Daily Game Plan

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

TODAY’S ECONOMIC DATA:   8:15ET ADP Weekly Employment Change; 9:00ET FHFA House Price Index; 10:00ET Conf. Board
Consumer Confidence, Richmond Fed Manufact. Index; 10:30ET Dallas Fed Services Activity; 1:00ET 5-year note auction; 4:00ET Trump speech on affordability and the economy

Highlights and News:  

• Trump accuses South Korea legislature of not living up to trade deal; says tariffs will rise to 25%
  
• South Korea reassures on US investment pledge after Trump threatens to hike tariffs
• India, EU reach landmark trade deal, tariffs to be slashed on most goods
• US is “open for business” ‌if Iran ‌wishes to contact Washington, a US official said
  
• Canada and India will pledge to expand trade in oil and gas
• CARNEY: HAD GOOD CONVERSATION WITH PRESIDENT TRUMP

Global stocks hovered near record highs, as investors pinned hopes on strong results from this week’s wave of major US company earnings, shrugging off President Trump’s
most recent tariff announcements. Late Monday, President Trump criticized South Korea’s legislature for “not living up” to the trade deal with the US and stated he would hike tariffs on imports from the country to 25% from 15%. The KOSPI quickly reversed earlier
losses to surge by more than 2% to a new peak after South Korea scrambled to assure the US it remained committed to implementing a trade deal. India and the European Union struck a long‑delayed
deal today that will slash tariffs on most goods, aiming to boost two‑way trade and lessen dependence
on the United States. The deal is expected to double EU exports to India by 2032 by eliminating or reducing tariffs in 96.6% of traded goods by value. India and the EU said agriculture-related items like soya, beef, sugar, rice and dairy have been excluded
from the trade deal. India will slash tariffs on cars to 10% over five years from as high as 110%.

EQUITIES: 

US equity futures point to a mixed but generally higher open amid optimism over this week’s heavy slate of large-cap US earnings. Yesterday’s gains came amid tech leadership and broader
rotation. Tech heavy Nasdaq outperforms as Micron Technology jumped 5% in premarket trading on plans to expand its memory-chip capacity. Shares of leading health insurers like UnitedHealth Group, CVS Health, and Humana plunged in premarket trading following
the US government’s proposal to keep payments to private Medicare Advantage plans essentially flat for next year. The sell-off intensified after UnitedHealth projected its first annual revenue drop in over 30 years. UPS forecast sales above expectations as
it forges ahead with plans to cut less-profitable package volume. Short-covering dominated the latest weekly US large-cap futures flows, while new long risk was added to the Russell 2000, according to Citigroup strategists. So far, the earnings season has
been good but not great, according to strategists at BofA. Attention will shift to the Federal Reserve’s policy decision on Wednesday.

Futures ahead of the bell: E-Mini S&P +0.25%, Nasdaq +0.6%, Russell 2000 +0.1%, DJI -0.5%.

In pre-market trading, Health insurers including Humana (HUM), UnitedHealth (UNH) and CVS (CVS) slide after the US proposed holding payments to private Medicare plans
flat next year. Analysts note that investors are disappointed as they expected mid-single digit-percentage rises. Humana -15%, UnitedHealth -16%, CVS -13%. Agilysys Inc. (AGYS) falls 12% after the hospitality software firm posted fiscal third quarter adjusted
earnings per share that fell short of expectations. American Airlines Group (AAL) rises 3% after reporting fourth-quarter results. CoreWeave (CRWV) gains 4%, set to extend Monday’s 5.7% rally, after Nvidia invested an additional $2 billion in the cloud computing
firm. Following the latest investment announcement, Deutsche Bank raised the recommendation on the stock to buy. General Motors (GM) climbs 4% as the company expects profits to grow as much as $2 billion this year and plans to return more of that to shareholders
with a higher dividend and buybacks. JetBlue Airways Corp. (JBLU) falls 3% after reporting a wider loss than expected last quarter. Redwire Corp. (RDW) climbs 15% after being awarded a contract for the Missile Defense Agency. Sanmina (SANM) falls 8% after
the electronics manufacturing services provider gave a revenue outlook for the second quarter that fell short. United Parcel Service Inc. (UPS) gains 3% as the courier forecast full-year sales above Wall Street’s expectations as it forges ahead with plans
to cut less-profitable package volume out of its network.

XLB/SPY positive as it climbs above the 200dma for the first time since March 2023.

European gauges gained as India and the European Union reached a free trade agreement, with upbeat earnings also lifting sentiment. The Stoxx 600 was led higher by
a surge of as much as 21% in Puma SE after the Pinault family sold a stake in the sportswear maker. China’s Anta Sports Products Ltd. has agreed to buy a stake of about 29% in Puma SE for €1.5 billion. Banks were among the biggest gainers, with HSBC Holdings
rising above $300 billion in market capitalization for the first time as Citigroup analysts lifted their price target. Mining stocks, the year’s top gainers, were among the laggards. Siegfried Holding AG jumped 14% after the Swiss pharmaceutical ingredients
company bought two new sites in the US. Stoxx 600 +0.45%, DAX +0.05%, CAC +0.5%, FTSE 100 +0.5%. Banks +1.2%, Telecom +1%, Insurance +0.9%. Basic Resources -0.6%, Autos -0.5%. 

