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

“Don’t let nobody take care of your business better than you.” — James Brown

Overnight

Sabotage hits France’s rail lines as Olympics begin WSJ

OpenAI to launch ‘SearchGPT’ in challenge to Google FT

Lineage, world’s largest global temperature-controlled warehouse REIT, begins trading as the largest IPO of 2024 YTD CNBC

Berkshire Hathaway dumps $2.3 billion of Bank of America shares in a 6-day sale CNBC

Viking Therapeutics stock jumps 30% after drugmaker moves weight-loss injection to late-stage trial CNBC

Hasbro beats second-quarter estimates, goes ‘all in’ on digital gaming segment CNBC

Ford’s stock books worst drop since 2008 on warranty ‘surprise,’ EV problems MW

Bill Ackman drastically slashes fundraising target for U.S. fund IPO as Pershing Square USA distances itself from its CEO’s comments FT

Uber and Lyft score victory in California gig-economy case FT

Revolut secures U.K. banking license after 3-year battle FT

Funding surge for blank-check companies points to SPAC bounce-back FT

Coinbase fined £3.5mn by U.K. regulator over ‘high-risk’ customers FT

How Citi’s error-riddled loan reports led to a $136mn fine FT

The junk in your index fund is costing you big-time WSJ

‘Boomer candy’ funds are hot; the taxes are not WSJ

NYCB posts bigger loss than expected on exposure to office real estate; sells mortgage-servicing unit RT

Russia’s central bank raises its key rate as war overheats economy WSJ

Inside J.D. Vance’s short-lived career as a venture capitalist WSJ

Venture firm Narya sees boost in interest after co-founder J.D. Vance’s nomination WSJ

Mexican drug lord Ismael ‘El Mayo’ Zambada arrested in U.S. WSJ

Will U.S. companies keep faith in the ‘Texas miracle’? FT

Chart of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

Since July 11th (June CPI), our stance is that June inflation gave the green light for small-caps to advance. In our view, this was a durable signal, even as many suggest this is only a short squeeze. Yesterday the Russell 2000 (IWM -0.03% ) generated a signal only seen 10 times since 1979 – and every single instance was an early-cycle signal. In other words, yesterday’s trading amplifies our view that this is the Summer of Small-caps, and urges investors to gain exposure to small-caps.

The signal here is that the Russell 2000 traded +/- 1% in 11 of the last 12 trading sessions. Outside of recessions/bear markets, this has only happened 10 times since 1979:
– the years are: 1987, 1998, 2009 (4x), 2011, 2020 (2x)
– these are all clear risk-on years, and more importantly, early-cycle years
– yes, this signal is an early-cycle signal for IWM -0.03% .

Click HERE for more.

TECHNICAL

SPX and QQQ look to be trying to stabilize after pulling back to support and showing a strong initial push off the lows into mid-day Thursday. Economic data came in stronger than expected on Thursday, which might make the FOMC’s job a bit tougher, but likely takes a July surprise rate cut off the table. Sentiment has worsened in recent weeks, though trends have not shown sufficient deterioration to expect much further selling pressure. Moreover, July seasonality (which has proven quite accurate thus far) shows that a bottom and rally back to new highs is quite likely during the final week of July. To reiterate yesterday’s message, DJIA, RSP, and SPX are very close to support, and a market bottom should likely happen between Friday 7/26 and Monday 7/29 before pushing back to new all-time highs into late August. 

Click HERE for more.

CRYPTO

In our latest video, we analyze the recent downturn in crypto markets and highlight pivotal factors that could catalyze the rally into August, such as the PCE and the BTC Conference.

Click HERE for more.

