Daily Game Plan

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

TODAY’S ECONOMIC DATA:  9:45ET S&P Global US Manufacturing PMI; 10:00ET ISM Mfg, ISM Prices Paid, ISM New Orders,
ISM Employment

Highlights and News:  

• Stocks tumbled as the US attack on Iran rattled global markets
• Trump Said the Bombing Campaign Against Iran Could Last for Weeks
• Islamic Republic’s security chief ruled out negotiations
• IDF STRIKING SIMULTANEOUSLY IN BOTH LEBANON AND IRAN
• Indian Refiners Eye Russian Oil Again as Iran Crisis Hits Supply
• Iran Conflict Unlikely to Dent US Stocks Outlook: Morgan Stanley
• JPMorgan’s Matejka Sees Buying Opportunity in Market Weakness
• US-Iran Escalation Heightens Stagflation Risks: Barclays
• Citi Upgrades UK’s Equities, Downgrades Japan’s on Iran Crisis

Global stocks slid as oil prices spiked, with the escalating military conflict in the Middle East expected to persist for weeks—potentially derailing the global economic
rebound and possibly sparking renewed inflation. The US and Israel fired missiles at targets across Iran on Saturday, while urging local people to overthrow the Islamic regime. Tehran responded with a wave of strikes against Israel, as well as US bases and
other targets in states including Saudi Arabia, Qatar, the United Arab Emirates, Kuwait and Bahrain.  The weekend saw a muddied back and forth of claims around Hormuz. Iranian authorities said on Sunday that the waterway remained open. President Trump said
US forces sank nine Iranian naval ships, and that combat operations would continue until all objectives were completed. The jump in energy costs — if maintained — risks boosting inflationary pressures around the world. The current geopolitical escalation should
ultimately be a buying opportunity in stock markets as fundamentals remain positive, according to JPMorgan strategists. Citi lifts its rating of UK equities to overweight from underweight, and downgrades Japan to underweight from overweight, after the strikes
on Iran.

EQUITIES: 

US equity futures are broadly lower as the spiraling conflict in the Middle East is adding fresh headwinds for markets already on edge over shifting US tariff policy, artificial intelligence
fallout, and private credit strains. Foremost in traders’ minds: how prolonged the hostilities will prove and how far they might reach. Futures are well off the steep overnight losses following a report that indicated at least one top official in Tehran sought
to resume nuclear talks with the US. Morgan Stanley’s Mike Wilson says equities are unlikely to experience a sustained selloff. After similar events in the past, the S&P 500 recorded gains in subsequent months, his strategy team wrote. The bear case is that
a persistent rise in oil derails the strengthening business cycle, they added. Paramount Skydance is gaining 4.4% in premarket trading after the company reached an agreement to buy Warner Bros. Discovery for $110 billion, defeating Netflix in a bidding war.
Among defense stocks advancing on the Iran war, Lockheed Martin rises 7%, RTX gains 6.5%, L3Harris +5.6%, Northrop Grumman +5.2%. Oil shares are rallying too, with Conoco gaining 6%, Exxon Mobil +5%, and Chevron +4%. Developments in Iran will dominate all
other news for investors this week.

Futures ahead of the bell: E-Mini S&P -0.9%, Nasdaq -1.1%, Russell 2000 -1%, DJI -0.9%

In pre-market trading, The Iran conflict is pushing shares of airlines and cruise operators lower, while energy stocks jump. Movers include American Airlines (AAL)
-6% and Exxon (XOM) +4%. AES Corp. (AES) falls 16% after a consortium led by Global Infrastructure Partners and EQT agreed to buy the electric utility. Berkshire Hathaway (BRK/B) slips 1% after the conglomerate’s operating profits fell nearly 30% in Warren
Buffett’s last quarter as CEO. EchoStar (SATS) declines 2% after the parent of Dish Network posted a net loss in the fourth quarter. Paramount Skydance (PSKY) rises 5% after Warner Bros. Discovery filed a join-statement following the market close on Friday
announcing that they had entered into a definitive merger agreement. UniQure (QURE) tumbles 41% after US regulators said the company should conduct a pivotal study before getting approval of its gene therapy for Huntington’s disease.

