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Emmanuel Macron gambles on snap French election after Marine Le Pen victory in EU vote

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Emmanuel Macron gambles on snap French election after Marine Le Pen victory in EU vote

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President Emmanuel Macron stunned France on Sunday when he called snap parliamentary elections after his centrist alliance was trounced by Marine Le Pen’s far-right movement in a European parliamentary vote.

Exit polls showed the Rassemblement National (RN) secured 31.5 per cent of the vote compared with 14.5 per cent for the French president’s centrist alliance, a stinging blow to Macron. He appeared to have only narrowly avoided a humiliating third place behind the centre-left, which took 14 per cent of the vote.

“For me, who always considers that a united, strong, independent Europe is good for France, this is a situation which I cannot countenance,” he said. “I have decided to give you back the choice of our parliamentary future with a vote.”

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The first round of the parliamentary elections will be held in just three weeks, on June 30, with a run-off on July 7.

The dissolution is an extraordinary gamble by the French leader who has already lost his parliamentary majority after winning a second term as president two years ago. His alliance could be crushed, which would force him to appoint a prime minister from another party, such as the centre-right Les Republicains or even the far-right RN, in an arrangement known as a “cohabitation”.

In such a scenario, Macron would be left with little power over domestic affairs with three years left as president.

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Macron said he believed a vote was needed to calm the volatile debates in the French parliament and achieve clarity on the direction of the country. Elysée officials said he had been considering it for some time to address gridlock in parliament.

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François Bayrou, a centrist politician whose party is in alliance with Macron, said the president was aiming to “end the impasse” in politics by asking voters a simple question of “whether France really recognises itself in the proposals of the far-right”.

Le Pen celebrated the victory and hailed Macron’s response to it. “This shows that when the people vote, the people win,” she said in a victory speech. “I can only salute the president’s decision to call early elections . . . We are ready to exercise power if the French give us their backing.”

RN has 88 seats out of 577 in the National Assembly, making it the biggest opposition party. Macron’s centrist alliance has 249, so has had to cut deals with other parties to further his agenda.

There have been three previous political cohabitations in France — where a president has to share power with a prime minister and government from an opposing party — since the Fifth Republic was founded in 1958.

Alain Duhamel, a veteran political analyst, predicted: “A dissolution means a cohabitation.”

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Rassemblement National leader Marine Le Pen and the party’s lead candidate in the European elections Jordan Bardella
Rassemblement National leader Marine Le Pen, left, and the party’s lead candidate in the European elections Jordan Bardella prepare to address supporters on Sunday © Reuters

In addition to the RN’s big win in Sunday’s European elections, another far-right party, Reconquête, was estimated to have won 5.3 per cent of the vote.

The margin of victory could lend huge momentum to Le Pen’s ambition to succeed Macron as president in 2027. The decision to call snap elections was presented by people close to the president as a high-stakes attempt to thwart her advance.

“This is a severe defeat for Macron given that he has been president for seven years and he has long said his goal is to combat the far-right,” said Bruno Cautrès, an academic and pollster at Sciences Po in Paris. 

The loss came after Macron had argued that the future of the EU was at stake because of Russia’s aggression against Ukraine, economic competition with the US and China, as well as the need to fight climate change — all topics on which he said the far-right could not be trusted.

Yet the message did not move French voters, who have historically used European elections as protest votes against the incumbent president.

“Given that Emmanuel Macron has sought to position himself as the intellectual leader of Europe, the fact that French voters don’t follow him is problematic for him,” added Cautrès. 

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Voting estimates showed the RN’s list, led by the charismatic 28-year-old party chief Jordan Bardella, had won almost as many votes as the combined total of Macron’s alliance, led by a little-known MEP Valerie Hayer, and the traditional parties of the centre-right and centre-left.

“In according more than 30 per cent of their votes to us, the French have delivered their verdict and marked the determination of our country to change the direction of the EU,” said Bardella in a speech from his campaign headquarters. “This is only the beginning.”