First News

Fromage Très Cher. Leaders of the world’s largest economies are attending a G20 meeting in Brazil, seeking to reach a deal, four years in the making, on how to tax global tech giants. Eight countries have imposed their own taxes, risking retaliatory tariffs from the U.S. on French cheese, Italian leather, and everything in between. Semafor

CS to CSI. Meta said it removed 63,000 Instagram accounts in Nigeria that engage in financial extortion based on sexual content. Accounts removed include “a coordinated network of around 2,500” as well as Facebook accounts belonging to advance-fee-fraud scammers. In the meantime, Deputy AG Lisa Monaco announced that the FBI and Justice Department recently disrupted the activities of a North Korean government- sponsored hacking group targeting U.S. hospitals with ransomware, recovering half a million dollars in ransom payments and cryptocurrency. This story could end up on the silver screen; read on. Semafor, AP

Paging Dr. Clooney. There was ER, Grey’s Anatomy, Scrubs, Dr. House, The Knick, Royal Pains, Nurse Jackie, Nip/Tuck, M*A*S*H, and St. Elsewhere*. And then there was Paddy Chayefsky’s masterpiece, The Hospital, which immortalized the infamously gritty, grimy NYC of the sixties and seventies, and afforded George C. Scott the chance to give his nth performance of a lifetime.**

The wealth of health-related, hospital-situated dramas overwhelms. Clearly, they mine a rich vein of interest in the human condition, as revealed by doctors doing the work they love (in circumstances they often hate) – and, as ever, the people who love them. So popular is this genre, which attempts to impose an exaggerating veneer of art on top of the quotidian, often squalid realities of industrial-scale healthcare, that real-life healthcare institutions are now trying to extract reputational and pecuniary profit from art created out of life – and sickness and death.

Case in point: likely cognizant of the underperformance of healthcare stocks of late, New York’s largest hospital system is setting its sights on the entertainment business. Northwell Health, which operates 21 hospitals and 900 outpatient facilities, is launching a studios division to develop scripted and unscripted content, betting that the entertainment business can bolster its bottom line and drive health awareness in the process.

This is either long-overdue genius or spectacularly ill-advised.

After facing labor issues for years, hospitals are making a comeback, as chains including HCA Healthcare and Tenet Healthcare (with shares of both up recently) see greater demand for services and hire more workers. Enter Northwell Studios, the new production company, meant to leverage its facilities, doctors, and patients (assuming consent, of course).

This isn’t Northwell’s first hospital-hallway rodeo. HBO’s One South: Portrait of a Psych Unit, debuted last month and was filmed at Northwell’s Zucker Hillside Hospital in Queens. The 2021 COVID-19 documentary First Wave was filmed at multiple Northwell facilities. Northwell Studios has signed a development deal with the production company CreativeChaos, and has five projects already in the works. With previous documentaries and series featuring (or ‘tackling’, as Northwell puts it) gun violence, mental health, and the global impact of war, the studios now want to “make a difference on a national scale” and therefore “need to expand and focus our efforts… building a bridge to filmmakers and distributors, going beyond traditional marketing to amplify our storytelling capabilities” and become “a leading voice on the issues that matter most – our health and wellness… [using] the power of storytelling to change the conversation, spark dialogue, and inspire action on a global scale.”

Although the quote above sounds a lot like it’s referring to a DEI initiative, it could charitably (in the spirit of Northwell Health’s nonprofit status) be described as an established business leveraging its access to build a foothold in the world of entertainment. This is most habitual in the world of sports, where leagues like the NFL, MLB, and Formula 1 combine their own in-house studios with outside production companies to give behind-the-scenes access to their star athletes.

A hospital system is no sports league, and doctors and nurses aren’t household names; securing consent from patients is also a lot more involved; but the reason behind-the-scenes medical documentaries have become commonplace on streaming services and TV is that access can generate compelling stories, as well as – given Northwell’s production deals – predictable profits. HollywoodReporter, WSJ

* St. Elsewhere technically followed an ensemble-cast model laid down previously by Hill Street Blues, namely: experimenting with format, tone, and genre, tackling hot-button issues, featuring a truly diverse cast as well as meta humor and self-awareness, and finally – a divisive finale that made viewers question their time spent watching the series.

* Heading up a department at a major NYC hospital half-a-century later, the person writing these lines saw that enough grime and grit was still there.