A daily market update from FS Insight — what you need to know ahead of opening bell
“Stay far from timid, only make moves when you’re heart’s in it, and live the phrase ‘the sky’s the limit’.” — The Notorious B.I.G.
Over the Weekend
Trump shooting at Saturday rally marks dark day in American politics WSJ
Bill Ackman and Elon Musk endorse Trump’s 2024 bid for president after shooting WSJ
Meta lifted restrictions on Trump’s accounts Friday CNN
The Republican National Convention begins in Wisconsin; Donald Trump plans to speak RT
U.S., Germany foil Russian plot to kill defense executive WSJ
Fed sends clearest signals yet that it will soon cut interest rates FT
Fed Chair Jerome Powell will join a ‘fireside chat’ with the Economic Club of Washington, D.C., today C-SPAN
China’s economic growth slowed and missed forecasts in the second quarter FT
Chinese leaders meet this week to set the country’s economic agenda for the next few years Semafor
Hong Kong government working on its own version of ChatGPT after OpenAI restricts access Semafor
Goldman challenges Fed’s demand it hold more capital after stress test FT
Fed up with their car-insurance bills, drivers shift gears WSJ
Samsung’s chip crisis: AI ambitions hit by unprecedented worker unrest FT
Florida’s ‘Space Coast’ is on track for a record number of rocket launches this year, after the 50th rocket took off from the region last week Semafor
A quantum computer made by a UK-based startup smashed a record for the accuracy of its calculations previously set by Google Semafor
U.K. universities want millions from new government for startups hatched in academia Semafor
SpaceX seeks more experimental rocket launches, aiming for Mars WSJ
StubHub delays IPO launch due to choppy market conditions WSJ
Why the Synapse bankruptcy has the fintech world on edge WSJ
Google near $23 billion deal for cybersecurity startup Wiz WSJ
Israel says it targeted October 7 mastermind in strike WSJ
Bitcoin is losing the hearts and minds of criminals, who now prefer stablecoins Chainalysis
America’s HR lobby scraps the ‘E’ from DEI WSJ
Shannen Doherty, 90210 and Charmed actress, dies at 53 RT
Richard Simmons, once-iconic fitness guru, dies at 76 WSJ
Ruth Westheimer, Dr. Ruth, who taught generations to talk about and enjoy sex, dies at 96 WSJ
England’s national team breaks 67-plus million hearts as it loses to Spain in the UEFA men’s European championship FT
Chart of the Day
![Biggie Smalls](https://cdn2.fsinsight.com/wp-content/uploads/2024/07/image-140.png)
MARKET LEVELS
Overnight |
S&P Futures +24
point(s) (+0.4%
) Overnight range: +1 to +25 point(s) |
APAC |
Nikkei flat Topix flat China SHCOMP +0.09% Hang Seng -1.52% Korea +0.14% Singapore +0.06% Australia +0.73% India +0.38% Taiwan -0.16% |
Europe |
Stoxx 50 -0.14%
Stoxx 600 -0.05% FTSE 100 -0.07% DAX -0.06% CAC 40 -0.2% Italy -0.1% IBEX -0.31% |
FX |
Dollar Index (DXY) -0.01%
to 104.08 EUR/USD +0.02% to 1.0909 GBP/USD -0.04% to 1.2983 USD/JPY +0.06% to 157.93 USD/CNY +0.17% to 7.263 USD/CNH +0.04% to 7.2751 USD/CHF -0.03% to 0.8941 USD/CAD +0.06% to 1.3643 AUD/USD -0.04% to 0.6781 |
Crypto |
BTC +4.51%
to 62828.09 ETH +4.88% to 3357.31 XRP +0.19% to 0.5303 Cardano +0.53% to 0.4358 Solana +3.2% to 152.45 Avalanche +2.43% to 27.0 Dogecoin +4.79% to 0.1182 Chainlink +4.79% to 13.89 |
Commodities and Others |
VIX +2.65%
to 12.79 WTI Crude +0.3% to 82.46 Brent Crude +0.24% to 85.23 Nat Gas -2.58% to 2.27 RBOB Gas -0.1% to 2.513 Heating Oil +0.1% to 2.512 Gold -0.09% to 2409.17 Silver -0.27% to 30.7 Copper -0.65% to 4.569 |
US Treasuries |
1M +1.7bps
to 5.3524% 3M -0.6bps to 5.3255% 6M -0.1bps to 5.1786% 12M -2.2bps to 4.8308% 2Y -1.1bps to 4.4406% 5Y +0.7bps to 4.109% 7Y +1.8bps to 4.1428% 10Y +2.7bps to 4.21% 20Y +3.8bps to 4.5391% 30Y +4.3bps to 4.4385% |
UST Term Structure |
2Y-3
M Spread narrowed 2.0bps to -91.3
bps 10Y-2 Y Spread widened 3.6bps to -23.5 bps 30Y-10 Y Spread widened 1.5bps to 22.7 bps |
Yesterday's Recap |
SPX +0.55%
SPX Eq Wt +0.88% NASDAQ 100 +0.59% NASDAQ Comp +0.63% Russell Midcap +0.97% R2k +1.09% R1k Value +0.62% R1k Growth +0.55% R2k Value +0.9% R2k Growth +1.29% FANG+ +0.01% Semis +1.27% Software +1.04% Biotech +1.02% Regional Banks +0.23% SPX GICS1 Sorted: Cons Disc +0.96% Materials +0.93% Tech +0.92% Utes +0.73% REITs +0.69% Healthcare +0.59% SPX +0.55% Indu +0.53% Cons Staples +0.42% Fin +0.22% Energy +0.22% Comm Srvcs -0.75% |
USD HY OaS |
All Sectors +4.8bp
to 359bp All Sectors ex-Energy +6.6bp to 340bp Cons Disc -1.0bp to 289bp Indu +74.2bp to 260bp Tech -1.0bp to 395bp Comm Srvcs -3.1bp to 673bp Materials -2.0bp to 322bp Energy -1.1bp to 271bp Fin Snr -1.1bp to 324bp Fin Sub +2.2bp to 230bp Cons Staples +1.3bp to 298bp Healthcare -3.0bp to 391bp Utes -0.7bp to 218bp * |
