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

“It has become progressively clearer that the [plastic] expression of true reality is attained through dynamic movement in equilibrium.” — Piet Mondrian

Overnight

Dow Jones Industrial Average tops 40000 for the first time; S&P 500, Nasdaq at record highs (WSJ)

Israel’s economy rebounds sharply from slump caused by war (BBG)

NYCB’s COO resigns (RT)  

New twist in the TikTok tale – a ‘people’s bid’ (FT)

ECB warns: high debt levels put Europe at risk of ‘adverse shocks’ (FT)

Walmart tops $500 billion in market value after earnings impress (BBG)

Under Armour is laying off workers as retailer says North America sales will plunge this year (CNBC)

Roche says weight loss drug shows promising results in early trial (CNBC)

Pfizer offers up to $250mn to settle thousands of Zantac cancer lawsuits (FT)

Sony Music warns global tech and streamers over AI use of its artists (FT)

U.S. green energy push expected to generate $47bn market in tax credits (FT)

Uber unveils new shuttle service to save money getting to concerts, airports; also Costco Perks (ABC)

As tensions rise between Beijing and Washington over sensitive technology, Microsoft offers to relocate staff from China (FT)

With a BlackRock CEO, $9 trillion Vanguard braces for turbulence (BBG)

As speculative funds pile in, U.S. copper prices soar to record high, gap between U.S. and U.K. prices hits largest on record (FT)

Top commodities trader says we could run out of cocoa (BBG)

Pot stocks surge as Biden ‘reschedules’ marijuana (Barron’s)

Starwood’s $10bn property fund taps credit line as investors in commercial real-estate run for the exits (FT)

How Coinbase is seeking to ease crypto’s credit crunch (TI)

LME Warehouse queue returns after jump in aluminum orders; canceled warrants have risen by over 280,000 tons in two days (BBG)

Argentina’s Milei targets labor law that would hand banker $10 million severance (BBG)

‘Finfluencers’ charged for promoting unauthorized trading scheme (FCA)

Europe’s banks find breaking up with Russia is hard to do (BBG)

Recently delisted Toshiba to cut 4,000 jobs in restructuring drive (RT)

JPMorgan investors weigh Dimon’s strategy and succession after record year (RT) 

Jefferies risk manager balked at Archegos cash plea (BBG)  

Investors reach for riskier assets as fear fades (RT)  

Fed remains cautious on cuts even as data improves (RT)  

Major brokerages retain Fed rate cut view after inflation data (RT)  

JPMorgan to recruit from non-target schools for back office roles in diversity push (FN) 

High debt levels put Europe at risk of ‘adverse shocks’ (FT)  

UPS taps Goldman Sachs to manage its $43.4B pension (RT)  

Reddit shares surge after content deal with OpenAI (FT)  

Digitalization of banking may create new risks (RT)   

Sports Illustrated adds Drew Brees as investor (BBG)  

Wayfair to open its first large store (CNBC)

First News

Wednesday’s market-moving Consumer Price Index report was released early by the Labor Department, but it seems to be no harm, no foul – at least for the moment

A bold company using AI and having acquired thousands of garages seeks to make parking as human-avoidant as possible.

Chart of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

Seven companies are reporting this week.

Of the 467 companies that have reported so far (93% of the S&P 500):

• Overall, 81% are beating estimates, and those that “beat” are beating by a median of 8%.
• Of the 19% missing, those are missing by a median of -5%.
• On the top line, overall results are beating estimates by a median of 5% and missing by a median of -4%, and 60% of those reporting are beating estimates.

Click HERE for more.

TECHNICAL

U.S. Equity markets look to be stalling out following this week’s push back to new highs. While we sense it’s right to be bullish for a rise into June expiration, there very well could be some consolidation in the short run, which might take the form of a choppier tape than what’s been seen in recent weeks. Sector rotation out of Industrials and Discretionary has been important and negative this week toward signaling that these sectors in particular might require a bit more consolidation before gains can continue.

Overall, we do not favor exiting long positions, but do suspect that some backing and filling might be necessary before the rally to SPX-5400 gets underway.

As shown below, the decline in TNX down to 4.35% looks important, and might result in a minor bounce attempt over the next 3-5 days (or slightly longer) before a pullback under 4.35% occurs on a weekly close.

Click HERE for more.

