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

“One isn’t necessarily born with courage, but one is born with potential.” — Maya Angelou

Overnight

Hamas leader killed in Tehran AP

Fertility app Flo valuation reaches $1bn as women’s health market takes off FT

The global chip war could turn into a cloud war FT

Cloud growth powers Microsoft earnings WSJ

Microsoft stock was down 7% in after-hours trading Tuesday post positive earnings results, another Microsoft 365 outage Barron’s

Nvidia shares sink 7% as tech sell-off reignites FT

AMD’s earnings beat forecasts; the stock also rises Barron’s

Audit shows IRS employees are mostly law-abiding WSJ

Boeing names Kelly Ortberg as new chief executive FT

Airbus logs sharp profit drop after supply-chain setbacks WSJ

Air New Zealand becomes first major airline to scrap its 2030 climate goal CNBC

Meta agrees to $1.4 billion settlement in Texas biometric data lawsuit over Facebook images CNBC

BP to drill new Gulf of Mexico field as profits beat forecasts FT

Stellantis to offer broad buyouts to U.S. salaried workers, warns of possible layoffs CNBC

Diageo warns of ‘extraordinary’ consumer environment after sales drop FT

U.S. accounting firms rethink global networks FT

Chinese online store Temu faces supplier backlash over business model shift FT

St James’s Place shares jump by fifth as it sets out cost-cutting plans FT

Standard Chartered stock up by at least a third since bank chief Winters lamented the bank’s ‘crap’ share price back in February FT

Cry me a river: Dmitry Balyasny gets across how very hard it is to compete with big multi-strategy funds BBG

Starbucks revenue misses estimates as same-store sales decline for second straight quarter CNBC

L’Oréal sales hit by China slowdown FT

Cosmopolitan financier brings Hollywood magic to blue-collar Jersey WSJ

The lady vanishes: luxury heir alleges his $13 billion Hermès fortune is gone BBG

Plunge in shares of Jared Kushner-backed QXO ’s erases $37 billion in paper value YF

Is the Treasury conspiring to manipulate markets and the economy? A new paper sparks debate on Wall Street. MW

Given high borrowing costs and slumping property prices, risky bet on U.S. office towers becomes debacle in South Korea BBG

For large companies, felony convictions are a mere footnote WSJ

Russia approves law allowing use of crypto for global payments as it faces ongoing sanctions CNBC

Chart of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

We believe the probabilities are high that equities (S&P 500 SPY -0.80% , Nasdaq 100 QQQ -0.94% , Small-caps IWM -0.69% ) rally post-July FOMC rate decision, with a potential 5-day gain of 4% to 5% (or more). This rate decision is at 2pm ET, and the press conference is at 2:30pm. We discuss the rationale for this view below:

The key premise is the Fed is likely to commit to a September rate cut of at least 25bp (1 cut). A possibility of more than that is not necessary. And while bond markets have priced in a 100% probability of this, equity investors likely will not be convinced until the Fed affirms this as such.

In the last 6 FOMC rate decision, post-Fed pivot of Sept 2023:
– S&P 500 gained 5D later 5 of 6 times
– median 5D return +2%
– this is already positive
– but we believe this July’s reaction will be even stronger.

Click HERE for more.

TECHNICAL

SPX and QQQ have been churning following the sharp two-week downtrends from mid-July and ongoing Technology underperformance. However, given that Treasury and German Bund yields are both lying near key support while SPX and QQQ are just below key resistance, it’s thought that this week’s Central Bank meetings (FOMC, BOJ and BOE) could serve as the catalyst for upside breakouts in both Equities and Treasuries as markets get a bit more adjusted to policy.  Movement over SPX-5492 and QQQ-468 likely could happen, coinciding with a breakdown in TNX this week under July lows at 4.144%. We expect the near-term Technology weakness to be complete by end of week.

Click HERE for more.

CRYPTO

In our latest video we discuss implications from Trump at BTC Conference, why we have yet to see follow-through in the spot market, and review data that supports an ETHBTC bottom.

Click HERE for more.

First News

Did It My Way. Japan’s central bank has implemented a tighter monetary policy, indicating growing confidence in the nation’s economic recovery. For decades, Tokyo had struggled with deflation, prompting its central bank to adopt loose monetary policies to stimulate growth. This era has now effectively ended with a second interest rate increase this year. Japan’s approach has diverged markedly from that of Western central banks, which are gearing up for a series of rate cuts later this year. The Federal Reserve, in particular, is scheduled to outline its plans today, with expected rate reductions commencing in September. One major beneficiary will be the renewable-energy sector, with high borrowing costs amounting to one of Big Renewables’ worst headaches of recent years. Semafor

PMs & AI = Better Commute. Speaking of tightening policies, AI now manages speed limits on a cutting-edge stretch of U.S. highway. During heavy traffic, sudden braking can create so-called ‘shockwaves’, causing vehicles behind to brake more abruptly, causing gridlock or even collisions. Smart motorways that adjust speed limits based on traffic conditions are already in use in several countries, including the U.S., but they typically rely on human operators. Since March, a new AI system has been operating independently on Tennessee’s I-24. This system uses historical data to inform its speed-limit decisions. According to New Scientist, while the data is still under analysis, project managers have expressed optimism about the initial results. “It’s just absolutely transformational how these systems operate.” Semafor

Roots Run Deep. U.S. special representative for Ukraine’s economic recovery, Penny Pritzker, will lay out a plan for Ukraine to revitalize its economy as Russia’s war rages on. “Ukraine’s future – and our collective legacy – will not be determined by how it wins the war but by how it wins the peace – specifically — the aspiration for Ukraine to become a sustainable, digital, clean, competitive, and E.U. member state integrated into global markets” is what Pritzker, just back from a trip to Kyiv, is due to say in an address at the Brookings Institution in Washington. She will stress that many countries, businesses, and nongovernment organizations are fueling Ukraine’s reconstruction, “unlike the Marshall Plan where one actor, the United States, was contributing to the reconstruction of many countries.” Not many people know that Pritzker, part of a prominent Chicago family that traces its roots to a patriarch who passed through Ellis Island in 1881, can trace her roots back to Velyki Prit’ski,, near Kyiv, Ukraine, which Pritzker had visited to some fanfare back in 2015. And so, the stake Pritzker has in seeing Ukraine recover sooner rather than alter is personal. KI