US Premarket Movers of Note:

• KTOS US (+8.3%), LNG US (+7.8%), LMT US (+7.4%), SM US (+7.3%), RTX US (+7.1%), NOV US (+7.0%), APA US (+6.7%),
  CTRA US (+6.2%), PR US (+6.1%), DVN US (+5.9%), RIG US (+5.9%), OXY US (+5.8%), NOC US (+5.8%), FANG US (+5.7%), LHX US (+5.6%), BKR US (+5.6%): Oil and Defense Stocks Rally, Airlines Decline on Iran Conflict
• XYZ US (-2.1%): Dorsey’s 4,000 Job Cuts at Block Arouse Suspicions of AI-Washing
• AMZN US (-2.5%): Amazon Cloud Disrupted After ‘Objects’ Hit UAE Data Center
• AVGO US (-3.0%): AutoZone, Broadcom, CrowdStrike, Ross Stores: Earnings-Day Vol
• MU US (-3.2%): Nvidia Is Back as Morgan Stanley’s Top Chip Pick Over Micron
• DAL US (-4.9%), UAL US (-4.9%), AAL US (-5.0%), RCL US (-5.8%), NCLH US (-6.0%), ALK US (-6.0%), CCL US (-6.8%)

European gauges tumble the most since November as conflict in the Middle East triggered a flight from riskier assets. Energy is the only sector
in the green, while luxury and travel stocks fall the most. Travel was disrupted in the Middle East and beyond, sending airline stocks sharply lower. Shares in TUI, Europe’s largest travel company, dropped 9%, while British Airways-owner IAG was down ~6%,
and Lufthansa and Air France-KLM both fell ~7%. Shipping and logistics stocks are among the few gainers in European trading. European defense stocks jump, with BAE Systems among those hitting record highs. The UK stock market may hold up relatively well given
its exposure to oil companies and military contractors, as well as defensive sectors, according to Citigroup. The bank raised the UK to overweight from underweight. Eurozone manufacturing grew at its strongest rate in almost four years last month, fueled by
a rebound in new orders and higher factory output—though intensifying cost pressures continued to compress profit margins, according to today’s survey data. Stoxx 600 -1.8%, DAX -2.5%, CAC -2.1%, FTSE 100 -1.4%. Luxury -4%, Travel & Leisure -4%, Banks -3.4%,
Autos -3.4%, Retail -3.3%. Energy +2.5%.

Shares in Asia dropped for the first time in six days as the US-Israeli war against Iran prompted investors to reduce exposure to risk assets. The MSCI Asia Pacific
Index slid 1.8%, with financials and health-care the worst-performing sectors. Pakistani shares plunged the most on record after geopolitical tensions in the Middle East escalated, while benchmarks in Thailand, the Philippines and Indonesia led declines in
the region. Markets in South Korea were shut for a holiday. Japan’s Topix dropped nearly 3% before paring declines, with bank stocks among the biggest losers. The sell-off unfolded as investors eagerly awaited the kickoff of China’s pivotal “Two Sessions”
annual political meetings starting Thursday, where leaders are set to unveil the 2026 GDP growth target and outline key economic priorities for the coming five years. Thailand -4%, Philippines -2.8%, Indonesia -2.6%, Hang Seng Index -2.1%, Singapore -2.1%,
Vietnam -1.8%, Sensex -1.3%, Topix -1%, Taiwan -0.9%. ASX 200 was flat. CSI 300 +0.4%.

FIXED INCOME: 
 

Treasuries pushed lower across the curve as traders chose to bet on the potential inflationary aspects of the US-Iran conflict rather than rush to havens. Yields
rose on short-term Treasuries as investors weighed whether higher energy prices would mean the Federal Reserve is less inclined to cut interest rates. US yields are 4bp to 7bp higher, with curve slightly flatter. IG dollar issuance slate includes a couple
of names. For this week, syndicate desks are projecting about $65 billion of high-grade issuance, setting up a strong start to March as dealers forecast $230 billion for the month. Treasury auctions resume next week with 3-, 10- and 30-year tenors.

