Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET S&P Global US Services PMI, Composite PMI; 10:00ET Leading Index, Existing Home Sales

HIGHLIGHTS and News:  

• Los Angeles Lakers hired JJ Redick to be their next head coach; he has no prior coaching experience
• Options Expiration:
  $5.5 Trillion Triple-Witching and S&P Index Rebalance Today
• AIRBUS, SPIRIT AERO CLOSER TO DEAL AMID BOEING TALKS

World stocks fell as Wall Street’s late-Thursday selloff in tech stocks spilled over to global markets, and after data showed euro-area business activity momentum
slowed.  Data earlier today showed that Japan’s demand-led inflation slowed in May, with core CPI excluding fuel costs rose 2.1%, slowing for a ninth straight month. Euro zone business growth slowed sharply this month as demand fell for the first time since
February, a survey found.  The bloc’s services industry is showing some signs of weakening while manufacturing in the region recorded its worst month this year. HCOB’s preliminary composite PMI fell to 50.8 from May’s 52.2 versus expectations for a rise to
52.5. British retail sales rose 2.9% in May, up from a revised 1.8% fall in April. Investors are now awaiting US business surveys for clues about whether the world’s largest economy remains strong enough to withstand high interest rates.    

EQUITIES:

US equity futures see modest losses as traders brace for the quarterly “triple witching” expiration of US options today, which may provide some short-term market swings.  About $5.5 trillion
are set to expire today, according to an estimate from options platform SpotGamma. Nasdaq futures slip after snapping its streak of 8-consecutive record closing highs, with mega-caps Nvidia and Apple leading losses yesterday.  The AI-driven rally showed signs
of flagging after inflows into tech funds reached a weekly record of $8.7 billion, according to BofA strategists. Short interest in the two biggest equity exchange-traded funds —SPY and QQQ — have plunged to record lows this year, providing a steady flow of
support to US stocks and helping to suppress volatility, JPMorgan strategists wrote in a note.  The strategists said the lack of shorts makes stocks vulnerable.

Futures ahead of the bell: E-Mini S&P -0.2%, Nasdaq -0.2%, Russell 2000 -0.02, DJI -0.05%.

In pre-market trading, Sarepta Therapeutics (SRPT) soars 37% after the FDA approved expanded use of the company’s gene therapy to treat children aged four and above with Duchenne muscular
dystrophy. Abacus Life (ABL) falls 21% after its offering of 10 million shares priced at $8 per share, representing an 18% discount to last close. Gilead (GILD) advances 3%, extending Thursday’s gains, after interim results from a trial of the firm’s drug
lenacapavir showed 100% efficacy for the prevention of HIV in cisgender women. Spirit AeroSystems (SPR) rises 4% after Reuters reported Boeing is nearing a deal to buy back the aircraft-parts supplier. Smith & Wesson (SWBI) slips 3% after the gun maker said
sales in its first quarter would be about 10% lower year over year. Palantir fell as much as 3.2% as Monness, Crespi, Hardt & Co cut the recommendation on the big data company to sell from neutral citing the company’s “gluttonous valuation.”

European gauges are lower after the rebound in euro-area private-sector business activity unexpectedly lost momentum, as the outcome of France’s snap election weighed on firms. French
and German ‘flash’ PMI data came in softer than expected. German June manufacturing PMI falls to 43.4 versus estimates of 46.4, while services PMI also weaker than expected. UK retail sales last month rose at the strongest pace since January. The Stoxx 600
Index is holding losses, with all sectors in the red except utilities. Banks, construction and technology shares are the biggest laggards. Among top performers, Zealand Pharma A/S shares soared as much as 27% after the company said a next-generation weight-loss
compound had positive results in an early-stage trial. Stoxx 600 -0.6%, DAX -0.4%, CAC -0.5%, FTSE 100 -0.5%. Banks -1.6%, Construction -1.5%, Technology -1.1%.  Utilities +0.3%. 

Shares in Asia traded lower, led by losses in the Philippines’ main benchmark that put it on course to enter a technical correction.  Stocks in Hong Kong fell sharply, as a global tech-driven
rally showed signs of fatigue.  The MSCI Asia Pacific Index fell 0.5%, with TSMC, Samsung and Tencent among the biggest drags. Hong Kong’s Hang Seng dropped as much as 2% while mainland gauges also slipped as Beijing is seen as reluctant to step up stimulus.
Key points to watch next week include the Philippine central bank’s monetary policy decision as well as inflation data from Japan, Singapore and Australia. Philippines -2.9%, Hang Seng Index -1.7%, Kospi -0.8%, Taiwan -0.6%, Sensex -0.3%, CSI 300 -0.2%, Nikkei
225 -0.1%. ASX 200 +0.3%, Thailand +0.6%, Indonesia +0.9%.

FIXED INCOME: 
 

Treasuries are holding gains that was led by core European rates, with German bonds outperforming after soft PMI data across Europe. US long-end tenors lag slightly,
extending the recent steepening in 5s30s spread beyond Thursday’s highs.  Treasury yields richer by 2bp to 4bp across the curve with front-end- and belly-led gains. 10-year yields trade around 4.230%, richer by ~3bp vs Thursday’s close. Chicago Fed President
Austan Goolsbee said policy makers will be able to cut rates if inflation continues to cool as it did last month. Richmond Fed boss Thomas Barkin said he needs further clarity. 

