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

“Remember when life’s path is steep to keep your mind even.” — Horace

Overnight

U.S. inflation refuses to bend, fanning fears it will stick (BBG)

The European Court of Human Rights ruled Tuesday in favor of a group of older Swiss women who argued that failure to combat climate change put them at a higher risk of dying in heat waves (Semafor)

Study finds that banks with net-zero targets behave no differently than those without them when it comes to financing fossil fuels, implying the uselessness of voluntary net-zero groups for financial institutions (Semafor)

IMF warns of cyber risks to financial sector (WSJ)

EPA sets limits on six PFAS or ‘forever’ chemicals for the first time (WSJ)

Shell CEO says his company’s shares are undervalued on the LSE compared to what they would attract on the U.S. stock market, which is more bullish on fossil fuels (Semafor)

U.S. is sending confiscated Iranian weapons to Ukraine (Semafor)

Americans still not sufficiently worried about the risk of world war (NP)

In the face of U.S. ban threats, TikTok’s parent company is more profitable than ever (TIME)

At least three Paramount directors to step down as company discusses Skydance merger (WSJ)

Chemical plants must curb ethylene oxide, chloroprene emissions under new EPA rule (WSJ)

PCAOB proposes turnover metrics and other new disclosures for audit firms (WSJ)

KPMG fined record $25 million in exam-cheating scandal (WSJ)

Lloyds Bank axes risk staff after executives complain they are a ‘blocker’ (FT)

Blizzard videogames to return to China in new deal with NetEase (WSJ)

WordPress.com owner buys universal messaging app Beeper from creator of Fitbit-acquired Pebble (BBG)

Trading in shares of Chinese cement maker halted after 99% crash in 15 minutes (BBG)

U.K. plan for private share trading could encourage firms to delist (FT)

The merchant banker who could win the Masters (WSJ)

NYSE is trying to get Japanese companies to list in the U.S. (BBG)

E.U. court rules for Russian oligarchs Fridman, Aven in blow to sanctions regime (FT)

Monaco private bank faces U.S. lawsuit based on anti-mafia laws (FT)

Advisers at U.K.’s biggest wealth manager St. James’s Place plc owe £920mn in business loans (FT)

High mortgage rates lead to rise in lending scams (FT)

Hotel chain Motel One valued at €4.1bn as hospitality dealmaking heats up (FT)

Saudi Arabia hopes to carve a new reputation with $22 billion railway (WSJ) (video)

Record-sized rate futures bet blows up in spectacular fashion (BBG)

Investors buy European bonds over U.S. Treasuries as economies diverge (FT)

Bull markets embolden retail traders to make risky bets (RT)

Options selling has helped temper U.S. stock swings (RT)

Meta trades at discount to M7 despite $1T AI rally (BBG)

Traders flee real estate stocks as inflation darkens outlook (BBG)

Commodities giants dismiss IPO route after bumper profits (FT)

Fed to reduce pace of QT by half (WSJ)

U.S. budget deficit hits $1.07T in H1 2024 (BBG)

Investors pump $126B into ETFs in March (FT)

Fitch cuts China’s credit ratings outlook to negative (RT)

Macy’s settles its proxy fight with Arkhouse (CNBC)

UBS faces tougher rules in Swiss response to Credit Suisse rescue (RT)

NYCB’s online arm is paying the nation’s highest APY at 5.55% (CNBC)

Adobe is buying videos for $3/min to build AI model (BBG)

S&P slashes property giant China Vanke’s credit rating to junk (RT)

World Bank cuts LatAm 2024 GDP forecast (RT)

Foxconn considers rotating CEOs in management reshuffle (RT)

Apple follows big tech rivals to expand in Miami (BBG)

BMW EV sales surge as rivals struggle with weak demand (BBG)

First news

  • The U.S. is significantly behind in developing the solutions needed to offset unavoidable emissions in the coming decades, yet the political feasibility of a national carbon price in the U.S. is low
  • Could money houses be getting the message about the medium to be in?
  • Ukraine’s energy sector adjusts on the fly to Russian attacks by stressing distribution of a different sort.

