A daily market update from FS Insight — what you need to know ahead of opening bell
“Most people make bad decisions because they are so certain that they’re right that they don’t allow themselves to see that better alternatives that exist.” — Ray Dalio
Overnight
Alice Munro, prolific short-story author and Nobel Laureate, dies at 92 (WSJ)
China threatened to take “all necessary actions” to defend its trade rights after President Biden announced new tariffs on a range of Chinese imports (Semafor)
Senate Majority Leader Chuck Schumer, along with Sens. Todd Young, Martin Heinrich, and Mike Rounds, released their roadmap to regulate artificial intelligence (US)
Musk’s xAI nears $10 billion deal to rent Oracle’s AI servers (TI)
OpenAI’s chief scientist Ilya Sutskever, a former foe of CEO Altman, resigns the Microsoft-backed startup for a new project (TI)
Nvidia’s Jensen Huang gets 60% pay bump (WSJ)
Boeing breached a 2021 deferred prosecution agreement that prevented the company from facing charges over fatal 737 Max crashes, the Justice Department said (CNBC)
Billionaire tech critic Frank McCourt says he plans to bid to buy TikTok and turn it into a better version of itself (Semafor)
Welsh Carson escapes FTC price-fixing case over private-equity rollups (WSJ)
Payments-company Waystar plans to restart IPO pitch (WSJ)
Norrsken closes €320mn impact investing fund to hunt for unicorns (FT)
Robust new bond issues led by NYC TFA, SFO airport, NJ turnpike, price into welcoming market (BB)
Meta to shut workplace tool; Zoom video’s Workvivo named preferred migration partner (WSJ)
Google to roll out AI search summaries to billions by year-end (WSJ)
The art market is down; a cyberattack at Christie’s may make things worse (WSJ)
Breaking up Anglo American now could mean merging it later (WSJ)
Women MBAs are asking for higher pay, but still earning less (Axios)
Sky-high housing costs propel construction of rental homes (WSJ)
Federal regulators now investigating Waymo over autonomous-vehicles crashes (MW)
Amazon gets new cloud-computing boss as AI battle shakes up its top profit engine (WSJ)
Comcast to launch streaming bundle of Peacock, Netflix and Apple TV+ exclusively to subscribers of its internet service (WSJ)
Credit card delinquencies are on the rise (Axios)
Why the world has gone cuckoo for copper (WSJ)
Teva, Israel’s once-dominant drugmaker, is revived by innovation, its shares up nearly twofold in the past year (WSJ)
Foot traffic and average purchase size fell at Home Depot (YF)
99+ Red Lobsters close as the chain tries to survive bankruptcy (CNBC)
Google’s Sora competitor is coming to YouTube (TI)
The hunt for the missing Greensill billions (FT)
Accountant shortage prompts U.S. plan for quicker path to qualification (FT)
More regulators eye whistleblower award programs hoping for insider tips (WSJ)
Traders fleeing ‘micro bubbles’ yank billions from thematic ETFs (BBG)
No company has done a better job of taking advantage of its meme-stock status than movie theater chain AMC, a company that, improbably, is still worth billions even after losing $7.5 billion over the past five years (Axios)
$40 billion a year is the cost of violent crime to South Africa’s economy, equivalent to roughly 10% of GDP (Semafor)
Mega Millions winner sued by family for breaking promise to share $1.35B jackpot (NYP)
Australian doctor whose rare brain cancer was treated with a therapy based on his own research remains cancer-free after a year (Semafor)
First news
- A county in Utah, one of the Upper Basin states duking it out for water rights with California, is combating water scarcity by pushing different plant species
- The anticipated crisis following the expiration of federal COVID-19 subsidies and female labor force participation
- A game-changing technology for producing hydrogen comes from Down Under.
