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

“Be fearful when others are greedy and greedy when others are fearful.” — Warren Buffett

Overnight

Powell says recent data boost(s) Fed’s confidence on inflation progress FT

Trump reveals ideologically aligned Ohio senator J.D. Vance as VP nominee at RNC Semafor

Elon Musk is committing ~$45 million a month to new pro-Trump Super PAC WSJ

Firearms stocks surge after Trump shooting WSJ

Bitcoin surges as traders bet on Donald Trump winning the election after shooting FT

S&P 500, Nasdaq rise as bond yields tick higher, expectations for lower interest rates set in, technology stocks continue to outperform, and strategists see a Trump trade Barron’s

Biden to announce proposal to cap rental costs RT

Bank of America’s profit slips WSJ

Evictions surge in major cities in the American Sunbelt WSJ

Investors keep faith in America’s ‘Apartment King,’ even in tough times WSJ

UBS survey of reserve managers at 40 central banks finds growing concerns about ‘unsustainable’ government debt levels IW

Big banks helped by Wall Street comeback WSJ

JPMorgan comes first in Wall Street’s bank bond sales spree BBG

Goldman Sachs targets $2 bln for first Asia-focused private equity fund, sources say RT

NYC’s TFA’s $2.1 billion deal includes BAB refunding provision BB

Private equity firms slash use of risky debt tactic to fund payouts FT

Private equity has become hazardous terrain for investors FT     

Starboard builds big stake in Tinder parent Match WSJ

Airbus and Thales explore space tie-up FT

Macy’s ends buyout talks with investor group WSJ

Solar stocks tumble as Trump, SolarEdge raise concerns Barron’s

Rare-earth prices are in the doldrums; China wants to keep them that way WSJ

Italy reconsiders nuclear energy 35 years after shutting down last reactor Semafor

PayPal fined $27.3 mln by Polish watchdog for “general, ambiguous and incomprehensible” contractual clauses RT

Burberry replaces CEO as turnaround challenges persist WSJ

Swatch Group posts sales decline on weak demand in China WSJ

Internal Disney communications leaked online after hack WSJ

Meanwhile, over in the Red Sea , the U.S. hasn’t been able to stop the Houthi assault on shipping WSJ

Amazon Prime Day is back – today and tomorrow BI

Gemini AI platform accused of scanning Google Drive files without user permission TR

New in-vehicle AI to spot drunk drivers through continuous face scanning for signs of intoxication LS

Chart of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

We continue to expect a sizable positive rise in small-caps in the next 10 weeks, and history shows the bulk of the move is after week 2. Institutions are still near record short on small-caps.

More in our latest Macro Minute Video, linked HERE.

TECHNICAL

As discussed late last week, the mean reversion higher in the broader market looks to be underway.  This started initially with strength in Consumer Discretionary and Financials, but has begun to spread to Industrials, Materials, and parts of Healthcare. 

Small- and mid-caps have begun to outperform, and this has been a positive influence on Regional Banks and Biotechnology.

However, the DJIA has just pushed back above May’s all-time high close of $40,003.60 to hit a new all-time high yesterday.

While some investors might not discuss the DJIA given its cap-weighted issues, it’s certainly a very relevant index, with broad-based representation across many sectors. When DJIA confirms movement to new all-time highs to join SPX and QQQ, it tends to give the idea of a broad-based rally more credence.

Click HERE for more.

CRYPTO

Crypto ETP products saw their fifth largest weekly inflows on record, totaling $1.44 billion and bringing year-to-date totals to $17.8 billion. Compared to 2021 – which represented the peak of the last bull market – flows are far more impressive (clearly helped by spot ETFs). 2021 saw full-year flows of $10.6 billion, while this year’s totals are on pace for over $30 billion. Bitcoin-related products made up the majority of weekly flows at $1.35 billion, while Short-Bitcoin products saw outflows of $8.6 million, the largest amount since April. Beyond Bitcoin, Ethereum products tallied $72.1 million in inflows, the largest weekly total since March. Other altcoins saw relatively small inflows, with SOL -1.09% , AVAX -1.82% , and LINK -0.30% seeing $4.4m, $2.0m, and $1.3m, respectively.

