A daily market update from FS Insight — what you need to know ahead of opening bell
“I’m not in this world to live up to your expectations and you’re not in this world to live up to mine.” ― Bruce Lee
Overnight
CPI inflation slowed to 3.3% YoY in May (CNBC)
Fed officials hold rates at 23-year high, raise forecast for inflation, pencil in a sole rate cut in 2024 (FT)
AI-powered Apple overtakes Microsoft as world’s most valuable company (RT)
Europe to hit China with EV tariffs of up to 48%, which its own automakers oppose (WSJ)
Battery specialist Umicore warns on electric vehicle slowdown (FT)
Broadcom rose 15% on a Q2 beat-and-raise, news of a 10-for-1 stock split, as it continues to benefit from the AI boom (CNBC)
McKinsey boss’s next big consulting project: his own firm (WSJ)
The world will be swimming in ‘staggering’ glut of oil by end of decade, says IEA (WSJ)
The world’s biggest financial firms are battling in chess – and they have ringers (WSJ)
Rentokil shares jump as activist investor Nelson Peltz takes stake (FT)
FedEx to lay off up to 2,000 employees in Europe amid cost-cutting efforts (WSJ)
Canada pushes for economic security in campaign to maintain duty-free access to the U.S. economy post-election (WSJ)
Argentina loses appeal over $1.5bn payment to hedge funds (FT)
Oil tanker group Frontline unlikely to return to Red Sea ‘anytime soon’ (FT)
BlackRock scouts for insurance partnerships in private-debt push (BBG)
The tiny trades that brought down Segantii’s giant hedge fund (BBG)
Do Kwon’s crypto firm agrees to pay $4.5 billion penalty to SEC, which may receive little of it (WSJ)
JPMorgan sees IB revenue jumping 30% in Q2 (RT)
PE giant Permira named new co-CEOs (FT)
Morgan Stanley CIO says Biden better for bonds, Trump for growth (RT)
Audit watchdog expands liability for auditors involved in firm violations (WSJ)
U.S. businesses seek higher insurance coverage amid AI and election risks (RT)
Citron Research closed its GameStop short position (RT)
Layoffs pile up amid economic uncertainty (RT)
401(k) matches on student loan payments gain traction (BBG)
ECB flags euro risks from Russia as global forex reserves dip (FT)
Sony buys Alamo Drafthouse movie-theater chain (WSJ)
A new WHO survey suggests that women are more exposed than men to superbugs (FT)
DARPA’s military-grade ‘quantum laser’ will outshine conventional laser beams in military applications like surveillance and secure communications in harsh environments (LS)
U.S. travelers can now renew their passports online as part of relaunched program (WSJ)
World’s oldest privately owned book sells for £3 million at auction (Barron’s)
A copy of the Declaration of Independence could sell for $5 million at Sotheby’s (Barron’s)
Ridley Scott’s latest release? Villa holidays at his Provençal estate (FT)
Farewell to Jerry West, superstar survivor of the NBA, dead at 86 (WSJ)
Chart of the Day
MARKET LEVELS
| Overnight |
| S&P Futures +3
point(s) (+0.1%
) Overnight range: +3 to +16 point(s) |
| APAC |
| Nikkei -0.4%
Topix -0.89% China SHCOMP -0.28% Hang Seng +0.97% Korea +0.98% Singapore +0.52% Australia +0.44% India +0.28% Taiwan +1.19% |
| Europe |
| Stoxx 50 -0.88%
Stoxx 600 -0.72% FTSE 100 -0.43% DAX -0.98% CAC 40 -0.98% Italy -1.16% IBEX -0.83% |
| FX |
| Dollar Index (DXY) +0.15%
