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

“A man is a long sentence, written with much love and inspiration, but full of spelling errors.” — Jordan Radichkov, Bulgarian writer

Overnight

The Nasdaq stock index hit a record high, apparently driven by a surge in optimism over artificial intelligence

Bud Light maker AB InBev reaches 5-year contract with workers to avoid a strike that would have started as soon as today at 12 U.S. breweries; Starbucks eases off hardline approach to its union, announcing a foundational framework’ providing back pay and potentially resolving dueling lawsuits

Stuff hits fan as fertilizer-laden ship, disabled in wake of Houthi attack, lies abandoned at sea

Carlyle escalates fight over 23 of its airplanes trapped in Russia, claiming London-based aviation insurers have collectively decided to indefinitely delay payment of Russia-related claims

U.K. firms see wave of takeover offers from foreign suitors attracted by cheaper valuations, weak pound

Executives, board members of OpenAI subpoenaed as part of investigation into whether CEO Sam Altman misled investors

OECD chief economist Clare Lombardelli named BoE deputy governor

Access to auto credit lowest since Aug. 2020 as banks tighten lending standards

Erik Wasson of Bloomberg explains how looming US government shutdowns have become routine

Sen. John Cornyn, R-Texas on Thursday becomes the first Republican to publicly announce his bid to replace Mitch McConnell as GOP leader

Bank of America and Wells Fargo are offering spot Bitcoin ETFs

India, currently home to zero semiconductor plants, approves construction of three semiconductor plants Thursday, signaling its ambition to become a major chips player

A key Chinese income metric was down in 2023 for the first time in 29 years, pushing the country further away from ‘high-income country’ status

China’s factory activity shrinks for 5th month, raises pressure for more stimulus

Dell shares jump ~20% after beating Q4 earnings and revenue estimates that showed strong demand for its AI servers

Bond giant PIMCO expects term premiums to rise again

Tesla to earn billions by opening charging network to Ford, other EVs

NYCB shares fall over 20% after disclosing ‘internal controls’ issue and a CEO change

Vanguard CEO Buckley to retire by year-end; CIO Davis named president

PE-owned German bank hit after 25% of US office loans default

IRS will crack down on 125k high-income non-filers

New York shut down a Ponzi scheme run by a Harvard MBA

Greg Coffey’s macro-focused Kirkoswald Asset Management is in talks to acquire emerging-markets focused Emso Asset Management to create a money manager with $13B in combined assets

Essence Magazine is in talks to acquire Vice Media’s women’s lifestyle site Refinery29, which Vice acquired for $400M in 2019

Cloud storage service Egnyte hired JPMorgan as lead underwriter for a New York IPO that could value it at over $3B

Kedaara Capital is set to raise $1.7B for what would be India’s biggest-ever PE fund

Ares Management partnered with Australia’s Pallas Capital for a $326M fund that will provide liquidity to CRE firms who lack bank funding

Chipotle increases commitment to its Cultivate Next VC fund to $100M

Crowds gather in Moscow for the funeral of the late Russian opposition figure Alexei Navalny

Zara, the Spanish fast-fashion giant, will begin reopening stores in Ukraine that it closed shortly after Russia’s full-scale invasion

First news

• Digital brokerage Webull going public via SPAC, not IPO
• As cocoa prices propel themselves higher on a caffeinated surge, candy makers titrate intake by dosing output, offering less chocolate in popular products at the same price
• Women continue proving they can do anything men can do better, opening home-improvement businesses at record pace.

Charts of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

Exiting Feb, S&P 500 +7% YTD.

Next key decision point is Feb. CPI on March 12. Beware of “residual seasonality”.

Click HERE for more.

TECHNICAL

Equity markets remain in a sweet-spot right now as February has come to a close having shown no real evidence of weakness that is traditionally possible in the months of February during election years. 

Trends remain upward-sloping on short and longer-term timeframes. Momentum is positively sloped and, while overbought on a daily and monthly basis, has not really begun to diverge meaningfully.   Technically strong sectors such as Technology have been joined by strength in Healthcare, Industrials, and Financials, while this week’s above-average gains have been seen in other sectors such as Consumer Discretionary and Materials. 

While we’re on the lookout for evidence of DeMark-based exhaustion and/or sector deterioration that might prove problematic, at present, we’re seeing the opposite, and the cyclical weakness possibility for mid-February has come and gone, with SPX, QQQ, and DJIA all now pushing back higher, along with cryptocurrencies.   

While the US Dollar and US Treasury yields have largely moved sideways over the past few weeks, this has not proven detrimental to the U.S. equity market. We suspect a rally might be possible for both the U.S. Dollar and Yields sometime in March, which could take both of these back to new monthly highs, despite a lack of Treasury supply until 3/11/24.

SPX technically should begin a push back higher to exceed 5111 into the month of March. We’ll discuss upside price and time targets next week, but another 2-3 weeks of gains look quite possible despite many market participants feeling SPX has grown elevated.

Click HERE for more.

CRYPTO

Adding DePIN Exposure and SOL Beta Through HNT (Core Strategy Rebalance).

In today’s video, we discuss the acceleration of Bitcoin ETF flows, leading us to believe there is more near-term upside, the investment thesis for the Helium Network, and how the Coinbase outage is an encouraging sign for retail activity returning.

Click HERE for the video.