The results show the rising popularity of the RN since 2019 when they won 23.3 per cent of the vote in the last European elections, coming in only slightly ahead of Macron’s list which took 22.4 per cent.

Additional reporting by Adrienne Klasa

How will the European parliamentary elections change the EU? Join Ben Hall, Europe editor, and colleagues in Paris, Rome, Brussels and Germany for a subscriber webinar on June 12. Register now and put your questions to our panel at ft.com/euwebinar

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Tech reversal pushes US megacaps into correction territory

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Tech reversal pushes US megacaps into correction territory

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Four of the so-called Magnificent Seven technology stocks that have powered the US market rally for the past nine months ended the week in correction territory, having fallen by more than 10 per cent from recent peaks. 

Another two — Microsoft and Amazon — are close to the double-digit falls that define a correction. Investors are looking ahead to further tech earnings updates next week amid worries about punchy valuations and the risks that returns from vast artificial intelligence-related spending may not live up to early hopes.

Nvidia and Tesla are each down 17 per cent from their recent peaks while Meta and Google parent Alphabet have fallen 14 per cent and 12 per cent. Apple is the best performer in the group, having lost just 7 per cent while Microsoft and Amazon have slid about 9 per cent each.

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On Wednesday Alphabet sparked a wider market sell-off when, despite it reporting solid quarterly operating numbers, its shares fell more than 5 per cent on concerns about AI-related investments. Its $13bn quarterly capital expenditure was almost double the levels of a year ago.

“For a long time investors were really sold on the premise that AI investment in and of itself — spending money — is good,” said Max Gokhman, a senior vice-president at Franklin Templeton Investment Solutions. “What we’re seeing now is . . . investors saying, ‘Hold up a sec, what are the productivity gains here, when do you expect to see them?’”

Alphabet’s fall helped drag the tech-heavy Nasdaq Composite to its worst one-day decline in 18 months on Wednesday, down 3.6 per cent. The index ended the week down 2.1 per cent.

Microsoft, Meta, Apple and Amazon earnings next week may set up a fresh test of investor faith in the AI narrative that has been a crucial driver of market gains.

“Expectations are high and valuations for the Mag Seven aren’t cheap. We’re also closer to the point when we see some decelerations in earnings from them as a group — from the beneficiaries of AI in general,” said Josh Nelson, head of US equity at T Rowe Price. 

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Investors this week also showed they were prepared to punish companies that missed expectations, with Tesla losing 12 per cent on Wednesday after slowing sales and its own AI spending shrank profits more than expected. And Ford shares tumbled 18 per cent on Thursday when its profits fell short, hurt by unexpectedly high warranty costs.

On average, companies that missed expectations had seen their shares drop 3.3 per cent in the days surrounding their earnings, according to data from FactSet, more than the five-year average of 2.3 per cent.

Companies that beat expectations saw on average no gains in their share price, FactSet reported.

“The trend of misses getting punished more than beats get rewarded is getting a little bit more significant,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “There is uncertainty and skittishness with regard to just how fast the market, driven by those names ran, without the commensurate improvement in their forward earnings prospects.”

Sonders also pointed to the fact that the earnings season under way had coincided with a “rotation” among investors taking profits in the biggest tech names in favour of backing smaller companies that were more likely to see big benefits if the Federal Reserve begins to cut interest rates in September.

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This week, the Russell 2000 index of small-cap stocks added 3.5 per cent while the blue-chip S&P 500 fell 0.8 per cent.

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Boar's Head recalls 200,000 pounds of deli meat linked to a Listeria outbreak

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Boar's Head recalls 200,000 pounds of deli meat linked to a Listeria outbreak

An electron microscope image of a Listeria monocytogenes bacterium, which has been linked to an outbreak spread through deli meat. Boar’s Head recalled meat on Friday, after two deaths and 33 hospitalizations linked to Listeria.

Elizabeth White/AP/Centers for Disease Control and Prevention


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Elizabeth White/AP/Centers for Disease Control and Prevention

Boar’s Head is recalling more than 200,000 pounds of deli meat that could be contaminated with listeria, the Food Safety and Inspection Service announced Friday.

