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

“Each second we live is a new and unique moment of the universe a moment that never was before and never will be again” ― Pablo Casals

Overnight

Largest port on U.S. East Coast, New York/New Jersey, begins prepping for what could be first union strike since 1977 CNBC

Mortgage rates drop to lowest since early February 2023 after Fed’s jumbo interest rate cut CNN

In break with tradition, powerful Teamsters union won’t endorse Harris or Trump SEM

E.U. plans to offer $39 billion loan to Ukraine without the U.S. NYT

DOJ sees tips flow in over first month of pilot whistleblower program WSJ

Seeking to counter China, US awards $3 billion for EV battery production in 14 states AP

UAW warns of potential strikes at Ford, Stellantis a year after unprecedented work stoppages CNBC

Danske Bank to pay $7 Million in French settlement over Estonia money-laundering WSJ

TD Bank CEO Bharat Masrani to Retire, Be Succeeded by Raymond Chun WSJ

FedEx shares tumble amid weak demand for pricey priority deliveries RT

Nike CEO John Donahoe is out, replaced by company veteran Elliott Hill CNBC

VW audit of Xinjiang plant failed to meet international standards FT

Masimo CEO Joe Kiani ousted from board after proxy fight; Politan wins two seats CNBC

Target Names PepsiCo’s Jim Lee as Finance Chief WSJ

Politico owner Axel Springer strikes breakup deal with KKR NYT

Publicis Buys Mars United Commerce in Deal Valuing Agency at $600 Million WSJ

Olive Garden breadsticks hitch a ride with Uber in delivery deal WSJ

Hong Kong man jailed for ‘seditious’ T-shirt BBC

US overdose deaths fell 10% after decades of rising SEM

Chart of the Day

MORNING INSIGHT

Good morning!

Markets reacted positively the day after the Fed initiated a rate cutting cycle. Most notably, small-caps are leading gains, even as markets have seen a broad-based rally. 

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TECHNICAL

• Short-term bullish trend looks to be “back on track” after pushing to record highs.
• Biotech offers appeal after rate cuts and XBI is on the verge of breaking out.
• Defensive sectors all retreated in lockstep Thursday, as SPX breakout caused exodus.

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CRYPTO

The Fed has done exactly what risk assets were looking for — implementing a dovish 50-bps cut and providing guidance for two more by year-end, all while maintaining reassuring economic commentary (though some bears misinterpreted this as hawkish). As we approach year-end, we remain optimistic about the crypto outlook, seeing the market’s lean toward a soft landing as constructive for prices. With the hard landing risk fading after the Fed’s dovish but reassuring stance, we believe now is the right time for crypto investors to deploy dry powder.

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First News

Zoonotic again. A peer-reviewed study newly published in the Cell scientific journal adds support to a theoretical link between the Huanan Seafood Wholesale Market in Wuhan, China and the coronavirus behind the COVID-19 pandemic. “This doesn’t prove by any means that there were infected animals at the market, but we believe that to be by far the most likely hypothesis,” Kristian Andersen, director of infectious disease genomics at the Scripps Research Institute and one of the authors of the new study, told NPR, citing data provided by the Chinese government.

Studying the likely zoonotic – animal-to-human – origins of COVID-19 are important, as many infectious disease experts believe there is an increasing likelihood that the next global pandemic will also be zoonotic in origin. That is unsurprising: scientists currently believe that three out of every four new or emerging infectious diseases in people come from animals.

Public health officials are currently monitoring two zoonotic diseases closely. The World Health Organization last month elevated monkeypox, also known as mpox, to the status of global health emergency. The first known case of a human infected with monkeypox emerged in 1970, but last month cases began to spread rapidly – first in the Democratic Republic of the Congo, then to other countries in west and central Africa. Also last month, Swedish authorities reported the first confirmed case of the more dangerous “clade 1 variant” of mpox outside Africa. 

Meanwhile, human cases of bird flu have begun to emerge. Although just 14 cases of avian influenza A, or bird flu, have been confirmed in the U.S., last week, Missouri health officials confirmed the first case in which the patient had no occupational contact with animals. In the Missouri case, the virus was found to have two genetic mutations not found in previous cases of human infection, though it is unclear whether those mutations explain how this latest patient was infected. He was briefly hospitalized but has recovered and been released. 

Where the air is rarified. Frequent flyer programs are highly valuable to airlines. Delta SkyMiles, for example, is valued at $25 billion – compared to Delta’s current market cap of $30.5 billion. U.S. regulators have begun looking into whether such programs became this valuable at the unfair expense of customers. 

One key concern is whether the often vague and unclear use of dynamic pricing to determine how miles are redeemed (or if they even can be redeemed) crosses the line into unfair or deceptive behavior. Another focuses on the devaluation of acquired miles over time. The Department of Transportation, which has responsibility for overseeing airlines’ consumer practices, is also concerned that recent consolidation in the airline industry has left many consumers with not just fewer choices as to what airlines they fly, but also, for all practical purposes, fewer choices as to miles programs in which they can participate. The airlines being targeted by the DOT’s inquiry are American, Delta, Southwest, and United Airlines. (FT, RT)