A daily market update from FS Insight — what you need to know ahead of opening bell

“Sometimes letting things go is an act of far greater power than defending or hanging on.” — Eckhart Tolle

Overnight

Morgan Stanley’s wealth arm probed by multiple federal regulators (WSJ)

Ford recalls nearly 43,000 SUVs due to gas leaks that can cause fires, but remedy won’t fix leaks (CNBC)

Bond traders are preparing for a 5% yield, no-rate-cut world (BBG)

Verod-Kepple Africa Ventures raised $60 million for its first fund, which will see it invest in 21 growth-stage companies (Semafor)

CarMax gets slammed by high rates, tight used-car supply (WSJ)

Boeing reveals executives got an extra $500,000 in private jet perks (WSJ)

Vietnamese property tycoon sentenced to death over $12 billion fraud (FT)

O.J. Simpson, whose murder trial spurred debate over race and criminal justice, is dead at 76 (WSJ)

Norway’s $1.3T SWF CEO’s podcast is making a killing (WSJ)

UnitedHealth chair, executives sold $102 million in stock before U.S. probe became public (BBG)

Hedge fund takes on shipping magnates over oil tanker deal (FT)

Managers to shut or convert $220 billion of U.S. money market funds before rule change (FT)

Grant Thornton retirees escalate revolt over private equity deal (FT)

BlackRock loses appeal over U.K. tax on $13.5 billion BGI deal (FT)

Pastoralist communities in northern Kenya have earned 1.7 billion shillings ($13.1 million) from carbon credits over the last 3 years embracing soil carbon removal through sustainable grazing management, a first-of-a-kind project enabling carbon capture by increasing grass cover (BD)

India’s top traders are raking in million-dollar salaries (BBG)

Unraveling rate cut bets spur investors to adjust portfolios (RT)

VC deal flow remains muted in Q1 (WSJ)

ECB holds rates but signals potential for a June rate cut (RT)

ECB can’t ignore Fed in own rate cut path (RT)

Big tech expected to lead Q1 earnings growth (RT)

Rent the Runway shares surge 200%+ after getting caught in AI frenzy (RT)

U.S. 30Y bond auction sees muted demand despite decade-high yields (BBG)

U.S. active ETF flows soar past previous records (FT)

Managers to shut/convert $220B of U.S. MMFs before rule change (FT)

Investors flock to U.S. 20Y+ Treasury ETF amid selloff (RT)

IMF chief sees higher U.S. rates as worry if they persist (RT)

ExxonMobil raised CEO pay to ~$37M in 2023 (RT)

Mortgage rates rise back to ~7% (WSJ)

Peru passes bill allowing for $7B in pension withdrawals (BBG)

Rivian and Lucid stock close at new lows (BBG)

NYC RTO rate nears 80% (BBG)

Harvard to reinstate SAT/ACT testing requirements (HC)

U.S. foreign investment watchdog to gain new powers under administration proposal (WSJ)

Budget committee chairman rejects calls to prioritize budget (WSJ)

First news

• It turns out that trying to relax is better at managing anger than attempting to vent it
• Andy Jassy let go of tens of thousands of Amazonians in 2023, then wrote about it in a newsletter
• Google makes it easier to let go of frenemies with a free AI photo eraser for Google Photos.

Chart of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

The March CPI report had far better internals than headlines suggest. 

The hot number is entirely due to auto insurance and vehicle leasing, and the % of components with <3% inflation is highest since 2021 = good.

Each CPI selloff has been bought. This one should be, too.

Click HERE for more.

TECHNICAL

In the very short-term, insufficient strength has occurred based on Thursday’s rally to suggest that an imminent move back to new highs is upon us. The U.S. Dollar and yields are still trending higher and the Equal-weighted S&P 500 needs to achieve the same degree of success that has happened with the NDX. However, AAPL’s strong breakout move happened on schedule, and gives a sharp nod of confidence that the broader market could be close to turning back higher following the last couple weeks of consolidation. We feel that it’s important that both Financials and Healthcare show some evidence of stabilization, given their combined weighting of roughly 25% within SPX.

Simply stated, Thursday’s lift in Technology was helpful for U.S. stock indices. However, the broader market move was far less robust. The equal-weighted S&P 500 ETF from Invesco (RSP 0.83% ) finished negative on the day and requires more strength for one to argue that the lows of this recent consolidation are officially in place.

That being said, it looks to be close to a time when the broader market should turn back up to new highs, and this could be driven by Technology. However, movements out of Financials and Healthcare are equally important, as they account for roughly 25% of SPX and have been underperforming over the last week.

Overall, the most important catalyst from a technical perspective to watch for in the weeks ahead concerns a turn back lower in the U.S. Dollar and Treasury yields. Despite the correlation between Treasuries and SPX having dissipated somewhat in the last month, the breakout in yields is looking to be a clear negative catalyst for stock indices to turn lower. Moreover, it’s thought that when cycles start to project lower for Yields between late April and August, that Stock indices should respond positively.

Click HERE for more.

CRYPTO

Uniswap Labs received a wells notice from the SEC yesterday, informing them that the regulatory body plans to pursue legal action against Uniswap, likely for offering unregistered securities on its platform. The SEC continues to warrant that most tokens are securities and believes most of crypto should fall under the SEC’s regulatory umbrella. In a post titled “Fighting for DeFi,” Uniswap presented its case, arguing that whether or not all tokens on Uniswap are securities or not, trading them on the secondary market does not constitute an investment contract. Uniswap plans to fight any action brought against them and has cited precedent from the SEC v. Ripple, Risley v. Uniswap Labs, and the ongoing SEC v. Coinbase legal cases to support its arguments. Uniswap’s products will continue to be accessible, and the team plans to continue shipping new features. The UNI token has dropped 18.9% over the past 24 hours following the news.

