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

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Overthe Weekend

Boeing likely to face fraud charges Barron’s

BlackRock to buy private data provider Preqin TI

Amazon hires Adept cofounders, licenses its tech, mirroring Microsoft-Inflection TI

SEC sues Consensys for violating securities law TI

Warren Buffett reveals what will happen to his money after he dies CNN

Ukraine has a month to avoid default Economist

Macron’s party urged voters to block Marine Le Pen’s National Rally after it secured a first-round election victory Semafor

Owners of ~1/3 of U.S. nuclear-power plants are in talks with tech companies to provide electricity to new data centers needed to meet demands of AI boom WSJ

Energy production in the U.S. exceeded consumption by record amounts in 2023 Semafor

Even a slowly cooling labor market often ends with a recession WSJ

Munis poised to find supportive market in July as massive reinvestment dollars await BB

Benchmark plots new $425 million fund TI

Paying big bills on your credit card can rack up points – and fees WSJ

How to get more dollars into tax-sheltered Roth accounts WSJ

The quarter that split the market, in six charts WSJ

How Tractor Supply decided to end DEI, and fast WSJ

‘An organization’s best and most authentic influencers’ FT

Houses you’ll never buy, pretend renovations: call it Zillow therapy WSJ

VC-backed IPOs had a tepid first half, squeezing venture capital more WSJ

Google’s Gemma 2 leads LMSYS’s leaderboard, where people vote blindly on which AI chatbot is best LMSYS

Brazil, hit by a cycle of erratic weather, including devastating floods, has broken records for the number of fires in its Pantanal wetlands – before fire season Semafor

The World Economic Forum is facing allegations of sexual harassment and discrimination against women and Black people WSJ

Chart of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

We are at the midpoint of 2024, and S&P 500 has gained ~15% – a very strong start. It has fewer trading days, given the 4th of July holiday (Thu), but it is still an important data-heavy macro week:

Inflation has been the focus of the data over the past few weeks (May PCE, last Friday, for instance) but this week’s data mostly highlights the health of the economy. And thus its focus will be on whether the economy is tracking toward a soft land (even “no landing”) or something worse.

Despite the shortened week, there is a lot of macro to digest:
– 7/1 Mon 9:45 AM ET: Jun F S&P Global Manufacturing PMI    51.7e
– 7/1 Mon 10:00 AM ET: Jun ISM Manufacturing PMI    49.2e
– 7/2 Tue 9:30 AM ET: Powell, Lagarde, Campos Neto Speak in Sintra
– 7/2 Tue 10:00 AM ET: May JOLTS Job Openings    7864ke
– 7/3 Wed 8:30 AM ET: May Trade Balance    -73.6be
– 7/3 Wed 9:45 AM ET: Jun F S&P Global Services PMI    53.0e
– 7/3 Wed 10:00 AM ET: Jun ISM Services PMI    52.4e
– 7/3 Wed 10:00 AM ET: May F Durable Goods Orders
– 7/3 Wed 2:00 PM ET: Jun FOMC Meeting Minutes
– 7/4 Thu July 4^th Holiday
– 7/5 Fri 8:30 AM ET: Jun Non-farm Payrolls    +191ke

Click HERE for more.

TECHNICAL

S&P and QQQ have largely been treading water in recent weeks to finish out the quarter on a positive note, while Equal-weighted S&P 500 finished down for 2Q 2024 as nine sectors lost ground and finished negative. However, given the high percentage of Russell 3k names above their respective 200-day moving average, some minor losses in a largely sideways pattern don’t seem to have much negative weight heading into Q3. Given that economic data continues to miss expectations, Treasury yields look to have begun their pullback to test December 2023 lows and the U.S. Dollar should not be far behind. Overall, while we respect the divergences present in the U.S. stock market, there hasn’t been evidence of any true technical deterioration, and sentiment remains too subdued at a time when seasonality and cycles still show an upward trajectory. We expect the first part of July to lead back to new all-time highs, and suspect that a broad-based rally should be forthcoming.