Shares in Asia extended gains, lifted by a continued rally in technology stocks in Taiwan and South Korea. The MSCI Asia Pacific Index gained 0.7%, with Samsung, SK
Hynix and TSMC offering the biggest boost. South Korea’s KOSPI surged nearly 3% to a fresh record high after reversing initial losses from Trump’s tariff rhetoric. India’s Sensex and Nifty ended higher, buoyed by buying in metals, banks, and optimism around
India-EU trade talks. Hang Seng climbs about 1% and mainland China indexes nudge higher. China’s industrial enterprises had their first annual gain in profits since 2021, with profits climbing 5.3% in December from a year earlier. Chinese travel stocks drop
after the government advised citizens to avoid trips to Japan during the Lunar New Year. Kospi +2.7%, Thailand +2.1%, Hang Seng Index +1.3%, Singapore +1.3%, ASX 200 +0.9%, Nikkei 225 +0.8%, Taiwan +0.8%, Philippines +0.5%, Sensex +0.4%, Shanghai Composite
+0.2%. CSI 300 -0.05%, Vietnam -0.7%

FIXED INCOME: 
 

Treasuries are slightly weaker ahead of a $70 billion auction of five-year notes. US yields remain within a couple basis points of Monday closing levels with 10-year
near 4.23%, about 1.5bp higher on the day. Curve is slightly steeper with 2s10s +2bps. $70 billion 5-year note auction at 1pm follow strong demand for Monday’s 2-year note sale.   Focal points today includes consumer confidence data.

METALS: 

Gold climbed for a seventh straight day, with some analysts predicting it could potentially exceed $7,000 by the end of the year due to ongoing geopolitical instabilities.
Spot gold has surged 18% so far this year. Market focus is now on the Federal Reserve’s policy meeting starting today,
⁠where it is expected
⁠to hold interest rates steady tomorrow.  Spot silver jumped as much as 8.8% after hitting
a record high of $117.69 on Monday. It has already surged more than 50% so far this year. America’s growing isolation from other nations is prompting many investors to cut holdings of dollar assets and shift into gold, according to Europe’s largest money manager,
Amundi SA. Copper declined from near a record high, despite a weaker dollar, as demand conditions appeared fragile. In China, metals markets have slowed ahead of next month’s Lunar New Year, when inventories typically build. Spot gold +1.6%, Silver +8.7%,
Copper futures -2.1%.

ENERGY:   

Crude oil held steady, with traders centering on expectations of ample supply while assessing the aftermath of a widespread US winter storm. Kazakhstan’s largest
producer is preparing to resume output at the Tengiz field, and Chevron is working to bring more Venezuelan crude to the market. In the US, freezing temperatures have hampered several refineries along the US Gulf Coast and caused scattered reductions in domestic
output, though analysts expect the disruptions to be temporary. US natural gas futures fell as traders took profits after prices shot up nearly 30% on Monday amid freezing temperatures. OPEC+, meanwhile, is scheduled to meet this weekend to review a decision
on output policy for next month and are expected to stick with plans to keep oil production steady. WTI +0.1%, Brent +0.02%, US Nat Gas -5.7%, RBOB +0.1%. 

CURRENCIES: 

In currency markets, dollar weakened as traders stayed vigilant for signs of potential coordinated currency intervention by US and Japanese authorities, with attention
turning to the Fed’s rate announcement on Wednesday. Much of the recent focus in the foreign exchange market has been on the yen, which has rallied as much as 3% over the past two sessions as jitters over intervention lingered. The euro firms to its highest
level versus the dollar since June 2021. The won weakened against the dollar following President Trump’s threat to raise tariffs on South Korean goods. The Australian dollar is nearing its strongest level in three years due to the central bank’s hawkishness
and the threat of a joint US-Japan yen defense. The Swiss franc’s latest rally is unlikely to justify currency intervention from Switzerland’s central bank for now, even though it’s gained to levels that triggered action in the past, Commerzbank says. US$
Index -0.4%, GBPUSD +0.5%, EURUSD +0.5%, USDJPY -0.6%, AUDUSD +0.5%, NZDUSD +0.4%, USDCHF -0.85%, USDCAD -0.25%, USDSEK -0.7%, USDNOK -0.7%.

Spot Bitcoin %, Spot Ethereum %. Bitcoin miners in the US are powering down operations as the winter storm strained power grids and drove up electricity costs.

