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

“Every adversity, every failure, every heartache carries with it the seed of an equal or greater benefit.” — Napoleon Hill

Overnight

Israel’s military spy chief resigns over Oct. 7 Hamas attack (WSJ)

Two SEC lawyers resign after agency censured for abuse of power in crypto case (YF)

U.K. hopes to send asylum seekers to live in Rwanda by summer (WSJ)

Sam Altman invests in energy startup focused on AI data centers (WSJ)

Meta Platforms signed deals with Lenovo, Asus, and Xbox to build headsets that will use Horizon, Meta’s VR software (TI)

A Russian court sentenced Andy Stone, Meta’s communications director, to prison for six years following a trial in absentia (NYP)

The E.U. is probing TikTok’s new app in Spain and France over a rewards program it is offering people who engage with the platform (TI)

Aaron Schnarch, former CEO of Coinbase Custody, is joining another cryptocurrency technology business, Anchorage, as chief operating officer (TI)

Honda, Canada on verge of deal to build EV-assembly plant in Ontario (WSJ)

Disney technology chief departs (WSJ)

India is on track to surpass Japan as the world’s fourth-largest economy in 2025, a year earlier than the IMF had projected (Semafor)

BlackRock steps up security for Larry Fink after ‘anti-woke’ backlash (FT)

Black-swan fund says Fed rate cuts will signal market crash (RT)

Short sellers pocket largest-ever weekly profit from Big Tech selloff (RT)

‘Overdue’ pullback in U.S. stocks to test dip-buyers’ resolve (RT)

NYSE is considering 24/7 trading (FT)

Rates traders flock from banks to hedge funds as BOJ ends YCC (BBG)

Companies flock to cash at fastest rate since Covid (WSJ)

Consulting firms step up efforts to push out low performers (FT)

Australian hedge fund First Sentier Investors will close four funds totaling $9B (BBG)

U.S. credit investors see geopolitical tensions as top concern (RT)

Fed says 1.8k banks, and others tapped emergency lending facility (RT)

Low-income consumers are getting increasingly crunched on loans (RT)

Hedge fund industry AUM hit $4.3T in Q1 (RT)

Tesla shareholders brace for worst results in seven years (FT)

Goldman moved head of Europe FIG to Paris in post-Brexit revamp (FT)

Grain trader ADM’s CFO will resign amid accounting investigation (RT)

Venezuela to accelerate crypto shift as oil sanctions return (RT)

Meta to open up quest headset OS to rivals (BBG)

Injury rates at SpaceX exceed industry average for second year (RT)

Columbia University cancels in-person classes amid protests; bars access to Jewish professor, saying it can’t guarantee his safety (NYP)

First news

• A study by Morgan Stanley points to drugs like Ozempic, Wegovy, and Mounjaro/Zepbound helping people eat less of the bad and more of the good
• A Korean company has come up with an EV battery that uses a raw material more common than lithium and charges in seconds
• The FTC falsely fears a relatively modest fashion-industry acquisition will spell doom for competition in the handbag department.

Chart of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

One hundred and fifty-eight companies are reporting this week. Of the 81 companies that have reported so far (16% of the S&P 500):

• Overall, 77% are beating estimates, and those that “beat” are beating by a median of 7%.
• Of the 23% missing, those are missing by a median of -5%.
• On the top line, overall results are beating estimates by a median of 2% and missing by a median of -2%, and 54% of those reporting are beating estimates.

Click HERE for more.

TECHNICAL

We feel that lows are close in U.S. Equities, but that Monday’s finish didn’t accomplish enough to think that the coast is clear just yet. However, both breadth and momentum have turned higher on a short-term basis, and this points toward thinking that both of these have bottomed. Even if prices attempt to break last week’s lows, we expect this to prove temporary and create a very attractive risk/reward situation for risk assets.   

U.S. Equities gave back a bit of the early breadth surge from mid-day on Monday’s advance. At the same time, Technology and Financials both finished higher than 1.00% for the day and likely could help lead markets higher.

Click HERE for more.