to 104.8 EUR/USD -0.05% to 1.0804 GBP/USD -0.1% to 1.2785 USD/JPY +0.31% to 157.21 USD/CNY +0.17% to 7.2526 USD/CNH +0.07% to 7.2681 USD/CHF +0.11% to 0.8954 USD/CAD +0.15% to 1.3743 AUD/USD -0.21% to 0.665 |
| Crypto |
| BTC -1.17%
to 67285.55 ETH -2.08% to 3480.83 XRP -0.96% to 0.4852 Cardano -1.92% to 0.4286 Solana -3.01% to 150.52 Avalanche -3.53% to 31.98 Dogecoin -1.51% to 0.1434 Chainlink -3.83% to 15.32 |
| Commodities and Others |
| VIX +1.25%
to 12.19 WTI Crude -0.97% to 77.74 Brent Crude -0.87% to 81.88 Nat Gas +0.33% to 3.06 RBOB Gas -1.09% to 2.368 Heating Oil -0.52% to 2.428 Gold -0.42% to 2315.22 Silver -1.43% to 29.3 Copper -0.66% to 4.537 |
| US Treasuries |
| 1M -0.8bps
to 5.3271% 3M -0.9bps to 5.3755% 6M -1.2bps to 5.3443% 12M -2.0bps to 5.0972% 2Y +0.2bps to 4.7537% 5Y -0.5bps to 4.3107% 7Y -0.8bps to 4.2997% 10Y -1.0bps to 4.3063% 20Y -0.8bps to 4.5514% 30Y -1.0bps to 4.4649% |
| UST Term Structure |
| 2Y-3
M Spread widened 0.5bps to -64.3
bps 10Y-2 Y Spread narrowed 1.0bps to -45.0 bps 30Y-10 Y Spread narrowed 0.1bps to 15.7 bps |
| Yesterday's Recap |
| SPX +0.85%
SPX Eq Wt +0.54% NASDAQ 100 +1.33% NASDAQ Comp +1.53% Russell Midcap +0.99% R2k +1.62% R1k Value +0.24% R1k Growth +1.37% R2k Value +1.62% R2k Growth +1.61% FANG+ +1.75% Semis +2.98% Software +2.27% Biotech +1.47% Regional Banks +2.48% SPX GICS1 Sorted: Tech +2.46% Indu +0.93% SPX +0.85% Cons Disc +0.84% REITs +0.68% Materials +0.22% Comm Srvcs +0.18% Fin +0.09% Healthcare -0.2% Utes -0.67% Cons Staples -1.0% Energy -1.09% |
| USD HY OaS |
| All Sectors -6.5bp
to 348bp All Sectors ex-Energy -5.8bp to 327bp Cons Disc -12.0bp to 281bp Indu -4.3bp to 244bp Tech -6.2bp to 406bp Comm Srvcs -10.4bp to 647bp Materials +0.1bp to 297bp Energy -4.9bp to 265bp Fin Snr -4.6bp to 316bp Fin Sub -6.1bp to 216bp Cons Staples -4.4bp to 284bp Healthcare -5.1bp to 372bp Utes -4.9bp to 208bp * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 6/13 | 8:30AM | May PPI m/m | 0.1 | 0.5 |
| 6/13 | 8:30AM | May Core PPI m/m | 0.3 | 0.5 |
| 6/14 | 8:30AM | May Import Price m/m | -0.1 | 0.9 |
| 6/14 | 10AM | Jun P UMich 1yr Inf Exp | 3.2 | 3.3 |
| 6/14 | 10AM | Jun P UMich Sentiment | 72.0 | 69.1 |
| 6/18 | 8:30AM | May Retail Sales m/m | 0.2 | 0.0 |
| 6/18 | 4PM | Apr Net TIC Flows | n/a | 102.063 |
| 6/19 | 10AM | Jun Homebuilder Sentiment | n/a | 45.0 |
MORNING INSIGHT
Good morning!
May Core CPI was released yesterday morning, and it was a huge downside reading at +0.16% MoM versus +0.28% consensus.
- The drivers of the downside read were several, but the most important was auto insurance
- This was adding +0.06% to core last month, and was zero this month (+0.0%)
- A huge difference and a major positive, as this is a sign that the auto insurance surge is peaking
- We have said before that CPI is being held up by housing and auto insurance, and now 1 of the 2 is breaking.
BOTTOM LINE: We want to buy stocks this week, and see 5,500 by month’s end.
This is especially positive for small-caps IWM 1.09% , as small-caps are sensitive to thee number of Fed cuts.
Click HERE for more.
TECHNICAL
It’s not wrong to say that Technology has come back with such a vengeance since mid-April that many investors and portfolio managers feel awkward about chasing the movement in some of the Tech hi-flyers. Stocks like AAPL 0.40% , after all, are higher by 10% in just two days’ time, while NVDA has pressed higher to the tune of +65% in less than two months.
