Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Wholesale Inventories,
Advance Goods Trade Balance;  9:45ET S&P Global US Manufacturing PMI, Services PMI, Composite PMI, Bank of Canada Rate Decision; 10:00ET New Home Sales; 1:00ET 5-Year Note Auction

HIGHLIGHTS and News:  

• Democrats meet today to complete a rule change to allow Harris to accept her nomination
• Soccer kicks off at the Paris Olympics today, two days before the opening ceremony
• Oil prices once again testing their pivotal 200 week mvg averages, which they haven’t had a weekly settle below since January 2021

Global shares fell as earnings from Tesla, Alphabet as well as European luxury brands disappointed. Growth in euro zone business activity stalled this month as a
tepid expansion in the bloc’s services industry failed to offset a deeper downturn among manufacturers, a survey showed. UK business activity picked up this month, boosted by the fastest manufacturing growth in two years. Germany’s private sector unexpectedly
contracted in July and France’s stagnated, effectively bringing growth in the euro area to a standstill.  Stocks slumped on lackluster results from Tesla, LVMH and Deutsche Bank AG, fueling concern about the health of global business as the reporting season
kicks into overdrive. The Bank of Canada is expected to cut rates for a second straight meeting today.

EQUITIES:  

US equity futures are lower as the start of the Magnificent 7’s earnings underwhelmed. Tesla shares fell 7% post-market after a fourth straight quarter of disappointing earnings and its
smallest profit margin in more than five years.  Alphabet also slipped in after-hours trade even as the firm beat revenue and profit targets. Nvidia dropped after Elon Musk said Tesla will focus on its Dojo supercomputer project. 

Futures ahead of the bell: E-Mini S&P -0.9%, Nasdaq -1.3%, Russell 2000 -0.5%, DJI -0.5%

In pre-market trading, Tesla (TSLA) drops 8% after the EV maker reported another quarter of disappointing profit and postponed a highly anticipated unveiling of autonomous taxis. Alphabet
(GOOGL) shares drop 3% after the Google parent sunk more resources into its drive to outmatch rivals in artificial intelligence. AT&T (T) gains 2% after the company added far more mobile-phone subscribers than Wall Street expected. Enphase Energy (ENPH) climbs
3% after the solar equipment maker saw demand in California climb in the 2Q as the nation’s biggest market showed signs of stabilizing. Geron (GERN) declines 6% after the biopharmaceutical firm said Chief Commercial Officer Anil Kapur is leaving. Texas Instruments
(TXN) rises 2% after the chipmaker reported 2Q results and gave a forecast that’s largely in line with expectations. Visa (V) slips 3% after reporting quarterly revenue that just missed Wall Street estimates.

European gauges are lower but well off the day’s lows. Personal and household goods sector lead declines as the world’s biggest luxury group LVMH reported slower sales growth as Chinese
shoppers rein in their spending. Remy Cointreau fell after it reported a larger-than-estimated drop in revenue. The Stoxx Europe 600 index fell with bank stocks in focus on a busy results day for the industry. Deutsche Bank dropped as much as 8.5% on its first
quarterly loss in four years and scrapped plans for a buyback. BNP Paribas SA slipped as its French retail banking business remains under pressure. Banco Santander SA climbed and UniCredit SpA dropped after their updates. Within consumer sectors, LVMH tumbled
6.5% after sales in China plummeted during the quarter. EasyJet Plc rose as it said airline ticket prices are holding up during the crucial summer period. Stoxx 600 -0.35%, DAX -0.7%, CAC -1%, FTSE 100 is flat. Personal Goods -1.5%, Technology -1.2%, Financial
Services -0.7%. Basic Resources +0.7%, Energy +0.6%.

Asian stocks resumed their slide as lackluster earnings performance from major firms globally hurt investor sentiment. The MSCI Asia Pacific Index fell 0.4%, with Samsung, AIA and Meituan
among the biggest drags. Heavyweight TSMC wasn’t trading as a typhoon closed markets in Taiwan and the Philippines. Japan and Hong Kong led losses among regional benchmarks. A key gauge of the strength of Japan’s service sector rebounded in July, while factory
activity showed a contraction. Chinese markets show evidence of state-backed intervention as redemptions from China’s stock-focused mutual funds was one of the largest since 2005 in the second quarter. Topix -1.4%, Hang Seng Index -0.9%, Indonesia -0.7%, CSI
300 -0.6%, Kospi -0.55%, Sensex -0.35%, ASX 200 -0.1%, Singapore ~flat. Vietnam bucked the trend, ending higher by 0.5%.

FIXED INCOME: 
 

Treasuries hold small gains in early US trading Wednesday, led by short maturities following record demand for Tuesday’s 2-year note auction. 2-year yield is more
than 6bps lower at 4.425%. 10-year yield at 4.235%. 5s30s +2bps, 2s10s +5bps. Supply cycle continues with $70b 5-year note sale later today and concludes Thursday with $44b 7-year sale.