Chart of the Day

The Right Path, Slowly

MARKET LEVELS

Overnight
S&P Futures -11 point(s) (-0.2% )
overnight range: -17 to +2 point(s)
 
APAC
Nikkei -0.35%
Topix +0.15%
China SHCOMP +0.23%
Hang Seng -0.26%
Korea +0.07%
Singapore -0.31%
Australia -0.44%
India flat
Taiwan -0.05%
 
Europe
Stoxx 50 -0.32%
Stoxx 600 -0.25%
FTSE 100 -0.1%
DAX -0.4%
CAC 40 +0.02%
Italy -0.53%
IBEX -0.69%
 
FX
Dollar Index (DXY) +0.02% to 105.26
EUR/USD -0.12% to 1.073
GBP/USD -0.02% to 1.2537
USD/JPY +0.02% to 153.19
USD/CNY +0.04% to 7.2373
USD/CNH -0.07% to 7.257
USD/CHF +0.04% to 0.9132
USD/CAD +0.05% to 1.3689
AUD/USD +0.14% to 0.6521
 
Crypto
BTC +1.3% to 70716.88
ETH +1.98% to 3583.25
XRP +0.42% to 0.6172
Cardano +1.34% to 0.5897
Solana -0.04% to 173.26
Avalanche -1.19% to 46.74
Dogecoin +0.81% to 0.1996
Chainlink +1.09% to 17.48
 
Commodities and Others
VIX +2.97% to 16.27
WTI Crude +0.26% to 86.43
Brent Crude +0.29% to 90.74
Nat Gas +0.11% to 1.89
RBOB Gas +0.54% to 2.797
Heating Oil -0.33% to 2.699
Gold -0.18% to 2329.86
Silver -0.24% to 27.88
Copper -0.49% to 4.261
 
US Treasuries
1M -1.4bps to 5.3698%
3M -1.9bps to 5.3772%
6M -1.1bps to 5.3577%
12M -1.4bps to 5.176%
2Y -1.4bps to 4.9588%
5Y -0.3bps to 4.601%
7Y +0.0bps to 4.5824%
10Y +0.2bps to 4.5457%
20Y +1.0bps to 4.7544%
30Y +1.1bps to 4.6335%
 
UST Term Structure
2Y-3 M Spread narrowed 2.1bps to -46.8 bps
10Y-2 Y Spread widened 1.6bps to -41.5 bps
30Y-10 Y Spread widened 0.9bps to 8.6 bps
 
Yesterday's Recap
SPX -0.95%
SPX Eq Wt -1.7%
NASDAQ 100 -0.87%
NASDAQ Comp -0.84%
Russell Midcap -1.66%
R2k -2.52%
R1k Value -1.38%
R1k Growth -0.68%
R2k Value -2.97%
R2k Growth -2.06%
FANG+ -0.49%
Semis -0.87%
Software -1.31%
Biotech -1.84%
Regional Banks -4.96% SPX GICS1 Sorted: Energy +0.38%
Comm Srvcs -0.23%
Cons Staples -0.34%
Tech -0.74%
Indu -0.84%
SPX -0.95%
Healthcare -1.15%
Cons Disc -1.19%
Fin -1.5%
Materials -1.55%
Utes -1.73%
REITs -4.1%
 
