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

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Overnight

Ex-Samsung Execs Arrested for Allegedly Stealing Tech for China BBG

US small business sentiment ebbs in August amid rising uncertainty RT

Allegations mount against India market regulator BBC

US audit firms ordered to bring in outsiders to oversee quality FT

Germany announces temporary controls on all land borders RT

Japan’s Q2 GDP growth revised down; softer consumption to test BOJ policy RT

China’s exports grow by 8.7% in August, beating expectations CNBC

U.S. adds India to Its global semiconductor alliance FP

Saudi Arabia ‘open’ to petroyuan, closer China ties, minister says SCMP

Hedge fund investors seek new allocation to equity strategies, says BNP Paribas RT

EU court rules Google must pay €2.4bn fine BBC

Apple must pay 13 billion euros in back taxes, EU’s top court rules CNBC

Oracle’s Missteps in Cloud Computing Are Paying Dividends in AI WSJ

Citi expects 20% jump in its investment banking fees on summer deal spree FT

Norfolk Southern CEO expected to leave railroad amid board probe WSJ

Southwest chairman Gary Kelly to retire after 2025 annual meeting YF

Nelson Peltz steps down as chair of Wendy’s board, starting a new era for burger chain CNBC

Air Canada prepares to shut down as talks with pilots union near deadlock CNBC

Big Lots files for bankruptcy CNN

Hybrid cars throw lifeline to platinum metals RT

Bad news for EVs: Consumers less likely to buy one compared to last year YF

Overheated battery-powered devices reported more often on planes: Report The Hill

Americans lost $5.6 billion last year in cryptocurrency fraud scams, the FBI says AP

SpaceX launches Polaris Dawn mission for first private spacewalk Semaphor

Chart of the Day

MARKET LEVELS

MORNING INSIGHT

Good morning!

The latest data shows stress in the used- and new-car markets. Also, the three most recent polls show a dead heat between Trump and Harris, adding weight to Tuesday evening’s debate.

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TECHNICAL

• Short-term trends for US Equities remain negative and insufficient technical strength has occurred that give meaningful proof that a low is at hand.   
• While Monday’s bounce was encouraging for the bulls, momentum remains negatively sloped in the short run, and trends in most sectors turned short-term bearish last week.  
• The stabilization in both US Dollar and Treasury yields might allow for a bounce that might also coincide with a bounce in US Equities, but more is needed to suggest that lows are at hand.

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CRYPTO

As recent price action suggests, capital flows have turned negative over the past week. Last week, a shortened four-day trading week for traditional markets, saw over $700 million in outflows from BTC spot ETFs. This brought aggregate net inflows for the year to just under $17 billion, with the five-day moving average of net flows dropping to $176 million—the lowest since May 2nd.

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First News

A darkening pearl. The Biden administration heightened its warnings for U.S. businesses doing business in Hong Kong, citing increased risks related to both Beijing and Moscow. Risks from Beijing include concerns that recent security initiatives mean that a wide range of normal business activities could be regarded by the government as threats to China’s national security. This is similar to risks associated with doing business on the mainland, and includes activities such as basic market research, particularly research and analyses that make use of government data. It also includes  lobbying and engaging with researchers, think tanks, and reporters. 

The U.S. Departments of State, Treasury, Commerce, Agriculture, and Homeland Security also jointly expressed concerns that Hong Kong is increasingly being used as a hub to evade sanctions and trade restrictions. This includes controls related to semiconductor-technology sales and transfers to China and the shipment of precursor chemicals used to synthesize fentanyl. It also addresses concerns that Russia is increasingly using Hong Kong as an intermediary to evade sanctions imposed on the country due to its invasion of Ukraine. 

The U.S. government’s warnings come even as Hong Kong strives to maintain its fading status as a leading global hub for business, trade, and finance. A number of independent researchers have concluded that Singapore has overtaken the erstwhile “Pearl of the Orient” in importance as a leading financial center. (BBG, WSJ)

Heightened pickup risks. The National Highway Traffic Safety Administration announced a proposal to mandate new safety-focused design standards for large vehicles such as SUVs and pickup trucks in an effort to reduce pedestrian deaths and injuries. Such vehicles have gotten not just larger over the years, but also taller. It is the added height that has become particularly problematic, as it caused blind spots for drivers. A study by the Insurance Institute for Highway Safety found that all else being equal, higher, more vertical front ends – hood heights 40 inches or higher and grilles sloped at 65 degrees or less – are 45% more likely to cause deaths in pedestrian crashes than cars with a lower hood heights and/or a sloping hood profile. 

NHTSA statistics showed that annual pedestrian deaths have increased 57% from 2013 to 2022. The federal agency wants to require automakers to update their safety testing to include simulations of head-to-hood impact, using dummies representing both a 6-year-old child and an average-sized adult male. Such standards are already in place in many other countries.
Although the NHTSA’s announcement on Monday focused on pedestrian safety, increasingly large SUVs and pickup trucks are also associated with a rising rate of fatalities when vehicles collide. As such vehicles have grown larger over the years, the average differential in size and weight between vehicles involved in crashes has also grown. Unsurprisingly, the extent of this gap is strongly correlated with the likelihood of fatalities for people in the smaller vehicle – put bluntly, the bigger the vehicle that crashes into your normal-sized car, the worse off you are likely to be. One study suggests that the fatality rate when a compact car collides with a heavy pickup truck is seven times higher than it is when colliding with a similarly sized vehicle. (AP, Economist)