METALS: 

Gold edged higher and held its biggest daily gain in five weeks as weakening US economic data strengthened the case for potential Federal Reserve monetary easing
this year. The precious metal surged 1.4% on Thursday following reports of slumping new home construction, indicating a possible economic slowdown. Meanwhile, Fed Bank of Minneapolis President Neel Kashkari told bankers in Michigan that while it could take
up to two years for the US to achieve its inflation goal, he’s “confident that we’re going to get there.” Spot gold +0.25%, silver -0.8%.

ENERGY:   

Oil prices were muted overnight while headed for the first back-to-back weekly gain since early April. Crude oil futures are flat in early trading, driven by concerns
over prolonged high interest rates in both Asia and the United States. Despite these pressures, a reduction in US oil inventories has provided some support to prices.  WTI -0.05%, Brent -0.05%, US Nat Gas -1.1%, RBOB +0.4%

CURRENCIES:   

In currency markets, The euro led losses in the Group-of-10 currencies after misses in PMI data releases out of France and Germany. The euro reversed modest gains
after data showed private-sector activity in France unexpectedly slowed in June; it fell to session lows after German data hit the wires. The dollar is modestly higher ahead of a US PMI print this morning that may show further slowing. The yen reversed marginal
losses after Japan’s inflation accelerated on the back of rising energy costs yet came in a tad below economists’ consensus. Sterling rose after better-than-expected May UK retail sales data, only to drop following the euro’s move lower. US$ Index +0.2%, GBPUSD
-0.1%, EURUSD -0.1%, USDJPY +0.01%, AUDUSD +0.15%, NZDUSD +0.15%, USDCHF +0.1%.

Spot Bitcoin -2%, Ethereum -0.6%.

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
• Alcoa (AA) Raised to Overweight at Morgan Stanley; PT $50
• Buenaventura (BUENAVC1 PE) ADRs Raised to Overweight at Morgan Stanley; PT $21
• Freeport (FCX) Raised to Overweight at Morgan Stanley; PT $62
• Home Depot (HD) Raised to Buy at President Capital Management
• Nike (NKE) Raised to Outperform at Oppenheimer; PT $120
• Outset Medical (OM) Raised to Outperform at RBC; PT $6
• Prestige Consumer Health (PBH) Raised to Buy at DA Davidson; PT $93
• Vale (VALE3 BZ) ADRs Raised to Neutral at BNPP Exane; PT $12.70
• Downgrades
• CGI Inc (GIB/A CN) Cut to Neutral at CIBC; PT C$151
• CME Group (CME) Cut to Underweight at JPMorgan; PT $187
• Ivanhoe Mines (IVN CN) Cut to Equal-Weight at Morgan Stanley; PT C$19.50
• Kinaxis (KXS CN) Cut to Neutral at CIBC; PT C$154
• Micron (MU) Cut to Hold at Aletheia Capital
• Northrop Grumman (NOC) Cut to Market Perform at Bernstein; PT $477
• Safe Bulkers (SB) Cut to Hold at Cleaves Securities; PT $6.20
• Star Bulk (SBLK) Cut to Hold at Cleaves Securities; PT $27
• Vasta Platform (VSTA) Cut to Underweight at Morgan Stanley; PT $3
• Initiations
• Alto Neuroscience (ANRO) Rated New Buy at Rodman & Renshaw; PT $43
• AudioEye (AEYE) Rated New Buy at Roth MKM; PT $25
• BrightSpring Health Services (BTSG) Rated New Buy at BTIG; PT $15
• Brown & Brown (BRO) Rated New Buy at William O’Neil
• Choice Hotels (CHH) Reinstated Neutral at Susquehanna; PT $125
• Couche-Tard (ATD CN) Rated New Buy at Jefferies; PT C$91
• GE Vernova (GEV) Rated New Outperform at Daiwa; PT $201.50
• Geely Auto (175 HK) ZK US Rated New Buy at BOC Intl; PT $32
• Harmony Biosciences (HRMY) Rated New Buy at Citi; PT $48
• Hilton Worldwide (HLT) Reinstated Neutral at Susquehanna; PT $215
• Hyatt (H) Reinstated Neutral at Susquehanna; PT $160
• ICU Medical (ICUI) Rated New Hold at Needham
• Intchains Group (ICG) ADRs Rated New Buy at Benchmark; PT $10
• Marriott Intl (MAR) Reinstated Neutral at Susquehanna; PT $255
• Matador Resources (MTDR) Rated New Overweight at Stephens; PT $83
• Monday.com (MNDY) Rated New Sell at Hedgeye
• Palo Alto Networks (PANW) Rated New Buy at DA Davidson; PT $380
• SM Energy (SM) Rated New Overweight at Stephens; PT $63
• Viking Holdings (VIK) Rated New Hold at Truist Secs; PT $38
• Wintrust Financial (WTFC) Reinstated Market Perform at Hovde Group
• Wyndham Hotels (WH) Rated New Neutral at Susquehanna; PT $80

Data sources: Bloomberg, Reuters, CQG