Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET CPI*, Hourly Earnings; 2:00ET FOMC Rate Decision; 2:30ET Fed Press Conference  

HIGHLIGHTS and News:  

• EU to impose additional tariffs on EV imports from China
• “Quiet quitters” cost the UK economy £257 billion in potential output last year, with just one in 10 classified as “engaged” at work
  
• Rory McIlroy reconciled with his wife ahead of the US Open which starts tomorrow
  
• Citron says it is no longer short GameStop
  

Global stocks rose, helped by positive sentiment in the technology sector, ahead of a key US inflation report and Federal Reserve policy decision that could determine
the near-term outlook for interest rates. Emerging-market stocks gained for the first day in four. The Fed’s rate decision, along with an update to its quarterly economic and interest rate projections, will give important indications on the appetite for riskier
assets going forward. In Argentina, President Javier Milei has a key day ahead to prove he can deliver reforms designed to drag the serial-defaulter out of its economic crisis, from raising taxes to slashing spending.

EQUITIES:

US equity futures are in wait-and-see mode ahead of a double-whammy of inflation data and Fed rate forecasts potentially upending markets. CPI is forecast to rise a slim 0.1% in May from
a month earlier, but with the core up 0.3%. The Fed is not expected to make any change to interest rates at its policy meeting. Instead, focus later in the day will be on an update of the Fed’s dot plot that will provide yet another piece of information that
could whipsaw markets. Oracle is set to open at a record high after surging in post-market trade. The software company reported better-than-expected bookings and announced partnership deals with rivals Google Cloud, Microsoft and OpenAI.  Apple has become
the first brand to cross $1 trillion in brand value, a 15% jump from last year, while chipmaker Nvidia’s value has nearly tripled, a global ranking by Kantar’s BrandZ showed.  

Futures ahead of the CPI data: E-Mini S&P +0.15%, Nasdaq +0.15%, Russell 2000 +0.5%, DJI +0.1%. Growth continues to outperform Value.

In pre-market trading, Oracle (ORCL) rises 8% after the infrastructure-software company announced a cloud infrastructure partnership with Google Cloud, as well as one with Microsoft and
OpenAI. Mereo (MREO) jumps 6% after the drug developer released new data from a mid-stage trial of its experimental drug for a genetic brittle-bone disease. NextEra Energy (NEE) slips 1.6%, extending yesterday’s 5.5% decline, as Mizuho downgraded its rating
after management held an investor conference on Tuesday. PetMed (PETS) falls 12% after the online pet pharmacy reported results. Rubrik (RBRK) gains 2% after the cybersecurity firm posted inaugural earnings results exceeded Wall Street’s expectations.

Apple outperforming relative to the broader market, settling just above the 200dma vs SPY.

European gauges rebounded after days of political upheaval in France. Banks and financial services companies outpace while autos underperform. French stocks and bonds have been battered
this week, as political uncertainty has unnerved investors and prompted three ratings agencies to warn the snap election poses a risk to the country’s credit standing. Among individual movers, London-listed Rentokil Initial shares jumped as much as 16% following
news that Nelson Peltz’s Trian Fund amassed a significant stake in the pest-control company. Stoxx 600 +0.6%, DAX +0.6%, CAC +0.5%, FTSE 100 +0.7%. Banks +1.2%, Fin Services +1%, Insurance +0.8%. Travel & Leisure -0.3%, Autos -0.3%. 

Shares in Asia were mixed, with the MSCI Asia Pacific Index down 0.1%. China was flat while Hong Kong closed at the lowest level since late April.  China’s consumer price gains held above
zero in May while factory-gate prices remained stuck in deflation, fueling concerns over persistently weak demand. The Hang Seng index slipped below the 18,000 level due to the lackluster Chinese CPI data and fresh speculation about looming US chip restrictions.
Chinese online retail stocks rise after the government encouraged financial institutions to offer support to companies doing cross-border e-commerce business. Apple supplier stocks advanced after the iPhone maker climbed to a record high on artificial intelligence
hopes. Japanese stocks slid as hot PPI data muddles the outlook for the Bank of Japan’s monetary policy decision due this Friday. Vietnam +1.2%, Taiwan +1.2%, Kospi +0.8%, Shanghai Composite +0.3%, Sensex +0.2%, CSI 300 +0.04%. Singapore -0.05%, ASX 200 -0.5%,
Topix -0.7%, Hang Seng Index -1.3%.

FIXED INCOME: 
 

Treasury yields remain within 1bp of Tuesday’s closing levels as investors await May CPI data during US morning and Fed policy announcement at 2pm EST. French 10-year
bonds were little changed after four days of losses. Traders are rapidly unwinding bets for a rally in US Treasuries ahead of today’s rare double-risk event, leaving positioning more balanced.  The likelihood that US policymakers will keep borrowing costs
higher for longer is overtaking optimism surrounding the start of the Fed’s easing cycle. Open interest dropped around 80,000 contracts in 10-year note futures since Friday. Now, investors are fully pricing in just a single cut this year.  10-year around 4.395%,
5s30s curve is flat, 2s10s is -1bp.

