Daily Game Plan

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

TODAY’S ECONOMIC DATA:  10:00ET Richmond Fed Manufacturing Index; 10:30ET Dallas Fed Services Activity; 1:00ET 7-Year
Note Auction; 1:45ET Fed’s Williams speaks; 2:00ET Fed’s Beige Book; 7:00ET Fed’s Bostic speaks

HIGHLIGHTS and News:  

• The Minnesota Timberwolves make their first trip to the conference finals in 20 years
• Apple wins legal battle in China over app store fees
• Gold is lower but remains above 50 day mvg avg; US$ higher after hold trend line support
  

Global stocks fell as investors kept an eye on bond yields with inflation concerns simmering. US government bond yields pushed to a near four-week high, lifting global
yields and pressuring stocks, as data sowed new doubts about the timing and extent of Federal Reserve rate cuts. Investors await the Fed’s favorite price gauge later this week, along with consumer-price data from Japan and across Europe for further clues on
global monetary policy. South Africans began voting in an election that looks set to reshape a political landscape dominated for three decades by the ANC, the party that Nelson Mandela led to power.   

EQUITIES: 

US equity futures slipped after a jump in Treasury yields overnight. Airlines are lower after American Airlines slashed its sales outlook for the second quarter. In M&A deals, ConocoPhillips
will acquire Marathon Oil in a $17 billion all-stock deal, a ~15% premium to Tuesday’s closing price. Hedge funds’ exposure to Big Tech hit a record following Nvidia’s earnings last week, Goldman’s prime brokerage said. The Magnificent Seven companies now
account for about 20.7% of hedge funds’ total net exposure to US single stocks.

Futures ahead of the bell: E-Mini S&P -0.65%, Nasdaq -0.7%, Russell 2000 -1.2%, DJI -0.7%

In pre-market trading, American Air (AAL) slumps 8% after the airline spooked investors with a revised profit outlook that adds to uncertainty in the aviation industry already grappling
with geopolitical tensions, scarce supplies of new aircraft and rising costs. Advance Auto Parts (AAP) rises 2% after the auto-parts retailer reported first-quarter gross margin that topped estimates. Bank OZK (OZK) slips 8% after Citi downgraded the stock
to sell. Cava (CAVA) falls 2% after Mediterranean eatery reported a decline in customer traffic. Dick’s Sporting Goods (DKS) gains 7% after the company raised its outlook for the year and reported sales that surpassed analysts’ estimates. Digital Turbine (APPS)
slides 9% after the company reported net revenue for the fourth quarter that missed estimates. Faraday Future (FFIE) shares plummet 32% after the electric vehicle maker reported full-year earnings and withdrew its production target guidance for 2024. Marathon
Oil (MRO) shares climb 7% after agreeing to be acquired by ConocoPhillips. COP shares are down 3%. Surmodics (SRDX) climbs 19% after the medical devices firm said it will be acquired by private equity firm GTCR. 

Equal weight S&P 500 (RSP) is at multi-year lows relative to SPY

European gauges fell for a second day as investors monitored an increase in bond yields due to concerns that the Federal Reserve could keep its monetary policy tight. The Stoxx Europe
600 dropped, led by financial services as well as travel and leisure sectors while energy shares outperformed. Anglo American Plc said it won’t give BHP Group any further time to commit to a takeover offer, signaling the likely end for now to a $49 billion
pursuit by the world’s biggest mining company. Airline stocks on both sides of the Atlantic are under pressure after American Airlines cut its profit guidance heading into the crucial summer travel season. Stoxx 600 -0.75%, DAX -0.8%, CAC -1.2%, FTSE 100 -0.4%.
Banks -1.6%, Basic Resources -1.5%, Travel -1.5%. Energy +0.3%. 

Asian equities were broadly lower, led by losses in Hong Kong, as rising bond yields and more Fedspeak saw US rate-cut bets further erode. The MSCI Asia Pacific Index fell 1.4%, with
Tencent, TSMC and Samsung among the biggest drags. Korean stocks slid after Samsung’s labor union said it plans to carry out its first strike ever, while Australia’s key benchmark tumbled after inflation came in faster than expected in April.  Mainland Chinese
stocks bucked the trend, edging slightly higher after the IMF upgraded its economic growth forecasts for the country. Shares of Chinese solar manufacturers surged after reports that President Xi Jinping is warning against an excess of investment into new energy
fields. Hang Seng Index -1.8%, Kospi -1.7%, Indonesia -1.55%, ASX 200 -1.3%, Topix -1%, Taiwan -0.9%, Sensex -0.9%, Vietnam -0.7%. CSI 300 +0.1%.

FIXED INCOME: 
 

Treasury yields rose after a pair of weak US note sales, while Fed Bank President Neel Kashkari said central bank officials haven’t entirely ruled out additional
rate hikes.  After jumping nine basis points on Tuesday, 10-year Treasury yields inched higher to 4.56%. UK 10-year yields added five basis points while those on German debt pulled back from a six-month high after regional inflation prints came in lower than
the monthly estimate. US treasury curve steepens for a second day with 2s10s +3.5bps.  Auction cycle concludes with 7-year note sale, following weak reception for 2- and 5-year notes Tuesday, and first operation of new buyback program targets shortest-maturity
coupons.

