Daily Game Plan

by Contributor
on February 7, 2025

TODAY’S GAME PLAN:  from the trading
desk, this is not research

TODAY’S ECONOMIC DATA: ET  9:15 a.m: Fed’s Cook speaks, 9:45 a.m: US December Services, Composite
PMIs 10:00am Factory Orders m/m

 

*US PAYROLLS 2024 AVG MONTHLY GAIN REVISED TO 166K FROM 186K

 

Highlights and News:  

 

  • Trump imposes sanctions on International Criminal Court targeting people who work on International Criminal Court investigations
    of U.S. citizens or U.S. allies such as Israel
  • A plane carrying 10 people went missing in Alaska yesterday at 4 p.m. local time in bad weather
  • U.S. Secretary of State Marco Rubio will visit Israel and Arab states in mid-February after Trump proposal for US to take over Gaza

 

Global stocks were mixed as investors awaited key payroll data and potential labor survey revisions, while Treasury yields rose, and the dollar steadied. Oil and
gold advanced, and Chinese tech stocks in Hong Kong neared a bull market, driven by optimism over DeepSeek ’s AI model offsetting tariff concerns. US job growth moderated in January after annual revisions from the government revealed less vigor in the labor
market last year than previously thought. Nonfarm payrolls increased by 143,000 last month after a revised 307,000 gain in December, a Bureau of Labor Statistics report showed Friday. Meanwhile, Lorie Logan suggested rates may already be near neutral, indicating
that even if inflation nears 2%, the Fed may hold off on rate cuts as long as demand remains strong and the labor market stable.

 

EQUITIES:  

US equity futures remained largely unchanged, with traders awaiting the US jobs report. Amazon led losses among the Magnificent Seven, falling 3% after warning of
AI-related capacity constraints, while Meta extended its record rally. Pinterest surged 20% on strong holiday-quarter revenue, and Doximity soared 24% after raising its full-year forecast. Elf Beauty plummeted 27% due to weaker-than-expected sales projections,
and Nikola plunged 35% amid bankruptcy concerns. Other notable movers included Affirm (+15%), Cloudflare (+10%), and Expedia (+10%) after strong earnings, while Bill Holdings sank 29% on disappointing revenue guidance.

 

Futures ahead of the bell: E-Mini S&P -0.1%, Nasdaq -.2%, Russell 2000 -0.1%, DJI -0.04%.

European stocks traded slightly lower in early trading as investors awaited key US jobs data, with the Stoxx Europe 600 Index down 0.1%. L’Oreal fell 4.5% after weaker-than-expected
US sales failed to offset a continued downturn in China, while Yara International dropped on disappointing dividends. Porsche tumbled 8% after warning that its profit margin would likely hit the lower end of forecasts and announcing an €800 million restructuring
cost. Investors remained cautious ahead of the US employment report, which could impact interest rate expectations, potentially boosting hopes for Federal Reserve easing if the data comes in weak or reinforcing a more hawkish stance if it surprises to the
upside. Despite previous underperformance, European stocks have outpaced the S&P 500 this year, as investors seek value in cheaper equities over expensive US tech giants. Stoxx 600 -0.05%, FTSE 100 -0.32%, DAX flat, CAC 40 -0.1%.

Asian equities advanced, gains in Chinese shares offset losses in Japan as traders awaited US jobs data. The MSCI Asia Pacific Index rose 0.1%, reversing an earlier 0.2% loss. The benchmark
recorded its fourth-straight week of gains, its longest win streak in 11 months. Tech shares, including TSMC and Tencent, were among the biggest boosts. Japan’s Topix Index fell 0.5% as Toyota Motor dragged on the gauge and Japanese stocks fell on a stronger
yen. Chinese stocks extended their recent rally on breakthroughs in artificial intelligence and hopes for further stimulus. Meanwhile, Hong Kong-listed tech stocks entered a technical bull market after the cheaper AI model from startup DeepSeek ignited interest
in China’s internet firms. Traders are watching energy, defense and AI stocks ahead of a meeting between Prime Minister Shigeru Ishiba and US President Donald Trump later today. Hang Seng Index +1.2%, CSI 300 +1.3%, ASX 200 -0.1%, Kospi -0.6%, Taiwan +0.7%,
Nikkei 225 -0.5%, Vietnam +0.3%. Sensex -0.2%, Philippines -1.4%, Thailand +1.6%, Indonesia -1.9%

FIXED INCOME: 
 

Treasuries remained steady, with yields slightly higher across the curve, led by the front-end where 2-year yields increased by about 1 basis point compared to Thursday’s
close. Bunds and gilts outperformed during the early London session, but overall market activity was subdued ahead of the January nonfarm payrolls report. The 10-year Treasury yield traded around 4.435%, relatively unchanged, while bunds and gilts outperformed
by 1.5 and 2.5 basis points respectively in that sector. The 2s10s spread flattened by 1.2 basis points, continuing a three-day trend that saw the curve drop from about 30 basis points on Wednesday to 21 basis points.