METALS: 

Gold traded in a narrow range as investors awaited the US consumer inflation report and the Federal Reserve’s commentary on interest rates. Concerns are growing within
the Fed as inflation is not decreasing as quickly as anticipated earlier in the year. A robust jobs market is pushing potential rate cuts further into the future, creating a headwind for gold.  The Fed’s median dot plot will be critical, as it could signal
two rate cuts instead of the one currently priced in by the market, potentially supporting gold prices. Spot gold -0.2%, silver +0.3%, copper +0.2.

ENERGY:   

Oil prices extended gains after industry data pointed to shrinking US crude stockpiles, shrugging of forecasts from the International Energy Agency that markets are
facing a major surplus this decade. Global oil markets face a “major” surplus this decade as the shift away from fossil fuels causes demand to hit a plateau amid plentiful supply growth, the IEA said. Meanwhile, oil production capacity continues to surge,
led by the US. World oil consumption will continue to expand for several years, adding about 4 million barrels a day by the end of the decade amid economic expansion in India and China, according to the IEA. WTI +1.1%, Brent +1%, US Nat Gas -2.7%, RBOB +1.1%.

CURRENCIES:   

In currency markets, the dollar fluctuated in a tight range following four days of gains as traders brace for a double-risk event. Sterling gained against the dollar,
shrugging off data that showed the UK economy did not grow at all in April, after a strong start to the year. The Mexican peso extended declines after sinking nearly 2% on Tuesday when President-elect Claudia Sheinbaum said a proposed reform of the nation’s
judicial system would be among the first to be discussed in congress. Sheinbaum will hold a press conference today on her plans. US$ Index -0.1%, GBPUSD +0.15%, EURUSD +0.2%, USDJPY +0.15%, AUDUSD +0.1%, USDCHF -0.2%, USDNOK =0.3%, USDSEK -0.4%. 

Spot Bitcoin +0.7%, Ethereum +1.5%. Several Bitcoin miners met with Donald Trump at Mar-a-Lago on Tuesday night. Trump told attendees that he loves and understands
cryptocurrency, adding that Bitcoin miners help to stabilize energy supply from the grid.

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
• Apple (AAPL) Raised to Neutral at LightShed Partners
• Cardinal Health (CAH) Raised to Buy at CFRA; PT $111
• Ciena (CIEN) Raised to Overweight at Morgan Stanley
• Darling Ingredients (DAR) Raised to Buy at Citi; PT $48
• Haemonetics (HAE) Raised to Buy at Needham; PT $112
• Klaviyo (KVYO) Raised to Overweight at Barclays; PT $29
• McCormick (MKC) Raised to Neutral at Citi; PT $69
• PagSeguro (PAGS) Raised to Outperform at Grupo Santander; PT $14
• Santander Chile (BSAN CI) ADRs Raised to Outperform at Itau BBA; PT $22
• StoneCo (STNE) Raised to Outperform at Grupo Santander; PT $16
• Downgrades
• Academy Sports & Outdoors (ASO) Cut to Equal-Weight at Wells Fargo
• Birkenstock (BIRK) Cut to Neutral at Goldman; PT $58
• Canadian Western Bank (CWB CN) Cut to Market Perform at BMO; PT C$52
• NextEra Energy Partners (NEP) Cut to Neutral at Mizuho Securities
• NextEra Energy (NEE) Cut to Neutral at Mizuho Securities; PT $71
• Paramount Global (PARA) Cut to Underweight at Wells Fargo; PT $9
• Pure Storage (PSTG) Cut to Equal-Weight at Morgan Stanley
• Initiations
• Agree Realty (ADC) Rated New Overweight at KeyBanc; PT $68
• AMD (AMD) Rated New Buy at Edward Jones
• Apple (AAPL) Reinstated Buy at William O’Neil
• Avadel (AVDL) Rated New Buy at Rodman & Renshaw; PT $27
• Broadcom (AVGO) Rated New Buy at SWS Research; PT $1,716
• Broadstone Net Lease (BNL) Rated New Sector Weight at KeyBanc
• Coinbase (COIN) Rated New Buy at Hedgeye
• Cresco Labs (CL CN) Rated New Overweight at Zuanic
• Farmers & Merchants Bancorp (FMAO) Reinstated Neutral at Piper Sandler
• Fiserv (FI) Rated New Overweight at Wells Fargo; PT $180
• Global Payments (GPN) Reinstated Equal-Weight at Wells Fargo; PT $100
• NCR Voyix Corp (VYX) Rated New Buy at Stifel; PT $16
• Peraso Inc (PRSO) Rated New Buy at Ladenburg Thalmann; PT $3.75
• Procore Technologies (PCOR) Rated New Buy at TD Cowen; PT $85
• Realty Income (O) Rated New Sector Weight at KeyBanc
• Skechers USA (SKX) Reinstated Overweight at Wells Fargo; PT $83
• Valvoline (VVV) Rated New Overweight at Piper Sandler; PT $49
• Zura Bio (ZURA) Rated New Overweight at Cantor

Data sources: Bloomberg, Reuters, CQG