A daily market update from FS Insight — what you need to know ahead of opening bell.
“Moderation is a fatal thing. Nothing succeeds like excess.” – Oscar Wilde
Chart of the Day
Good morning!
Last Thursday, the Federal Trade Commission (FTC) began an investigation into how technology companies decide which content to block from users, and whether this hurts users and amounts to an improper suppression of free speech. The FTC suggested that this could amount to censorship, asserting that “censorship by technology platforms is not just un-American, it is potentially illegal” – though the FTC did not identify which laws the platforms might be violating.
It’s not the First Amendment, according to Cathy Gellis, an attorney with expertise on laws governing free speech and the digital age. As she told TechCrunch, “In most cases, internet platforms are private actors, which have their own First Amendment rights to moderate their sites as they would choose.” The text of the First Amendment prohibits government interference with free speech but says nothing about what private entities can do on their own platforms or venues. Indeed, Snap CEO Evan Spiegel argues that the First Amendment guarantees internet platforms the right to “choose whatever content guidelines or policies it wants” free from government interference. To adherents of this stance, it follows that government efforts to mandate how (or whether) platforms moderate content is a form of censorship.
Meta’s Mark Zuckerberg is one such adherent. As he announced the company’s decision to eliminate U.S.-based fact-checking on Facebook, Instagram, and Threads on Jan. 7, he attacked any government attempt to force tech companies to moderate content as “institutionalizing censorship.”
Yet just two weeks later, on Jan. 21, Meta’s Facebook and Instagram joined other large platforms including Snapchat, TikTok, Twitch, LinkedIn, and YouTube in once again agreeing to abide by the EU’s Digital Services Act (DSA), which requires them to actively combat misinformation and hate speech on their respective services – in part by blocking hate speech and maintaining fact-checking on posts seen by EU users.
This appears likely to set up a regulatory clash between the U.S. and the EU. As the Electronic Frontier Foundation notes, for the past decade “the EU has served as the regulatory frontrunner for online services and new technology,” much to the displeasure of Silicon Valley’s Tech giants. Social media platforms have chafed at calls for moderation, for multiple reasons. As scholars at the Brookings Institution explain, “Social media platforms, such as Meta, thrive on engagement-stimulating, unedited rage,” and moderation arguably curtails that. Tech companies also struggle to keep content-moderation departments fully staffed, as the job is often traumatic and thus has a high burnout rate.
President Trump’s instincts about how Big Tech should operate thus present the platforms with an opportunity. His views are already at odds with the European vision on the matter, so Silicon Valley is hoping the White House and its allies in Congress will intervene on their behalf – perhaps by using Trump’s planned tariffs to pressure EU regulators to at least lighten up on the Tech giants.
Catch Up With Fundstrat
We view the sell-off in momentum stocks/broad equities (last 2 days of last week) as a flesh wound. We see four reasons why this week could see a recovery.
TECHNICAL
- Minor consolidation in SPX, QQQ looks close to bottoming this week.
- Magnificent 7 shouldn’t stay the “Lag 7” much longer and should turn higher soon.
- Consumer Staples recent outperformance shouldn’t lead to meaningful outperformance.
CRYPTO
In monetary terms, the Bybit hack presents one of the largest thefts in history, and it reminds us that diversification of custody is always appropriate. Ironically, this could act as a tactical tailwind for ETH at some point in the future, but in our view, we probably won’t see it until the macro environment clears up a bit.