CRYPTO

Wednesday’s CPI release brought significant flows back into the market, which is evident through substantial ETF inflows, a large uptick in CME open interest, and a strong move higher in stablecoin creations. Nearly $1.4 billion in BTC Open Interest was added on the CME, while over $300 million flowed into Bitcoin spot ETFs, marking the highest level in over two weeks and pushing the 7-day moving average well into positive territory. Additionally, more than $600 million was added to the total stablecoin market cap since yesterday. These developments suggest investors viewed the CPI as convincing evidence of continued dollar weakness.

On Wednesday, a number of institutional investors filed their quarterly 13F reports, revealing significant Bitcoin ETF holdings as of March 31st. Millennium Management disclosed around $2 billion in spot Bitcoin ETF exposure, including $844 million in BlackRock’s iShares Bitcoin Trust, $800 million in Fidelity’s Bitcoin Fund, and $202 million in Grayscale’s Bitcoin Trust. Paul Singer’s Elliott Capital reported a $12 million stake in BlackRock’s ETF, while Apollo Management disclosed a $53.2 million stake in ARK/21’s fund. Other investors, such as Aristeia Capital and Hudson Bay Capital, also participated last quarter. This early institutional involvement increases the likelihood of further adoption among other traditional investors.

To the surprise of many, particularly those in the White House, the Democrat-led U.S. Senate voted 60 to 38 to overturn the SEC’s SAB 121, which sets accounting standards for firms that custody crypto, requiring them to hold customer crypto holdings as assets on their balance sheet. The measure, previously passed by the House, now goes to President Biden, who has already stated that he will veto it, with both chambers lacking the two-thirds majority needed to override the veto. This represents a significant shift from both House and Senate Democrats, who went against President Biden’s veto promise. This is an encouraging regulatory development for the crypto space.

Click HERE for more.

FIRST NEWS

The Early Worm. Information about Wednesday’s critical consumer price index release circulated a half-hour early on the website of the Bureau of Labor Statistics, which, expectedly, says that a full investigation is underway, adding, unexpectedly, that the early publication appeared to go unnoticed by investors. Indeed, there was little unusual market activity in the half-hour prior to the official release time, suggesting that the early release, normally market-moving, was not widely seen. Still, the fact that the BLS had inadvertently published CPI data 30 minutes early raises fresh questions about how the government agency releases some of the world’s most sensitive economic information, with implications for global asset prices and Federal Reserve policy.

Several years ago, the BLS modified the way it releases the data, which had previously been provided to members of the media in advance, under a lock-up, at the bureau’s Washington, D.C. office, for release promptly at 8:30 a.m. In the times of the Trump administration, department officials expressed concerns that clients of some outlets in the lock-up were getting an unfair trading advantage through the system, and thus terminated the arrangement. Now, the information is provided on the website around 8:30, with no pre-release.

While many wonder who caused the snafu, it seems to be a one-off, and not something persistent. CNBC, Bloomberg

The Tesla Supercharger Amazon Go You-Get-the-Idea of Parking Garages. SP Plus, an independent, century-old, publicly listed corporation, is now part of… an AI startup promising to transform the underwhelming task of parking in large garages.

SP Plus operates parking garages, which, under the new owner, Metropolis, will employ at its 4,000 locations camera-based systems that recognize individual cars (not just their license plates) and bill the owners directly. This means that cars will be able to simply drive in and drive out – and, in the case of Teslas (or similar) using the Summon feature (or similar) of Autopilot (or similar), this will be literal, i.e. sans driver – whenever they want, without needing to install any kind of device or encounter any kind of barrier.

Founded in 2017, Metropolis has raised $1.8 billion in order to buy the much larger SP Plus, paying a 52% premium over the pre-announcement closing price, thanks in part to the promise of transformation via AI. At 2,000 employees yesterday, today Metropolis has more than tenfold that, yet the smarts of the move aren’t in the people power.

The idea is that, instead of selling its technology to operators one facility at a time, Metropolis can, in one fell swoop, acquire 50 million-plus customers, all of whom will now be able to pay for parking (or similar) services at thousands of locations without going for their wallet or – gasp – seeing a human face.

In theory, the company’s technology could be used in similar use cases – say, to identify cars in congestion-pricing schemes such as the one due to take effect soon in New York City (seeking to actually increase the number of human-to-human interactions by nudging people away from entering the city in their cars and toward doing so using public transportation).

Bent on offering solutions that people seek instead of dread, the CEO of Metropolis says he has no particular desire to oversee a technology that millions of drivers resent. Axios