Chart of the Day
MARKET LEVELS
| Overnight |
| S&P Futures +3
point(s) (+0.1%
) overnight range: -3 to +8 point(s) |
| APAC |
| Nikkei +0.08%
Topix -0.0% China SHCOMP -0.82% Hang Seng flat Korea flat Singapore -0.72% Australia +0.35% India -0.12% Taiwan +0.77% |
| Europe |
| Stoxx 50 +0.09%
Stoxx 600 +0.31% FTSE 100 +0.23% DAX +0.49% CAC 40 -0.16% Italy +0.56% IBEX +0.61% |
| FX |
| Dollar Index (DXY) -0.15%
to 104.86 EUR/USD +0.08% to 1.0828 GBP/USD +0.25% to 1.2623 USD/JPY -0.4% to 155.8 USD/CNY -0.18% to 7.2209 USD/CNH -0.27% to 7.2203 USD/CHF -0.13% to 0.9053 USD/CAD -0.15% to 1.363 AUD/USD +0.26% to 0.6644 |
| Crypto |
| BTC +1.81%
to 62695.51 ETH +1.13% to 2923.8 XRP -0.22% to 0.5029 Cardano +1.21% to 0.4352 Solana +2.51% to 145.53 Avalanche +4.24% to 32.91 Dogecoin +4.13% to 0.1512 Chainlink +0.88% to 13.15 |
| Commodities and Others |
| VIX +3.58%
to 13.9 WTI Crude +0.33% to 78.28 Brent Crude +0.28% to 82.61 Nat Gas +0.94% to 2.37 RBOB Gas +0.75% to 2.478 Heating Oil +0.47% to 2.431 Gold +0.46% to 2369.01 Silver +0.76% to 28.84 Copper +4.52% to 5.178 |
| US Treasuries |
| 1M -2.9bps
to 5.3373% 3M -0.9bps to 5.3701% 6M -2.1bps to 5.3478% 12M -2.4bps to 5.1387% 2Y -1.5bps to 4.7997% 5Y -2.1bps to 4.4331% 7Y -2.1bps to 4.4219% 10Y -2.0bps to 4.4198% 20Y -1.9bps to 4.6703% 30Y -1.5bps to 4.5701% |
| UST Term Structure |
| 2Y-3
M Spread narrowed 4.3bps to -63.0
bps 10Y-2 Y Spread narrowed 0.7bps to -38.4 bps 30Y-10 Y Spread widened 0.5bps to 14.8 bps |
| Yesterday's Recap |
| SPX +0.48%
SPX Eq Wt +0.4% NASDAQ 100 +0.68% NASDAQ Comp +0.75% Russell Midcap +0.63% R2k +1.14% R1k Value +0.4% R1k Growth +0.62% R2k Value +1.06% R2k Growth +1.23% FANG+ +1.09% Semis +1.71% Software +0.59% Biotech +1.0% Regional Banks +1.17% SPX GICS1 Sorted: Tech +0.93% REITs +0.69% SPX +0.48% Fin +0.48% Comm Srvcs +0.47% Cons Disc +0.44% Healthcare +0.44% Utes +0.21% Materials +0.08% Indu -0.0% Energy -0.13% Cons Staples -0.22% |
| USD HY OaS |
| All Sectors +3.7bp
to 348bp All Sectors ex-Energy +3.3bp to 328bp Cons Disc +1.2bp to 283bp Indu +3.5bp to 240bp Tech +4.1bp to 415bp Comm Srvcs +6.7bp to 646bp Materials +3.0bp to 296bp Energy +5.4bp to 263bp Fin Snr +4.0bp to 307bp Fin Sub -0.9bp to 222bp Cons Staples +4.2bp to 287bp Healthcare +4.3bp to 378bp Utes +2.9bp to 208bp * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 5/15 | 8:30AM | Apr CPI m/m | 0.4 | 0.4 |
| 5/15 | 8:30AM | Apr Core CPI m/m | 0.3 | 0.4 |
| 5/15 | 8:30AM | Apr CPI y/y | 3.4 | 3.5 |
| 5/15 | 8:30AM | Apr Core CPI y/y | 3.6 | 3.8 |
| 5/15 | 8:30AM | Apr Retail Sales m/m | 0.4 | 0.7 |
| 5/15 | 10AM | May Homebuilder Sentiment | 50.0 | 51.0 |
| 5/15 | 4PM | Mar Net TIC Flows | n/a | 51.637 |
| 5/16 | 8:30AM | Apr Import Price m/m | 0.3 | 0.4 |
MORNING INSIGHT
Good morning!