Overall, the key to whether it’s right to chase a market like this has everything to do with one’s own risk tolerance and timeframe for investment. As discussed over the past week, sentiment had become understandably subdued given the lack of clarity from FOMC guidance (lining up with what the market had priced in), and many Tech stocks have surged higher in a very short time. Still, the latter is rarely a reason to avoid investing (for those with long-term timeframes) and no evidence of momentum and/or price deterioration is visible to give investors much of a warning.
Click HERE for more.
CRYPTO
Ripple, the development company behind XRP 0.65% , announced its EVM-compatible sidechain called XRPL EVM Sidechain. XRPL EVM Sidechain is built using evmOS, a modular tech stack built by Evmos. EVM compatibility will allow developers to easily port Ethereum applications to the sidechain, unlocking new opportunities for growth within the XRP ecosystem. Axelar (AXL -0.61% ) will be the exclusive bridge between XRPL and XRPL EVM Sidechain so users can bridge their XRP into eXRP, which will serve as the native gas token on the sidechain. Axelar can also facilitate bridging between the XRP ecosystem and 55 other blockchains, vastly improving the interoperability of XRP. Ripple applauded Axelar as a stellar interoperability solution that simplifies the user experience without compromising security. With the Axelar partnership, Ripple is putting the development of XLS-38, a proposal to develop an in-house cross-chain bridge, on the back burner as they monitor whether it’s worth the time, effort, and cost.
MetaMask has introduced a new pooled staking service where Ether holders can stake any amount of ETH with Consensys’ validators. Previously, MetaMask users would need 32 ETH to delegate to Consensys validators. Now, MetaMask Pooled Staking allows smaller owners to earn a share of staking rewards and secure the network with any amount. More than 99% of ETH holders have less than 32 ETH, so MetaMask hopes the feature will increase participation in Ethereum staking. MetaMask Pooled Staking is built on top of Consensys’ 33,000 hosted Ethereum validators in a multi-cloud, multi-region, and multi-client infrastructure. It also leverages Stakewise’s modular architecture to power its smart contracts. MetaMask users can unstake at any time but are subject to the Ethereum exit validator queue. Additionally, the pooled staking service will not be accessible to U.S. and U.K. customers due to regulatory uncertainty. Consensys hopes to offer the feature to all jurisdictions in the future.
Click HERE for more.
FIRST NEWS
Good News: Wage Slavery More Like Wage Indentured Servitude. In mid-January, a chart made the rounds in the X-sphere (aka the ex-Twittersphere) showing how services such as healthcare and education had become much less affordable in America over the past quarter-century or so.
Here it is.
It’s a good, although not a great chart, as 1. ignoring financial aid, it overstates college costs, and 2. its data source likely understates the recent drop in tuition. It also places housing in the red because housing went up in price in absolute terms – yet wages increased by more. These minor quibbles aside, the chart accurately conveys the fact that, since the turn of the century, big-ticket services have become less affordable even as many physical goods became more so.
Yet with percentage-increase charts like this, the starting year chosen is crucial. Change the starting year and the trend could look very different indeed. As we see in the chart below, many of the big-ticket services that have grown less affordable since 2000 had actually gotten more affordable since 2013:
Apart from the one massive outlier (hospital services), medical care in general has become slightly more affordable, as has college, day care, and housing – and this could mean that the hefty service-cost increases of earlier decades were a one-time phenomenon unlikely to be repeated soon. Let’s also not forget that wages outstripped practically every other category in their growth over 2013-2023, while workers’ wages were up 5.2% in 2023 (vs. a 4.1% inflation), with the largest gain going to the lowest-paid workers. The highest-paid ones, i.e. the CEOs of S&P companies, received a 13% pay bump on average. The median S&P employee made $81K+ in 2023, or in excess of the ‘magic-number’ $75K salary after which additional money supposedly doesn’t add to happiness.
Naturally, all this doesn’t mean that we should stop looking for ways to make healthcare, education, and housing more affordable. It does mean that the headwinds stopping us from doing that may now have slackened. It’s also an important reminder that economic trends aren’t set in stone. NoahPinion, LinkedIn
