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

“And as we let our own light shine, we unconsciously give other people permission to do the same.” — Marianne Williamson

Overnight

Copper prices hit 2-year high, entering overbought territory (MW)

China creates its largest ever quantum computing chip that looks to match the performance of industry leaders like IBM (LS)

SoftBank commits $5 billion to AI after three years of losses (WSJ)

IMF holds off on fresh Argentina loan despite praise for Javier Milei (FT)

Squarespace to go private in $7 billion private-equity deal (CNBC)

JP Morgan AM launches euro-denominated public debt money market fund (IW)

Kraft Heinz explores sale of Oscar Mayer (WSJ)

GameStop, AMC soared over 70% because of a Twitter post (CNBC)

Trading in GameStop stock halted on NYSE after 110% rally as meme hero Roaring Kitty returns (Barron’s)

GameStop short sellers lost ~$1B after monster memestock rally (CNBC)

JPMorgan resists major proxy recommendations (RT)

Corporate greed not to blame for price pressures, Fed study shows (RT)

European retail hedge fund assets are at an eight-year low (RT)

NYSE President sees more U.S. companies pursuing IPOs (BBG)

European banks’ Goldilocks rally tempts back bulls and bears (RT)

NY Fed report warns discount window stigma may never go away (RT)

OpenAI launches its latest GPT-4o AI model (CNBC)

Anthropic launches its Claude AI chatbot across Europe (CNBC)

Temu cools on U.S. after shelling out billions (WSJ)

U.S. worker satisfaction is at a record high, with nuances (WSJ)

Takeda Pharmaceuticals reaches $2bn deal to develop Alzheimer’s vaccine (FT)

China reduces access to live data on share trades by foreign investors (FT)

Dell hacker able to directly attack company servers and scrape data for~50 million people (TR)

Black Basta ransomware has become one of the biggest threats worldwide, CISA and FBI say (TR)

Melinda F. Gates resigns as Gates Foundation co-chair three years after her divorce from Bill Gates (MW)

Lazard AM bolsters global thematic equity team with portfolio manager hire (IW)

U.S. adopts new rules on power line rollout as electricity demand rises (FT)

Apollo and Intel enter talks to finance $11bn chip plant in Ireland (FT)

Hess investors advised to abstain from vote on $53bn Chevron deal (FT)

Anglo American rejects BHP’s fresh $43 billion takeover bid as pressure builds on its strategy (WSJ)

How the maple-syrup cartel keeps a sticky grip on the global market (WSJ)

France secures $16 billion from Microsoft, Amazon and others at foreign-investment summit (WSJ)

The U.S. and Taiwan conducted joint naval drills last month in the Pacific, which officially did not occur, amid rising military threats by China (RT)

China makes headway in Iraq’s oil industry as U.S. influence fades (Semafor)

China fires starting gun on $140bn debt sale to boost economy (FT)

Raiffeisen Bank continues to make big profits as a rogue operator in Russia two-plus years after Putin’s invasion of Ukraine (FT)

Bank of Montreal, Canada’s fourth-largest bank discloses spot Bitcoin ETF holdings (Binance)

Walmart is cutting hundreds of corporate positions and asking most of its remote employees to begin working in offices (WSJ)

Former Rep. Mike Gallagher joins TitletownTech, a VC firm started by the Green Bay Packers and Microsoft, as a senior strategic adviser (MJS)

Startup lender Ampla – an important source of working capital for early-stage F&B entrepreneurs – seeks buyer, cuts credit lines (TI)

Tesla is rehiring some of the nearly 500 Supercharger employees it laid off last month (BBG)

A whisker away from demise, Fisker gets $3.5 million in funding from short-term loan (WSJ)

For $323 million, last private land in Arctic Archipelago can be yours (BBG)

First news

• FERC hands down a 2-1 decision approving rule designed to pave the way for construction of new transmission lines connecting clean-energy projects to the grid
• Saudi Arabia’s government projects reliant on a revolving-door ecosystem of professional consultants.

Chart of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

The Fed has maintained a dovish tilt because it is waiting for housing and auto insurance (April Core CPI (Wed); we expect +0.29% or better) to cool. This could be a sign that April might be fueling further May gains.

More in today’s Macro Minute Video linked HERE.

TECHNICAL

Monday’s AAPL close finished at the highest level since February and should boost technology even further, despite other sectors not participating as well as desired. 

Daily charts of AAPL show little likely overhead resistance until $200, with the stock having begun to outperform other “Magnificent 7” stocks lately, given its uptick in momentum.

Overall, we like AAPL technically and feel that this can start to show better relative strength in the weeks to come vs. recent months, as the stock’s technical position has improved meaningfully.

Click HERE for more.

CRYPTO

The market is currently fixated on the ongoing GameStop (GME) short squeeze. If this serves as a precursor to broader short-covering across the market, crypto-related equities stand to benefit, as they happen to be a heavily shorted area. Our crypto equities basket is filled with names that have short interest levels near or exceeding 20% of their respective floats: MSTR (21%), MARA (23%), RIOT (20%), and CLSK (18%).

