Good morning. US stock futures rose in Wednesday morning trading as Wall Street looked towards the first potentially pivotal inflation report slated for release this week.

"The art of investment is the discipline of inaction in the absence of a good opportunity, but aggressive action when one is identified"

Li Lu

Top News

Nasdaq to rebalance index

WHAT: The wild success of a handful of mega tech stocks this year has got the Nasdaq doing some fancy footwork! The company announced that it will do a special rebalance of the Nasdaq 100 Index, which will take effect before the market opens on July 24, to address “overconcentration” in the index.

WHY: The Nasdaq 100 comprises 100 of the largest non-financial companies that trade on the exchange and is often seen as a proxy for growth stocks. The index has surged about 37% year to date, well above the S&P 500 and Dow Jones Industrial Average.

Microsoft gaming takeover approved in US

WHAT: Microsoft just scored a big win in their quest to acquire gaming powerhouse Activision Blizzard as a US judge gave them a resounding thumbs-up on the $69 billion deal. The US and Britain have been the two countries opposed to what would be Microsoft’s biggest deal ever, and the largest transaction in the videogame industry’s history.

WHY: Shortly after the judge’s order, Britain’s Competition and Markets Authority (CMA) said it was prepared to consider Microsoft’s proposal to resolve antitrust concerns in the UK, suggesting the two parties could come to a resolution.

Bad banking

WHAT: Bank of America is forking over a whopping $250 million in fines after getting caught red-handed by regulators in a case of “double-dipping” on those pesky overdraft fees. The Consumer Financial Protection Bureau (CFPB) also charged the bank for opening accounts for customers without their consent.

WHY: The nation’s largest bank once charged consumers a $35 fee when they authorized a transaction from their accounts that lacked sufficient funds. The CFPB said Bank of America “double-dipped” by charging consumers a fee each time those transactions were re-attempted by merchants.

In Other News

TikTok employees could get major payday

WHAT: ByteDance, the parent company behind TikTok has a special treat for its US employees. They’re loosening restrictions and allowing employee-owned shares to vest without waiting for the company to list on the stock market thereby allowing US employees to cash out. The move is aimed at appeasing employees who have been waiting on an IPO to profit from shares they’ve been awarded as part of their compensation.

WHY: US employees have faced heightened political and regulatory scrutiny because of concerns that ByteDance may be sharing TikTok user data with Chinese authorities.

Disney explores options for India business

WHAT: Disney might be considering some magical maneuvers for its business in India! According to reports from the Wall Street Journal, the company is exploring “strategic options” for its Star India business, which could include a joint venture or complete sale. Disney’s India business comprises Disney+ Hotstar and Star India which it took over when it acquired the entertainment assets of 20th Century Fox in 2019.

WHY: Disney, like its peers in streaming and the wider media industry, is cutting costs as macro economic headwinds weigh on its advertising revenue and subscriber growth.

Canada probes multinationals over labor allegations

WHAT: Canada’s corporate ethics watchdog is putting on its detective hat and launching investigations into Nike Canada and Dynasty Gold. The investigations stem from allegations that both companies might have used or benefited from forced Uyghur labor in their supply chains and operations in China.

WHY: In the last couple of years, several large US and Canadian multinational companies have been accused of using Uyghur forced labor either directly or in their supply chain.

Key Economic Events

• Wednesday - US CPI Y-o-Y, Fed’s Kashkari Discusses Monetary Policy, Banking Solvency

• Thursday - Initial Jobless Claims (wk end 8-Jul)

• Friday - U. Of. Mich. Sentiment

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