Daily Game Plan

by Contributor
on May 21, 2025

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

TODAY’S ECONOMIC DATA:  12:15ET Fed’s Barkin, Bowman speak; 1:00ET 20-Year Bond Auction

Highlights and News:  

  • China threatens legal action against anyone enforcing US restrictions on using Huawei’s AI chips
  • JOHNSON SAYS THEY CAME TO $40,000 SALT DEDUCTION CAP AGREEMENT
  • Oil Rises on Report Israel Preparing Iran Strike
  • The DOJ opened a criminal investigation into Andrew Cuomo
  • Morgan Stanley raised its call on US stocks

 

Global stocks dipped as investors grappled with concerns over the fiscal health of major developed economies and stalled trade negotiations. Rising government debt
levels and budget deficits in countries like the US, Japan, and parts of Europe are spooking markets, with fears that unsustainable borrowing could trigger higher interest rates or austerity measures. Meanwhile, trade talks, particularly between the US and
China, show little headway. US-China tech tensions are flaring again, with Beijing threatening legal action against anyone enforcing Washington’s restrictions on Huawei Technologies Co.’s chips, clouding a recent trade truce. Markets were also monitoring the
Group of Seven finance ministers’ meetings currently underway in Canada for any hints that a weaker dollar could help advance trade negotiations. Today’s data revealed a decline in Japanese shipments to the US in April, despite exports growing for the seventh
consecutive month.

 

EQUITIES: 

US equity futures fall as House lawmakers debated President Trump’s tax cuts throughout the night, racing to meet a self-imposed deadline to approve the legislation by Thursday. Trump
is growing frustrated with demands to significantly boost the cap on the state and local tax (SALT) deduction, signaling a deadlock in passing a giant tax-cut bill. Meanwhile, Morgan Stanley raised its call on US stocks and Treasuries on expectations that
interest-rate cuts will support bonds and boost company earnings. Nvidia CEO Jensen Huang criticized the US restrictions aimed at curbing China’s technological rise as a “failure,” urging the White House to ease AI chip sale barriers to prevent American companies
from losing ground to emerging competitors.

Futures ahead of the bell: E-Mini S&P -0.6%, Nasdaq -0.6%, Russell 2000 -1.0%, DJI -0.8%.

In pre-market trading, Canada Goose (GOOS) rises 9% after the coat manufacturer posted fourth-quarter revenue that beat estimates. Lowe’s (LOW) climbs 2% after comparable
sales beat expectations during the latest quarter. Moderna (MRNA) slips 1.3% after the biotechnology company voluntarily withdrew its pending biologics license application for its flu, Covid combination vaccine for adults 50 years and older. Palo Alto Networks
(PANW) slips 3% after the cybersecurity provider posted quarterly results and gave an outlook. Take-Two Interactive (TTWO) declines 4% after the video-game publisher announced plans to sell $1 billion of new stock to investors. Target (TGT) falls 5% after
earnings, revenue, and guidance all fell short of expectations as tariff-related uncertainty and consumer boycotts crimped consumer demand. Toll Brothers (TOL) gains 3% after the company reaffirmed its expectations for home sales in its full fiscal year. 
UnitedHealth (UNH) slides 5% after the Guardian reported that the health insurer secretly paid nursing homes to reduce hospital transfers for ailing residents. VF Corp. (VFC) tumbles 12% after the owner of apparel and footwear brands forecast a wider-than-expected
adjusted operating loss from continuing operations for the first quarter.

European gauges are lower, with the Stoxx 600 on course to snap a four-day winning streak as retail, auto, and travel shares lead declines. Domestically focused UK
stocks declined after British inflation jumped to a higher-than-expected annual rate of 3.5% in April from 2.6% in March, its highest rate in over a year. Services inflation, watched closely by the BOE for signs of underlying price pressures, accelerated to
5.4% from 4.7%. Cisco CEO Chuck Robbins told CNBC this morning that he sees a positive future for the European market, after the company announced it would open a new global AI hub in Paris. Chancellor Rachel Reeves will hold talks with Scott Bessent on the
sidelines of this week’s G-7 summit in Canada, as the UK and US continue to finalize a trade deal.  Stoxx 600 -0.35%, DAX -0.2%, CAC -0.5%, FTSE 100 -0.05%. Retail -1.3%, Autos -1.3%, Construction -1.3%, Travel -1.25%. Aero & Defense +0.5%, Telecom +0.3%.