Click HERE for more.

CRYPTO

ORA, a trustless AI protocol, raised $20 million in a Series A round from Polychain Capital, Hashkey Capital, SevenX Ventures, and HF0. ORA is a verifiable oracle protocol which integrates AI inference directly into smart contracts to enhance compute capabilities, unlocking a new set of AI powered dapps. The funding will be used to develop and enhance its infrastructure and expand the ecosystem.

The convergence of crypto and AI continues to accelerate, but smart contract limitations are still an inhibitor due to their inability to interact natively with AI models. Many of the largest and most advanced models are operated by centralized entities with little consideration for integrating with blockchains. On-chain models struggle to gather sustainable contributions and monetize outputs, resulting in projects fizzling out or lack of adoption. ORA is tackling all these problems by creating a trustless AI protocol that enhances smart contracts and creates a sustainable funding mechanism for AI projects.

Click HERE for more.

First News

On-Demand Demand Down. Library visits in the U.S. are on a downward spiral, down to 671 million physical visits in 2022 from 1.25 billion visits in 2019. The average number of library visits per user per year is down 49.1%. Here come the knock-on effects on the book industry: in 2022, there were 162 million fewer books on library shelves than in 2010, a 20% decline. It’s a chicken-egg problem, as falling book stocks beget fewer visitors to libraries, etc. On a side note, New York City officials have agreed to restore $111+ million in funding to libraries and cultural institutions, as announced by the City Council Thursday.

Demand for other physical forms of entertainment seems to be in continued trouble. After weeks of concern over its ability to continue operating, Chicken Soup for the Soul Entertainment (CSSE) has filed for Chapter 11 bankruptcy protection, as the owner of Redbox owes money to most of Hollywood. At its peak, the company famous for its ubiquitous red boxes operated 40,000 Redbox DVD rental kiosks, but is down to 27,000 now, while its three ad-supported VOD platforms (Redbox, Crackle, and Chicken Soup for the Soul) are also in need of much TLC. At this point, CSSE owes $970 million in debt, has $414 million in assets, and lost $636.6 million in its most recent year of operation. For what it’s worth, it has an A-list of creditors, including Universal ($16.7 million), Sony ($9.1 million), BBC Studios Americas ($9 million), Lionsgate ($4.6 million), Warner Bros. Discovery ($2 million) and Paramount ($3.16 million).

Basic Fun, the maker of Care Bears, Tonka, and Lincoln Logs, looks to be approved for $50 million in financing as it also files for bankruptcy protection – still in a tailspin from the collapse of Toys R Us in 2018, and the owner of every also-ran in the business, e.g. K’NEX, Lite-Brite, and the Littlest Pet Shop.

On a bright note for physical demand of digital entertainment, Disney/Pixar’s stellar Inside Out 2 continues its outperformance at the box office, adding another $57 million to its domestic total and pushing its global gross over the one billion mark. Publishers Weekly, CNN, Toy Book, Media Play News

Less Play, More Work. Going golfing may become slightly more expensive while being a builder may cost a little less, as two American golf cart manufacturers, Club Car LLC and Textron Specialized Vehicles Inc., lobby the federal government to impose a 100% tariff on Chinese-imported, low-speed, battery-powered small vehicles. The official accusation is dumping. Imports of Chinese-made golf carts and similar buggy-class vehicles are up six-fold over 2020 levels, in part because they’re assessed a different, cheaper, tariff rate than traditional EVs. Last year, the U.S. imported $915.6 million worth of the vehicles from China, up from $147.8 million in 2020.

In the meantime, Japanese exports of Kei trucks, i.e. narrow trucklets popular in Japan and made by Mitsubishi, Toyota et al, have quadrupled over the past decade to hit 68,800 last year, with the U.S. the eighth-highest ranked recipient. Kei trucks are convenient as they combine all the advantages of a pickup truck’s bed (at a lighter and more compact size to boot) with vastly better fuel economy. Bloomberg