Daily Game Plan

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

TODAY’S ECONOMIC DATA:  10:00ET U. of Mich. Sentiment

Highlights and News:  

• Israeli Strikes Take Out Iranian Supreme Leader’s Top Generals
• TRUMP TELLS ABC ISRAELI ATTACK ON IRAN `EXCELLENT’ – THERE’S MORE TO COME
• TRUMP URGES IRAN TO MAKE A DEAL ‘BEFORE IT IS TOO LATE’
• IRAN TO CONTINUE NUCLEAR ACTIVITIES AFTER ISRAEL STRIKES: TV
• IRAN: US RESPONSIBLE FOR CONSEQUENCES CAUSED BY ISRAELI STRIKES
• WALMART AND AMAZON ARE EXPLORING ISSUING OWN STABLECOINS: WSJ
• Protest Groups to Hold Events Across the US on Saturday in Opposition of Military Parade and Trump

Global stocks are broadly lower and oil prices are spiking as Israel attacks Iran, sparking worries of a broader Middle East conflict and drove investors into safe-haven
assets. Israel hit at major targets in Iran in the early hours of Friday, including Tehran’s nuclear and military facilities, escalating tensions and potentially provoking retaliation. Iran warned that Israel will face “a very heavy price” for the attacks.
Iran reportedly has launched more than a hundred drones in response. Israel declared a state of emergency, citing expected missile and drone attacks from Tehran, and the US military is preparing for various contingencies. Trump, who was informed of the strikes
shortly before, urged Iran to make a deal “before it is too late.” Shipping lines, brokers, and analysts are warning of risks to key maritime thoroughfares in the Middle East. Japan’s top trade negotiator expects a trade deal with the US to spare Tokyo from
higher auto tariffs.

EQUITIES: 

 US equity futures fell after Israel launched airstrikes across Iran, targeting nuclear facilities and killing senior military commanders in a major escalation that could spark a broad
war in the Middle East. Israel pledged more attacks, with Prime Minister Benjamin Netanyahu saying they “will continue for as many days as it takes to remove this threat.”  Israel said it hit around 100 targets and had “struck at the heart of Iran’s nuclear
enrichment program.” Trump told Fox News he was aware of Israel’s action before they happened and that he hoped Iran would continue negotiating a nuclear deal. US Steel shares fell premarket after Nikkei reported that Nippon Steel’s planned takeover of the
US company may not proceed if the Japanese company has insufficient freedom of management. Almost all the iPhones exported by Foxconn from India went to the US between March and May as Apple attempted to bypass tariffs on China, Reuters reported.

Futures ahead of the bell: E-Mini S&P -0.85%, Nasdaq -1.1%, Russell 2000 -1.3%, DJI -0.9%.

In pre-market trading, Magnificent Seven stocks are lower as investors rotate out of equities and into haven assets. Tesla (TSLA) -1.6%, Amazon (AMZN) -1.9%, Meta Platforms
(META) -1.5%, Nvidia (NVDA) -1.5%, Alphabet (GOOGL) -2%, Microsoft (MSFT) -0.8%, Apple (AAPL) -0.2%. Energy and defense stocks rise after Israel’s airstrikes against Iran. Exxon Mobil (XOM) +3.3%, Chevron (CVX) +2.6%, Occidental Petroleum (OXY) +5.5% RTX (RTX)
+5.5%, Lockheed Martin (LMT) +4.8%. Airline and travel stocks slide following Israel’s predawn attacks. Delta Air Lines (DAL) -4.4%, United Airlines (UAL) -5%, American Airlines (AAL) -4%. Royal Caribbean Cruises (RCL) -3.7%, Carnival Corp (CCL) -5.5% and
Norwegian Cruise (NCLH) -4%. Adobe Inc. (ADBE) slips 3% after the company gave a sales outlook for the current quarter that topped analysts’ estimates, but investors remain skeptical. RH (RH) jumps 19% after the luxury furniture company reported adjusted earnings
per share for the first quarter that beat. Visa (V) falls 2.7% and Mastercard (MA) declines 2.4% as the Wall Street Journal reports that large merchants, including Walmart and Amazon, are exploring how to issue or use stablecoins to bypass traditional fees
of the card-based systems. US Steel (X) falls 4% after Nikkei reported that Nippon Steel’s planned takeover of the US company may not proceed if the Japanese company has insufficient freedom of management.