Shares in Asia gained amid continued optimism over the possibility for trade deals in the region.  The MSCI Asia Pacific Index rose 0.6% to the highest level since
early October. Key gauges in tech-heavy South Korea and Taiwan were at the top of the leaderboard. “Reprieves have been priced; residual tariffs on China and autos plus potential semis and pharma actions imply a deeper earnings rebase for exporters,” Morgan
Stanley analysts wrote in a note.  “We position in domestic demand and reform beneficiaries across Asia and EM, which should get a growing tailwind from lower rates and USD into 2026.” Hedge funds “trimmed positions in the “Magnificent 7 while adding to China
ADRs” in the first quarter, according to Goldman Sachs strategists. Taiwan +1.3%, Kospi +0.9%, Indonesia +0.7%, Philippines +0.6%, Hang Seng Index +0.6%, Vietnam +0.6%, ASX 200 +0.5%, Sensex +0.5%, CSI 300 +0.5%. Topix -0.2%, Nikkei 225 -0.6%, Thailand -0.8%.

FIXED INCOME: 
 

Treasury yields have stayed elevated, with the yield on 30-year Treasury bonds hitting above 5%. Treasuries are 2bp-6bp cheaper across maturities, with long-end tenors
lead the move ahead of the 20-year bond auction later in the day. 10-year yield is around 5bp higher on the day at 4.54%: 2s10s curve is steeper by ~2bp. Treasury auctions resume with $16 billion 20-year new issue.

 

METALS: 

Gold prices rose as the dollar weakened and investors flocked to safe-haven assets amid concerns about renewed conflict in the Middle East.  Spot gold trades around
$3,311 per ounce, the highest in more than a week. Gold has received new impetus this week after Moody Rating’s stripped the US of its top credit rating, renewing concerns about the nation’s ballooning budget deficit. Spot gold +0.6%, Silver +0.2%, Copper
+0.7%.

 

 

ENERGY:   

 

Oil prices surged following a CNN report that Israel might be planning strikes on Iranian nuclear sites, sparking concerns about potential Middle East supply disruptions.
Prices eased after CNN added it was not clear whether Israeli leaders have made a final decision. There are also concerns that Iran could retaliate by blocking oil tanker flows through the Strait of Hormuz, through which Saudi Arabia, Kuwait, Iraq and the
United Arab Emirates export crude oil and fuel. WTI +0.8%, Brent +0.7%, US Nat Gas +2.3%, RBOB +0.6%. 

 

CURRENCIES: 

In currency markets, the dollar slides for a third straight day as investors flocked to safe haven currencies amid speculation the Trump administration may seek cooperation
to drive down the dollar during a Group-of-7 meeting in Canada. Initially, the yen and the Swiss franc led gains after CNN reported that new US intelligence suggested Israel could be gearing up for a possible strike on Iran’s nuclear facilities. UK inflation
jumped to its highest rate in over a year, briefly sending the pound to a three-year high against the dollar. Traders now see just one more 25-bp cut from the BOE by year end. US$ Index -0.5%, GBPUSD +0.1%, EURUSD +0.4%, USDJPY -0.5%, AUDUSD +0.3%, NZDUSD
+0.2%, USDCHF -0.4%, USDCAD -0.2%, USDSEK -0.7%, USDNOK -1.0%.

 

 

Bitcoin -0.4%, Ethereum +1.0%. 

