Daily Game Plan

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

TODAY’S ECONOMIC DATA:   9:00ET Fed’s Waller speaks, Fed’s Barr speaks; 10:30ET Fed’s Jefferson speaks on economic
outlook, housing; 2:00ET Fed’s Mester on BTV

FED’S BOSTIC: ECONOMY IS SLOWING DOWN, BUT DOING SO VERY SLOWLY – STILL A WAYS TO GO ON INFLATION

HIGHLIGHTS and News:  

• London court rules WikiLeaks founder Assange can appeal against an extradition order to the US
• The International Criminal Court’s prosecutor is seeking arrest warrants for Israeli Prime Minister Benjamin Netanyahu and Hamas’s Gaza leader, Yahya Sinwar
• US Opposes Global Tax On Billionaires, Treasury Sec Yellen Says – WSJ
• Gold pairs gains after hitting new all-time high
• WTI holding below its 200dma
  

World shares edged higher, buoyed by investor optimism due to slower inflation, economic growth and China’s efforts to address its property crisis. However, a number
of policymakers have urged caution over cutting rates, with the ECB’s Martins Kazaks the latest to warn against hasty cuts after the first move in June. In key events to watch this week, traders will be monitoring interest-rate decisions in New Zealand, Indonesia
and South Korea. Developments in the Middle East will also be a focus after Iran’s President Ebrahim Raisi, widely seen as a candidate to become the country’s next supreme leader, was killed in a helicopter crash on Sunday.

EQUITIES: 

US equity futures inched up as investors awaited quarterly results from artificial intelligence chip leader Nvidia and minutes of the Fed’s latest monetary policy meeting, both scheduled
for Wednesday. Nvidia, which is expected to report a more than three-fold jump in quarterly revenue, rose about 1.5% ahead of the bell, while other chipmakers including Micron Technology and Super Micro Computer also advanced. Microsoft plans to announce several
pieces of hardware and software related to consumer devices at a product event today, a day before the start of its annual developer conference. Investors will watch for Fed officials’ speeches this week, including from Governor Christopher Waller who is set
to talk specifically about the US economy and monetary policy. Big-box retailers Target, Macy’s and Lowe’s will offer clues this week on the health of consumers, as sentiment slumps to a six-month low on inflation and job market expectations.

Futures ahead of the bell: E-Mini S&P +0.1%, Nasdaq +0.2%, Russell 2000 is flat, DJI +0.05%

In pre-market trading, Paramount Global (PARA) climbed 3% after a report Sony Pictures Entertainment and Apollo Global Management have signed non-disclosure agreements that will allow
them to look at the media company’s books ahead of a potential bid for its assets. Johnson Controls International (JCI) jumped over 5% following a report that activist investor Elliott Investment Management had built a position worth over $1B in the building
solutions provider. CyberArk Software (CYBR) gains 4% after agreeing to buy Venafi, a cybersecurity company backed by private equity firm Thoma Bravo. Jaguar Health (JAGX) plummets 35% after the natural products pharmaceutical company announced a 1-for-60
reverse stock split on Friday. JPMorgan Chase (JPM) gains 0.8% after the bank lifted its forecast for the amount of net interest income it expects to generate this year. Li Auto (LI) ADRs fall 4% after the Chinese EV maker reported a sharp decline in profitability.
NextDecade (NEXT) rises 4% after the main oil company of the United Arab Emirates bought a stake in the company’s natural gas export project in Texas. Nvidia (NVDA) advances 1.4% after Barclays increased its price target, seeing more upside for data center
revenue compared to current estimates. Wix.com (WIX) rises 7% after reporting first-quarter revenue that beat estimates.

The Communications Services ETF is holding a positive tone relative to the S&P 500

European gauges edged higher, hovering near their record highs, with industrial stocks leading the way while banks underperformed.  Automotive shares were among the laggards as Morgan
Stanley analysts turned cautious on the industry. Morgan Stanley strategists hiked their MSCI Europe Local Index target to 2,500, implying 18% gains from current levels over the next 12 months. The region’s equities are in a “sweet spot,” supported by an emerging
earnings recovery and continued re-rating. Stoxx 600 +0.2%, DAX +0.5%, CAC +0.6%, FTSE 100 +0.1%. Industrial Goods +1%, Retail +0.8%, Chemicals +0.6%. Banks -0.5%, Autos -0.2%.

Asian stocks rose for a seventh-straight day of gains, as China’s latest property-rescue measures and expectations for global interest-rate cuts buoyed sentiment. The MSCI Asia Pacific
Index climbed 0.4%, led by mining stocks on a strong rally in metal prices. Indices in Japan led advances around the region, with notable increases also in South Korea and Australia. Chinese shares gained after Beijing unveiled a policy package to bolster
the slumping housing market, even as concerns linger that the measures may be too small. Shares of Chinese travel-related firms traded higher after President Xi Jinping calls for greater efforts to boost the tourism industry. Philippines +1%, Topix +0.8%,
Kospi +0.6%, ASX 200 +0.6%, Shanghai Composite +0.5%, Hang Seng Index +0.4%, Vietnam +0.3%, Taiwan +0.05%. Indonesia -0.7%.