METALS: 

Gold rose alongside government borrowing costs as financial markets came to grips with US and Israeli strikes on Iran over the weekend that killed Supreme Leader
Ayatollah Ali Khamenei. Spot gold jumped over 2% to above $5,400 an ounce, to the highest in a month. “Gold is set to benefit from geopolitical instability, less risk appetite and inflation concerns amid skyrocketing energy costs,” analysts at TD Securities
wrote in a Sunday note. Speculators, who have been pulling back from the long gold trade in recent weeks “could see the developments in the Middle East as an opportunity to get back in,” TD said. Spot gold +2.4%, Silver +0.9%, Copper futures -0.7%. 

ENERGY:   

Oil prices spiked dramatically with tanker movements all but halted in the Strait of Hormuz and a key Saudi Arabian refinery offline, as the escalating regional conflict
disrupts critical energy supply routes. Saudi Aramco halted operations at its Ras Tanura refinery after a drone strike in the area. How quickly tanker traffic can normalize in Hormuz is critical to energy markets because the waterway handles a fifth of the
world’s oil and a similar portion of liquefied natural gas. JPMorgan estimates that a halt lasting 25 days would fill producer nations’ storage tanks, forcing them to cut production. In reaction to the widening conflict, OPEC+ agreed at a pre-arranged weekend
meeting to raise quotas next month by 206,000 barrels a day.  Morgan Stanley, meanwhile, raised its second-quarter Brent forecast to $80 a barrel from $62.50.  The effective closure of the Strait of Hormuz poses the greatest risk for China, which imports close
to 40% of the oil that transits the chokepoint. Brent futures were trading about 13% higher over $82 a barrel, before paring gains, following a report that at least one top official in Tehran sought to resume nuclear talks.  In Europe, natural gas surged as
much as 28%, the biggest increase since August 2023. Goldman Sachs warned that European natural gas prices could more than double if shipping through the Strait of Hormuz is halted for one month. WTI +7.1%, Brent +8%, US Nat Gas +6.9%, RBOB +5%.

CURRENCIES: 

In currency markets, the dollar strengthened as a spike in oil prices spurred traders to dial back bets on Fed rate cuts this year.  The safe haven Swiss franc rose
to its highest since 2015 against the euro. However, the yen, another safe haven, weakened against the dollar. Japan heavily depends on Middle East nations for energy imports, getting more than 90% of crude oil from the region. The euro fell toward its 200-day
moving average versus the dollar. “Investors have been overweight the euro on the recovery story this year – a story that will naturally be challenged this week by higher energy prices,” ING said. JPMorgan analysts said Iran escalation challenges bearish dollar
view, recommends tactically unwinding EUR/USD longs today. US$ Index +0.9%, GBPUSD -0.7%, EURUSD -1%, USDJPY +0.9%, AUDUSD -0.8%, NZDUSD -1%, USDCHF +1.2%, USDCAD +0.2%, USDSEK +1.3%, USDNOK +0.6%.

Spot Bitcoin +0.4%, Spot Ethereum +0.5%. 