 

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
    • Acadia Pharma (ACAD) Raised to Buy at Deutsche Bank
    • AutoZone (AZO) Raised to Buy at BofA
    • Bilibili (BILI) ADRs Raised to Buy at HSBC; PT $22.50
    • Home Depot (HD) Raised to Buy at Stifel; PT $425
  • Downgrades
    • CAE (CAE CN) Cut to Sector Perform at RBC; PT C$38
    • Myriad Genetics (MYGN) Cut to Sector Perform at Scotiabank; PT $6
    • NanoXplore (GRA CN) Cut to Sector Perform at RBC; PT C$2.50
    • PennantPark Investment (PNNT) Cut to Sell at Compass Point; PT $5.75
    • UnitedHealth (UNH) Cut to Reduce at HSBC; PT $270
  • Initiations
    • Atlantic Union (AUB) Rated New Buy at Jefferies; PT $37
    • Axos Financial (AX) Rated New Buy at Jefferies
    • Banc of California (BANC) Rated New Buy at Jefferies; PT $18
    • BankUnited (BKU) Rated New Hold at Jefferies; PT $39
    • BOK Financial (BOKF) Rated New Hold at Jefferies; PT $105
    • Cathay General (CATY) Rated New Buy at Jefferies; PT $53
    • CF Bankshares (CFBK) Rated New Overweight at Piper Sandler; PT $29
    • Citizens Financial (CFG) Rated New Buy at Jefferies; PT $50
    • CleanSpark (CLSK) Reinstated Buy at Chardan Capital Markets; PT $20
    • Columbia Banking (COLB) Rated New Hold at Jefferies; PT $27
    • Comerica (CMA) Rated New Underperform at Jefferies; PT $47
    • Cullen/Frost (CFR) Rated New Underperform at Jefferies; PT $105
    • D2L (DTOL CN) Rated New Outperform at CIBC; PT C$20
    • Eagle Bancorp (EGBN) Rated New Hold at Jefferies; PT $20
    • East West Bancorp (EWBC) Rated New Buy at Jefferies; PT $115
    • Fifth Third (FITB) Rated New Buy at Jefferies
    • First Citizens (FCNCA) Rated New Hold at Jefferies; PT $2,050
    • First Foundation (FFWM) Rated New Buy at Jefferies; PT $7
    • First Horizon (FHN) Rated New Buy at Jefferies; PT $25
    • Flagstar Financial (FLG) Rated New Buy at Jefferies
    • Huntington Bancshares (HBAN) Rated New Buy at Jefferies
    • KeyCorp (KEY) Rated New Hold at Jefferies; PT $18
    • Landbridge (LB) Reinstated Buy at William O’Neil
    • Lifecore Biomedical Inc (LFCR) Rated New Outperform at William Blair
    • M&T Bank (MTB) Rated New Buy at Jefferies
    • Old National (ONB) Rated New Hold at Jefferies; PT $24
    • Pinnacle Financial (PNFP) Rated New Buy at Jefferies; PT $135
    • Pony AI (PONY) ADRs Rated New Buy at President Capital Management
    • Prosperity Banc (PB) Rated New Buy at Jefferies; PT $85
    • Regions Financial (RF) Rated New Hold at Jefferies; PT $24
    • SelectQuote (SLQT) Rated New Hold at Jefferies; PT $2.75
    • SouthState Corp (SSB) Rated New Buy at Jefferies; PT $110
    • Synovus (SNV) Rated New Hold at Jefferies; PT $55
    • Texas Capital (TCBI) Rated New Hold at Jefferies; PT $80
    • Tvardi Therapeutics (TVRD) Rated New Outperform at Oppenheimer; PT $65
    • Valley National (VLY) Rated New Hold at Jefferies; PT $10
    • Vertiv Holdings (VRT) Rated New Equal-Weight at Oxcap; PT $115.70
    • Webster Financial (WBS) Rated New Buy at Jefferies; PT $65
    • Western Alliance (WAL) Rated New Buy at Jefferies
    • Wintrust Financial (WTFC) Rated New Buy at Jefferies; PT $145
    • Zions (ZION) Rated New Underperform at Jefferies; PT $40

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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