Daily Game Plan

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

TODAY’S ECONOMIC DATA:  11:00ET NY Fed 1-Yr Inflation Expectations; 1:00ET 3-year note auction

Apple’s Worldwide Developers Conference through June 14. Fed officials are expected to refrain from commenting until after their June 12 policy announcement.

HIGHLIGHTS and News:  

• FAR-RIGHT MAKES SIGNIFICANT GAINS IN EUROPE
• Nvidia begins trading after a 10-for-one stock split
  
• Antony Blinken returns to the Middle East today to push a cease-fire proposal
• Caitlin Clark was left out of the US women’s basketball team for the upcoming Paris Olympics

Global stocks are on the defensive, while French bonds and stocks were hit hard following French President Emmanuel Macron’s decision to call a snap parliamentary
election after being trounced in a European Union vote by the far right. Germany’s AfD also polled strongly, with Greens the largest loser on the night. The French president shocked his allies on Sunday by calling an immediate election for the National Assembly
after exit polls gave France’s Rassemblement National more than double the vote share of Macron’s centrist alliance. The results delivered a stinging blow to the domestic standing of the French president and Olaf Scholz, the German chancellor, and are expected
to help tilt the European parliament towards a more anti-immigration and anti-green stance. In Germany, the three parties in Scholz’s coalition were all overtaken by the far-right Alternative for Germany (AfD), which came in second behind the conservative
CDU-CSU opposition. Ultraconservative and nationalist parties also won or made significant gains in Austria, Cyprus, Greece and the Netherlands, exit polls showed. Markets in Australia, China, Hong Kong, Taiwan and Colombia were closed for holidays.

EQUITIES:

US equity futures edged lower as focus shifted to inflation data and a Federal Reserve meeting later in the week. American stocks rose to all-time highs last week as stronger-than-expected
jobs data bodes well for corporate earnings even as it suggests monetary policy will be on hold for longer. The Federal Reserve sets rates on Wednesday.  Apple hopes to demonstrate its AI prowess as its flagship developers conference kicks off today. It’s
set to weave the technology into its next software updates and phones, as well as a more powerful version of Siri.
Oracle reports after the bell today.

Futures ahead of the bell: E-Mini S&P -0.05%, Nasdaq -0.05%, Russell 2000 -0.5%, DJI -0.05%.

In pre-market trading, CrowdStrike (CRWD), GoDaddy (GDDY) and KKR (KKR) are all up more than 3% as the stocks will join the S&P 500 Index in the latest quarterly weighting change. Advanced
Micro Devices (AMD) slips 2% after Morgan Stanley downgrades the chipmaker to equal-weight. Diamond Offshore (DO) rises 6% after agreeing to be purchased by Noble Corp. GameStop (GME) gains 7%, putting the video-game retailer’s stock on track to recoup some
of Friday’s 39% losses. Perion (PERI) drops 22% after the company cut its revenue guidance for the second quarter. ProKidney (PROK) rises 5% after saying interim results of REGEN-007 Phase 2 trial show stabilization of kidney function for 18 months. Southwest
Airlines (LUV) gains 8% after the Wall Street Journal reported that Elliott Investment Management has built an almost $2 billion stake in the US carrier.

Utilities and gold underperformed the broader market last week, while technology outpaced.

European gauges opened sharply lower with shares in France weighing, led by steep losses in the likes of lenders such as BNP Paribas (-5%) and Societe Generale (-7.5%). Centre, liberal
and Socialist parties were set to retain a majority after the European Parliament elections, but Eurosceptic nationalists made the biggest gains, raising questions about the ability of major powers to drive policy in the bloc. Making a risky gamble to reestablish
authority, Macron called a parliamentary election with a first round on June 30. Specifically, investors are concerned about the risk of interventionist economic policies and stronger regulation from the country’s far-right National Rally party, Morningstar
analysts said. Stoxx 600 -0.5%, DAX -0.5%, CAC -1.6%, FTSE 100 -0.2%. Banks -1.4%, Construction -1.1%, Food & Bev -0.9%, Technology -0.8%. Energy +0.4%, Basic Resources +0.3%.

Asian equities were mixed as declines in South Korea and elsewhere offset advances in Japan. The MSCI Asia Pacific Index inched higher by 0.1%. Samsung Electronics was the biggest drag
as lowered bets on US interest rate cuts weighed on Korean shares. Japanese stocks gained as rising bond yields lifted financials while yen weakness supported exporters. Japan’s service sector sentiment worsened in May to levels not seen in nearly two years,
government data showed, as rising fuel and food costs from a weak yen dragged on household spending. The data highlights the fragile nature of consumption, making it harder for the BOJ to justify further interest rate hikes. The Bank of Japan holds a two-day
monetary policy meeting this week and could offer fresh guidance on how it plans to scale back its massive bond purchases. Shares in India slipped after their post-election rally. China, Hong Kong, Taiwan and Australia were closed for holidays. Topix +1%,
Indonesia +0.3%, Vietnam +0.2%. Sensex -0.3%, Kospi -0.8%, Philippines -0.9%.