Date | Time | Description | Estimate | Last |
---|---|---|---|---|
7/16 | 8:30AM | Jun Import Price m/m | -0.2 | -0.4 |
7/16 | 8:30AM | Jun Retail Sales m/m | -0.2 | 0.1 |
7/16 | 10AM | Jul Homebuilder Sentiment | 43.0 | 43.0 |
7/18 | 4PM | May Net TIC Flows | n/a | 66.198 |
MORNING INSIGHT
Good morning!
To us, the most compelling near-term investment case is small-cap stocks (IWM 0.31% ). We believe small-caps can gain as much as +50% in 2024, while so far they are up only 6%. The astonishingly low June CPI, in our view, is giving the “green light” for small-caps to continue to rally.
The failed assassination attempt against Trump is positive for Bitcoin, Cyclicals, negative for Energy, Healthcare.
Click HERE for more.
TECHNICAL
U.S. Equity indices look to have shaken off the minor pullback attempt of mid-last week and are beginning yet another leg higher, which should prove more broad-based in participation than what’s been seen in recent months. Breakouts in the Equal-weighted S&P 500, along with Russell 2000, on Friday are both conducive to thinking that some mean reversion is taking hold in some of the formerly underperforming sectors. Meanwhile, some stalling out in Tech relative to the broader market is possible in the short run. However, we don’t expect that this will prove too long-lasting before Technology starts to turn up again. Bottom line: Small-caps now look to be in the zone where they can begin to show some relative strength, and we expect that Equal-weighted S&P 500’s rally will continue. However, it’s difficult to say just yet that meaningful outperformance vs. Technology will occur.
Click HERE for more.
CRYPTO
In our latest video we continue to discuss how the market is working through the “supply overhang” issue, the downside risk posed by the Gox coins, and why we think it is important to stay allocated here.
Click HERE for more.
First News
Big-Time for Small-Caps? Small-cap stocks gained ground last week after the latest CPI number came in weaker than expected, buttressing the chances of a rate cut. Still, small and mid-sized businesses are struggling to survive, with many going underwater this year.
Nearly 350 companies filed to either liquidate or re-organize through bankruptcy in 1H24 – the highest half-year level since 2010, when 467 filed, per data from S&P Global Market Intelligence. Just last month, 75 companies filed for bankruptcy – the largest monthly total since early 2020.
Most of the businesses that have gone extinct are in the Consumer Discretionary category, meaning that they sell goods or services that people don’t necessarily need on a daily basis: restaurants, clothing stores, and car dealerships. Most of the businesses are also considered small or mid-sized.
With interest rates remaining at their highest level in nearly a quarter century, the squeeze is on businesses that rely heavily on borrowing to purchase equipment, replenish inventory, meet payroll and/or expand operations – not just on consumers. For small, private companies unable raise money through financial markets, access to credit is a do-or-die condition of doing business, yet a recent Federal Reserve Bank of Kansas City survey of 170 small businesses showed that “credit standards tightened for the tenth consecutive quarter and credit quality decreased.”
On top of that, consumer demand has also been underwhelming so far this summer, per ISM’s latest survey of businesses that sell any kind of service. In contrast with 2023, U.S. consumers don’t seem to be splurging this summer – although summertime is a crucial season for many kinds of service-providing businesses – spending cautiously instead.
This could be a troubling omen; it could also just be an instance of an unwinding of pandemic-related distortions in the economy. Government programs supported small businesses in the depths of the pandemic, so there were relatively fewer filings in 2021 and 2022 than usual. At the same time, new business applications took off in 2020 and have remained elevated ever since. Last year saw a record 5.5 million applications to start a new business (though that pace has slowed so far in 2024, per government statistics).
Inflation resumed a downward trend this spring after stagnating early in the year, which is a precursor for the Fed finally lowering borrowing costs sometime this year.
Fed officials expect to cut interest rates at least once this year, which wouldn’t provide huge immediate relief for all, but would be significant for small-caps, as it shows investors the path forward, with further possible cuts on the horizon, but perhaps most importantly, fewer reasons to worry about rates going up.” CNN