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

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“Raymond Shaw is the kindest, bravest, warmest, most wonderful human being I’ve ever known in my life.” — The Manchurian Candidate

Overnight

Nasdaq slides on shift from tech to small-caps, as does the S&P 500, while the Dow gains Barron’s

Biden seriously considering proposing major Supreme Court changes ABC

Bloomberg’s interview with the Republican presidential nominee on his economic plans BBG

Trump says Powell should not cut rates until election passes Barron’s

U.S. crude oil inventories fall for third straight week WSJ

Google, Microsoft help Chinese firms skirt ban on Nvidia chips TI

China deploys censors to create socialist AI FT

Novo Nordisk and Eli Lilly shares slide on new obesity drug trial from Roche CNBC

Biden administration will give GlobalWafers $400 million in chips grants to expand semiconductor production in Texas and Missouri WH

$5 billion from the bipartisan infrastructure law to go toward repairing or replacing large bridges across 13 states TG

Intel and GlobalFoundries avoided the semiconductor sector’s worst selloff in four years, could benefit from potential semiconductor-industry restrictions on China and Taiwan MW

Nvidia, AMD are among the chip stocks falling on China fears, but it’s no cause for panic MW

Prosecutors push for arrest of tech billionaire at centre of K-pop bidding battle FT

Ex-Goldman Sachs associate gets 28 months in insider trading case BBG

Warburg Pincus names Jeffrey Perlman CEO, succeeding Chip Kaye RT

Morgan Stanley sells $8 billion of bonds as demand soars BBG   

Capital One pledges $265 billion in lending, philanthropy as it tries to clinch Discover deal RT

IRS sweetens offer for land tax-break deals it has blasted WSJ

Prologis says demand for data centers is boosting the industrial property outlook WSJ

Data breaches highlight lack of basic cyber controls WSJ

Anthropic launches $100M AI fund together with Menlo Ventures CNN

TSMC’s net sales are up 40% YoY to NT$ 673.5B ($20.6B) in Q2 CNBC

Cybersecurity startup funding is up 144% YoY to $4.2B in Q2 CB

Beyond Meat engages bondholders for restructuring talks WSJ

Natural disasters are costing U.S. households, Fed finds WSJ

The India-Russia relationship is less than meets the eye WSJ

Chart of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

We want to re-emphasize that this is the summer of Small-caps, with an expected 10-week rally of 40% or more. Mark Newton also sees a Technology breather (DeMark 13 sells confirmed), fueling this rotation out of Technology to Small-caps, regional banks, and Biotech: IWM -0.91%  KRE -1.56%  BTK.

More in today’s Macro Minute Video linked HERE.

TECHNICAL

U.S. Equity indices remain within established uptrends despite Wednesday’s sharp pullback to three-day lows. While Technology bore the brunt of this selling, the broader market held up much better, with six sectors higher on the day and REITS, Energy, Financials, and Staples all finishing higher by more than +0.50%. The U.S. Dollar and Yields are both headed lower, as DXY officially broke $104 today and should eventually prove bullish for Emerging markets and Commodities. The post-expiration selloff looks to have gotten underway earlier than expected. However, given that breadth levels have improved markedly and there looks to be solid evidence of the “great rotation” getting underway, we expect this deterioration to prove short-lived and buyable, likely into end of week, or next week at a maximum. SPX should not fall under 5500 before turning back up to push to 5800. Meanwhile, QQQ has strong support between 473-475.

Click HERE for more.

CRYPTO

Grayscale has announced the creation of the Grayscale Decentralized AI Fund, seeking to provide investors with exposure to protocols in the crypto artificial intelligence sector. Grayscale believes decentralized AI leveraging blockchain technology can help mitigate the risks emerging with the proliferation of centralized AI services by distributing ownership and governance. The fund will consist of decentralized AI assets falling into three categories: protocols building decentralized AI services such as chatbots and generative AI, projects attempting to solve centralized AI problems like deep fakes and misinformation, and underlying infrastructure critical to AI development, including data marketplaces and storage solutions. The current assets included in the fund include Bittensor (TAO 11.32% ), Filecoin (FIL 5.92% ), Livepeer (LPT 4.56% ), Near (NEAR 9.99% ), and Render (RNDR), with each asset’s weighting seen below.

After months of negotiations, the CFTC and FTX Bankruptcy Estate have agreed to a $12.7 billion settlement, pending approval from a judge. The CFTC has agreed to receive nothing from the estate if FTX complies with its reorganization plan, foregoing the pursuit of a monetary penalty in light of FTX insiders’ convictions and its desire to accelerate FTX’s emergence from Chapter 11. Of the $12.7 billion, $8.7 billion is defined as restitution, with the other $4 billion serving as disgorgement, subordinated to prior payment of all creditors. The settlement allows the estate to focus on its May reorganization plan, in which creditors would receive at least 118% of their reported claims upon court approval. Some creditors have opposed the plan, favoring receiving lost assets in-kind, which would likely equate to higher amounts, with all creditors’ votes due by August 16th. A hearing regarding the proposed settlement is set for August 6th, and a court decision on the repayment plan is due in October.

Click HERE for more.

First News

Manchurian-Style. A company called Austin Private Wealth LLC, with ~$1 Billion in assets under management, shorted 12,000,000 shares of DJT -1.98%  via a put option on July 12th – the day before the assassination attempt on Donald Trump. This was by far – by roughly an order of magnitude – the largest put placed. X

In the meantime, The prospect of Trump’s return is dominating the European Security Summit now taking place. A prominent conservative foreign-policy expert views the approach of Trump-Vance as a chance for Europe to strengthen its own defense capabilities, leading to less European reliance on U.S. security guarantees – a real opportunity for Europe to move away from a dependency model of alliances, where the focus is always on Washington’s actions.

At the same event, E.U. Ambassador to the U.S. Jovita Neliupšienė cautioned against potential future trade barriers between the U.S. and E.U., arguing they could hinder efforts to reduce economic ties with China. Notable attendees included Taiwan’s de facto ambassador to the U.S., Alexander Tah-ray Yui, who expressed the view that the recent attempt on Trump’s life should be seen as a moment for American unity. Semafor, WSJ

Aiming for Edison. Anthropic, an AI company, is partnering with Menlo Ventures to create a $100 million fund supporting startups that use Anthropic’s technology. The fund, named Anthology, will see Menlo Ventures providing the investment capital while Anthropic offers $25,000 in credits for its large language models to each startup, plus coaching, quarterly meetups, and direct support – but won’t take equity. This is redolent of the cloud-computing credits that Microsoft offered OpenAI earlier this year as part of their partnership.

The model is similar to Apple’s iFund, which supports developers on Apple’s platforms. Competing with OpenAI’s $175 million Startup Fund, it aims to create a feedback loop for Anthropic to enhance its products. Some context: AI startup funding exceeded $24 billion in Q2, so this is small change hoping for big change. The ecosystem of coaching and other support will prove at least as important as the money the startups will get. CNBC