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

HIGHLIGHTS and News:  

• Several influential congressional Democrats said privately on Sunday they want Joe Biden to step aside
• Boeing will plead guilty to criminal conspiracy to defraud the US
• More than 1 million customers affected by power outages in the Houston area as Hurricane Beryl heads toward the city
  

Global stocks are mixed as growth woes in China and the prospect of political deadlock in France counters optimism about a US interest rate cut as early as September.
A surprise victory by a left-wing coalition in legislative elections over the weekend saw France’s New Popular Front — which includes the Socialists — come first but without enough seats to form a government. The outcome potentially constrains the influence
of the left-wing coalition and Marine Le Pen’s National Rally, both of which advocate increased public spending. In China, the central bank sought to take more control of market interest rates by announcing additional open market operations and tightening
the band within which short-term rates can fluctuate. Talks over a US ceasefire plan to end the nine-month-old war in Gaza are under way and being mediated by Qatar and Egypt.      

EQUITIES:

US equity futures fluctuate as investors await Fed Chair Powell’s semi-annual testimony to the Senate Banking Committee on Tuesday, and the House Financial Services Committee on Wednesday.
The main economic event will be the US consumer price report on Thursday, where headline inflation is expected to slow to 3.1%, from 3.3%. Earnings season kicks off this week with major US banks due to report on Friday. In corporate news, Boeing agreed to
plead guilty to criminal conspiracy to defraud the US after the Justice Department concluded the plane maker failed to adhere to an earlier settlement stemming from two crashes of its 737 Max jetliner. Meanwhile, President Biden continues to salvage his embattled
reelection bid, fending off calls from Democratic lawmakers to step aside.    

Futures ahead of the bell: E-Mini S&P +0.05%, Nasdaq +0.05%, Russell 2000 +0.45%, DJI +0.1%.

In pre-market trading, Paramount (PARA) rises 2% after it agreed to merge with Skydance Media in a deal that hands control of the storied Hollywood studio to producer David Ellison. Morphic
(MORF) soars 76% after agreeing to be purchased by Eli Lilly in a  $3.2 billion deal. Corning (GLW) rises 7% after posting preliminary 2Q core sales that topped expectations. Gilead Sciences (GILD) gains 2.7% after Raymond James upgraded the biotech to outperform
on the potential for its HIV and liver disease treatments. HilleVax (HLVX) shares are halted after the biopharmaceutical company said a clinical study did not meet its primary endpoints. R1 RCM (RCM) rises 13% after holder TCP-ASC said it’s in the process
of finalizing a proposal to acquire all of the outstanding shares of the revenue-management company that it doesn’t already own. ServiceNow (NOW) slips 3% as Guggenheim cut its rating to sell. SolarEdge Technologies (SEDG) rises 5% after BofA upgrades the
renewable energy equipment company to neutral, saying the stock is already pricing in the worst case scenario.

European gauges edged higher as traders weighed the unexpected French election result, as initial nerves about the outcome of France’s election led to optimism politicians can form a
more moderate coalition. Jean-Luc Melenchon vowed to implement the leftist New Popular Front’s entire spending program. President Macron’s group was second with Marine Le Pen’s National Rally trailing in third. Investor morale in the euro zone broke an eight-month
streak of improvements with a bigger-than-expected decline in July. The Stoxx Europe 600 advanced by 0.3%, with insurance and travel sectors outperforming, while commodity stocks retreated. French media stocks gained as the election result means the far-right
National Rally is in no position to follow through with plans to privatize France’s state TV and radio groups. French banking stocks are in focus because the left has talked about raising banks’ mandatory capital buffers and transaction taxes. Stoxx 600 +0.35%,
DAX +0.3%, CAC +0.15%, FTSE 100 +0.2%. Insurance +1.25%, Travel & Leisure +1.2%, Banks +0.8%. Basic Resources -0.8%.

Shares in Asia declined as a slump in Chinese equities extended ahead of a key policy meeting, weighing on the broader region. Mainland China and Hong Kong stocks underperformed as investors
were disappointed by a lack of policy stimulus measures amid a weak economic recovery, rising geopolitical tensions and foreign outflows. The MSCI Asia Pacific Index erased early gains to end lower by 0.2%. TSMC, which has the highest weightage on the regional
benchmark, jumped 3% to a record high after Morgan Stanley raised its price target. Hang Seng Index -1.55%, CSI 300 -0.85%, ASX 200 -0.8%, Topix -0.6%, Singapore -0.2%, Kospi -0.15%, Sensex -0.05%. Vietnam +0.05%, Philippines +0.6%, Taiwan +1.4%. 

FIXED INCOME: 
 

Treasuries start the week on the backfoot, as traders brace for Federal Reserve Chair Jerome Powell’s congressional testimony and US inflation data this week. Treasuries
are slightly cheaper across the curve, led by bear-flattening in bunds after an unexpected win by a left-wing coalition in the second round of French legislative election gave no party an absolute majority. US yields cheaper by ~2bp across the curve with front-end
and belly leading losses, flattening 5s30s spread slightly, and 10-year around 4.30%. Treasury issuance resumes Tuesday with $58b 3-year note sale, followed by $39b 10-year and $22b 30-year reopenings Wednesday and Thursday.

METALS: 

Gold prices retreated after experiencing their largest weekly gain in three months, with attention focused on central bank purchasing. The People’s Bank of China
maintained its gold reserves for the second consecutive month in June, while other central banks like India and Poland reportedly added to their holdings. Spot gold -0.7%, silver -0.4%.

