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

“Clouds come floating into my life, no longer to carry rain or usher storm, but to add color to my sunset sky.” ~ Rabindranath Tagore

Overnight

Israeli missile hits Iran, US officials say, as blasts heard (Semafor)

Some Hedge Funds Too Big to Fail for Bond Market, IMF Says (BBG)

Austin and NYC tech job boom towns: report (Axios)

Private-equity giant Blackstone reports 1% rise in first-quarter earnings (RT)

Meta’s battle with ChatGPT begins now (The Verge)

Apple Complies After China Demands Removal of Popular Messaging Apps (WSJ)

Sony and Apollo discuss teaming up to bid for Paramount Global (FT)

Private equity gears up for potential National Football League investments (FT)

NY Fed chief: No ‘urgency’ to cut interest rates (Semafor)

US and UK issue new sanctions on Iran in response to Tehran’s weekend attack on Israel (AP)

European Union pushes ahead with plan to buy weapons for Ukraine with profits from $200 billion in frozen Russian assets (AP)

Moderna CEO says AI will help scientists understand ‘most diseases’ in 3 to 5 years (Semafor)

First law protecting consumers’ brainwaves signed by Colorado governor (RT)

Boeing aims to bring flying cars to Asia by 2030 (Nikkei)

The U.S. renews oil sanctions on Venezuela citing a failure to allow fair elections (NPR)

Nearly half of China’s major cities are sinking — some ‘rapidly’ (Nature)

March homes sales dropped despite a surge in supply (CNBC)

TikTok-ban measure attached to House foreign aid bill, boosting odds of passage (WSJ)

Polish citizen accused of spying for Russia in potential plot to assassinate Ukrainian President Volodymyr Zelenskyy (ABC)

Sotheby’s Sale of $700 Million in Securities Reflects Art-Loan Performance Strengths (Barron’s)

Gigantic marine reptile’s fossils found by British girl and father (RT)

First news

• Prologis beats earnings estimates, warns of headwinds ahead for warehousing and commercial real-estate
• Alphabet fires 28 employees after protests over Israeli contract
• Netflix to stop quarterly updates of subscriber numbers
• Cargo haulers adapt after bridge collapse while hoping that Port of Baltimore re-opens at the end of May as scheduled.

Chart of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

As many are aware, we have viewed the bleeding of stocks in the past two weeks as part of a painful de-leveraging process. We see some signs this process might be winding down.

Regardless, the fundamental case for stocks in 2024 remains intact, supported by strengthening earnings and the $6 trillion of cash on the sidelines.

Click HERE for more.

TECHNICAL

• Overall, the most important catalyst from a technical perspective to watch for in the weeks ahead concerns a turn back lower in the US Dollar and Treasury yields.  
• It’s thought that when cycles start to project lower for Yields between late April and August, that Stock indices should respond positively.  
• Furthermore, cycle composites suggest a possible low might materialize into end of week, near 4/20/24.  (Might be 4/19, or 4/22-4/23).

Click HERE for more.

CRYPTO

There have been some of the near-term uncertainties plaguing risk assets. Those uncertainties remain. However, we have reasons to believe that markets will find their footing in May.

Click HERE for more.

FIRST NEWS

Warehouse woes. Prologis shares fell on Thursday despite reporting beats on top and bottom lines, as the commercial real-estate powerhouse forecast a declining demand for warehousing in the next two quarters as retailers and manufacturers try to trim logistics costs. 

Prologis CEO Hamid Moghadam acknowledged that many indicators of demand appear robust. Among them are top-line GD, real sales and e-commerce sales figures. However, many of Prologis’ customers appear to be taking a cautious approach to leasing, likely motivated by uncertainty ultimately stemming from an unclear picture of the Federal Reserve’s timeline for rate cuts. That, in turn, has left interest rates high and retailers uncertain. 

Nevertheless, recent announcements by two major Prologis customers bode well for the REIT. Amazon is planning to double the number of its same-day delivery sites, while Home Depot is looking for warehouse space as it targets professional contractor customers. (WSJ)

“Cloud” burst. Google fired 28 employees who had protested against its business ties with the government of Israel, specifically the company’s joint deal (dubbed “Nimbus”) with Amazon to provide cloud services to the Israeli Ministry of Defense. Vice President for Global Security Chris Rackow wrote in a firm-wide e-mail that the employees were fired for protests that were “extremely disruptive and made co-workers feel threatened.”

Among the disruptive actions cited by the company include two sit-in protests – one in the office of Google Cloud CEO Thomas Kurian in Sunnyvale, California, and another across two floors of Google offices in New York City. The protesters included both those opposed to Alphabet taking military contracts in general, and those critical of Israeli policies. 

Users in the stream. During an earnings call in which Netflix reported adding a bountiful number of new subscribers (nearly triple analysts’ expectations), the streaming pioneer also told analysts that it would stop reporting subscriber numbers on a quarterly basis. The company argued that in the early days of the company’s streaming efforts, subscriber numbers had been strongly correlated to current and future revenue. 

That is no longer the case. As the company pointed out, the correlation has weakened. Netflix can now add user-based revenue without adding to its subscriber count through paid-sharing accounts and various pricing tiers, and the company also generates revenue from ads that are tied to viewer engagement. This weakened correlation, in the company’s view, makes it unhelpful for investors to track subscriber counts on a quarterly basis. Subscriber numbers will continue to be reported once a year. (RT, WSJ)

Ports-a-calling. During its earnings call on Thursday, CSX Corp. estimated that the collapse of Baltimore’s Francis Scott Key bridge on March 26 would result in lost revenues of up to $30 million a month. Another cargo rail operator, Norfolk Southern, had previously forecast a $50-100 million hit to its 2Q revenues due to the disaster.

It’s certainly true that there have been many logistics challenges and disruptions ever since the accident that saw a cargo ship crashing into a critical concrete pylon supporting the bridge. Truckbound shipments have certainly been affected – before the accident, the bridge carried about 5,000 trucks carrying $28 billion in goods each day – and those trucks have obviously diverted to other, presumably less efficient routes. The Port of Baltimore was also a major port for automobile and coal shipments (this accounts for most of CSX’s anticipated lost revenues), and liquified natural gas. 

Nevertheless, the supply-chain collapse that some had feared does not appear to have materialized – the auto and coal industries have not reported any wide-ranging or long-lasting impacts. The Port of New York and New Jersey has taken over about two thirds of the container shipping and a third of the auto shipments that had been handled by Baltimore, while the port in Brunswick, Georgia being used for another portion of the auto shipments. Various ports in Virginia are handling the coal shipments.

Clean-up efforts are being run by the Federal Emergency Management Agency, with personnel from the U.S. Coast Guard, U.S. Navy and the U.S. Army Corps of Engineers, as well as Maryland Department of the Environment, Maryland Transportation Authority and Maryland State Police. The team hopes to remove debris from the catastrophe and re-open the port by the end of May, though Coast Guard Cmdr. Roberto Concepcion acknowledged that the objective was “very aggressive,” given that the accident left approximately 50,000 tons of steel and concrete in the water. (The Hill, Council on Foreign Relations, NYT)