Daily Game Plan

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

DATA/HEADLINES:  11:00ET NY Fed 1-Yr Inflation Expectations; 1:00ET Fed’s Goolsbee speaks; 7:00ET Fed’s Kashkari
speaks

TODAY’S HIGHLIGHTS and News:  

• Progress in Gaza truce talks in Cairo, Egypt’s Al Qahera news says
• Ukrainian drone downed over roof of Zaporizhzhia nuclear power unit, no damage detected
• Alibaba is cutting prices for cloud customers outside of China by as much as 59%
  
• Biden’s alternative student-debt relief plan may forgive loans for as many as 26 million Americans

Global shares rose and oil prices retreated from a six-month peak as geopolitical tensions eased somewhat with truce talks making progress in Cairo, while Israel
withdrew more soldiers in southern Gaza over the weekend. All parties have agreed on basic points, Egypt’s state-affiliated TV channel said early today.  Investor focus this week will be on the US consumer price index report on Wednesday, which is expected
to show core inflation slowing to 3.7% in March from 3.8% the prior month.  The European Central Bank sets interest rates on Thursday, with investors looking for signs from officials that rate cuts will start in June after inflation slowed more than expected
in March. Treasury Secretary Janet Yellen threatened sanctions for Chinese banks and exporters that help bolster Russia’s military capacity. She also implored Beijing to fundamentally rethink its economic growth strategy.      

EQUITIES:  

US equity futures are muted ahead of a busy week that includes US inflation data, a European Central Bank rate decision and the start of first-quarter earnings. The S&P 500 index and
tech-heavy Nasdaq 100 both climbed more than 1% in the final session of last week as the bumper jobs report boosted optimism over US corporate earnings.  Amazon.com was on course to open above its all-time closing high for the first time in almost three years.
Shares in cryptocurrency-linked companies rose as Bitcoin climbed back over the $71,000 mark as it advanced for a third session. The US will award TSMC $6.6 billion in grants and as much as $5 billion in loans to ramp up domestic production.   

Futures ahead of the data: E-Mini S&P +0.05%, Nasdaq +0.1%, Russell 2000 +0.4%, DJI +0.05%

In pre-market trading, Boeing (BA) slips 1.2% and Southwest Airlines (LUV) declines 0.7% after the FAA announced it was investigating an incident where the engine cowling of a Boeing
plane fell off during takeoff.  Ducommun (DCO) rises 15% after confirming the board received an unsolicited non-binding indication of interest from Albion River to buy all outstanding shares for $60 per share in cash. Esperion (ESPR) gains 5% after the company
presented data from a study of its heart drug, Nexletol, in the treatment of diverse population of patients with obesity. Skyworks Solutions (SWKS) declines 2% after KeyBanc cut its rating to sector weight. Tesla (TSLA) rises 2.6% as Elon Musk said the maker
of electric cars will unveil its long-promised robotaxi on Aug. 8.

European shares are higher as attention turned towards upcoming macroeconomic events, including the European Central Bank policy decision and US inflation data. The Stoxx 600 Index rose
0.4%, driven by gains in mining stocks following a rise in iron ore prices. The autos subindex also reached a new high. The ECB is likely to keep its key rate unchanged on Thursday as traders eye rate cuts to begin in June. German industrial production grew
for a second month in February, boosting hopes of recovery. Production expanded 2.1%, more than expected. Stoxx 600 +0.4%, DAX +0.7%, CAC +0.7%, FTSE 100 +0.3%. Basic Resources +1.7%, Autos +1.4%. Food & Bev -0.2%.

Asian stocks were mixed overnight, with Japanese shares leading the region higher, tracking the gains in the US on Friday. China mainland stocks reopened lower after extended holidays
from Thursday. Sentiment was dampened after a Chinese state bank called for the liquidation of defaulted developer Shimao Group. Chinese shares related to fentanyl such as Jiangsu Nhwa Pharmaceutical drop after Yellen said the US is “committed to using all
of our tools, including international cooperation to counter this threat.”  The MSCI Asia Pacific Index rose 0.4%, paring last week’s loss, with TSMC and Toyota among the biggest contributors.  Topix +0.95%, Sensex +0.7%, Taiwan +0.4%, ASX 200 +0.2%, Kospi
+0.1%, Hang Seng Index +0.05%.  Singapore -0.05%, Vietnam -0.4%, CSI 300 -0.9%.

FIXED INCOME: 
 

US Treasury yields hit their highest in over four months as investors continued to rein in bets on Federal Reserve interest rate cuts.  Yields rose 2-5bps across
the curve, with the 10-year climbing to 4.46%. Front-end yields joined the rest of curve at YTD highs as Fed-OIS contracts price in less cumulative easing this year. Today has few scheduled events ahead of Treasury auctions and US CPI and PPI reports later
in week. 2s10s spread is wider by 2bps on the day.
Coupon auction cycle begins Tuesday with $58b 3-year note; $39b 10-year note and $22b 30-year bond reopenings follow Wednesday and Thursday.  In Europe, core and semi-core yields
are higher by 4-5bps on weaker demand for EU 7 year and 10-year supply.  

METALS: 
   

Gold rose to a fresh record above $2,350 an ounce as investors shifted focus to the US inflation reading later this week. Bullion buying by central banks and consumers
has been robust but outflows from gold-backed ETFs suggest a major group of investors is missing out.  Spot gold +0.3%, silver +0.6%. 

