Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Building Permits, Housing Starts; 9:00ET Fed’s Barkin speaks; 9:15ET Industrial Production,
Manufacturing (SIC) Production, Capacity Utilization; 9:35ET Fed’s Waller speaks; 1:00ET 20-Year Auction; 2:00ET Beige Book

US JUNE BUILDING PERMITS RISE 3.4% M/M; EST. +0.1%

HIGHLIGHTS and News:  

• YOUNGKIN: TRUMP WILL USE TARIFFS TO MAKE SURE TRADE IS FAIR
• European indexes this week have sharply underperformed the US
  
• US is said to be considering its most severe trade restrictions yet on China’s chips access
• Trump warned the Fed shouldn’t cut rates before November
  
• Amazon’s advertising portal for merchants briefly crashed, disrupting Prime Day; sales +12%

Global stocks edged lower, with chip stocks tumbling amid reports of tighter export restrictions from the US and a ramping up of geopolitical tensions. The slide
came after Trump questioned US support for Taiwan in an interview with Bloomberg Businessweek, saying the closely monitored island should pay for US protection. Chinese stocks were subdued for a second straight day. The World Trade Organization highlighted
China’s “lack of transparency” on industrial subsidies, suggesting the absence of such public information is fueling complaints from other nations about the threat of Chinese goods flooding the global economy. Israeli forces pounded areas in the central Gaza
Strip, killing at least nine Palestinians, while Israeli tanks carried out a limited advance further into Rafah in the south. The Israeli military said troops were “continuing precise, intelligence-based operational activity in the Rafah area” and that it
had eliminated what it called a terrorist cell.          

EQUITIES:   

US equity futures are sharply lower after the S&P 500 closed at another all-time high on Tuesday, and in only five days, the Russell 2000 jumped almost 12%. Bets that the Fed will cut
rates soon helped fuel a rotation trade. Worries that US politicians are taking a harder stance on China and Taiwan sparked a pullback across technology shares, driving S&P 500 futures down 1%. Nvidia, Advanced Micro Devices and Broadcom lost more than 3%
in pre-market trading. The Biden administration is considering using the most severe trade restrictions available if companies including ASML continue to give China access to advanced semiconductor technology, Bloomberg News reported.

Futures ahead of the bell: E-Mini S&P -0.9%, Nasdaq -1.4%, Russell 2000 -0.5%, DJI -0.2%

In pre-market trading, Nvidia (NVDA -4%) was among several semiconductor stocks to drop after a report that the Biden administration has told allies that it’s considering using the most
severe trade restrictions available if companies continue giving China access to advanced chip technology. Aehr Test Systems (AEHR) rises 11% after the maker of semiconductor test equipment gave a fiscal year revenue forecast that topped estimates. American
Airlines (AAL) ticks 1% lower after TD Cowen stepped away from its buy rating, fretting over summer discounting. Bloom Energy (BE) gains 10% after the company said it will provide CoreWeave with power solutions for an AI data center. Five Below (FIVE) slides
15% after the discount retailer cut second-quarter earnings guidance and announced its CEO would step down. Spirit Airlines (SAVE) declines 6% after the low-cost carrier estimated that total revenue for the second quarter would be lower than previously expected.
Gates Industrial (GTES) rises 7% after the maker of power transmission equipment was included in the S&P Smallcap 600 Index. GitLab (GTLB) gains 15% after Reuters reported the software developer was exploring a sale after attracting interest from potential
bidders.

European gauges declined for a third day as the start of the second-quarter earnings season failed to revive investor optimism and trade tensions between the US and China over semiconductors
weighed on sentiment. The Stoxx Europe 600 index is near the lows of the day with technology stocks leading the decline.  ASML, the largest equipment supplier to chipmakers, reported better-than-expected profit in the second quarter, but its shares dropped
more than 7% after Bloomberg News reported that the Biden administration is mulling more severe measures to restrict the company’s exports to China.  Adidas AG gained 5% after raising its annual profit target for the second time in three months. Roche Holding
AG jumped on promising early-stage study results for a weight-loss pill. Stoxx 600 %, DAX %, CAC %, FTSE 100 %. Technology -3.5%, Retail -1.4%, Industrials -1%. Utilities +0.6%, Telecomm ++0.5%.

Shares in Asia were mixed while the market awaited more details from a key Chinese policy meeting. The MSCI Asia Pacific Index rose 0.4% with benchmarks climbing in Australia and New
Zealand, while equities fell in South Korea and Taiwan. TSMC fell 2.4%, wiping out close to $30 billion from the market value of the world’s largest chipmaker and a key player in the global supply chain. New Zealand shares hit their highest since March 2022
after data showed inflation slowing, though the rates market dipped and the currency rose on sticky domestically driven inflation. Investors are in a waiting mode ahead of China’s Third Plenum and also the conclusion of the Republican National Convention where
Trump could provide more concrete details on his governing agenda. ASX 200 +0.7%, Topix +0.4%, Philippines +0.3%, CSI 300 +0.1%. Nikkei 225 -0.4%, Kospi -0.8%, Taiwan -0.95%, Vietnam -1%. India was closed.

FIXED INCOME: 
 

Treasuries bear-flatten as front-end yields rise around 5bp on the day with long-end little changed while Trump warned the Fed shouldn’t cut rates before November.
Treasury yield curve extends Tuesday’s flattening move, tightening 2s10s and 5s30s spreads by ~3bp. 10-year around 4.18% is ~2bp higher versus Tuesday’s close. The US session includes $13 billion 20-year bond reopening. 

