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

“Patience is bitter, but its fruit is sweet.” — Jean-Jacques Rousseau

Overnight

U.S. economy expands at revised 3% rate on resilient consumer BBG

PBoC’s $56bn debt purchase sparks talk of bond market intervention FT

China’s international use of renminbi surges to record highs FT

There’s a China-shaped hole in the global economy WSJ

Dollar General warns poorer US consumers are running out of money FT

After partnering with OpenAI for its AI features, Apple joins Nvidia and Microsoft in talks to join new funding round for OpenAI, which boasts 200M+ weekly active users WSJ

Silicon Valley’s elite rattled by prospect of tax on unrealized gains FT

Patriots pile into Palantir, driving its stock too high TI

Dell attempts to sell cybersecurity firm SecureWorks again YF

European oil majors face falling profits, says Morgan Stanley FT

Shell to cut 20% of workers in oil and gas exploration units FT

Houthis bow to pressure, stop interfering with efforts to salvage burning Red Sea oil tanker FT

U.S.-made F-16 jet crashes during air battle in Ukraine FT

Bill Ackman seeks to revive IPO with sweeteners for investors FT

Most-hated credit trade turns into a big winner for hedge funds BBG

Tesla gets buy rating from William Blair on its ‘underappreciated’ energy-storage business CNBC

Brazil’s supreme court justice unilaterally blocks Starlink accounts to force X to pay fines BS

Alibaba launches Qwen2-VL vision AI model, claiming to be better than GPT-4o, Claude 3.5 Sonnet VB

Telegram faces a reckoning Wired

Nippon ups ante in bid for U.S. Steel and makes a deal a little more likely Barron’s

Nvidia stock takes one for the AI team; AMD, Arm rise Barron’s

Global smartphone shipments forecast to +5% in 2024 after 2 years of declines CR

Uber invests in SoftBank-backed self-driving software firm Wayve BBG

Senate Committee on Environment and Public Works braces for leadership change BB

Vanguard backed no environmental or social measures in 2024 proxy season FT

Constitutional challenge to Texas anti-ESG law filed in federal court BB

Yelp sues Google for dominating local search results CNET

The alleged kickback schemes that inflated costs for home buyers WSJ

$5 for a good online review? No way, says new FTC rule WSJ

This TikTok lawsuit could change the face of social media forever, and it’s about time TR

Bosses are finding ways to pay workers less WSJ

Tyson Foods names Curt Calaway CFO YF

U.K. to delay bank capital reforms until at least January 2026 BBG

German inflation unexpectedly falls below ECB target WSJ

Macy’s doesn’t need a miracle to lift its stock WSJ

Private equity is coming for youth sports BBG

A 34-year-old VC and heart-transplant recipient fights to fix the transplant system WSJ

How open trade saved us from a global food crisis FT

Cash-starved Angola pays local suppliers with Treasury bills BBG

The COVID-era tech that could reinvent cancer care FT

Children argued their country’s climate efforts were shoddy; a top court agreed WSJ

He raised Disney park prices and fans still love him; now he’s on the CEO shortlist WSJ

SEC Wells notice targets NFTs on OpenSea BW

Hong Kong editors convicted of sedition in landmark press-freedom verdict WSJ

A wide-ranging collection from art-book publishers Harry and Robert Abrams could fetch $16 million at Sotheby’s Penta

Mike Ullman, a corporate fixer who helped save JCPenney and Macy’s, dies at 77 WSJ

Chart of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

It is a sign of market strength that NVDA fell -6% post-EPS and yet the S&P 500 managed to go up, with stronger gains from small-cap stocks. As we noted earlier this week, the probabilities favored post-NVDA 1.39%  results would trigger a rotation, rather than risk-off.

Pundits said “as goes NVDA, so goes the market”, such as in this X.com tweet, and this is why stocks, in our view, were so soft on Wed. Investors expected the entire market to follow NVDA in either direction. Post-EPS, the largest stock (NVDA) in S&P 500 fell 6%.

Click HERE for more.