USD HY OaS
All Sectors -5.6bp to 340bp
All Sectors ex-Energy -5.8bp to 327bp
Cons Disc -6.1bp to 275bp
Indu -6.3bp to 239bp
Tech -2.8bp to 434bp
Comm Srvcs -3.9bp to 597bp
Materials -8.4bp to 296bp
Energy -2.9bp to 261bp
Fin Snr -5.4bp to 300bp
Fin Sub -6.7bp to 229bp
Cons Staples -6.6bp to 297bp
Healthcare -10.1bp to 396bp
Utes -1.5bp to 205bp *
DateTimeDescriptionEstimateLast
4/118:30AMMar PPI m/m0.30.6
4/118:30AMMar Core PPI m/m0.20.3
4/128:30AMMar Import Price m/m0.30.3
4/1210AMApr P UMich 1yr Inf Exp2.92.9
4/1210AMApr P UMich Sentiment79.079.4
4/158:30AMMar Retail Sales m/m0.40.6
4/1510AMApr Homebuilder Sentiment51.051.0
4/174PMFeb Net TIC Flowsn/a-8.756

MORNING INSIGHT

Good morning!

Ten companies are reporting this week.

Of the 22 companies that have reported so far (4% of the S&P 500):

  • Overall, 86% are beating estimates, and those that “beat” are beating by a median of 9%.
  • Of the 14% missing, those are missing by a median of -4%.
  • On the top line, overall results are beating estimates by a median of 2% and missing by a median of -2%, and 45% of those reporting are beating estimates.
The Right Path, Slowly
The Right Path, Slowly

Click HERE for more.

TECHNICAL

In the very short-term, there does look to be a chance for a bit more technical selling as a result of Wednesday’s decline. Equity index uptrends were broken and breadth came in very heavily negative. Moreover, the minor breakout in U.S. Dollar as well as U.S. Treasury yields will need to show some evidence of stalling and reversing course. Overall, we don’t see the potential for more than a 1.5-2% decline from here, and SPX should find strong support near 5100 before turning back higher. In the bigger scheme of things, the next big move should be higher, not lower, yet one has to allow for a bit more weakness to complete this recent pattern. Neither NASDAQ nor SPX cash have broken last week’s lows yet to match what happened in the Futures markets, so this remains important to keep an eye on.

Click HERE for more.

CRYPTO

Hong Kong is on the verge of approving its first applications for spot bitcoin exchange-traded funds (ETFs), with the potential for trading to begin as early as April, reports Reuters. This development marks Hong Kong as a leader in Asia for the introduction of spot bitcoin ETFs, propelled by an expedited approval process from Hong Kong regulators. Among the applicants are the Hong Kong branches of China Asset Management, Harvest Fund Management, and Bosera Asset Management, who have approached the Securities and Futures Commission (SFC) for approval. This advancement may facilitate easier wealth transfer for mainland citizens from domestic equity and real estate markets into bitcoin and could be a real needle-mover.

EigenLayer, an Ethereum restaking protocol that has garnered over $13 billion in total value locked (TVL), launched its mainnet yesterday. Alongside, EigenLayer introduced EigenDA, a data availability solution functioning as an actively validated service (AVS). While the full suite of EigenLayer’s capabilities is expected to roll out later in the year, this initial launch allows for the delegation of restaked balances to operators for running AVSs. This development leverages Ethereum’s security model by enabling further restaking of ETH, enhancing the utility and yield potential for ETH holders. It will be interesting to see how restaking affects ETH demand.

Click HERE for more.

FIRST NEWS

Removing Obstacles to Carbon Removal. The Department of Energy’s Loan Programs Office (LPO) has $217.6 billion remaining in climate tech loans and loan guarantees as of the end of March. The LPO has been working to disburse this money quickly while maintaining proper due diligence to avoid accusations of waste from Congressional Republicans. Yet they’ve only disbursed about $26 billion so far. Senator Martin Heinrich (D-N.M.) has warned that if Donald Trump wins the presidency before this money is allocated, “one of the biggest pots of climate cash in the U.S. would just die on the vine.”

At the same time, a new report from the Rhodium Group, a think tank, indicates that the U.S. is significantly behind in developing the technological and nature-based solutions needed to offset unavoidable emissions in the coming decades. Today, dedicated carbon removal projects, mostly through tree planting, amount to a mere 5 million metric tons. While current policies, including tax credits from the Inflation Reduction Act, are projected to grow this to 50 million tons by 2035, a much larger scale of carbon removal will be required. Depending on the scenario, around 20% of U.S. emissions in 2050, or 1 billion tons, may need to be offset through carbon removal.