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
• Affirm Holdings (AFRM) Raised to Buy at Needham; PT $100
• Bank of Hawaii (BOH) Raised to Outperform at KBW; PT $91
• BCE (BCE CN) Raised to Equal-Weight at Barclays; PT C$35
• CoreWeave (CRWV) Raised to Buy at Deutsche Bank; PT $140
• CoStar (CSGP) Raised to Buy at BTIG; PT $80
• FirstEnergy (FE) Raised to Outperform at Wolfe; PT $50
• Magnolia Oil & Gas (MGY) Raised to Equal-Weight at Wells Fargo; PT $22
• Okeanis Eco Tankers (ECO) Raised to Buy at Clarksons; PT $46.05
• Target (TGT) Raised to Peerperform at Wolfe
• TE Connectivity (TEL) Raised to Outperform at Oppenheimer; PT $270
• Teleflex (TFX) Raised to Buy at Needham; PT $138
• WW Grainger (GWW) Raised to Outperform at Oppenheimer; PT $1,250
• Downgrades
• Alcoa (AA) Cut to Equal-Weight at Morgan Stanley
• Ametek (AME) Cut to Market Perform at Oppenheimer
• Bitdeer Technologies Group (BTDR) Cut to Market Perform at KBW; PT $14
• Bitfarms/Canada (BITF CN) Cut to Market Perform at KBW; PT $3
• Clearwater Analytics (CWAN) Cut to Equal-Weight at Morgan Stanley
• Compass (COMP) Cut to Neutral at Goldman; PT $14
• Emerson Electric (EMR) Cut to Market Perform at Oppenheimer
• Enbridge (ENB CN) Cut to Neutral at JPMorgan; PT C$69
• Hive Digital Technologie (HIVE CN) Cut to Market Perform at KBW; PT $3.50
• Ichor (ICHR) Cut to Market Perform at Oppenheimer; PT $32
• Inspire Medical (INSP) Cut to Sector Perform at RBC; PT $90
• Matador Resources (MTDR) Cut to Equal-Weight at Wells Fargo; PT $47
• Mobileye (MBLY) Cut to Neutral at Arete; PT $15.70
• Noble Corp. (NE) Cut to Sell at SEB Equities; PT $33
• Oneok (OKE) Cut to Neutral at JPMorgan; PT $83
• P&G (PG) Cut to Hold at TD Cowen
• SkyWater Tech (SKYT) Cut to Hold at TD Cowen; PT $35
• Cut to Hold at Needham
• Cut to Neutral at Piper Sandler; PT $35
• Trade Desk (TTD) Cut to Hold at CFRA
• Venture Global (VG) Cut to Neutral at JPMorgan; PT $11
• Initiations
• ADP (ADP) Rated New Overweight at Cantor; PT $306
• Affirm Holdings (AFRM) Rated New Overweight at Cantor; PT $85
• Alithya Group (ALYA CN) Reinstated Sector Outperform at Scotiabank; PT C$3
• Aurora Cannabis (ACB CN) Reinstated Buy at Canaccord; PT C$10
• Beta Bionics (BBNX) Rated New Hold at TD Cowen; PT $17
• Better Home & Finance Holding (BETR) Rated New Overweight at Cantor
• BioAge Labs (BIOA) Rated New Overweight at Piper Sandler; PT $73
• Block (XYZ) Rated New Overweight at Cantor; PT $87
• CGI Inc. (GIB/A CN) Reinstated Sector Perform at Scotiabank; PT C$140
• Corpay (CPAY) Rated New Overweight at Cantor; PT $385
• Cronos Group (CRON CN) Reinstated Buy at Canaccord; PT C$4.25
• Datadog (DDOG) Rated New Buy at Daiwa; PT $190
• Fidelity National (FIS) Rated New Overweight at Cantor; PT $72
• Fiserv (FISV) Rated New Neutral at Cantor; PT $70
• Global Payments (GPN) Rated New Neutral at Cantor; PT $80
• Globus Medical (GMED) Rated New Buy at TD Cowen; PT $110
• Intuitive Surgical (ISRG) Rated New Buy at TD Cowen; PT $660
• Kyndryl (KD) Reinstated Sector Outperform at Scotiabank; PT $40
• Mastercard (MA) Rated New Overweight at Cantor; PT $650
• Molecular Partners (MOLN SW) ADRs Rated New Buy at HC Wainwright; PT $13
• Netflix (NFLX) Rated New Buy at GF Securities; PT $100
• Organigram (OGI CN) Reinstated Buy at Canaccord; PT C$3
• Orthofix (OFIX) Rated New Hold at TD Cowen; PT $14
• OrthoPediatrics (KIDS) Rated New Buy at TD Cowen; PT $23
• Paychex (PAYX) Rated New Underweight at Cantor; PT $98
• PayPal (PYPL) Rated New Neutral at Cantor; PT $60
• Remitly (RELY) Rated New Overweight at Cantor; PT $17
• SI-BONE (SIBN) Rated New Buy at TD Cowen; PT $21
• Tilray Brands (TLRY) Reinstated Hold at Canaccord; PT $9.48
• Versant Media (VSNT) Rated New Neutral at Goldman; PT $34
• Visa (V) Rated New Overweight at Cantor; PT $400
• Waters (WAT) Rated New Buy at HSBC; PT $460
• Western Union (WU) Rated New Underweight at Cantor; PT $9
• WEX (WEX) Rated New Neutral at Cantor; PT $158

Data sources: Bloomberg, Reuters, CQG

David Wienke