A daily market update from FS Insight— what you need to know ahead of opening bell
Wanting to be someone else is a waste of the person you are. — Kurt Cobain
Overnight
A Santa Rally Could Lead to a Sober January. Be Cautious—Not Bearish. BR
BlackRock agrees to buy investment firm HPS in $12bn deal FT
America’s biggest private company is laying off thousands of workers CNN
OPEC’s Power Is Waning. That’s Bad for Oil Bulls. BR
China curbs sales of chipmaking minerals to US in latest trade tensions SEM
AT&T expects over $18 billion in free cash flow in 2027, driven by 5G and fiber expansion CNBC
Tesla loses bid to restore Elon Musk’s record $56bn pay package FT
Why America’s economy is soaring ahead of its rivals FT
Construction Industry Braces for One-Two Punch: Tariffs and Deportations WSJ
China’s Flood of Cheap Goods Is Angering Its Allies, Too WSJ
Art Cashin, New York Stock Exchange fixture for decades, dies at age 83 CNBC
Fed Governor Waller says he is ‘leaning toward’ a December rate cut, but worries about inflation CNBC
Porch Pirates Steal So Many Packages That Now You Can Get Insurance WSJ
Enron has been resurrected in what appears to be an elaborate joke CNN
Chart of the Day
| Overnight |
| S&P Futures flat Overnight range: -2 to +6 point(s) |
| APAC |
| Nikkei +1.91%
Topix +1.43% China SHCOMP +0.44% Hang Seng +1.0% Korea +1.86% Singapore +0.93% Australia +0.56% India +0.75% Taiwan +1.28% |
| Europe |
| Stoxx 50 +0.67%
Stoxx 600 +0.44% FTSE 100 +0.62% DAX +0.19% CAC 40 +0.55% Italy +1.27% IBEX +0.96% |
| FX |
| Dollar Index (DXY) -0.2%
to 106.23 EUR/USD +0.22% to 1.0521 GBP/USD +0.17% to 1.2676 USD/JPY +0.29% to 150.04 USD/CNY +0.16% to 7.2863 USD/CNH +0.19% to 7.3001 USD/CHF -0.15% to 0.8852 USD/CAD -0.12% to 1.403 AUD/USD +0.25% to 0.6491 |
| Crypto |
| BTC -0.04%
to 95386.51 ETH -0.19% to 3610.02 XRP -3.54% to 2.6128 Cardano +4.86% to 1.2521 Solana -0.27% to 225.2 Avalanche -1.93% to 51.33 Dogecoin -1.16% to 0.4166 Chainlink +1.35% to 25.27 |
| Commodities and Others |
| VIX -0.07%
to 13.33 WTI Crude +1.15% to 68.88 Brent Crude +1.06% to 72.59 Nat Gas -1.21% to 3.17 RBOB Gas +0.92% to 1.935 Heating Oil +1.02% to 2.2 Gold +0.19% to 2644.24 Silver +1.53% to 30.98 Copper +1.51% to 4.137 |
| US Treasuries |
| 1M -1.3bps
to 4.5677% 3M -0.2bps to 4.46% 6M -1.1bps to 4.4195% 12M -1.7bps to 4.262% 2Y +0.4bps to 4.1836% 5Y +1.7bps to 4.1039% 7Y +2.3bps to 4.1587% 10Y +2.7bps to 4.2168% 20Y +3.2bps to 4.4911% 30Y +3.4bps to 4.3961% |
| UST Term Structure |
| 2Y-3
M Spread narrowed 2.8bps to -32.0
bps 10Y-2 Y Spread widened 2.5bps to 3.1 bps 30Y-10 Y Spread widened 0.9bps to 17.7 bps |
| Yesterday's Recap |
| SPX +0.24%
SPX Eq Wt -0.25% NASDAQ 100 +1.12% NASDAQ Comp +0.97% Russell Midcap -0.35% R2k -0.02% R1k Value -0.54% R1k Growth +0.89% R2k Value +0.05% R2k Growth -0.1% FANG+ +1.26% Semis +2.37% Software +0.1% Biotech -0.31% Regional Banks -0.94% SPX GICS1 Sorted: Comm Srvcs +1.45% Cons Disc +1.06% Tech +1.03% SPX +0.24% Cons Staples -0.1% Healthcare -0.13% Materials -0.2% Indu -0.66% Energy -0.86% Fin -0.9% REITs -1.44% Utes -2.08% |
| USD HY OaS |
| All Sectors -0.9bp
to 310bp All Sectors ex-Energy -1.3bp to 294bp Cons Disc +0.7bp to 252bp Indu -1.9bp to 239bp Tech -1.1bp to 320bp Comm Srvcs -3.4bp to 512bp Materials -2.1bp to 287bp Energy -0.7bp to 289bp Fin Snr -1.0bp to 273bp Fin Sub -2.0bp to 189bp Cons Staples -2.1bp to 293bp Healthcare +2.3bp to 363bp Utes -2.0bp to 213bp * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 12/3 | 10AM | Oct JOLTS | 7519.0 | 7443.0 |
| 12/4 | 9:45AM | Nov F S&P Srvcs PMI | 57.0 | 57.0 |
| 12/4 | 10AM | Nov ISM Srvcs PMI | 55.6 | 56.0 |
| 12/4 | 10AM | Oct F Durable Gds Orders | 0.2 | 0.2 |
| 12/5 | 8:30AM | Oct Trade Balance | -75.0 | -84.359 |