The recall includes all Liverwurst products, as well as a variety of other meats listed in the FSIS announcement. The CDC has identified 34 cases of Listeria from deli meat across 13 states, including two people who died as of Thursday. The statement also said there had been 33 hospitalizations.

The CDC warns that the number of infections is likely higher, since some people may not be tested. It can also take three to four weeks for a sick individual to be linked to an outbreak.

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Listeria is a foodborne bacterial illness, which affects about 1,600 people in the U.S. each year, including 260 deaths. While it can lead to serious complications for at-risk individuals, most recover with antibiotics. Its symptoms typically include fever, muscle aches and drowsiness,

The CDC says people who are pregnant, aged 65 or older, or have weakened immune systems are most at risk. It suggests that at-risk individuals heat any sliced deli meat to an internal temperature of 165°F.

The investigation from the CDC and FSIS is ongoing. This is not the first listeria outbreak of the summer, as more than 60 ice cream products were previously recalled during an outbreak in June.

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US charges short seller Andrew Left with fraud

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US charges short seller Andrew Left with fraud

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A federal grand jury in Los Angeles has charged prominent short seller Andrew Left with more than a dozen counts of fraud, alleging that he made profits of at least $16mn from “a long-running market manipulation scheme”, according to a statement from the Department of Justice.

The DoJ added: “Left knowingly exploited his ability to move stock prices by targeting stocks popular with retail investors and posting recommendations on social media to manipulate the market and make fast, easy money.”

The grand jury indictment charged him with 17 counts of securities fraud, one count of engaging in a securities fraud scheme and one count of making false statements to federal investigators.

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The indictment alleged that Left, who has a high profile on social media, publicly claimed that companies’ share prices were too high or low, often with a recommended target price and “an explicit or implicit representation about Citron’s trading position”. This, the DoJ said, “created the false pretence that Left’s economic incentives aligned with his public recommendation”.

Left prepared to quickly close positions after publishing his comments, taking profits on price moves he had caused, according to the indictment.

It also accused Left of presenting himself as independent and concealing Citron’s links with a hedge fund by fabricating invoices and wiring payments through a third party.

If convicted, Left could face decades in prison. Each securities fraud count carries a maximum penalty of 20 years in prison, while the securities fraud scheme and false statements counts each carry a maximum prison term of 25 years and five years, respectively.

The US Securities and Exchange Commission has also filed a separate civil fraud case against Left and his firm Citron Research, claiming the founder made $20mn from a “multi-year scheme to defraud followers.” Left declined to comment on the DoJ and SEC charges.

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“Andrew Left took advantage of his readers. He built their trust and induced them to trade on false pretences so that he could quickly reverse direction and profit from the price moves following his reports,” said Kate Zoladz, regional director of the SEC’s Los Angeles office. “We uncovered these alleged bait-and-switch tactics, which netted Left and his firm $20mn in ill-gotten profits, and we intend to hold Left and his firm accountable for their actions.”   

The practice of betting that a company’s share price will go down has long been controversial — opponents say it gives traders incentives to spread misinformation, while supporters argue that it improves price discovery and holds management accountable. Last year the SEC adopted new rules that require investors to disclose short positions more quickly and fully.

Left has been most vocal recently in his scepticism over GameStop, the ailing video games retailer. In May it raised $3bn selling new shares following a surge in its price driven by the reappearance of Roaring Kitty — whose real name is Keith Gill — who was instrumental in the 2021 meme stock mania that had sent its value rocketing.

Left told followers in mid-June that Citron had closed its short position on the stock not because he had changed his views but because of GameStop’s newly-strengthened balance sheet.

In 2016, Left received a five-year “cold shoulder” ban from regulators in Hong Kong — a landmark ruling for the city — temporarily barring him from its markets after he was found culpable of misconduct related to a research report he published on Chinese property developer China Evergrande.

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Additional reporting by Stefania Palma in Washington and Brooke Masters in New York

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