 

 

 

 

METALS: 

 

Gold prices edged higher, sitting just below all-time highs made earlier this week. The metal’s strength comes behind safe-haven demand driven by uncertainties surrounding
the policies of President Trump. A sharp rise in lease rates also indicates tension in the physical market. Additional demand is seen overseas as China’s central bank continues to expand its gold reserve and launches a pilot program for insurance funds to
invest in the bullion. Spot gold +0.33%, Silver +0.24%

 

 

ENERGY:   

 

Oil edged higher and is on track for its third consecutive weekly decline as concerns over President Trump’s tariffs on China outweigh the impact of new US sanctions
on Iran. Brent crude remains down more than 2% for the week, despite a slight rebound on Friday, as fears grow that escalating trade tensions will weaken demand and contribute to a supply glut later in the year. Chinese refiners have cut operating rates to
levels last seen during the pandemic, while European crude markets also show signs of softness as key processing plants shut down. WTI +0.7%, Brent +0.7%.

 

 

CURRENCIES: 

In currency markets, the U.S Dollar Index rose slightly ahead of today’s non-farm payroll numbers. Expectations for weaker NFP data will support further predictions
of a Fed interest rate cut. The Japanese yen strengthened as comments from a Bank of Japan board member underscored the case for higher interest rates. The euro slipped against the dollar as Chief Economist Philip Lane said the ECB will scrutinize economic
data when deciding how far to lower borrowing costs. Sterling pared losses to trade higher with the market’s dovish take on the latest BOE decision. Focus turns to BOE Chief Economist Huw Pill who will speak at the National MPC Agency briefing later. US$ Index
+0.1%, GBPUSD +0.1%, EURUSD -0.1%, USDJPY -0.5%, AUDUSD flat, NZDUSD flat, USDCHF -0.2%, USDCAD -0.2%

 

 

 

Bitcoin +0.7%, Ethereum +1.5%

Colors within the report:
Green is always the 200 period (day, week).
Red is always 21,
Blue = 50,
Brown =
100 *Stars have added importance 

 

 

  • Upgrades
    • Aptiv (APTV)
      Raised to Buy at Deutsche Bank; PT $78
    • Deckers
      Outdoor       (DECK) Raised to Buy at Citi;
      PT $215
    • Denny’s (DENN)
      Raised to Outperform at Wedbush; PT $10
    • Doximity (DOCS)
      Raised to Outperform at Leerink; PT $90
    • Expedia (EXPE)
      Raised to Buy at HSBC; PT $215
    • First
      United       (FUNC) Raised to Outperform
      at Raymond James; PT $42
    • Genpact (G)
      Raised to Buy at TD Cowen; PT $60
    • Great-West
      Lifeco       (GWO CN) Raised to Outperform
      at CIBC; PT C$60
    • Hershey (HSY)
      Raised to Neutral at Citi; PT $154
    • Honeywell (HON)
      Raised to Buy at Deutsche Bank; PT $260
    • Li
      Auto       (LI) ADRs Raised to Outperform
      at Macquarie; PT $29
    • Nevro (NVRO)
      Raised to Neutral at Piper Sandler; PT $5.85
    • Pagaya (PGY)
      Raised to Buy at Citi; PT $14.50
    • Pinterest (PINS)
      Raised to Buy at Benchmark; PT $55
    • Power
      of Canada       (POW CN) Raised to Outperform
      at CIBC; PT C$55
    • Spectrum
      Brands       (SPB) Raised to Buy at Canaccord;
      PT $102
    • TransDigm (TDG)
      Raised to Overweight at Wells Fargo; PT $1,500
    • XPO
      Inc       (XPO) Raised to Positive at Susquehanna;
      PT $180
  • Downgrades
    • Air
      Products       (APD) Cut to Neutral at
      JPMorgan; PT $320
    • Altus
      Power       (AMPS) Cut to Neutral at Seaport
      Global Securities
    • AMD (AMD)
      Cut to Hold at DZ Bank; PT $120
    • American
      Financial       (AFG) Cut to Market Perform
      at KBW; PT $144
    • Bausch
      Health       (BHC CN) Cut to Hold at Jefferies;
      PT C$11.45
    • BCE (BCE
      CN) Cut to Underweight at JPMorgan; PT C$29
    • Beacon
      Roofing       (BECN) Cut to Hold at Stifel;
      PT $122.55
    • Cloudflare (NET)
      Cut to Perform at Oppenheimer
    • Dlocal (DLO)
      Cut to Neutral at Banco BTG Pactual; PT $14
    • Elf
      Beauty       (ELF) Cut to Equal-Weight
      at Morgan Stanley; PT $70
      • Cut
        to         Neutral at DA Davidson; PT $80
    • Linde (LIN)
      Cut to Hold at Equita; PT $470
    • Match
      Group       (MTCH) Cut to Hold at HSBC;
      PT $36
    • Mondelez (MDLZ)
      Cut to Hold at DBS Bank; PT $57
      • Cut
        to         Sell at DZ Bank; PT $52
    • Nike (NKE)
      Cut to Neutral at Citi; PT $72
    • Paycor
      HCM       (PYCR) Cut to Neutral at Baird;
      PT $22.50
    • PepsiCo (PEP)
      Cut to Market Perform at CICC; PT $166
    • Performance
      Food       (PFGC) Cut to Neutral at Piper
      Sandler; PT $90
    • Selective
      Insurance       (SIGI) Cut to Market Perform
      at KBW; PT $93
    • Sprinklr (CXM)
      Cut to Market Perform at William Blair
    • XPeng (XPEV)
      ADRs Cut to Neutral at Macquarie; PT $18
  • Initiations

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

Dan Forsythe,CMT

Categories:

Charts

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