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

“Men at some time are masters of their fates. The fault, dear Brutus, is not in our stars But in ourselves, that we are underlings.” — Cassius, Act 1, Scene 2, Julius Caesar

Overnight

JPMorgan hit with nearly $350 million fine for compliance failures in trading

Japan’s biggest companies agreed to a 5.28% annual wage hike, the largest since 1991, presaging a sea change in the fiscal and monetary policy of the world’s fourth-biggest economy

Italy 10-year bond spread sinks to a two-year low as Italy’s economy outshines Germany

Oil holds near four-month high after sharp supply-side price pressure this week

SpaceX’s Starship, the biggest rocket ever to fly, completed most of its latest test flight but didn’t survive re-entry into Earth’s atmosphere

As ex-Treasury Sec. Mnuchin gathers syndicate to buy TikTok, Beijing slams ‘robber’s logic’ of “suppress[ing] excellent companies… arbitrarily” – while itself banning Google, Meta, X et al on data-sharing, national-security grounds

Uber and Lyft to cease operations in Minneapolis after the city votes to require that they boost their drivers’ pay

The Paris Club agrees to cancel 99% of Somalia’s debt – $2 billion – equivalent to almost a quarter of the country’s GDP

New data and new method suggest India has practically eliminated extreme poverty

Russia has an election this weekend and Vladimir Putin is all but assured another term

Corporate defaults at highest rate since 2008 crisis

European corporate credit spreads hit two-year low as rate cut hopes shift

European fund group warns of ‘systemic’ risk from U.S. settlement reform

Foreigners pile into Japan bonds on bets of end to negative rates

Blackstone says real estate prices have bottomed

Germany RE giant Vonovia posts a record $7.3B FY loss

Morgan Stanley names Jeff McMillan as head of AI

Foreign investment in Germany drops to a decade low

Cigarette maker Altria raised $2.4B through a sale of Anheuser-Busch shares, with Anheuser-Busch acquiring $200M in the sale

KKR launched a $3.1B takeover offer for German utility Encavis

Cisco Systems won unconditional EU approval for its $28B acquisition of cybersecurity firm Splunk

IT security firm Zscaler acquired Israeli artificial intelligence data startup Avalor in a $310M cash-and-stock deal

Apple quietly acquired Canadian AI startup DarwinAIearlier this year

Drugmaker AstraZeneca will acquire endocrine diseases-focused firm Amolyt Pharma in a $1.05B cash deal

U.S. will offer a record $2.3B loan to help Lithium Americas develop a Nevada lithium deposit

NYCB sells some loans for gains, aims to add Signature into financial reporting

Sports Illustrated’s last print magazine will be in May, employees were told

South Africa Central Bank governor Kganyago granted another term.

First news

• The oil and gas industry could wipe out a significant share of its methane emissions at zero cost.
• A belief that paying out old PE investors with new investors’ cash is a Ponzi scheme is a conceptual pyramid that crumbles upon examination
• The Ides of March as a day of reflection.

Charts of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

Equity markets are up modestly for the week (despite a Thu. sell-off), extending the rally for a 20th week. While this rally is certainly mature (vs. 16-19 weeks of most recent gains), there remains a substantial amount of dry powder to fuel further gains:

As extended as this rally might feel (20 weeks), a “buy the dip” regime remains as:
– sentiment supportive –> still find many skeptics in our Latam roadshow
– technicals positive –> Mark Newton sees S&P 500 5,250-5,300 by late March
– flows very supportive –> record $6.1 trillion cash on sidelines.

Click HERE for more.

TECHNICAL

The chart below showcases the Value Line Geometric index, which contains 1700 Equal-weighted stocks. Thus, while most fret about the U.S. stock market being overconcentrated or overbought or overvalued, it’s important to see that the broader market has literally just started to push back to multi-year highs. (Yes, a move back to new all-time highs already happened with RSP 0.10%  (Invesco’s Equal-weighted S&P 500 ETF)).

Furthermore, when viewing our 26% SPX rally over the last 19 weeks in Equal-weighted terms, incorporating a much larger grouping of stocks, we see that this rally isn’t nearly as overbought as one might suspect.

Bottom line: stock indices could certainly keep going at a time when some investors have begun to make excuses for reasons to not participate. This breakout in Value Line’s index makes us constructive and doesn’t show technically why U.S. stock indices are vulnerable.

Click HERE for more.

CRYPTO

We discuss the upcoming tax season’s implications on domestic liquidity conditions, a reduced probability of the spot ETH ETF being approved in May, and revisions to our Core Strategy allocations.

Click HERE for more.

FIRST NEWS

Low-hanging fruit. Forty percent of methane emissions from the oil and gas industry could be eliminated at zero net cost,the International Energy Agency reported. Energy-related methane emissions hit 120 million tons in 2023, close to a record, and are not falling anywhere near fast enough to hit the world’s 2030 net zero goals. Although many countries and energy companies have methane-reduction targets, few have policies to achieve them, the IEA said (the U.S., which finalized methane regulations in December, is an exception for now). Nearly half of the total could be cut with technologies that are less expensive than the value of the gas they allow to be captured and sold. The remaining cuts needed for net-zero alignment could be achieved for less than 5% of the global oil and gas industry’s 2023 profits, the report concludes. Semafor

The old normal. Private equity firms are sitting on 28,000 companies valued at $3.2 trillion that they can’t sell, new data from Bain shows. As investors want their money back, there is now a red-hot market for continuation funds, called by some “the story of the year.” This week, Elliott Management invested $500 million to have Quantum Capital pay out existing backers while holding onto natural-gas company HG Energy. “Is automatically selling a great business the best answer?” Eric Resnick, the CEO of investment firm KSL Capital Partners, asked earlier this year while raising $3 billion to cash out existing investors in a ski-resort operator. To critics, the idea of paying out old investors with new investors’ cash looks an awful lot like a Ponzi scheme, and some question whether firms are in denial over whether these companies are worth what they think they are. Then again, it may not be so different from IPOs, which, after all, use new investors’ cash to pay off – or enable an exit by – old investors; and if the price of a newly listed company goes down, and stays down, which it often does after an IPO, that is also the market voting that a company is not worth what its backers thought it was. Semafor

Be Aware of The Ides of March. The 74th day of the Roman calendar happened to correspond to March 15, which happens to be today. In Ancient Rome, it was known as the Ides of March, and was marked by religious observances. In 44 BC, the Ides of March became forever linked to the assassination of Julius Caesar, and hence a turning point in Roman history.

Caesar was stabbed to death on that day at a meeting of the Senate. Brutus and Cassius led as many as 60 conspirators. Per Plutarch, after a seer had prophesied that harm would come to Caesar on the Ides of March, on his way to the Theatre of Pompey, the big man himself saw the seer (or spoke to the soothsayer, if you prefer) and allowed himself a moment of sarcasm, “Well, the Ides of March are come”, to which the seer replied, “Aye, they are come, but they are not gone”.

Not many people know that, apart from being a day that lives in infamy – as it opened the final chapter in the crisis of the Roman Republic – the Ides of March also served as a deadline for settling debts. Debts can look like obligations to existing investors, as in the story above, or they can be actual monetary debts, or debts (real or imagined) of the interpersonal or spiritual sort. Today may or may not be the day to settle a debt in a productive way, yet as a day that has accreted a great deal of awareness on the part of billions of people throughout history, it is one whose accumulated significance we would do well to reflect upon – to the benefit of both our financial and spiritual selves.