FIXED INCOME: 
 

Treasuries traded in a narrow range overnight, with yields within a basis point of Friday’s close across the curve. 10-year yield is around 4.42%, little changed
on the day while the curve is just slightly steeper. The US session focus will be on a busy slate of Fed speakers with no scheduled data prints. Traders expect a near 82% chance that the Fed will cut rates by at least 25 basis points in September, according
to the CME’s FedWatch Tool.

METALS: 

Gold rose before paring gains after surpassing its previous record set in April, as the death of Iranian President Ebrahim Raisi in a helicopter raised concerns of
fresh tensions in the Middle East. The news added to a sense of rising geopolitical risks across the region after a China-bound oil tanker was hit by a Houthi missile in the Red Sea on Saturday. Copper surged to a record high, lifting futures on the London
Metal Exchange above $11,000 for the first time. Tight supply of copper ore has fueled talk of output cuts by smelters, and investors are betting that surging usage in fast-growing sectors including EVs, renewable energy and artificial intelligence will offset
the drag from traditional sectors like construction. Higher commodity prices are adding to inflation risks, with copper particularly key due to its role in the green transition.   Spot gold +0.1%, silver -0.7%.

ENERGY:   

Oil eased, erasing earlier gains after uncertainty swirled regarding succession in Iran and Saudi Arabia. Iranian President Ebrahim Raisi, along with the country’s
foreign minister and others, were found dead Monday after their helicopter crashed in foggy conditions.  Saudi Crown Prince Mohammed bin Salman postponed a trip to Japan due to concerns over King Salman’s health. The monarch is suffering from lung inflammation.
Gasoline exports from China collapsed to 400,000 tons in April, the lowest since 2015. Meanwhile, its LNG imports surged 32% last month and are forecast to hit a record this year. WTI -0.5%, Brent -0.4%, US Nat Gas +1.4%, RBOB -0.7%.

CURRENCIES:   

Currency markets see a quiet start to the week amid a thin data calendar. The euro is slightly lower as ECB Governing Council member Martins Kazaks said the pace
of interest-rate cuts must match the gradual slowdown of euro-area inflation.  Money markets almost fully price in a quarter-point reduction next month by the ECB and assign a 75% probability that the SNB cuts rates at its June meeting. US$ Index +0.1%, GBPUSD
-0.05%, EURUSD +0.05%, USDJPY +0.1%, AUDUSD +0.15%, USDSEK +0.2%, NZDUSD -0.3%

Spot Bitcoin +1.4%, Ethereum +0.7%. 

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
• GreenTree Hospitality (GHG) US Raised to Equal-Weight at Morgan Stanley; PT $4
• Huya (HUYA) ADRs Raised to Overweight at JPMorgan; PT $9
• Micron (MU) Raised to Equal-Weight at Morgan Stanley; PT $130
• Teradyne (TER) Raised to Buy at Goldman; PT $161
• Downgrades
• Impinj (PI) Cut to Neutral at Goldman; PT $156
• Ormat (ORA) Cut to Hold at Bank Leumi; PT $76
• Sea Ltd (SE) ADRs Cut to Neutral at Phillip Secs; PT $75
• Initiations
• Abivax (ABVX FP) ADRs Rated New Buy at BTIG; PT $43
• Airship AI (AISP) Rated New Buy at Roth MKM; PT $12
• Amphenol (APH) Rated New Buy at Seaport Global Securities; PT $150
• AZZ (AZZ) Rated New Buy at Jefferies; PT $105
• Cleveland-Cliffs (CLF) Reinstated Buy at Jefferies; PT $22
• DoubleDown Interactive (DDI) ADRs Reinstated Outperform at Macquarie
• Fulcrum Therapeutics (FULC) Rated New Overweight at Cantor; PT $23
• Gdev (GDEV) Rated New Overweight at Cantor; PT $4.40
• Huntington Ingalls (HII) Rated New Buy at Citi; PT $310
• Kinsale Capital (KNSL) Rated New Hold at TD Cowen
• Loar Holdings (LOAR) Rated New Buy at Citi; PT $64
• Rated New Equal-Weight at Morgan Stanley; PT $55
• Rated New Outperform at RBC; PT $60
• Marex Group (MRX) Rated New Buy at Citi; PT $24
• Rated New Overweight at Piper Sandler; PT $27
• Rated New Overweight at Barclays; PT $25
• Rated New Buy at Goldman; PT $33
• Rated New Outperform at KBW; PT $24
• Rated New Buy at Jefferies; PT $24
• Nucor (NUE) Reinstated Hold at Jefferies; PT $190
• Prime Medicine (PRME) Rated New Buy at HC Wainwright; PT $10
• Rubrik (RBRK) Rated New Buy at Mizuho Securities; PT $46
• Rated New Overweight at Wells Fargo; PT $42
• Rated New Overweight at Barclays; PT $41
• Rated New Overweight at Capital One; PT $42
• Rated New Buy at Goldman; PT $48
• Rated New Buy at Guggenheim; PT $48
• Rated New Overweight at KeyBanc; PT $46
• Rated New Buy at Truist Secs; PT $43
• Rated New Market Perform at BMO; PT $40
• Steel Dynamics (STLD) Reinstated Hold at Jefferies; PT $150
• U.S. Steel (X) Reinstated Buy at Jefferies; PT $45

Data sources: Bloomberg, Reuters, CQG