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

“Two things awe me most, the starry sky above me and the moral law within me.” ~Immanuel Kant

Overnight

Ship owner in Baltimore bridge collapse agrees to pay $102 million for cleanup AP

Tech boom forces US funds to dump shares to avoid breach of tax rules FT

Oil prices ease on possible new Middle East ceasefire talks RT

Morgan Stanley taps CEO Ted Pick to succeed Gorman as chair BBG

Argentina’s Milei gets World Bank backing for economic agenda SEM

Wells Fargo CEO says bank may lose up to $3 billion on its office building loans RT

Russia provided targeting data for Houthi assault on global shipping WSJ

India evacuating more than a million people as Cyclone Dana nears BBC

Merger of handbag makers Tapestry, Capri halted as judge sides with FTC in antitrust case AP

Taco Bell, Pizza Hut, KFC pull onions from meals after E. coli outbreak WSJ

Trudeau announces sharp cuts to Canada’s immigration targets BBC

US approves Nevada lithium project in push to break China’s grip on EV minerals FT

Biden administration is launching an investigation of competition in air travel AP

OpenAI disbands another safety team, as head advisor for ‘AGI Readiness’ resigns CNBC

US issues new rules on use of AI by security establishment FT

Intel wins lengthy EU legal battle over $1.15B antitrust fine TG

Chart of the Day

MORNING INSIGHT

Good morning!

Many investors want to dismiss betting markets, citing biases due to betting markets operating outside US and participants being mostly male. However, regardless of whether one believes the betting markets represent true election signal, it seems like the betting market movements are impacting equity markets.

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TECHNICAL

• SPX, QQQ look vulnerable through November and 5900-5935 looks important.
• TSLA looks close to a breakout and should push back higher over the next 6 months.
• Consumer Discretionary likely to benefit short-term given TSLA’s strength.

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CRYPTO

• Favorable seasonality, election-driven tailwinds, and suitable liquidity conditions create a favorable backdrop for crypto in our view, arguably skewing risks to the upside.
• We maintain a bias toward being overweight SOL and remain generally focused on the majors.

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First News

Much has been written about the consequences of a rapidly aging population. Generally, the problem isn’t just that a large number of people are aging into retirement, but also that not enough young people are entering workforce.

While the problems with insufficient people in the labor market can be partially solved with the implementation of AI and automation, that still leaves the problems stemming from an inadequate tax base of working people. In short, AI and automation are not necessarily panaceas. Some countries are thus trying to make themselves more enticing to young people, seeking to both attract young people from other countries and dissuade their own young people from moving away. 

For example, Portuguese Prime Minister Luis Montenegro recently proposed tax breaks for young people for the first decade of their working lives, including a tax-free first year. The incentive would apply to both Portuguese nationals and workers from abroad. Montenegro’s plan, if it passes Parliament next month, would be the latest in an array of Portuguese programs aimed at attracting young workers and giving them reason to stay. The country already pays bonuses for anyone under 35 with a bachelor’s or master’s degree who opts to live in Portugal, and it has established an expedited, streamlined process that makes it easier for recent grads from abroad to quickly have their foreign degrees and diplomas recognized. 

Portugal has long seen its young people moving abroad for better economic opportunities: about 20% of people born in Portugal currently live and work abroad. It is not alone: officials in countries around the world, from Finland to New Zealand, have also highlighted similar problems. The competition for young workers is fierce, with countries like South Korea, Taiwan, and Hungary each seeking to make themselves more attractive to young employees at home and from abroad.

It is not entirely clear how successful these initiatives will be. Larger, wealthy Western countries like the U.S., France, and Germany are likely to remain enormously attractive to talented young professionals around the world. However, smaller countries like Portugal might take a look at what Switzerland and Singapore have done. INSEAD ranks both countries highly when it comes to attracting foreign talent – first and second place, respectively. So does Switzerland’s IMD. (The U.S. is ranked No. 3 and No. 21 by those institutions, respectively.)

Both INSEAD and IMD noted that Switzerland’s quality of life, strong social safety net (generous pensions and unemployment benefits), and excellent educational system (including vocational training and apprenticeship programs), as well as its transparent and fair business and legal environment were key to its ability to attract talent. For Singapore, the city-state’s openness to foreign workers, its health infrastructure, and excellent educational system help it compete and win in the global talent marketplace, and its friendly business environment and fairly administered justice system were also noted as distinct pluses. 

Of course, emulating Switzerland and Singapore are easier said than done. (FT, RFE, NK, AS)