TECHNICAL

U.S. Equities were able to show fractional gains on Thursday, as 9 out of 11 sectors finished positive, with meaningful movement back to new highs from Financials, Healthcare, Utilities, and Industrials. (While ^SPX 0.91%  closed flat, RSP 0.77%  finished up +0.37%.)

Thus, despite the continued focus on NVDA after its earnings announcement, and the drop in the stock during Thursday’s session, the broader market managed to chug higher on Thursday, and remains in much better shape technically in the short run when compared to QQQ and SPY.

Click HERE for more.

CRYPTO

In our latest video, we discuss the recent lack of spot market volumes and how historical data indicates that volumes are likely to bottom out this week. We also explore why the outcome of Jackson Hole significantly reduces the likelihood of a cyclical downturn for crypto in the near term.

Click HERE for more.

First News

Patently Cuckoo. Over the past few decades, the U.S. has had a healthy student-visa program. In 2022 alone, the U.S. Department of State issued over 411,000 F-1 student visas, up 15% from 2021. Many foreign nationals studying in the U.S. choose to stay here and become American citizens, but many go back to their native country and continue their studies or career there, which is why it isn’t surprising that the U.S. Defense Department, NASA, and other government agencies have collectively funded research leading to more than 1,000 patents for China-based inventors since 2010. What is potentially concerning is that the patents include those in sensitive fields such as biotechnology and semiconductors. Per data provided to the House of Representatives’ select committee on China by the US Patent and Trademark Office, the Department of Health and Human Services funded 356 of these patents, the Department of Defense contributed nearly 100, and NASA played a role, too – despite restrictions on cooperation with China. Reuters

Bill, Baby, Bill. California lawmakers have passed a contentious AI safety bill, known as SB 1047, which mandates costly and rigorous safety testing for large-scale AI models, as well as a kill switch for models that go rogue. The law targets systems that either require substantial computer power or cost more than US$100 million to train – although no current AI models are known to have actually hit that threshold. The bill is awaiting a final vote in the state senate before it needs to be signed by Governor Gavin Newsom a month from now in order to become law. SB 1047 also includes provisions for kill switches, third-party audits, and whistleblower protections, and gives the state attorney general authority to sue non-compliant developers. Tech giants Google and Microsoft have opposed the bill – yet, not surprisingly, it has the support of Silicon Valley’s resident contrarian (Elon Musk). In related news, the U.S. AI Safety Institute has said that OpenAI and Anthropic had signed deals with the U.S. government to research and test AI models. The Guardian, Reuters

Meta4. Some people say personality is a predictor of success, and some that demographics are destiny. We say a similar connection exists between the basic meaning of word roots and what they denote in the world at large. As if to prove our point, the world of rare-earth metals is yielding two vivid examples of this connection even now.

As China has ramped up production of rare-earth metals, most prices have declined substantially, but two metals in particular – antimony, used in solar-cell cover glass, and gallium, used in multiple types of semiconductors – have seen prices spike as China has announced export controls. China produces 48% of the world’s antimony, with the other major producers including Myanmar and Russia. The restrictions have sent prices to $25,000 per ton, up more than twofold from $12,000 per ton at the end of last year.

Now, to some – the American Chemical Institute, for instance – antimony is the “element most likely to sound like the first name of a YA novel’s protagonist”. To us, antimony transparently sounds like a combination of anti and alimony, suggesting that antimony is a bit of a tightwad – disapproving of paying money out; preferring to receive it from others instead. Indeed, China, the master of antimony, controlling roughly half of its supply, is making others pay dearly for the privilege of getting it.

What’s more, China’s 90% market share in the gallium business has, predictably, already made supplies of the metal tight, with export licenses announced in July 2023 sending prices up 20% over the course of a month. It seems that whoever gets their hands on a sufficient supply of gallium starts acting like they have the gall to keep benefiting from the swiftly rising prices that result from a cornered market. This is why the unexpected export licenses for antimony have market participants fretting it’s in for a similar shock. Nikkei Asia