nomura Asset Management Middle East. “For those who are familiar with the region, it will be unsettling, but maybe not critical in how they look on making investments for the foreseeable future.”

Yields on Qatar’s $3.5 billion in bonds due 2026 increased 23 basis points to 3.366 percent, the highest level since March.

 

Twelve-month forward contracts for the riyal jumped as much as 203 points to 405 points, the highest level in more than a year, indicating increased bets Qatar could devalue its currency. The contracts traded at 350 by 2:09 p.m. in Doha, up 148 points on the day. The riyal is pegged at 3.64 per dollar.

The country’s QE stock index fell 7.3 percent by the market close on Monday in Doha. Qatar Gas Transport Ltd., Aamal Co, Qatari Investors Group QSC and Gulf International Services QSC dropped by the maximum of 10 percent allowed by the exchange. Six other companies on the country’s 19-member main index dropped between nine and 10 percent, including lender Masraf Al Rayan QSC, which contributed the most to the index move. Qatar National Bank, which has a weighting of 17.9 percent in the index, fell 6 percent.

The benchmark is the worst performer globally this year, posting losses of 12 percent while shares from emerging markets gained more than 18 percent.

Cheerio.

The Pinstripe and Bowler Club shares information with MF Solutions Ltd