ENERGY:   

Oil prices are lower after four straight weekly gains, even as traders tracked twin threats to crude production with a hurricane in the US and wildfires in Canada.
Hurricane Beryl made landfall in Texas, with oil companies adjusting operations. Supply disruption worries eased on hopes of a ceasefire deal in Gaza as Hamas drops its objections to the US-backed proposal.  Oil touched the highest level since late-April last
week on expectations for higher demand and lower stockpiles over the summer months. Still, the rally has faced some resistance from signs of weakness in China. Traders are in line for a slew of reports this week that will shed light on global crude balances,
including OPEC’s monthly outlook.  WTI -0.8%, Brent -0.6%, US Nat Gas +1.1%, RBOB -0.4%.

CURRENCIES:   

In currency markets, the euro reversed early losses as traders assessed the impact of France’s political gridlock following Sunday’s elections. A shock defeat for
Marine Le Pen’s far right in Sunday’s elections produced a divided parliament with no clear majority.  The yen reversed earlier gains despite data supporting the case for tighter Bank of Japan monetary policy. Japanese wage data showed the largest jump in
base salaries since 1993, which increased expectations for a potential BOJ rate hike. US$ Index is steady as market focus turns to the Fed as Chair Jerome Powell delivers his semi-annual testimony to the Senate Banking Committee Tuesday. US$ Index +0.05%,
GBPUSD +0.1%, EURUSD -0.05%, USDJPY +0.15%, AUDUSD -0.15%, NZDUSD -0.2%, USDCHF +0.05%.

Spot Bitcoin +1.2%, Ethereum +1.3%.

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
• Acelyrin (SLRN) Raised to Overweight at Wells Fargo; PT $13
• Ally Financial (ALLY) Raised to Neutral at JPMorgan; PT $45
• Cinemark (CNK) Raised to Buy at B Riley; PT $27
• Clearwater Analytics (CWAN) Raised to Outperform at Oppenheimer; PT $25
• Columbia Sports (COLM) Raised to Buy at Stifel; PT $92
• Domino’s Pizza (DPZ) Raised to Outperform at Baird; PT $580
• Ecolab (ECL) Raised to Buy at Stifel; PT $283
• EnLink Midstream (ENLC) Raised to Overweight at Wells Fargo; PT $17
• Fortive (FTV) Raised to Buy at TD Cowen; PT $90
• GDS Holdings (GDS) ADRs Raised to Outperform at RBC; PT $14
• Gilead (GILD) Raised to Outperform at Raymond James; PT $93
• Lundin Gold (LUG CN) Raised to Outperform at National Bank; PT C$27.75
• Schwab (SCHW) Raised to Outperform at KBW; PT $84
• Silgan (SLGN) Raised to Buy at Citi; PT $50
• SolarEdge (SEDG) Raised to Neutral at BofA; PT $29
• Downgrades
• Arhaus (ARHS) Cut to Hold at Jefferies; PT $16
• Blue Owl Capital (OWL) Cut to Hold at TD Cowen; PT $19
• Brinker (EAT) Cut to Outperform at Raymond James
• Bumble (BMBL) Cut to Equal-Weight at Wells Fargo; PT $10
• Canadian National (CNR CN) Cut to Market Perform at Bernstein; PT C$179
• Desktop Metal (DM) Cut to Neutral at Cantor; PT $5.50
• First Quantum Minerals (FM CN) Cut to Equal-Weight at Morgan Stanley
• Intapp (INTA) Cut to Market Perform at Oppenheimer
• JPMorgan (JPM) Cut to Peerperform at Wolfe
• KeyCorp (KEY) Cut to Neutral at UBS; PT $15
• Malibu Boats (MBUU) Cut to Hold at Truist Secs; PT $32
• Raymond James (RJF) Cut to Peerperform at Wolfe
• Safe Bulkers (SB) Cut to Hold at DNB Markets; PT $6.40
• ServiceNow (NOW) Cut to Sell at Guggenheim; PT $640
• Spirit Aero (SPR) Cut to Neutral at JPMorgan; PT $37
• State Street (STT) Cut to Underperform at Wolfe; PT $73
• Stella-Jones (SJ CN) Cut to Sector Perform at RBC; PT C$94
• Stifel Financial (SF) Cut to Hold at TD Cowen; PT $89
• Initiations
• Akamai (AKAM) Rated New Sector Outperform at Scotiabank; PT $110
• Alphatec (ATEC) Rated New Overweight at Barclays
• Cargo Therapeutics (CRGX) Rated New Buy at Chardan Capital Markets
• Cloudflare (NET) Rated New Sector Perform at Scotiabank; PT $85
• Emerson Electric (EMR) Rated New Buy at Redburn; PT $135
• Flex (FLEX) Rated New Hold at Baptista Research; PT $32.70
• Four Corners Property (FCPT) Rated New Market Perform at JMP
• Ideaya Biosciences (IDYA) Rated New Outperform at Mizuho Securities
• International Paper (IP) Rated New Neutral at Davy; PT $45
• Jasper Therapeutics (JSPR) Rated New Buy at BTIG; PT $90
• Neumora Therapeutics (NMRA) Rated New Outperform at Mizuho Securities
• Norfolk Southern (NSC) Resumed Underweight at Morgan Stanley; PT $175
• Revolution Medicines (RVMD) Rated New Buy at Jefferies; PT $63
• Revvity Inc (RVTY) Rated New Outperform at Leerink; PT $125
• Rockwell Automation (ROK) Rated New Neutral at Redburn; PT $256
• Trulieve Cannabis (TRUL CN) Reinstated Buy at PI Financial; PT C$19

Data sources: Bloomberg, Reuters, CQG