European gauges are all firmly in negative territory, with Germany’s DAX taking the biggest hit. The Stoxx 600 is well off the early lows though every sector except
energy and healthcare remains in the red, with travel and leisure stocks leading losses. Among individual stocks, British Airways owner IAG shed 4.8%, while cruise operator Carnival’s London-listed shares were down 4.2% and digital car sales firm Auto1 Group
shed 6%. Oil tanker giant Frontline, gained over 8% as oil prices surge. Shipping stocks rose, with AP Moller-Maersk A/S up 3.5% and Hapag-Lloyd AG gaining over 1% as the attacks sharpened focus on the region’s pressure points for oil and container trade.
Defense stocks gained, with Rheinmetall AG climbing 1.3% and BAE Systems Plc rising 2.9%. Stoxx 600 -0.6%, DAX -1.1%, CAC -0.8%, FTSE 100 -0.1%. Travel & Leisure -2.1%, Luxury -1.9%, Autos -1.6%. Energy +1.5%, Healthcare +0.1%.

Shares in Asia dropped amid rising risk-off sentiment following Israel’s attacks on Iran’s military facilities. The MSCI Asia Pacific Index fell 1%, TSMC, Alibaba and
Samsung Electronics among the stocks that weighed the most. Asian gold miners’ shares jumped, following price hikes in the precious metal, while energy stocks tracked crude oil higher. Shipping stocks also advanced on speculation freight rates will soar. Auto-related
stocks took a hit from President Donald Trump’s plan to raise US auto tariffs in order to boost domestic auto manufacturing. Taiwan -1%, Nikkei 225 -0.9%, Kospi -0.9%, CSI 300 –0.7%, Sensex -0.7%, Hang Seng Index -0.6%, Vietnam -0.6%, Indonesia and Thailand
-0.5%, ASX 200 -0.2%. Philippines +0.2%.

FIXED INCOME: 
 

Treasuries turn lower into early US session, unwinding an overnight flight-to-quality bid after Israel launched airstrikes on Iran’s nuclear and ballistic missile
programs. Treasury yields higher by a couple of basis points across shorter maturities with curve spreads little changed. 10-year is now flat around 4.36%. 2s10s and 5s30s curve is flatter by ~1.5bp. Next week’s Treasury auctions include $13 billion 20-year
bond reopening Monday and $23 billion 5-year TIPS reopening Tuesday.

METALS: 

The flight from risk drove safe-haven gold up to its highest point in more than a month to around $3,444 an ounce. Bullion climbed as much as 1.7% on haven demand
from investors, before paring some gains. Israeli Prime Minister Benjamin Netanyahu said the operation would continue until the “threat” was removed. Iran vowed a “severe response” to the airstrikes and sent a wave of drones towards Israel.  Spot gold +1.2%,
Silver -0.3%, Copper -2.1%.

ENERGY:   

Oil surged as much as 14%, near multi-month highs, though later pared its gains. Israel’s strikes on Iran have raised risks to key Middle East shipping routes. Crude
options volatility jumped to the highest since Russia’s invasion of Ukraine. Oil’s gains are extending across the futures curve — signaling that traders see potential for prolonged supply disruption. Trump suggested that Iran had brought the attack on itself
by resisting US demands in talks to restrict its nuclear program, and urged it to make a deal, “with the next already planned attacks being even more brutal”. Iran promised a harsh response to a barrage that killed the heads of both its armed forces and the
powerful Revolutionary Guards. The United Nations’ atomic watchdog said there were no indications of increased radiation levels at Iran’s main uranium-enrichment site of Natanz. Iran said its oil refineries and storage tanks weren’t damaged.  WTI +8.1%, Brent
+7.5%, US Nat Gas +1.2%, RBOB +4.4%. 

