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

“’I am not bound to win, but I am bound to be true. I am not bound to succeed, but I am bound to live up to what light I have.” — Abraham Lincoln

Overnight

Financial markets now fully price just one quarter-point interest rate cut from the Fed this year, compared to the six built into futures prices at the start of 2024 (RT)

Gold futures slump continues on tough Fed interest-rate commentary (WSJ)

The SEC effectively approves ETH ETFs (SEC)

U.S. natural gas prices retreat in wake of storage report (WSJ)

DoJ sues to break up Live Nation-Ticketmaster (WSJ)

Boost for world economy as U.S., Eurozone accelerate in tandem (WSJ)

Washington’s pivot on bank rules could free up tens of billions (WSJ)

Boeing says cash flow is worse than it thought (WSJ)

NOAA predicts the most hurricanes that it has ever forecast (WSJ)

Norfolk Southern settles government’s Ohio derailment probe (WSJ)

The monthly supply of new houses in the U.S. is up (FRED)

Microsoft’s controversial Recall feature for Windows 11 could already be in legal hot water (TR)

Investment firm 777 sells U.S. insurance business to Knighthead (Semafor)

Google writes the U.S. government a cashier’s check in an effort to get its closely watched advertising antitrust trial heard by a judge rather than a jury that can award damages (Semafor)

Gorman to step down as Morgan Stanley Chairman at end of year (BBG)

Goldman becomes first Wall Street bank to get Saudi HQ license (BBG)

Non-Turks flocking into Turkish lira bonds at record pace (BBG)

China’s new sovereign bond prices go haywire amid search for safe assets (MS)

Jamie Dimon admits to ‘tough’ going for JPMorgan in China (FT)

Segantii to shut as insider trading charge draws redemptions (BBG)

Nigeria’s top banks have set out to raise millions of dollars in fresh capital to meet new central bank requirements for the financial sector (Semafor)

The U.S. is lining up major investments in Kenya’s tech sector, with deals announced during President William Ruto’s state visit (Semafor)

American Funds parent launching partnership with KKR to move into private assets (WSJ)

Hargreaves Lansdown shares jump after investment platform becomes PE takeover target (WSJ)

First News

• As if on cue, a brave destroyer of tyranny with a famed track record drives home a message for the markets in time for Memorial Day.

Chart of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

Stocks have weakened over the past two days as inflation concerns have resurfaced. We see this as a bit of a false flag and want to buy the dip.

Click HERE for the video.

TECHNICAL

S&P has diverged from Equal-weighted S&P given Tech outperformance.

-S&P 500 in equal-weighted terms has fallen every day this week, despite Technology roaring back.

-US Dollar and Treasury yields have been bouncing, which directly coincides with this Equity market weakness.

-Technology’s 30% weighting in ^SPX has helped to camouflage this week’s consolidation in markets.

-RSP might fall for a few more days, but looks buyable into end of May, while Large-cap Technology might show some consolidation.

-Overall, it’s important to recognize the degree of distortion that Technology is causing as it rallies while the broader market stalls. This divergence makes it impossible for some investors to keep up with the SPX and QQQ, and passive investing has a huge edge given the extent of Technology dominance within the indices.

Click HERE for more.

CRYPTO

Farcaster, a web3 social media platform, raised 150 million in a series A round led by Paradigm with participation from a16z, Haun Ventures, Variant Fund, Union Square Ventures, and Standard Crypto. The funding round values Farcaster at $1 billion, and the fresh capital will be used to add new product features, increase the number of daily active users, and hire additional engineers. We are beginning to see a rise in valuations across private markets. Farcaster is the second company to earn a $1 billion valuation in May and is the eighth so far in 2024, surpassing 2023’s total less than halfway through the year. 