METALS: 

Gold slipped as US Treasury yields firmed and the dollar rose, while investors geared up for a crucial inflation report due later this week that could provide insights
into the Federal Reserve’s policy path. Spot gold -0.9%, silver -0.7%.

ENERGY:   

Oil prices rose on expectations major producers will maintain production cuts at a meeting this weekend at the same time fuel consumption should begin rising with
the start of the peak summer demand season. Texas storms grounded flights, flooded streets and left more than 1 million homes and businesses without power. Chinese oil demand outlook weakened as refineries lower run rates amid falling diesel margins. Brent
crude advanced as another attack in the Red Sea added to heightened geopolitical tensions in the Middle East. WTI +0.7%, Brent +0.6%, US Nat Gas -2%, RBOB +0.2%

CURRENCIES:   

In currency markets, the dollar rose to a four-week high, boosted by higher US treasury yields. The Ausie$ fell after Australian consumer price inflation unexpectedly
picked up to a five-month high in April, bolstering expectations that interest rates would not be lowered any time soon. China’s yuan slid to the lowest since November amid signs policymakers are letting the currency drop against a resilient dollar. Sterling
rose to the strongest level against the yen since 2008. The euro fell to a near two-year low versus the pound after data showed inflation in May slowed across Germany’s regions compared with a month ago.  US$ Index +0.2%, GBPUSD -0.15%, EURUSD +0.1%, USDJPY
+0.05%, AUDUSD -0.3%, USDCHF +0.15%, NZDUSD -0.25%, USDNOK +0.15%, USDSEK +0.4%.

Spot Bitcoin -0.5%, Ethereum -0.3%. BlackRock’s Bitcoin ETF surpassed the Grayscale Bitcoin Trust to become the world’s largest crypto fund. The NYSE announces collaboration
with CoinDesk indices to launch financial products tracking spot bitcoin.

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
• Bain Capital Specialty Finance (BCSF) US Raised to Overweight at Wells Fargo; PT $17
• Core Scientific (CORZ) Raised to Buy at BTIG; PT $8
• Eldorado Gold (ELD CN) Raised to Outperform at RBC
• FS KKR Capital (FSK) Raised to Overweight at Wells Fargo; PT $21
• Intel (INTC) Raised to Peerperform at Wolfe
• Liberty Energy (LBRT) Raised to Buy at Citi; PT $32
• Melco Resorts (MLCO) ADRs Raised to Buy at BofA; PT $10.40
• Norwegian Cruise (NCLH) Raised to Buy at Truist Secs
• United Airlines (UAL) Raised to Buy at Jefferies; PT $65
• Downgrades
• American Air (AAL) Cut to Hold at Jefferies; PT $12
• Bank OZK (OZK) Cut to Sell at Citi; PT $37
• Bruker Corp (BRKR) Cut to Sell at Nephron Research; PT $65
• CubeSmart (CUBE) Cut to Market Perform at BMO; PT $47
• First Solar (FSLR) Cut to Hold at DZ Bank; PT $270
• Goldman Sachs BDC (GSBD) Cut to Underweight at Wells Fargo; PT $14
• Ikena (IKNA) Cut to Neutral at Wedbush; PT $2
• Independent Bank Group (IBTX) Cut to Hold at Truist Secs; PT $50
• MSC Industrial (MSM) Cut to Neutral at Baird; PT $95
• Triple Flag (TFPM CN) Cut to Sector Perform at RBC
• TriplePoint Venture Growth BDC (TPVG) Cut to Underweight at Wells Fargo
• Wesco (WCC) Cut to Neutral at Baird; PT $195
• WW Grainger (GWW) Cut to Neutral at Baird; PT $975
• Initiations
• Bird Construction (BDT CN) Rated New Outperform at BMO; PT C$25
• CareTrust REIT (CTRE) Rated New Neutral at Wedbush; PT $26
• CervoMed Inc (CRVO) Rated New Buy at JonesTrading; PT $70
• Cognition Therapeutics (CGTX) Rated New Buy at HC Wainwright; PT $10
• Fortrea (FTRE) Rated New Hold at TD Cowen; PT $27
• Medpace Holdings (MEDP) Rated New Buy at TD Cowen; PT $452
• Mind (MNMD) Rated New Outperform at Baird; PT $27
• New Oriental Education (EDU) ADRs Reinstated Buy at HSBC; PT $110
• Palo Alto Networks (PANW) Reinstated Outperform at Daiwa; PT $350
• RBC Bearings (RBC) Resumed Outperform at William Blair
• Sage Therapeutics (SAGE) Rated New Sell at Citi; PT $8
• Rated New Neutral at Baird; PT $15
• SharkNinja (SN) Rated New Buy at China Renaissance; PT $90.99
• Tal Education (TAL) ADRs Reinstated Buy at HSBC; PT $16

Data sources: Bloomberg, Reuters, CQG