A good April CPI shatters “inflation accelerating” camp, meaning number of Fed cuts by YE 2024 starts to drift higher, towards 2.0-2.5.
Click HERE for more.
TECHNICAL
NASDAQ has pushed back to new all-time highs on a closing basis on Tuesday, while SPX, DJIA and Equal-weighted SPX remain just shy of late-March highs.
While March highs look formidable given today’s important CPI report, it’s tough to believe that any stalling out would represent anything more than a short-term area of resistance ahead of a push higher to SPX-5400.
Importantly, a breakout in SPX, along with NDX, DJIA and Equal-weighted S&P 500, to join the NASDAQ would represent a much more bullish development than NASDAQ Composite having made a new all-time high close on its own.
Click HERE for more.
CRYPTO
In today’s video, we discuss this morning’s PPI data being somewhat of a non-factor as investors brace for tomorrow’s CPI release, which could serve as a catalyst for a short squeeze in crypto equities.
Click HERE for the video.
FIRST NEWS
Water under the Plants. A county in Utah is taking proactive measures to combat water scarcity by incentivizing residents to replace their thirsty grass lawns with more sustainable vegetation. The program, funded by an $8 million allocation from the Utah Legislature, with $3 million recurring annually, aims to curb the staggering water consumption associated with traditional lawns. Statistics reveal that a staggering 70 percent of residential culinary water is dedicated to maintaining lawns, with each square foot of conventional turf guzzling a whopping 37 gallons annually, in stark contrast to the mere 9 gallons required by more adapted plants.
Washington County is offering a compelling incentive, paying $2 per square foot of converted turf, up to 5,000 square feet, after which the rate drops to $1 per square foot. The initiative has gained popularity, with 2,044 applications submitted and 918 completed thus far. By the end of 2024, it’s projected that this program will result in an annual water savings of 100 million gallons.
Recognizing its success, advocates are urging the legislature to allocate an additional $12 million to sustain the initiative, underscoring the urgency of addressing water scarcity through innovative and sustainable solutions. Utah is one of the so-called Upper Basin states, also including Colorado, New Mexico, and Wyoming, that submitted an aggressive plan for California, Arizona and Nevada to make water-usage cuts starting when major reservoir levels reach 90%, ramping up to cuts of 1.5 million acre feet when levels hit 70%, and up to 3.9 million acre feet if they dip below 20%. These scenarios are considered draconian by California. Route Fifty
No She-Cession. The anticipated crisis following the expiration of federal COVID-19 subsidies for childcare in the previous year failed to materialize, echoing the earlier predictions of a “she-cession” that proved short-lived in the initial months of the pandemic. In light of this development, advocates are adapting their messaging strategies. Despite concerns, female labor force participation steadily increased during the pandemic, prompting advocates to emphasize the potential for significant setbacks if substantial new federal investments were not made.
Projections from the Century Foundation paint a dire picture, estimating an annual loss of $9 billion in family earnings and a whopping $10.6 billion reduction in tax and business revenue for states should the situation deteriorate. Nevertheless, congressional Republicans rejected the Democrats’ child care proposals during the contentious Build Back Better negotiations. Labor force participation among women aged 25-54 has continued to rise. Vox
Hi-drogen Breakthrough from Down Under. A breakthrough technology for producing hydrogen, touted as the world’s most efficient system, is poised to revolutionize the industry through mass production. Conventional processes for converting water into hydrogen and oxygen typically suffer from significant energy losses, ranging from 20% to 30%, yet the Australian startup Hysata has developed a groundbreaking new system that overcomes these inefficiencies by avoiding the formation of bubbles in the fluid, which can impede the conduction of electrical charge. This innovative approach has achieved a remarkable efficiency of 95%.
Hydrogen offers distinct advantages over batteries for long-term energy storage. Its higher energy density makes it a more viable option for industries such as aviation, and it doesn’t experience charge loss over extended periods. Recognizing the immense potential of this technology, Hysata has secured $111 million in funding to scale up production and bring the very promising solution to the mass market. Semafor