Farcaster’s mobile app Warpcast is a new social media platform that gives users more data control, letting them easily monetize content and enhance customizability via its open-graph styling tool. Creators can design unique views called “frames,” where people can interact with polls, galleries, or mini-apps within the app. Farcaster’s adoption trends have been impressive since launching in October. Farcaster has seen over 350k paid signups and a 50x increase in network activity. It has accumulated over 40,000 daily active users, with an average of 1.2 million posts per day. For comparison, friend.tech, one of its largest competitors, has averaged slightly under 7,000 daily users over the past 30 days. Farcaster recently announced support for Arbitrum, bringing its functionality to the L2 in addition to Ethereum and Solana. Crypto is still waiting for its killer consumer app that brings a mass audience on-chain, and Farcaster, working toward that goal, is on the right track. 

Click HERE for more.

FIRST NEWS

On Memorial Day, Remembering What Counts. All through the months of December and January we followed the exploits of the Navy destroyer USS Carney as she defended herself and other ships from brazen attacks by Houthi terrorists: Whirlpool, Others Find Themselves in Maelstrom and Special Relationship Dep’t, among other coverage.

After a by-any-measure historic 235-day deployment, much of it spent downing enemy drones seeking to shut down a global shipping artery, the Carney deservedly pulled into home port in Naval Station, Mayport, FL this week after making U.S. landfall on May 10 in Norfolk, VA. Using the opportunity of her absence from the Red Sea theater, the craven Houthis continue to terrorize cargo ships, striking a tanker with a ballistic missile as recently as May 18.

The first military vessel in the Red Sea to intercept land-attack cruise missiles and unmanned aerial vehicles launched by Houthi terrorists toward Israel last October, the Arleigh Burke-class guided-missile destroyer outperformed by a nautical mile. Called to action on the very first day she entered the U.S. Fifth Fleet, she conducted 51 engagements over 6 months – the hottest wartime, real-ammo, naval at-’em-boys since the USS Hadley notched 23 engagements back in May 1945. Operating in the Red Sea and the Gulf of Aden, the Carney intercepted ballistic missiles aimed largely at commercial shipping, while conducting defensive strikes into Yemen and responding to at least one distress call – saving a tanker damaged by a Houthi missile – ensuring no lives were lost.

The plucky ship, whose official description, on her website, is “Resolute, Committed, Successful”, proved to have all of those qualities – in spades. Laid down in 1993 at Bath Iron Works in Bath, Maine, USS Carney (DDG 64) was launched in 1994 with Betty Taussig (daughter of Admiral Carney, the ship’s namesake, as sponsor) and placed in commission in 1996. At 505-foot-long, the Carney is no pint-size cutter, but with a maximal displacement of 9,700 long tons, she’s no floating fortress, the way, say, an aircraft carrier is. (The USS Gerald R. Ford is 1092 feet long and displaces 100,000 long tons.) 

Still, the USS Carney dreads nought. 

Thanks to the bravery, quick thinking, and quality training of her crew, and the will to act decisively and relevantly, displayed by her captain, Cmdr. Jeremy Robertson, the Carney has become the most lethal ship in the Navy – easily sailing to an entry in the annals of U.S. naval history; stealing our hearts in the process; proving herself richly deserving of the name of her type – destroyer – in the most noble sense of the word: destroyer of the enemies of freedom.

As we are often reminded by the press, taking democracy for granted is dangerous. True – a democratic way of life must be defended from the forces that would see it wither. Free enterprise and free markets – the concepts and the things themselves, which those who open this newsletter tend to want to read about – are also taken for granted at our peril. 

This Memorial Day, as we remember all those who gave their lives to preserve our way of life, let us give thanks to USS Carney – intrepid patroller of the seas, unabashed defender of commerce, destroyer of the enemies of democracy, free sailing, and yes: free markets, which, as we’re sure you know, dear reader, are closed this coming Monday as buyers and sellers take a well-deserved rest, just like a certain ship ensconced in a berth at her Florida home base. WSJ, U.S. Navy

^{May 19, 2024.The USS Carney returns to Naval Station Mayport, Fla. to a hero’s welcome.}