CRYPTO

• Following the fourth Bitcoin halving on Friday evening, total bitcoin miner revenue saw a sharp increase, primarily due to a spike in network fees associated with the launch of the Runes protocol and the minting of new tokens. Daily transaction fees reached over $80 million the day after the halving, setting a new record. Transaction fees have since declined from these initial peaks to a more normalized, albeit still elevated, level. This resurgence in on-chain activity could be an important tailwind for miners. As the demand for block space driven by DeFi and speculative activities climbs, and transaction fees increase, the profitability of miners improves. A sustained rise in transaction fees may be underpriced by the market. Although it remains to be seen where fees will stabilize in the coming days, the initial surge in fees is likely a significant short-term relief for miners, who experienced an immediate 50% reduction in block reward margins due to the halving.
• After a thorough and competitive selection process involving various layer-2 solutions, Celo’s primary developer, cLabs, has chosen Optimism’s OP Stack for its transition to a layer-2 network atop Ethereum. This decision marks a strategic shift from Celo’s current status as an independent L1 to becoming part of the larger Ethereum ecosystem. The proposal to adopt OP Stack, praised for its compatibility with features from other technologies like Polygon’s Type 1 prover, will be deliberated in community calls before being put to a vote by CELO token holders. This move aligns with the increasing popularity of OP Stack among blockchain projects, as evidenced by Coinbase’s use of the technology to build its layer-2 chain, Base, and Worldcoin’s recent announcement of plans for a layer 2, World Chain, also built with OP Stack. The firm plans to deploy a testnet for the Celo Layer 2 sometime this summer, following another round of community voting.

Click HERE for more.

FIRST NEWS

Digesting Ingestion Projections. Fresh survey results from users of GLP-1 weight-loss drugs are offering insights into possible shifts in future dietary habits. Conducted by Morgan Stanley in February, the survey involved 300 people currently taking drugs like Ozempic, Wegovy, and Mounjaro/Zepbound.

^{Data: AlphaWise, Morgan Stanley Research; Chart: Axios Visuals}

Hope-givingly, key findings suggest a decrease in the consumption of indulgent treats and a greater indulgence – if we might phrase it this way – in healthier snacking options. Notably, 71% of respondents reported eating less ice cream, marking the most significant change across all categories tracked. On the other hand, only 4% said they were now eating more ice cream.

Better than half of the participants revealed a reduced intake of frozen pizzas and meals, with nearly 80% of this group cutting back by more than 50%. Conversely, the survey results pointed to a potential rise in the popularity of protein bars and trail mix as go-to snack choices.

For the chart above, Morgan Stanley analysts combined their estimate for the share of the U.S. population they expect to be on GLP-1s in 2035 (~9%) with the consumption trends from their survey. Axios

Charging EVs Pit-Stop-Style. Korean researchers have developed a sodium-ion battery that can be charged in seconds. Yes, you read that right. Sodium is roughly 1,000 times as abundant on Earth as lithium, the metal used in most modern batteries, and is therefore highly attractive as a raw material. Not surprisingly, it finds itself among a number of battery technology improvements coming at us over the next decade. BMW’s new electric vehicle batteries will see a 20% increase in energy density, while an Israeli startup expects to achieve EV charging as fast as filling a gas tank. The Wall Street Journal reports that “the next five to 10 years should see a steady drumbeat of new battery technologies” leading to cheaper, long-range, rapid-charging EVs. WSJ

Perish the Thought Dept. In what is at once a less-than-prescient forecast and a Wrong-Way-Charlie lament that’s sure to become the rallying cry of all those aspiring to one day join the Park Avenue set, the other day, Henry Liu, director of the FTC’s Bureau of Competition, lambasted Tapestry’s proposed $8.5 billion acquisition of Capri (which would see fashion brands Coach, Kate Spade, Michael Kors, and Versace under one roof) thus: “This deal threatens to deprive consumers of the competition for affordable handbags.” Then he boldly sued to block the acquisition, intended by the dealmates to create a U.S. luxury group to compete with European giants on the order of Louis Vuitton’s parent, LVMH, and Kering, the owner of Gucci.

Fashion is the one industry that just may suffer least from a lack of competition, and the lawsuit is a strange move by the agency. What’s more, Tapestry and Capri together are at ~$12 billion in revenue, while LVMH alone enjoyed revenue of 86.2 billion euros, or about $92.2 billion last year. The total addressable market, as well as the thousands of choices and hundreds of brands of handbags that are currently available at any price point and are sure to continue being available if the deal is consummated, could be a further argument that the agency is being overzealous. Regulators in the European Union and Japan have already approved the deal, with the FTC now the lone holdout.

Despite the fact that the deal seems to be one worth fighting for, word on the street is, it’s in danger. Traders have been betting against the likelihood of its going through. Shares of Capri have fallen 25% this year, while Tapestry’s have gained 6%. Perhaps the FTC believes that Tapestry, which remains focused on closing the deal this year and said it is prepared to defend it in court, will not likely stop at acquiring Capri, and that – perish the thought – this deal could give it leverage for future ones, which would surely put the industry on a one-way road to perdition in a handbag. NYT