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

“Every good idea sooner or later degenerates into hard work.” ― Calvin Trillin

Overnight

Fed cuts rates by half percentage point WSJ

Bank of England keeps its main interest rate on hold at 5% in wake of big US Fed rate cut AP

Foreign holdings of US Treasuries rose to a record high RT 

Republican divisions sink House bill as government shutdown nears WSJ

Israeli arrested over Iran plot to kill Netanyahu, Israeli security services say BBC

FBI says Iranian hackers sent unsolicited stolen Trump info to people associated with Biden campaign CNBC

More explosions in Lebanon one day after blasts injure thousands, state media reports CNN

The Fed isn’t first to cut rates, but it is the signal other central banks want WSJ

Wealthy families are getting more bullish on risk assets RT  

South Korea emerges as a top US investor as China tensions escalate FT

Worst drought on record lowers Amazon rivers to all-time lows RT

Boeing starts furloughing tens of thousands of employees amid machinist strike CNBC

Alaska Airlines completes its acquisition of Hawaiian Air, which will remain a separate brand AP

Hong Kong investigators say Cathay Pacific’s A350 engine defect could cause ‘extensive’ damage CNN

Former MoviePass CEO admits the $9.95 ‘unlimited’ ticket scheme was fraud TV

Amazon raises pay of US hourly workers in fulfillment, transport ops RT

Iconic Tupperware Brands seeks Chapter 11 bankruptcy AP

Meta faces hefty EU antitrust fine over classified ads practices FT

JPMorgan creates new role overseeing junior bankers as Wall Street wrestles with workload concerns CNBC

Canadian union, GM reach tentative agreement RT

Musk’s Neuralink gets FDA’s breakthrough device tag for ‘Blindsight’ implant RT

FBI says it has disrupted major Chinese hacking operation that threatened US critical infrastructure CNN

CERN to expel hundreds of Russian scientists SEM

Dozens arrested as “Ghost” crime message network dismantled BBC

Notre-Dame restoration reveals Renaissance poet’s coffin BBC

Chart of the Day

MORNING INSIGHT

Good morning!

The Fed’s 50bp cut is positive, as it shows the Fed is committed to keeping expansion healthy. Stocks stumbled after the meeting, but the reasons for that do not negate the positive impacts stemming from the Fed kicking off an easing cycle.

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TECHNICAL

• Short-term bullish trend could face near-term consolidation after Wednesday’s reversal.
• Treasuries likely have peaked in the near-term, and rates might rise, despite FOMC’s cut.
• Homebuilders have stalled out post FOMC, and would benefit from pullback

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CRYPTO

Circle is set to launch its stablecoin on the Layer 1 blockchain Sui (SUI), marking the company’s 15th network integration since USDC’s debut in 2018.  This move highlights Sui’s growing ecosystem, which is rooted in Meta’s former Libra project and utilizes the Move programming language.

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First News

Coming into port. The port of Baltimore has been fully re-opened for just over three months now, but it will be years before the Francis Scott Key bridge is rebuilt after the cargo ship Dali crashed into one of its pillars and destroyed it. Some experts anticipate that the accident will end up being the most expensive maritime disaster in history, eclipsing the $1.5 billion shipwreck of the Costa Concordia off the coast of Italy in 2012.

Singapore-based Grace Ocean Private Ltd. has already filed a court pleading seeking to cap its liabilities at $43.6 million. The figure is based on an 1851 maritime law that limits a ship owner’s accident liabilities to the value of the ship’s remains. 

The federal government does not agree. The Justice Department yesterday sued Grace Ocean and the ship’s management company, Synergy Marine Private Limited, seeking $100 million in damages – roughly equivalent to the costs of clearing the harbor after the catastrophe. Federal prosecutors said the accident was “entirely preventable” and blamed a badly maintained ship and a poorly trained crew for the accident. The defendants were “outrageous, grossly negligent, willful, wanton, and reckless,” the U.S. asserted, “cutting corners” in maintaining the ship.

Federal investigators have found that in the 12 hours before the accident, the ship lost power four times. A loose cable in one of the ship’s transformer and breaker systems might have been the cause; shortly before the accident, the crew had switched to the system after inadvertently stalling out an engine during routine maintenance. Engineers from Hyundai, the manufacturer of the ship’s electrical system, told authorities that it’s possible that the loose cable caused the blackouts that caused the Dali to lose power and veer off course. It was not immediately clear if this was the case, or how the cable got loose, but prosecutors claim these issues were symptomatic of longstanding problems with the Dali’s electrical system that had been subjected to makeshift patches rather than actual repairs. 

Also yesterday, the families of three out of the six casualties of the accident filed wrongful death lawsuits against Grace Ocean. The men killed had been repairing potholes on the bridge when the Dali crashed into it. (CNN, BBC AP, AP)

AI giveth, and … Instagram announced new efforts to protect younger users, making teen accounts private by default and restricting their access to more mature types of content, a category that goes beyond violent or sexually explicit content to include posts that promote cosmetic procedures or content about suicide and self-harm. For those predicting that teens will just lie about their ages, Instagram plans to augment ID-verification requirements with an AI-driven system that will seek to identify the accounts of underaged users based on which other accounts and what types of content they interact with – and how. 

If AI is providing a potential solution to a serious problem, it is also creating problems. California Gov. Gavin Newsome just signed a series of bills into law that address the problem of deepfakes. Some address elections – one that will take effect immediately bans individuals from knowingly sharing deceptive political deepfakes in the period beginning 120 days before an election and ending 60 days afterward. The other two would require labels for deceptive political audio, video, and imagery generated from AI, and require social media platforms and major websites to promptly label and remove AI deepfakes. Newsome also signed legislation that would require entertainment companies from getting explicit permission from performers (or their estates, if deceased) before using AI to clone their voices and likenesses 

Free speech advocates have strenuously opposed such initiatives and threatened to challenge the laws in court. (NYT, AP, TC)