News We’re Following
Breaking News
- Apple will invest $500 billion in the U.S. with a focus on AI QZ
Markets and economy
- Dow, S&P 500 futures surge after Friday’s sell-off WSJ
- Treasury yields inch higher as investors await a flurry of economic data this week CNBC
Business
- Berkshire operating earnings surge 71% in fourth quarter, cash hoard balloons to record $334 billion CNBC
- Microsoft said to be canceling leases for AI datacenters BBG
Politics
- Federal Agencies Push Back on Elon Musk’s ‘What Did You Do Last Week?’ Email WSJ
- DOJ Slip-Ups Show Challenges of Defending Trump’s Freewheeling Approach WSJ
Overseas
- Conservatives, Merz projected to win German election as far right rises SEM
- Zelensky willing to give up presidency in exchange for Nato membership BBC
Of Interest
- Shiffrin claims historic 100th World Cup win in Alpine skiing BBC
- MSG Networks reaches deal with Altice USA to bring back New York Knicks, Rangers games CNBC
| Overnight |
| S&P Futures +31
point(s) (+0.5%
) overnight range: +5 to +39 point(s) |
| APAC |
| Nikkei +0.26%
Topix +0.07% China SHCOMP -0.18% Hang Seng -0.58% Korea -0.35% Singapore -0.06% Australia +0.15% India -1.06% Taiwan -0.70% |
| Europe |
| Stoxx 50 -0.15%
Stoxx 600 +0.05% FTSE 100 +0.00% DAX +0.71% CAC 40 -0.32% Italy +0.23% IBEX +0.46% |
| FX |
| Dollar Index (DXY) +0.06%
to 106.68 EUR/USD +0.05% to 1.0463 GBP/USD +0.04% to 1.2637 USD/JPY -0.35% to 149.80 USD/CNY +0.03% to 7.2500 USD/CNH +0.03% to 7.2527 USD/CHF -0.13% to 0.8995 USD/CAD +0.06% to 1.4216 AUD/USD +0.11% to 0.6364 |
| UST Term Structure |
| 2Y-3
M Spread widened 1.7bps to -9.5bps
10Y-2 Y Spread narrowed -0.6bps to 22.3bps 30Y-10 Y Spread widened 0.3bps to 24.8bps |
| Yesterday's Recap |
| SPX -1.71%
SPX Eq Wt -1.40% NASDAQ 100 -2.06% NASDAQ Comp -2.20% Russell Midcap -2.18% R2k -2.94% R1k Value -1.38% R1k Growth -2.23% R2k Value -2.24% R2k Growth -3.59% FANG+ -2.94% Semis -3.03% Software -3.41% Biotech -1.10% Regional Banks -2.60% SPX GICS1 Sorted: Cons Disc -2.77% Tech -2.45% Indu -2.23% Energy -1.95% Materials -1.80% Comm Srvcs -1.78% SPX -1.71% Fin -1.18% REITs -0.80% Healthcare -0.47% Utes -0.02% Cons Staples +1.00% |
| USD HY OaS |
| All Sectors +10.8bps
to 319bps All Sectors ex-Energy +9.8bps 299bps Cons Disc +12.6bps 289bps Indu +11.4bps 238bps Tech +10.8bps 321bps Comm Srvcs +8.9bps 507bps Materials +9.4bps 278bps Energy +13.4bps 301bps Fin Snr +10.7bps 269bps Fin Sub +4.9bps 207bps Cons Staples +7.8bps 293bps Healthcare +11.9bps 357bps Utes +6.4bps 227bps * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 2/25 | 9:00 AM | Dec Case Shiller 20-City m/m | 0.4 | 0.41 |
| 2/25 | 10:00 AM | Feb Conf Board Sentiment | 102.65 | 104.1 |
| 2/26 | 10:00 AM | Jan New Home Sales | 675 | 698 |
| 2/26 | 10:00 AM | Jan New Home Sales m/m | -3.3 | 3.6 |
| 2/27 | 8:30 AM | 4Q S GDP QoQ | 2.3 | 2.3 |
| 2/27 | 8:30 AM | Jan P Durable Gds Orders | 2 | -2.2 |
| 2/28 | 8:30 AM | Jan PCE m/m | 0.3 | 0.3 |
| 2/28 | 8:30 AM | Jan Core PCE m/m | 0.3 | 0.16 |
| 2/28 | 8:30 AM | Jan PCE y/y | 2.5 | 2.6 |
| 2/28 | 8:30 AM | Jan Core PCE y/y | 2.6 | 2.79437 |