FIRST NEWS

Webull Works as a SPAC. Digital brokerage Webull said it’s struck a deal to go public through a merger with a SPAC (SK Growth Opportunities, trading on the Nasdaq under the ticker SKGR), the combined company to be listed on the Nasdaq as Webull and expected to begin trading around September.

The deal values Webull at ~$7 billion and is expected to raise about $100 million for the brokerage, which plans to use the proceeds to further its international expansion and add new products.

Webull, which bills itself as a “mobile-first brokerage platform that offers a unique community-driven experience”, had previously considered an IPO, but ultimately chose a SPAC. The IPO market has been recovering slowly since drying up in 2022, while SPACs have been going in the opposite direction. In 2020 and 2021, SPAC fundraising was all the frenzy on Wall Street, with more than 860 SPACs raising over $200 billion, per SPACInsider. Then, SPAC transactions ground to a halt in 2022. Last year, a mere 31 SPACs raised less than $4 billion.

Webull launched its U.S. trading platform in 2018 and surged in popularity around 2021, when amateur investors mobbed brokerages with commission-free stock trading to flood meme stocks like GameStop. The firm had $370 billion in equity notional volumes and 430 million options contracts traded through its platform in 2023.

Webull has expanded to Asia, Europe, and Latin America, and says it has about 20 million registered users globally, recording eight consecutive quarters of profitability.

A review on Forbes Advisor shows a star rating of 3.1 out of 5, with cons listed as:

• No mutual funds, bonds, futures or foreign exchange (forex) trading
• No live chat, poor phone support
• Very limited educational resources
• Fewer research tools than other leading brokerages
• Accepts payment for order flow.

It does reportedly make stock trading and buying options easy for new investors, with an active user community – like an in-house Twitter to help you learn about trading – baked into the platform.

Webull used to offer cryptocurrency, but discontinued its crypto offerings at the end of Q323 on account of what it says are the SEC’s unclear rules for registered broker-dealers that work with crypto. Webull has stated that its previous attempt at an IPO was likely blocked due to its crypto-related services, although major competitor Robinhood has offered crypto trading features since 2018 and successfully completed its IPO in 2021. WSJ, CNBC, Forbes Advisor, Crypto Slate

A Count of Chocula Comes Up Short. On Valentine’s Day, we wrote about the rising cost of the commodity known as cocoa, used to make the luxury known as chocolate (Cupid Bitter as Cost of Romance Cons, Chocolate Remains High). To be sure, most people in Western countries view chocolate as a readily accessible source of pleasure, but with cocoa prices per metric ton rising to $6,000, up from $2,600 per ton this time last year, chocolate is well on its way to becoming a luxury – something fewer and fewer can afford. Instead, thanks to sneaky sweets makers, chocolate is becoming a rara avis – increasingly absent in the very places one might expect to find it.

Last year, Mars Inc. made a clandestine tweak to its popular Galaxy chocolate bar, shaving 10 grams (0.35 oz.) off the standard product size and hiding the weight-loss measure (well, not in that way) via different packaging – all without lowering the price. Naïve U.K. shoppers were surprised, although seen-it-all cocoa traders were not. The 113-year-old company, which had $45 billion in sales for 2022 and is almost as famous for still being privately held, second to its fame as the maker of popular packaged sweets including Twix and M&M’s, is taking a well-used, bitter-tasting page from a well-thumbed playbook – as the cost of cocoa rises, companies find ways to sell smaller doses of chocolate at the same price – rhetorically repackaged with the buzzy name ‘shrinkflation’.

Like many others, Mars is keeping products at familiar sticker prices while hoping consumer don’t notice the effective price increase. Mars says it’s absorbed the rising cost of materials and operations and intimated that it was chagrined to reduce the size of products. (It could nibble on a Twix for dopamine-driven comfort, although there will be that much less of it now, what with the smaller serving size.) French supermarket chain Carrefour has been placing labels on its shelves warning customers about products – including Lindt, another offender in this category – that have shrunk in size while increasing in price. Bloomberg, confectionerynews.com

Plumbing She Did. Goldman Sachs’ 10,000 Small Businesses philanthropic programhas helped more than15,000 small businesses, and just at the right time, too, as both entrepreneurship and operational obstacles have proliferated since the pandemic.

The program aims to provide small businesses with access to education, capital, and support services. Business owners most frequently want to learn more about the financials of their business, negotiating interest rates on loans, and new technologies, including AI. Over half of the program’s small businesses already use ChatGPT and other tools to help them automate tasks like data analysis.

According to government data, a record-breaking 5.5 million new business applications were filed in 2023. Some of the highest growth has been in less densely populated states, including Colorado, Iowa, North Dakota, South Dakota, Wyoming, Montana, Maine and Kentucky.

In related news, the ‘she-conomy’, i.e. economic growth attributed to women, continues to expand. Women opened more home-services businesses than beauty businesses in 2023, according to Yelp’s report released Wednesday.

^{Data: Yelp; Chart: Jared Whalen/Axios}

New findings from Yelp reveal that women are opening more businesses traditionally dominated by men, such as plumbing and HVAC repair (although that doesn’t mean that they are actually doing the physical work). Listings within the home-services category that were created by women grew 38% last year, 6 points more than the national average in that category.

In Boston, general contractor businesses listed by women grew 500%, while Miami electrician and D.C. flooring listings started by women each saw 400% growth. Yelp says the creation of women-owned businesses grew 17% overall in 2023. Miami, Los Angeles, and NYC had the highest total number of new women-owned businesses last year. Axios