METALS: 

Gold steadied after hitting another record as traders increased bets on Federal Reserve rate cuts, while weighing the uncertain political outlook in the US.  Spot
gold +0.2%, silver -0.9%.

ENERGY:   

Oil prices slipped early, weighed by signs of weakening demand from China, but held above its 50 and 200 day moving averages before rebounding.  Russia’s Energy Ministry
has proposed extending the temporary ban on gasoline exports to stabilize the situation on the domestic market. The EIA is due to release official data on crude stockpiles, a day after industry data showed a decrease in inventories. WTI +0.8%, Brent +0.6%,
US Nat Gas -0.2%, RBOB +0.2%.

CURRENCIES:   

In currency markets, Sterling ticked higher as traders pared bets on an interest-rate cut in August after stickier-than-expected inflation data. British inflation
held at 2% year-on-year in June against forecasts for 1.9%, with services inflation stuck at an uncomfortable 5.7%. The Japanese yen strengthened, pushing USDJPY below a key trend line, after a few rounds of likely intervention from Tokyo authorities late
last week. In the interview, Trump said the strength of the dollar has been hurting the competitiveness of US exports and pointing to the weakness of yen and yuan. That’s raised some speculation among strategists that he might adopt policies to reduce the
value of the greenback if he takes office. US$ Index -0.5%, GBPUSD +0.45%, EURUSD +0.35%, USDJPY -1.2%, AUDUSD +0.15%, NZDUSD +0.65%, USDCHF -0.8%.

Spot Bitcoin is flat, Spot Ethereum +0.2%.

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
• Core Scientific (CORZ) Raised to Buy at B Riley; PT $13
• Fluor (FLR) Raised to Overweight at KeyBanc; PT $57
• Genpact (G) Raised to Neutral at JPMorgan; PT $40
• Hess (HES) Raised to Outperform at Bernstein
• Progressive (PGR) Raised to Outperform at KBW; PT $245
• UnitedHealth (UNH) Raised to Buy at Jefferies; PT $647
• Valero Energy (VLO) Raised to Outperform at Mizuho Securities; PT $175
• Downgrades
• 1-800-Flowers (FLWS) Cut to Underperform at DA Davidson; PT $8
• American Air (AAL) Cut to Hold at TD Cowen; PT $10
• Amkor Technology (AMKR) Cut to Sell at CFRA
• Associated Banc (ASB) Cut to Neutral at Baird; PT $27
• CenterPoint Energy (CNP) Cut to Equal-Weight at Morgan Stanley; PT $29
• Chevron (CVX) Cut to Market Perform at Bernstein
• Dominion Lending Centres Inc (DLCG CN) Cut to Hold at Desjardins; PT C$4
• Eagle Materials (EXP) Cut to Market Perform at Raymond James
• Envestnet (ENV) Cut to Market Perform at Raymond James
• FB Financial (FBK) Cut to Neutral at Piper Sandler; PT $46
• Five Below (FIVE) Cut to Inline at Evercore ISI; PT $113
• Cut to Equal-Weight at Barclays; PT $90
• Cut to Neutral at Mizuho Securities; PT $85
• Cut to Neutral at Citi; PT $92
• Cut to Hold at Truist Secs; PT $89
• Cut to Market Perform at William Blair
• Cut to Equal-Weight at Morgan Stanley; PT $100
• Marathon Oil (MRO) Cut to Hold at SWS; PT $30
• Cut to Neutral at JPMorgan; PT $33
• Morgan Stanley (MS) Cut to Market Perform at Oppenheimer
• Qualcomm (QCOM) Cut to Hold at HSBC; PT $200
• Schwab (SCHW) Cut to Hold at TD Cowen; PT $71
• Silk Road Medical (SILK) Cut to Hold at Stifel; PT $27.50
• SolarEdge (SEDG) Cut to Sell at DZ Bank; PT $24
• Spirit Aero (SPR) Cut to Neutral at Susquehanna; PT $37
• Spirit Air (SAVE) Cut to Sell at TD Cowen; PT $2
• Telus International CDA (TIXT CN) Cut to Underweight at JPMorgan
• TFI International (TFII CN) Cut to Hold at Desjardins; PT C$219
• Truist Financial (TFC) Cut to Neutral at Baird; PT $45
• Initiations
• Axon (AXON) Rated New Buy at BofA; PT $380
• Rated New Buy at Jefferies; PT $385
• Broadcom (AVGO) Rated New Buy at Huatai Research; PT $200.47
• Chart Industries (GTLS) Rated New Outperform at Haitong Intl; PT $220
• Core Scientific (CORZ) Rated New Overweight at Cantor; PT $20
• CVR Energy (CVI) Rated New Neutral at Mizuho Securities; PT $27
• Fidelis Insurance (FIHL) Rated New Inline at Evercore ISI; PT $19
• GE Healthcare (GEHC) Rated New Outperform at BNPP Exane; PT $92
• Home Depot (HD) Reinstated Buy at Jefferies; PT $426
• Par Pacific (PARR) Rated New Outperform at Mizuho Securities; PT $33
• Reddit (RDDT) Rated New Neutral at President Capital Management; PT $74
• Rezolute (RZLT) Rated New Buy at BTIG; PT $13
• Rumble (RUM) Rated New Neutral at Wedbush; PT $8
• Sable Offshore (SOC) Rated New Buy at Benchmark; PT $24
• Tango Therapeutics (TNGX) Rated New Buy at Jefferies; PT $19

Data sources: Bloomberg, Reuters, CQG