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

“Faith makes you stable and steady. It brings out the totality in you. Consolidation of your energy is faith. Dissemination of energy is doubt.” — Sri Sri Ravi Shankar

Over the Weekend

Twelve children killed as Hezbollah rocket hits soccer field Saturday, sparking wider war fears ToI

Recep Erdogan, president of Turkey, a NATO member, issues open threat to invade Israel ToI

President Biden plans to endorse reforms to the Supreme Court, including backing a binding code of ethics Semafor

Paris Olympics open with tour de force on the River Seine WSJ

French Railways (SNCF) fixes sabotaged train lines as security at Olympics remains tight FT

A Fed rate cut is finally within view WSJ

BoE rate cut a coin toss, second small rate hike from outlier Bank of Japan more likely RT

Trump adds crypto to his ‘America First’ agenda WSJ

Kamala Harris campaign seeks ‘reset’ with crypto companies FT

U.S. launches military command in Tokyo to counter China WSJ

TikTok collected U.S. users’ views on gun control, abortion, and religion, U.S. says WSJ

Behind Vance’s populist rhetoric, Trump GOP is all in on tax cuts WSJ

A pioneer of small-cap stock-picking steps back after five decades FT

U.S. accuses prominent short seller Andrew Left of fraud WSJ

One Equity Partners raises $1.75 billion so far for latest fund WSJ

Morgan Stanley moves forward on homegrown AI WSJ

Dealmaking revival hands bumper profits to UK ‘magic circle’ law firms FT

Investors gobble up convertible bonds WSJ

Shares in Japan’s Eisai plunge after E.U. panel rejects Alzheimer’s drug FT

America is running out of generic drugmakers; another one is on the brink WSJ

Warner’s TNT sues NBA, alleging breach of media-rights contract WSJ

State Street to pay $7.5 million to settle allegations of Russia-related sanctions violations WSJ

Plan to send Azeri gas to Europe may simply disguise Russian fuel, say experts FT

Wildfires affect air quality in parts of the U.S. WSJ

Hawaiian Electric nears wildfire settlement aiming to avoid PG&E’s bankruptcy fate WSJ

U.S. home insurers suffer worst loss this century FT

‘Olympic levels of karma’: Star’s Games meet painful, teary end after handshake snubs Fox

Chart of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

This week, 171 companies are reporting. Of the 207 companies that have reported so far (41% of the S&P 500):

• Overall, 81% are beating estimates, and those that “beat” are beating by a median of 5%.
• Of the 19% missing, those are missing by a median of -5%.
• On the top line, overall results are beating estimates by a median of 3% and missing by a median of -3%, and 59% of those reporting are beating estimates.

Post-FOMC press conf. (next one this Wed.), equities rallied 5D last 5 of 6 instances. Small-cap remains most compelling; Summer of small-cap thesis intact with IWM reaching $280-$300 implied.

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TECHNICAL

Overall, the market bounce looks to have occurred on schedule, and we remain optimistic that this can carry Equities higher into this week’s FOMC meeting. However, more will need to occur to suggest that this rally can get back to new highs without any further consolidation into August.

Momentum has turned more negative given the selling from mid-July, and the downtrend from mid-July remains in place following a break of the uptrend from April. Thus, while there remain many reasons to be optimistic on Equities between now and early-to-mid-September (as well as a rally the last week of July), it’s not wrong to say that Equities have entered a more difficult period in 2H than what happened over the first six months of the year.

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CRYPTO

The adoption of BTC in corporate treasuries continues with OneMedNet Corporation (ONMD), a provider of regulatory-grade real-world data solutions for the healthcare sector, completing a $4.6 million private placement with institutional investors, including Off the Chain Capital and Discovery Capital Management. The funds are allocated for working capital, corporate purposes, and notably, $1.8 million for purchasing bitcoin. This company certainly has risks to consider, such as its potential delisting should it not receive approval on its petition with the SEC on a listing compliance plan. However, this treasury strategy could bring more liquidity to its shares, bolster the recovery story for the company, and help it chart a path forward. Regardless, this is yet another example of a recurring trend of corporations adopting a hard money approach for its balance sheet. ONMD rallied nearly 20% on market open, and is now trading approximately 8% above yesterday’s market close.

The State of Michigan Retirement System has disclosed ownership of 110,000 shares in the ARK 21Shares Bitcoin ETF, currently valued at $7.4 million, according to a 13F filing with the SEC. While the ownership is relatively small percentage-wise, it marks a beginning for the pension fund. Michigan is the third pension entity to invest in spot bitcoin ETFs, following the State of Wisconsin Investment Board and Jersey City. In May, Wisconsin reported holding significant shares in BlackRock’s IBIT and Grayscale’s GBTC4.88%, valued at nearly $100 million and $64 million, respectively. Jersey City Mayor Steven Fulop announced that the city plans to allocate a portion of its pension fund to spot bitcoin ETFs, with the investment process expected to conclude by the end of summer.

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First News

Olympic Levels of Pragmatism. The United States Olympic & Paralympic Committee (USOPC) operates a high-performance grant system with an annual budget of $50-60 million. This system strategically allocates funds to those governing bodies of sports that are likely to yield Olympic medals.

ON the back of the U.S.’s consistent success in gymnastics, the USOPC has historically invested heavily in the sport. Recently, it increased funding for weightlifting following promising results in the Rio and Tokyo Olympics. As new sports have been added to the Olympic program, the committee has also directed resources toward emerging disciplines such as rugby, climbing, surfing, skateboarding, and breaking.

Conversely, the USOPC withholds funding from sports where the U.S. has limited medal prospects, including team handball, badminton, table tennis, and modern pentathlon.

Sailing is an example of how funding can fluctuate based on performance. In the lead-up to the Tokyo Olympics, sailing received $3.1 million, but after failing to secure any medals in Tokyo and winning only a single bronze since 2008, the sport’s funding was reduced to $2.1 million over the subsequent two-year period. Sportico

Different Sort of Games. In 2016, Skillz Inc. launched *Solitaire Cube*, which became a runaway success in the competitive gaming market, but the company’s financial performance has faltered since then. After reaching a peak of $384 million in revenue in 2021, Skillz saw a sharp decline, with earnings dropping to $150.1 million in the following year.

In response to this downturn, Skillz has initiated legal action against several competitors, including Avia (creator of *Solitaire Clash*) and Papaya (developer of *Solitaire Cash*). The company alleges that these rivals have misappropriated its game technology.

A key aspect of Skillz’s legal claim is the accusation that its competitors’ platforms are overrun with bots. These automated players, Skillz contends, dominate tournaments and unfairly capture cash prizes that should be won by human participants. This issue is particularly fraught given the substantial sums involved in these competitions. For context, Avia reported in 2023 that it had distributed $1.4 billion in prizes to gamers. Bloomberg

Different Sort of Interest in Gold. Seeking returns on national assets and keeping financial security on the level is delicate balance, especially for a country perennially teetering on the edge of financial abyss. The last few days have found Argentina’s opposition leaders on a quest to locate approximately 2 million troy ounces of gold, valued at $4.5 billion, which was recently held in the country’s central bank. The Milei administration has confirmed that these gold reserves have been moved overseas but has not disclosed the specific location.

The economy minister stated that the gold was transferred abroad to earn interest, and speculation suggests it may be in either London or Basel. However, this move has raised concerns among economists for several reasons:

1. It potentially undermines the fundamental purpose of central bank reserves.

2. The costs associated with insuring the gold in a foreign location might outweigh any interest earned.

3. The gold could become vulnerable to seizure by Argentina’s creditors. El País