South Korea’s People’s Power Party has proposed pushing the taxation of crypto capital gains from 2025 to 2028. The rationale for the proposal is predicated on the current negative sentiment of digital assets within the country. Industry advocates believe that further taxation on a higher risk asset, combined with negative sentiment, could be enough to push investors away from the asset class altogether. The tax in question is a 20% tax on all crypto gains, and was initially proposed in 2022, but has already been delayed to 2025. Despite the cited negative sentiment, the South Korean crypto market remains the most active globally, with the Korean Won being the most used fiat currency for crypto trading in the first quarter of 2024, and approximately 12.5% of South Korean citizens reporting using crypto as of the end of 2023. The South Korean Ministry of Economy and Finance is expected to disclose tax code amendments at the end of July which may include a final decision on the crypto tax issue.

Click HERE for more.

First News

KYC Squared. Financial institutions implement ‘Know Your Customer’ (KYC) protocols to verify client identities and combat illicit activities like money laundering. Some services require video verification as part of this process. However, a concerning trend has emerged where underground markets are exploiting this system. These illicit services recruit individuals, often in countries like Serbia, to provide selfies, videos, and photos for a small fee ($5-$20). These are then sold to potential fraudsters seeking to bypass KYC checks. An investigation revealed that a comprehensive package – including 80 photos and four videos of a single person – can be purchased for approximately $30 in bitcoin. These videos are deliberately produced to allow for easy editing, enabling the insertion of forged passports or ID cards. This development poses a significant challenge to the integrity of KYC procedures and highlights the ongoing cat-and-mouse game between financial-security measures and those attempting to circumvent them. 404 Media

Everything Is… Connected. Speaking of vultures, in a shocking discovery, Indian scientists have ascertained that the near-extinction of India’s birds of this type led to half a million human deaths and $70 billion in economic damage. Thirty years ago, Indian farmers turned to a new livestock drug that turned out to be poisonous to vultures. Populations plummeted – from 50 million to ~2,000. Carcasses of predator and prey piled up in fields, spreading disease. The government kicked the foot-in-mouth disease up a notch by ordering them to be destroyed with yet more chemicals, which leached into waterways, causing more damage to humans. A study found that areas which had had large vulture populations before the collapse saw a 4% increase in all-cause mortality after 1994, while places with smaller initial such populations saw a smaller jump. The drug was banned in 2006, but will India’s vultures – and their hapless human counterparts – ever fully recover? Semafor

Hillbilly AI-logy. J.D. Vance’s tech track record could leave big companies looking over their shoulder. Vance is part of a group of conservatives sympathetic to the idea that Big Tech companies should be broken up. Should he have Trump’s ear on the issue, antitrust enforcement could stay just as aggressive as it’s been under Biden.

Once a VC, possibly future VP Vance has long had support from the right-leaning cohort in Silicon Valley. For example, his Senate run was bankrolled heavily  by Peter Thiel, a PayPal co-founder and early investor in Facebook. Vance has also repeatedly referred to the “Big Tech oligarchy”, accusing companies of having too much power over competition and online speech.

Still, he’s shown himself to be a contrarian. At a Senate Commerce hearing just last week, Vance said he’s skeptical of heavy AI regulation because it could entrench Big Tech incumbents. Yet when debate over the divest-or-ban TikTok bill was raging in the Senate, Vance admitted he was skeptical of the bill, as it gave the government too much power to prosecute an individual company.

At the same time, he’s supported the work of FTC Chair Lina Khan, who’s aggressively gone after consolidation in the tech industry, calling her “one of the few people in the Biden administration actually doing a good job.”

By contrast, most of his Republican colleagues have inveighed against Khan, siding squarely with business interests. Axios