CURRENCIES: 

In currency markets, the dollar rose versus all major peers after trading around a three-year low on Thursday, as investors moved into safe-haven assets. ING currency
strategists said news of the strikes had offered “the oversold and undervalued dollar a catalyst for a rebound.” The Swiss franc initially gained versus the greenback and risk-sensitive currencies like the Aussie and kiwi slid, yet momentum didn’t last. The
yen gained initially before retreating. Bank of Japan officials expect the central bank’s benchmark interest rate to be left at 0.5% at the end of a two-day gathering next week as they need to monitor developments in tariff talks globally and their economic
implications, sources said. US$ Index +0.5%, GBPUSD -0.6%, EURUSD -0.6%, USDJPY +0.5%, AUDUSD -0.9%, NZDUSD -1%, USDCHF +0.3%, USDCAD +0.2%, USDSEK +0.8%, USDNOK +0.1%.

Bitcoin -0.8%, Ethereum -3.3%.  Some of the biggest merchants, including Walmart and Amazon, are exploring how to issue or use stablecoins, potentially shifting the
high volumes of cash and card transactions that they handle outside the traditional financial system and saving them billions of dollars in fees.

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
• Darden (DRI) Raised to Hold at Jefferies; PT $210
• Docusign (DOCU) Raised to Equal-Weight at Wells Fargo; PT $80
• Klaviyo (KVYO) Raised to Overweight at Wells Fargo; PT $40
• Myers Industries (MYE) Raised to Overweight at KeyBanc; PT $21
• Newell Brands (NWL) Raised to Overweight at JPMorgan; PT $7
• Oracle (ORCL) Raised to Outperform at BMO; PT $235
• Williams Cos (WMB) Raised to Peerperform at Wolfe; PT $60.08
• Zscaler (ZS) Raised to Overweight at Wells Fargo; PT $385
• Downgrades
• CureVac (CVAC) Cut to Neutral at Van Lanschot Kempen; PT $5.46
• Cut to Hold at Jefferies; PT $5
• Dayforce (DAY) Cut to Underweight at Wells Fargo; PT $50
• GE Vernova (GEV) Cut to Peerperform at Wolfe
• Haivision Systems (HAI CN) Cut to Hold at Paradigm Capital; PT C$4.50
• LyondellBasell (LYB) Cut to Sell at CFRA
• Sherwin-Williams (SHW) Cut to Neutral at Citi; PT $385
• Tim Brasil (TIMS3 BZ) ADRs Cut to Hold at HSBC; PT $19.50
• United Rentals (URI) Cut to Neutral at Redburn; PT $760
• ZoomInfo (GTM) Cut to Underweight at Wells Fargo; PT $9
• Initiations
• Aimco (AIV) Blue Owl Technology Fina Rated New Equal-Weight at Wells Fargo
• Air Products (APD) Rated New Outperform at RBC; PT $355
• American Electric Power (AEP) Rated New Outperform at Raymond James
• Atlanta Braves (BATRA) Rated New Neutral at Citi; PT $45
• Chevron (CVX) Rated New Buy at Punto Casa de Bolsa; PT $165.58
• Constellation Energy (CEG) Rated New Outperform at Raymond James
• Duke Energy (DUK) Rated New Market Perform at Raymond James
• Endeavour Silver (EDR CN) Reinstated Outperform at National Bank; PT C$9
• Entergy (ETR) Rated New Market Perform at Raymond James
• Highlander Silver (HSLV CN) Rated New Outperform at National Bank
• Infinity Natural Resources (INR) Rated New Buy at SWS; PT $23
• KLA Corp (KLAC) Reinstated Buy at William O’Neil
• Linde (LIN) Rated New Outperform at RBC; PT $576
• Microsoft (MSFT) Reinstated Buy at William O’Neil
• New Jersey Resources (NJR) Rated New Outperform at Raymond James
• NRG Energy (NRG) Rated New Strong Buy at Raymond James; PT $195
• Oracle (ORCL) Rated New Buy at William O’Neil
• RadNet (RDNT) Rated New Buy at B Riley; PT $69
• Solaris Energy (SEI) Rated New Outperform at Raymond James; PT $39
• Southern Co (SO) Reinstated Outperform at Raymond James; PT $98
• Sun Communities (SUI) Rated New Neutral at Colliers; PT $130
• Talen Energy (TLN) Rated New Outperform at Raymond James; PT $314
• USA Rare Earth (IPXXU) Rated New Buy at Canaccord; PT $17
• Vistra Corp (VST) Rated New Strong Buy at Raymond James; PT $216

Data sources: Bloomberg, Reuters, CQG

David Wienke