FIXED INCOME: 
 

Treasury yields rose, with the curve steeper as Friday’s selloff extends and US yields follow wider moves seen across European government debt after Sunday’s European
Parliament elections. US yields cheaper by up to 3bp across long end of the curve with 2s10s, 5s30s spreads steeper by 2.5bp and 1bp on the day. US 10-year yields trade around 4.46%.  French government bond prices fell, pushing 10-year yields close to their
highest this year, at around 3.19%.  US session focus includes 3-year note auction, with this week’s highlights coming Wednesday with both CPI and Fed policy announcement due.

METALS: 

Gold rose, following the biggest daily loss since late 2020 as traders look ahead to the Federal Reserve’s rate decision on Wednesday. Bullion traded near $2,300
an ounce after plunging 3.5% on Friday, when strength in a US jobs report led to traders becoming less optimistic the Fed will start reducing interest rates. Spot gold +0.5%, silver +2%.

ENERGY:   

Oil prices are firm, attempting to find a footing after an OPEC+ decision to begin unwinding some voluntary production cuts later this year helped send crude to a
third straight weekly decline. Goldman expects Brent to strengthen to $86 in the third quarter as rising demand pushes the market into a deficit of 1.3 million barrels a day. Iraq expects to reach a deal soon with the semi-autonomous region of Kurdistan and
international oil companies there to restart oil exports.  WTI +1%, Brent +1%, US Nat Gas +4.5%, RBOB +0.9%.

CURRENCIES:   

In currency markets, the euro slid to a one-month low and volatility surged after French and German mainstream parties were trounced by the far right in EU elections.
Gains for the French far-right in the vote for European lawmakers prompted Macron to gamble on a snap election to halt the rise of his rival, Marine Le Pen. German Chancellor Olaf Scholz also suffered humiliating losses. Sterling eased versus the dollar ahead
of UK jobs data on Tuesday.  US$ Index +0.4%, GBPUSD -0.15%, EURUSD -0.65%, EURGBP -0.4%, USDJPY +0.15%, AUDUSD +0.2%, NZDUSD +0.05%, USDNOK +0.05%.

Spot Bitcoin -0.5%, 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
• ACV Auctions (ACVA) Raised to Overweight at JPMorgan; PT $21
• Enphase Energy (ENPH) Raised to Buy at HSBC; PT $166
• Krispy Kreme (DNUT) Raised to Buy at Truist Secs; PT $15
• Lions Gate (LGF/A) Raised to Peerperform at Wolfe
• Lithia & Driveway (LAD) Raised to Overweight at JPMorgan; PT $280
• Mohawk Industries (MHK) Raised to Strong Buy at Raymond James; PT $140
• Oscar Health (OSCR) Raised to Buy at Nephron Research; PT $31
• PG&E (PCG) Raised to Overweight at JPMorgan; PT $22
• Planet Fitness (PLNT) Raised to Buy at Jefferies; PT $100
• Sonic Automotive (SAH) Raised to Neutral at JPMorgan; PT $58
• Walmart (WMT) Raised to Overweight at JPMorgan; PT $81
• Downgrades
• Adobe (ADBE) Cut to Hold at Melius
• Adventus Mining Corp (ADZN CN) Cut to Tender at National Bank
• AMD (AMD) Cut to Equal-Weight at Morgan Stanley; PT $176
• Asbury Auto (ABG) Cut to Neutral at JPMorgan; PT $230
• Corus Entertainment (CJR/B CN) Cut to Sector Underperform at Scotiabank
• Delek US Holdings (DK) Cut to Sell at TD Cowen; PT $20
• MidCap Financial (MFIC) Cut to Neutral at Compass Point; PT $16
• PowerSchool (PWSC) Cut to Neutral at Macquarie; PT $22.80
• Cut to Hold at Jefferies; PT $22.80
• Cut to Neutral at Piper Sandler; PT $22.80
• Initiations
• American Express (AXP) Rated New Neutral at Citi; PT $250
• Blue Owl Capital (OWL) Resumed Buy at Deutsche Bank; PT $21
• BOS Better On-Line Solutions (BOSC) Rated New Buy at ThinkEquity; PT $5
• Broadcom (AVGO) Resumed Overweight at Morgan Stanley; PT $1,658
• Dave (DAVE) Rated New Buy at Seaport Global Securities; PT $54
• Huya (HUYA) ADRs Rated New Outperform at CICC; PT $6.30
• Microsoft (MSFT) Rated New Buy at New Street Research; PT $570
• Remitly (RELY) Rated New Underperform at Autonomous; PT $9
• Seadrill (SDRL NO) Rated New Buy at Benchmark; PT $60
• Solitario Resources Corp (XPL) Rated New Buy at Roth MKM; PT $2
• Tenaya (TNYA) Rated New Outperform at William Blair
• TerraVest Capital (TVK CN) Rated New Buy at Canaccord; PT C$91

Data sources: Bloomberg, Reuters, CQG