If the U.S. wants to continue its momentum on carbon removal, a lot more needs to happen, and soon, on many different fronts. This includes increased public investment in R&D for innovative carbon-removal strategies, more research on measuring and monitoring emissions, federally-funded hubs for first-of-a-kind carbon removal projects, and incentives for individuals and companies to purchase carbon-removal credits. Larsen estimates that this could require $100 billion per year by 2050; in other words – the current budget of the U.S. Department of Agriculture. The best way to save on future carbon-removal costs would be to invest more in carbon-avoidance measures now, though there is scant confidence among carbon-policy wonks in the political feasibility of a national carbon price in the U.S. Semafor

The Media Is the Money. Positive press coverage has repeatedly been correlated with improved inflows. At the same time, the investment management industry has a complex relationship with the media. Therefore, the more interesting financial stories this week were not about what was published, but rather about whom the media chose to elevate.

Consider the case of Jamie Dimon. This week, weekly Google search volumes for his name hit an annual high of nearly 460,000 searches, four times the usual rate. This was likely due to the extensive coverage of JP Morgan’s annual shareholder letter. Dimon’s thought leader status in the media on topics such as AI, China, oil and gas, and interest rates may have contributed to JP Morgan’s stock rising 54% over the past 12 months.

In contrast, Goldman Sachs stock rose 26% over the same period, yet its CEO, David Solomon, who is likely no less well-informed on the markets, receives far less media attention, with weekly search volumes for his name hovering around 8,000.

This suggests that if press coverage is lucrative, it may be beneficial for firms to own their own media outlets. Robinhood has taken this approach, officially launching a website for its cleverly named new media subsidiary, Sherwood News, this week. Sherwood has been operating independently since January and recently acquired the data-visualization outfit Chartr.

Per Axios, more financial firms are looking to combine news and information with trading platforms, seeking to emulate the success of Bloomberg Media. In just five years since launching its paywall, Bloomberg Media has hit 500,000 subscribers, one of only 16 English-language news publishers to reach this milestone working with paying customers.

While Bloomberg’s media subsidiary is not yet profitable, it generates significant value for the overall Bloomberg business. Out of the company’s more than $12 billion in annual revenue, about $500 million comes from the media division.

If Robinhood could successfully spin Sherwood News into a profitable venture that adds material value to its investment business, it could prompt industry leaders such as Vanguard and BlackRock to follow suit. In that case, the creation of ‘thought leadership content’ could take on a more commercial twist. FinText

Winds of War. Ukraine’s largest private energy firm wants to build a distributed energy network to better survive Russian attacks – but can’t get capital

The head of Ukraine’s largest private energy firm, DTEK CEO Maksym Timchenko, says that building more green-energy plants could help Ukraine keep the lights on as Russia continues to bombard the country’s power system. At the same time, Timchenko says DTEK is unable to invest in new solar or wind projects due to the investment risks related to the war, as Russia’s increased drone and missile strikes have already caused DTEK to lose 80% of its generation capacity, with five of its six coal-fired power plants seriously damaged. Repairing this damage would cost an estimated $300 million, taking up to 8 months.

To address the broader problem, Timchenko argues that Ukraine needs to diversify its power sources away from large, centralized plants that are vulnerable to Russian attacks. Spreading power generation across hundreds of wind turbines, for example, would make the system more resilient, which is why Timchenko is calling on the E.U. to provide financial support and equipment such as transformers and turbines to help rebuild Ukraine’s energy infrastructure. He also wants the European Bank for Reconstruction and Development and European Investment Bank to help DTEK access capital and de-risk investments in new renewable projects.

In the longer term, DTEK will be hauling Russia to court to recoup the damages to its energy assets in Donbas since 2014, with Timchenko claiming this will eventually allow Ukraine to pay for all its losses. Politico

Disclosures (show)

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