| 12/6 | 8:30AM | Nov AHE m/m | 0.3 | 0.4 |
| 12/6 | 8:30AM | Nov Unemployment Rate | 4.1 | 4.1 |
| 12/6 | 8:30AM | Nov Non-farm Payrolls | 218.0 | 12.0 |
| 12/6 | 10AM | Dec P UMich 1yr Inf Exp | 2.7 | 2.6 |
| 12/6 | 10AM | Dec P UMich Sentiment | 73.2 | 71.8 |
| 12/9 | 11AM | Nov NYFed 1yr Inf Exp | n/a | 2.87 |
MORNING INSIGHT
Good morning!
We discuss how the incoming macro is supportive of stocks in the near term. Moreover, we see the probabilities rising that Bitcoin exceeds $100,000 comfortably by the year end.
Click HERE for more.
TECHNICAL
- SPX, QQQ continuing to press higher, despite Monday’s poor market breadth.
- AAPL breakout is noteworthy given this has been range-bound since July.
- Prior occasions of +25% gains from January-November have all shown positive December gains.
Click HERE for more.
CRYPTO
- Increased CME futures activity, improving risk appetite (e.g., PSCT/SPX and IWM/SPX ratios), and positive ETF flows signal a potential rotation from institutions out of BTC and into ETH.
- ETH’s allocation in the Core Strategy has been increased from 5% to 10%, while BTC’s has been reduced from 60% to 55%, reflecting rising expectations of a near-term ETH “catch-up” trade.
Click HERE for more.
First News
24-hours stock trading is all the rage these days. However, the risks might outweigh the merits.
Trading during expanded hours has been around for a while for some market participants, such as hedge funds and institutional investors. Now, it seems like the ability to trade stocks 24/7 is set to be embraced by an even broader group of investors.
The SEC last week approved the startup 24 Exchange to provide trading up to 23 hours per day, five days a week, as early as next year. A slew of exchanges and brokerages, including the New York Stock Exchange, have rushed en masse to extend trading hours or sought approval to expand their own sets of offerings. A handful, such as Robinhood Markets and Interactive Brokers, already offer extended trading to some extent.
Interest in that space has been steadily growing over the past few years. Barron’s reported that total off-hours volume was 5.5% of overall daily volume in 2019. This year, it’s running at 8.7%, with more than a billion shares trading off-hours each day, on average, up from nearly 760 million in 2023.
But the drawbacks from trading in extended hours could be detrimental to not only investors’ portfolios but also overall market stability.
In theory, a regulated overnight stock exchange should help with price discovery, price transparency and risk management by allowing investors to participate in the markets when stock-moving events happen outside regular trading hours. That should ultimately help make markets more efficient.
But theory rarely plays out as planned in real life. It’s more probable that off-hours liquidity would remain low even with the increased availability of off-hours trading. That would likely lead to wider bid-ask spreads, increase volatility, and prevent investors from getting the best market price.
The likelihood of individual investors getting squeezed by larger sharks like hedge funds and institutional investors could also jump because of factors like volume and trade size. At the same time, small trades could also have an outsized effect on prices and volatility. Investors opening excessively leveraged positions during expanded trading hours could also lead to financial stability concerns. Do traders really need any more reason to lose sleep at night?
The resemblance of 24-hour stock trading to a 24-hour casino cannot be overstated. It might be a while before overnight exchanges command the same level of reputation for trade execution that traditional exchanges enjoy.