Bitfinex Securities has announced a tokenized debt issuance in El Salvador to raise money for a hotel complex at El Salvador International Airport. Bitfinex Securities El Salvador was the first regulated entity to receive a license to operate under El Salvador’s Digital Asset Securities Law. The project entails construction of a five-floor 4,484 square meter facility with eighty rooms, five commercial spaces, restaurants, a swimming pool, a gym, and multipurpose rooms. The issuance is targeting $6.25 million with a 10% coupon over five years. The minimum investment is $1,000, and investors can also receive free hotel accommodations following construction. The tokenized debt will trade under the ticker HILSV and trade on the Liquid Network, a Bitcoin L2. The issuance will take place on May 13th and displays the continued evolution of capital markets and the integration of tokenized assets.

Click HERE for more.

FIRST NEWS

Not Irrelevant for Finance Types. Let’s just clear the air: many a high-flying finance person has been to an anger-management professional. Maybe it’s a self-selected-group thing, as the profession tends to attract A-type-personality types that may or may not have lingering issues from childhood. (Hint: they may.) Maybe it’s the stress of the job: the bullying bosses, the backstabbing brown-nosers, the horrific hours, the holding in and bodying about of all that frustration and angst. Maybe.

Well, it turns out that letting it out in what seem to be cathartic ways isn’t a very good idea. A large-scale analysis spanning 154 studies with 10,186 total participants found that people experiencing anger are best served by adopting calming techniques. The data revealed that practices designed to promote relaxation, such as deep breathing, meditation, and yoga, were significantly more effective at reducing anger levels than those aimed at “blowing off steam.”

Surprising though it is, certain activities commonly thought of as stress-relieving, e.g. jogging, were actually found to make feelings of anger worse. This counterintuitive result is, at second blush, understandable, since – as anyone who’s wrestled with inner demons on a grueling run knows – engaging in such behaviors can prolong the focus on the initial source of anger, compounded by additional discomforts like thirst and musculoskeletal discomfort. The study also showed that venting anger through other activities intended to release frustrations, and normally thought of as cathartic – such as screaming into a pillow or punching a bag – ultimately increased, rather than alleviated, feelings of anger. In contrast, relaxation-based techniques proved much more successful at reducing them. Scientific American

“I’m a CEO, Not a Writer.” Shareholder letters are all the rage these days. Time was, few people paid heed to the genre. Then, certain authors – Warren Buffett comes to mind – made them required reading: edifying, relatable, engaging.

In his third shareholder letter since 2021, when he took over as Amazon’s CEO from Jeff Bezos, Andy Jassy emphasizes the company’s efforts to control costs while investing in new growth areas – particularly AI.

Jassy acknowledges that Amazon still has significant room for improvement across its various businesses, the better to serve customers. Indeed, Jassy’s leadership, Amazon has undergone a period of retrenchment, initiating the largest layoffs in its history – cutting more than 27,000 jobs since late 2022. Jassy said he believes there are ways for Amazon to continue “lowering our cost to serve” in the retail business this year and beyond.

Even as the company tightens its belt in some areas, Jassy expresses a focus on finding new avenues for growth. He highlights the importance of building so-called primitive services – “discrete, foundational building blocks” that can spur new projects and businesses, pointing to Amazon Web Services (AWS), the company’s cloud computing division, as an example of a successful primitive service.

Looking ahead, Jassy believes that generative AI is shaping up to be Amazon’s next big primitive service. He acknowledges that, while Amazon is developing its own AI applications, the “vast majority will ultimately be built by other companies,” but emphasizes that AWS will play a crucial role in supporting the AI boom.

To bolster its AI capabilities, Amazon has made several recent investments, including adding $2.75 billion to its stake in AI startup Anthropic. The company has also launched AI-powered tools such as the off-kilter-named Rufus, which uses AI to help users search and shop for products, and (the much better named) Bedrock, a generative AI service for AWS customers.

As Amazon navigates this period of cost-cutting and strategic pivots, Jassy’s shareholder letter tries to big up the company’s commitment to maintaining its long-term resilience and finding new avenues for growth, with AI emerging as a key focus area.

So, has Jassy knocked it out of the park with his latest shareholder letter? You be the judge; read the screed by scrolling down past the article at this link: CNBC

Doing Uncle Joe Proud. In May, Google will launch a free AI photo eraser for Google Photos users on iPhone and Android phones as part of expanded access to its AI-powered editing features. These will include Magic Editor, Magic Eraser, Photo Unblur, and Portrait Light – previously only available on Pixel phones or through the Google One cloud storage subscription service. These features include:

Magic Eraser, which removes unwanted objects from photos,

Photo Unblur, which sharpens out-of-focus images, and

Portrait Light, which can rebalance a photo’s lighting.

^{Source: Reddit. In a pioneering touch, Stalin famously used a group of photo re-touchers to cut his enemies out of photographs. Nikolai Yezhov – head of the NKVD from 1936 to 1938, during the height of the Great Purge, and once a key figure in Stalin’s inner circle – was later removed from the first photograph above.}

The expansion will also bring these features to more devices, including Pixel tablets. Desktop users will need to use a Chromebook Plus with ChromeOS version 118 or later, or sport at least 3GB of RAM. Mobile users will need to have Android 8.0 or iOS 15 and above.

Google is also broadening access to its Magic Editor feature to all Pixel devices. All Google Photos users on Android and iOS will receive 10 Magic Editor photo saves per month. Pixel device users and premium Google One subscribers with 2TB of storage will have unlimited saves.

The Magic Editor tool, which launched with the Pixel 8 and Pixel 8 Pro last fall, uses generative AI to perform advanced photo edits like repositioning subjects, removing items, and changing sky colors, while creating new imagery to fill in the gaps. CNBC