Metaplanet Inc., a Tokyo-based publicly listed firm specializing in crypto, has announced its adoption of bitcoin as a strategic reserve asset, attributing the decision to ongoing fiscal challenges in Japan, including high government debt levels and a weak yen. With Japan grappling with economic difficulties, marked by a staggering government debt-to-GDP ratio and the yen’s recent plunge to a 34-year low, Metaplanet views bitcoin as a non-sovereign store of value that offers stability amid fiat currency depreciation. The company plans to expand its bitcoin reserves using various capital market instruments, currently holding 117.7 BTC valued at $7.2 million as of May 10.

Click HERE for more.

FIRST NEWS

Transmitting the Transition. Washington is buzzing with excitement over a groundbreaking move by the Federal Energy Regulatory Commission (FERC). On Monday, the energy regulator handed down a 2-1 decision approving a far-reaching new rule designed to pave the way for construction of new transmission lines connecting clean-energy projects to the grid. Climate advocates have long – well… advocated for such a measure, viewing it as crucial to accelerating the development of wind and solar power. The changes will mandate that grid operators plan new capacity 20 years in advance to accommodate the country’s evolving power mix, and establish guidelines for allocating costs associated with new projects.

Senate Majority Leader Chuck Schumer, a staunch proponent of the rule, hailed it as a ‘joyous day’ and suggested that Congress would not likely do its own deal on energy permitting reform, stating, “I’ve told Joe Manchin it’s going to be virtually impossible to get something done.”

Senator Schumer is also expected to release a road map for regulating artificial intelligence this week. Semafor

Ex Marks the Spot. Surely everyone reading this has seen the irresistibly silly 2002 romp Ali G Indahouse, in which the fictional Ali G, brought to glorious pinnacle-of-stupid-funny life with characteristic wide-grinned abandon by a young Sacha Baron Cohen, is the leader of Da West Staines Massiv, a teenage collective made up of aspiring, hilariously hapless gangsters from Staines, Surrey, U.K. Without meaning to, Ali G becomes the MP for Staines in a by-election. Now vested with a lawmaker’s powers and the access they afford, he is given a tour of a subterranean secure location housing all sorts of confiscated paraphernalia. When some of it turns out to be extra-strong marijuana, Ali G insists that the stash be examined by experts, choosing for the job a trio of his wannabe-gangster friends, who show up in the bunker wearing their fathers’ trench coats. “We is experts” they declare to the incredulous policeman on duty.

The look of distaste on that policeman’s face is likely not dissimilar to the feeling of distaste in the mind of Saudi Arabia’s Energy Minister when contemplating the extent to which his country’s economy is overrun by outside experts. For most of its history, the energy ministry’s planning and operations have relied, at least in part, on employees of embedded consulting firms, which has allowed Crown Prince Abdulaziz bin Salman – the Energy Minister and half-brother of Mohammed bin Salman Al Saud (MBS), the country’s ruler – to bemoan the lack of “a future outlook safeguarded by people who take it from start to finish”.

Ironically, it was MBS’s 2016 launch of an ambitious program to steer the Middle East’s largest economy away from overdependence on oil revenues that had expanded Riyadh’s use of consultants. Since then, the kingdom’s consultancy market has swelled to a record $3bn as of last year, roughly the size of Switzerland’s, with the Big Four of Deloitte, EY, KPMG and PwC, also McKinsey, BCG, and PwC’s Strategy&, as well as more specialist strategy consulting firms taking enthusiastic shares of the pie.

The consulting market in the Gulf region grew 13% overall last year (and just 3.5% globally), while in Saudi Arabia it grew 18.2%. The Middle East consultancy space is projected to grow at two to three times the speed of the broader market.

Reliance on the firms has meant many government bodies established since the 2016 launch of economic reforms were designed to function with consultants in mind. In many places, the process has a budget line that can only be spent on a third-party vendor. Still, it’s not a free for all. Cost control has become critical to MBS’s Vision 2030, especially as the price of oil has fallen. Amid concerns about borrowing and liquidity at local banks, and with billions of dollars of spending at stake, over the past 18 months the crown prince has led an effort to decide the funding of which government projects would be prioritized.

Saudi Arabia’s long experience with foreign management consultants has also made its ministries tough taskmasters focused on getting their money’s worth. What’s more, once a consultant shows an ability to deliver a good return on the money spent, if they are a domestic talent, they are often poached by the government, which helps explain why, although 56% of PwC’s 2,300 employees in Saudi Arabia are Saudi nationals, no more than 20 of 100-plus partners are Saudis. Several senior government officials are themselves former consultants, including two deputy ministers for tourism with a McKinsey provenance.

Thus, in any given planning meeting in Riyadh, three people claiming to be experts will be consulting at least one ex-expert who’s heard it all before. FT