METALS: 

Gold holds an advance ahead of this week’s key US economic data, which is forecast to support the case for rate cuts this year. While prices have been fairly muted
this week after President Joe Biden dropped out of the race, volatility is likely to remain heightened. Spot gold +0.3%, silver +0.3%.

ENERGY:   

Oil prices rose, bouncing from the lowest finish in six weeks, after an industry report indicated that US crude inventories fell for a fourth week. US crude inventories
fell by 3.86 million barrels last week, with a drop also seen at Cushing, the API reported. The fourth week of declines would be the longest stretch since September if confirmed by the EIA today. Supply from wildfires in Canada’s oil-sands region, have already
forced some producers to curtail production. Brent and WTI are once again testing the 200 week moving averages, which they haven’t had a weekly settle below since January 2021. WTI +1.3%, Brent +1.1%, US Nat Gas -3%, RBOB +1.4%

CURRENCIES:   

In currency markets, the yen extended yesterday’s advance, surging to a seven-week high as traders repositioned for the possibility of the Bank of Japan to deliver
a rate hike in its policy meeting due next week. Intraday rallies earlier were sold into as the narrative around a possible 15 basis-point rate hike from the BOJ gained traction. The dollar steadied ahead of an inflation reading on Friday and a Federal Reserve
meeting next week. The euro slipped as European data showed private-sector activity barely grew. USDCAD is flat as traders focus on the Bank of Canada policy decision. BOC is likely to cut interest rates for a second straight meeting as it aims to steer clear
of a recession while avoiding an inflation flare-up. US$ Index -0.05%, GBPUSD +0.05%, EURUSD -0.1%, USDJPY -0.9%, AUDUSD -0.2%, NZDUSD -0.35%, USDCHF -0.5%.

Spot Bitcoin +0.8%, Spot 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
• A O Smith Corp (AOS) Raised to Buy at Stifel; PT $98
• Akamai (AKAM) Raised to Hold at HSBC; PT $96
• Estee Lauder (EL) Raised to Outperform at RBC; PT $131
• Ionis Pharma (IONS) Raised to Outperform at Leerink; PT $62
• Lockheed (LMT) Raised to Buy at TD Cowen; PT $560
• Madison Square Garden Entertainment (MSGE) Raised to Buy at Goldman
• Spotify (SPOT) Raised to Buy at DZ Bank; PT $375
• Raised to Buy at Goldman; PT $425
• Downgrades
• Alexandria Real Estate (ARE) Cut to Neutral at Wedbush; PT $130
• Autohome (ATHM) ADRs Cut to Hold at Benchmark
• BWX Technologies (BWXT) Cut to Underweight at Barclays; PT $90
• Cadence Bank (CADE) Cut to Neutral at Piper Sandler; PT $34
• Centene (CNC) Cut to Hold at Jefferies; PT $69
• Colgate-Palmolive (CL) Cut to Hold at Jefferies; PT $95
• Community Financial System (CBU) US Cut to Market Perform at Raymond James
• FactSet (FDS) Cut to Underweight at Barclays; PT $390
• General Motors (GM) Cut to Equal-Weight at Morgan Stanley
• Iqvia (IQV) Cut to Hold at Jefferies; PT $242
• Moody’s (MCO) Cut to Market Perform at BMO; PT $455
• NBT Bancorp (NBTB) Cut to Market Perform at Raymond James
• P&G (PG) Cut to Hold at Jefferies
• Q2 Holdings (QTWO) Cut to Neutral at DA Davidson; PT $76
• Red Rock Resorts (RRR) Cut to Equal-Weight at Wells Fargo; PT $64
• SmartFinancial (SMBK) Cut to Neutral at Piper Sandler; PT $28
• TE Connectivity (TEL) Cut to Hold at HSBC; PT $162
• Tesla (TSLA) Cut to Neutral at Cantor; PT $245
• Truist Financial (TFC) Cut to Neutral at Citi; PT $47
• Ulta Beauty (ULTA) Cut to Neutral at Piper Sandler
• Initiations
• Aaon (AAON) Rated New Neutral at Baird; PT $100
• Asure Software (ASUR) Rated New Neutral at Bradesco BBI; PT $18.24
• Badger Meter (BMI) Rated New Buy at William O’Neil
• Biohaven (BHVN) Rated New Overweight at Morgan Stanley; PT $58
• GE Aerospace (GE) Rated New Buy at William O’Neil
• Imax (IMAX) Rated New Buy at Seaport Global Securities; PT $23
• JFrog (FROG) Rated New Buy at TD Cowen; PT $50
• M/I Homes (MHO) Rated New Strong Buy at Raymond James; PT $200
• Meritage Homes (MTH) Rated New Outperform at Raymond James; PT $220
• Taylor Morrison (TMHC) Rated New Outperform at Raymond James; PT $75
• Tectonic Therapeutic (TECX) Rated New Outperform at Leerink; PT $49

Data sources: Bloomberg, Reuters, CQG