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

“And though she be but little, she is fierce.” — A Midsummer Night’s Dream, Act 3, scene 2

Overnight

U.S. Secret Service head resigns over Donald Trump assassination attempt FT

Biden will deliver a rare Oval Office speech at 8 p.m. ET today CNN

Trump said he isn’t considering JPMorgan’s Jamie Dimon as Treasury secretary, despite previously saying he would BBG

Ether ETFs trade over $1 billion in strong crypto-fund debut BBG

Insurers’ losses from global IT outage could reach billions FT    

AMC has a debt deal that Wall Street likes; the meme stock is down anyway Barron’s

J&J allies with mass-tort specialists to seal $8 billion talc settlement WSJ

Meta warns E.U. regulatory efforts risk bloc missing out on AI advances FT

Meta’s new Llama model, released yesterday, surpasses OpenAI’s on almost every metric X

Transparency rules for US private funds lapse after SEC allows deadline to pass FT

Alphabet earnings bring beats across the board, although it’s cut ~2900 jobs so far this year MW

Alphabet revenue jump shows no sign of AI denting search business FT

Tesla posts mixed Q2 earnings; profit below expectations, robotaxis delayed MW

Danaher stock surges as strong earnings renew hopes for recovery WSJ

Drug middlemen push patients to pricier medicines, House probe finds WSJ

FTC to examine whether companies raise prices using consumer surveillance WSJ

Rolls-Royce boss warns of prolonged supply chain strains FT

Revolut targets valuation jump to $45 billion in sign of fintech revival WSJ

UPS shares dive on weak earnings outlook WSJ

GM delays EV projects in latest industry pullback WSJ

KKR to buy wealth manager Janney Montgomery Scott from Penn Mutual Barron’s

Red Lobster lenders near takeover of bankrupt seafood chain WSJ

The D.C. office market is in trouble no matter who wins the election WSJ

U.S. remains off track on climate pledge despite Biden’s green spending push FT

Southwest Airlines close calls draw federal safety scrutiny WSJ

The federal minimum wage – last updated to $7.25 in July 2009 – turns 15 Axios

U.K. has 3 years to prepare for war, army chief says FT

Football players and leagues to lodge anti-FIFA complaint with Brussels FT

France faces glut of unwanted Olympics tickets FT

Snoop Dogg (aka Snoop Lion) will be one of the final torchbearers at the Paris Olympics CNN

Chart of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

There are two notable developments this week: first, there is now “technical confirmation” of the small-cap breakout (“summer of small-caps”) and second: new evidence that this is funded by a rotation out of large-caps.

Three weeks into July, and the Russell 2000 is up +9.7%, while S&P 500 is up +1.7%. Previously, we had confidence that a sizable rally for small-caps would ensue, but we had initially thought this would be funded by the $6 trillion of cash on the sidelines.

Click HERE for more.

TECHNICAL

As discussed yesterday, gains look likely in IWM up to $244 from its current $220, a level that roughly aligns with all-time highs for IWM. As discussed last week, the strength of the move in IWM relative to SPX was so powerful that it will likely lead to additional near-term outperformance for Small-cap shares. 

Bottom line: while this might require some consolidation between September and November before pushing higher yet again, we expect IWM to show absolute and relative strength over the next 4-6 weeks. 

Click HERE for more.

CRYPTO

In our latest video, we compare the current rally to the one back in May through the lens of the options market. Elevated implied vols suggest that traders are making higher-conviction upside bets on BTC.

Click HERE for more.

First News

Duck Ape. Anyone who has ever waxed lyrical – or been left speechless – by the creamy undertow, the smoky perfume, the wine-like complexity of foie gras must also countenance how the sausage – or, in this case, the pâté – is made. Hapless, helpless ducks who’ve never done any harm to anyone are force-fed until their liver becomes fatty enough to serve as the raw material for the vaunted spread. It is precisely because of the brutish provenance of fancy French duck pâté that it gives us great pleasure to assure the reader that no sentient beings were harmed as part of the events described in the ensuing paragraphs.

Cooks worldwide are gamely diversifying the pool of cooking oils they are willing to use in the quest for the healthiest, most sustainable oil, and avocado, olive, and coconut have gotten fat on the usual mentions. Lately, however, certain kinds of microalgae – organisms invisible to the naked eye and found both in water and on land – are being used to create a neutral-flavored cooking oil high in healthy fats and low on the energy and land required to produce it.

To be sure, the usual oil suspects, including olive oil, also contain beneficial monounsaturated fats along with antioxidants. What’s more, many consumers turn to olive oil for its taste, which is so far mostly missing from algae oil. Then again, olive oil is best used at room temperature or at low heat, but it is certainly not a high-heat oil.

So what’s the connection to foie gras? Well, certain kinds of algae, which are some of the fastest-growing organisms in the world, naturally contain oil (at an impressive ~30% of their cell weight) as a mechanism to store energy. When algae are fed sugar, they grow and expand this oil they store – similar to the way those duck livers store fat… but this is a vegetarian story. Wise to the algae’s high oil content, companies and researchers that use algae to make biofuels and nutritional supplements have been isolating cooking oil from algae as well.

For instance, Amsterdam-based Corbion, manufacturing algae oil for Algae Cooking Club and others, operates a fermentation plant in Brazil that uses local sugarcane as feed for the algae, which grow, multiply, and mature in a fermentation tank. After the algae have filled up the tank, the feeding continues and they accumulate a higher level of oil, increasing to up to 80% of cell weight.

Algae cooking oil has just a quarter of the saturated fat found in olive oil and is higher in heart-healthy monounsaturated fat than other popular cooking oils; crucially, it also contains less of the polyunsaturated fat found in seed oils. To clinch its position as winner in the sustainable-and-usable stakes, algae oil has a higher smoke point than many other oils, remaining stable in high-heat situations without degrading or losing flavor.

Expanding algae as a cooking-oil ingredient seems promising despite the energy required to heat up fermentation tanks. Fermenting algae is likely to use less water than traditional agriculture while limiting CO2 emissions and the need for fertilizers. Speaking of reusing inputs, Corbion’s algae-oil process uses energy from the remnants of sugar cane and ferments in the dark rather than employing a more energy-intensive process that needs CO2 and light to ferment the algae, and more water for the tanks.

Certain chefs, which could prove to be the pivotal influencers in the adoption of algae oil, are intrigued. At NYC’s 3-Michelin-star exclusively plant-based restaurant Eleven Madison Park, chef Daniel Humm is experimenting with the oil to better showcase subtle flavors, such as those of a mushroom-dashi soba dish now on its menu.

The global cooking oil market size, $205 billion in 2023, is projected to expand from $218 billion this year to $369 billion in 2032, growing at a low-fat but healthy clip of CAGR of 6.79% over the forecast period. WSJ, Fortune Business Insights