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
• Aehr Test Systems (AEHR) Raised to Outperform at William Blair
• AppLovin (APP) Raised to Neutral at Arete; PT $340
• CrowdStrike (CRWD) Raised to Overweight at Piper Sandler; PT $520
• Dorman Products (DORM) Raised to Buy at Jefferies; PT $140
• Dutch Bros (BROS) Raised to Buy at Goldman; PT $75
• First American (FAF) Raised to Overweight at Stephens; PT $81
• Flywire (FLYW) Raised to Overweight at Morgan Stanley; PT $17
• Frontdoor (FTDR) Raised to Neutral at Goldman; PT $67
• Hyster-Yale (HY) Raised to Outperform at Northland; PT $50
• JetBlue (JBLU) Raised to Equal-Weight at Barclays
• Netflix (NFLX) Raised to Overweight at JPMorgan; PT $120
• Restaurant Brands (QSR CN) Raised to Buy at Stifel; PT C$122.84
• Raised to Overweight at Piper Sandler
• South Plains (SPFI) Raised to Overweight at Piper Sandler; PT $48
• StepStone (STEP) Raised to Overweight at Barclays; PT $55
• Twilio (TWLO) Raised to Buy at TD Cowen; PT $160
• Zions (ZION) Raised to Overweight at Morgan Stanley; PT $75
• Downgrades
• Aardvark Therapeutics (AARD) Cut to Neutral at HC Wainwright
• Cut to Equal-Weight at Morgan Stanley
• Cut to Sector Perform at RBC; PT $6
• Cut to Hold at Stifel; PT $6
• Arcellx (ACLX) Cut to Hold at TD Cowen
• AZZ (AZZ) Cut to Equal-Weight at Wells Fargo; PT $132
• Blue Owl Capital (OWL) Cut to Equal-Weight at Barclays; PT $11
• Fiverr (FVRR) Cut to Neutral at BTIG
• Frontier Airlines (ULCC) Cut to Underweight at Barclays
• Gitlab (GTLB) Cut to Hold at TD Cowen; PT $29
• Novo (NOVOB DC) ADRs Cut to Neutral at Goldman; PT $41
• Playtika (PLTK) Cut to Neutral at Wedbush; PT $3
• SITE Centers (SITC) Cut to Neutral at Piper Sandler; PT $6.50
• Initiations
• Axo Copper (AXO CN) Rated New Buy at Stifel Canada; PT C$2
• Bob’s Discount Furniture (BOBS) Rated New Outperform at Raymond James
• Rated New Buy at Loop Capital; PT $28
• Rated New Neutral at Baird; PT $22
• Rated New Overweight at Morgan Stanley
• Rated New Outperform at RBC; PT $26
• Rated New Overweight at JPMorgan
• Rated New Neutral at Goldman; PT $25
• Rated New Overweight at KeyBanc; PT $28
• Rated New Buy at UBS; PT $27
• Didi Global (DIDIY) ADRs Rated New Buy at UOB Kay Hian; PT $6.60
• Dynatrace (DT) Rated New Neutral at Macquarie; PT $36
• Eikon Therapeutics (EIKN) Rated New Overweight at Cantor
• Rated New Outperform at Mizuho Securities
• Rated New Overweight at Morgan Stanley
• Rated New Overweight at JPMorgan; PT $29
• Forgent Power Solutions (FPS) Rated New Outperform at Oppenheimer
• Rated New Buy at TD Cowen; PT $45
• Rated New Equal-Weight at Morgan Stanley
• Rated New Overweight at Barclays; PT $44
• Rated New Overweight at JPMorgan; PT $40
• Rated New Overweight at KeyBanc; PT $41
• Rated New Buy at Jefferies; PT $44
• Rated New Buy at Goldman; PT $48
• Genmab (GMAB DC) ADRs Rated New Overweight at Wells Fargo; PT $40
• GoGold Resources (GGD CN) Rated New Buy at Stifel Canada; PT C$5.25
• Luca Mining Corp (LUCA CN) Rated New Buy at Stifel Canada; PT C$4
• NextTrip (NTRP) Rated New Buy at Ascendiant Capital Markets; PT $7
• Regentis Biomaterials (RGNT) Rated New Buy at ThinkEquity; PT $10
• Relmada Therapeutics (RLMD) Rated New Buy at Lucid Capital Markets
• Silver Tiger Metals Inc (SLVR CN) Rated New Speculative Buy at Canaccord
• VeraDermics (MANE) Rated New Outperform at Leerink; PT $75
• Rated New Buy at Citi; PT $85
• Rated New Buy at Jefferies; PT $75
• Rated New Overweight at Cantor
• Versant Media (VSNT) Rated New Hold at TD Cowen; PT $32

Data sources: Bloomberg, Reuters, CQG

David Wienke