ENERGY:   

Oil slipped for the first time in five sessions after Israel withdrew more troops from Gaza over the weekend, saying it ended its mission there. Oil surged last week
on fears of a more direct confrontation between Israel and Iran, with Brent topping $90 a barrel for the first time since October. WTI -0.7%, Brent -0.8%, US Nat Gas +0.2%, RBOB -1%.

CURRENCIES:   

In currency markets, the dollar nudged higher while the yen remained under pressure, with traders on alert for possible intervention by Japanese authorities. The
People’s Bank of China kept the yuan’s reference rate within its recent range in its daily fixing Monday in a bid to stabilize the currency after its recent slide. The decision came as China’s financial markets reopened after a two-day holiday. The European
Central Bank looks set to beat the Federal Reserve in both the timing and scale of interest rate cuts in 2024, encouraging traders to position for euro weakness. US$ Index +0.1%, GBPUSD -0.2%, EURUSD -0.2%, USDJPY +0.2%, AUDUSD +0.1%, NZDUSD +0.05%, USDNOK
-0.25%, USDCHF +0.5%. 

Spot Bitcoin +7.5%, Ethereum +7.3%.

TECHNICAL LEVELS:  

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
• Applied Materials (AMAT) Raised to Overweight at Cantor; PT $260
• BJ’s Wholesale (BJ) Raised to Buy at Goldman; PT $87
• BRP Group (BRP) Raised to Overweight at JPMorgan; PT $33
• Fastly (FSLY) Raised to Overweight at Piper Sandler; PT $16
• Forte Biosciences Inc (FBRX) Raised to Buy at Ladenburg Thalmann
• Huntington Bancshares (HBAN) Raised to Buy at Jefferies; PT $16
• Sealed Air (SEE) Raised to Buy at Truist Secs; PT $44
• SQM (SQM/B CI) ADRs Raised to Buy at Jefferies; PT $62.80
• T. Rowe (TROW) Raised to Hold at Cowen; PT $114
• Take-Two (TTWO) Raised to Buy at Citi; PT $200
• Transocean (RIG) Raised to Positive at Susquehanna; PT $9
• UiPath (PATH) Raised to Overweight at KeyBanc; PT $27
• Ulta Beauty (ULTA) Raised to Buy at Loop Capital; PT $540
• Zebra Tech (ZBRA) Raised to Outperform at Wolfe; PT $337
• Downgrades
• Amer Sports (AS) Cut to Market Perform at Bernstein; PT $16
• Douglas Dynamics (PLOW) Cut to Neutral at Baird; PT $25
• Eaton Corp (ETN) Cut to Underperform at Wolfe
• Energy Vault (NRGV) Cut to Sell at Chardan Capital Markets; PT $7
• GlobalFoundries (GFS) Cut to Neutral at Cantor; PT $55
• Kroger (KR) Cut to Underperform at BNPP Exane
• Palomar (PLMR) Cut to Neutral at JPMorgan; PT $85
• Shockwave Medical (SWAV) Cut to Equal-Weight at Morgan Stanley; PT $335
• Cut to Market Perform at Leerink; PT $335
• Skyworks (SWKS) Cut to Sector Weight at KeyBanc
• Sphere Entertainment (SPHR) Cut to Neutral at Seaport Global Securities
• Initiations
• Advantage Energy Ltd (AAV CN) Reinstated Outperform at BMO; PT C$13
• Alnylam (ALNY) Rated New Buy at Mirae Asset Daewoo; PT $208
• American Tower (AMT) Rated New Neutral at Mizuho Securities; PT $205
• Apellis Pharma (APLS) Rated New Buy at Baptista Research; PT $83.20
• Athabasca Oil (ATH CN) Reinstated Outperform at BMO; PT C$6.50
• Banzai International (BNZI) Rated New Buy at Ascendiant Capital Markets
• Broadcom (AVGO) Reinstated Buy at Deutsche Bank; PT $1,500
• Canadian National (CNR CN) Rated New Hold at Jefferies; PT C$176.79
• Canadian Pacific Kansas (CP CN) Rated New Buy at Jefferies; PT C$142.79
• CSX (CSX) Rated New Hold at Jefferies; PT $40
• D-Wave Quantum (QBTS) Rated New Buy at Needham; PT $2.50
• EHang Holdings (EH) ADRs Rated New Buy at TF Securities; PT $24.75
• Gaotu Techedu (GOTU) ADRs Reinstated Buy at TF Securities; PT $8.96
• Know Labs (KNW) Rated New Speculative Buy at Benchmark; PT $1
• Norfolk Southern (NSC) Rated New Buy at Jefferies; PT $300
• Occidental (OXY) Rated New Hold at HSBC; PT $65
• Outset Medical (OM) Rated New Buy at BTIG; PT $6
• Pinstripes (PNST) Rated New Outperform at William Blair
• Prime Medicine (PRME) Rated New Buy at Cowen
• Republic Services (RSG) Rated New Sector Perform at Scotiabank
• Sidus Space (SIDU) Rated New Buy at ThinkEquity; PT $10
• Simply Good Foods (SMPL) Rated New Buy at Baptista Research; PT $44.60
• SoFi Technologies (SOFI) Resumed Buy at Citi; PT $11
• Solventum (SOLV) Rated New Equal-Weight at Wells Fargo; PT $69
• Union Pacific (UNP) Rated New Hold at Jefferies; PT $250
• Verve Therapeutics (VERV) Rated New Buy at HC Wainwright; PT $15

Data sources: Bloomberg, Reuters, CQG