Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Personal Spending, Personal Income, PCE Price Index, Core PCE, 10:00ET U. of Mich.
Sentiment; 11:00ET Kansas City Fed Services Activity

Core PCE prices are expected to have risen just 0.1% last month, with the annual rate slipping to a three-year low of 2.5%.

HIGHLIGHTS and News:  

• Barack Obama and his wife Michelle endorsed Kamala Harris’ bid for president
• Apple lost ground in China’s smartphone market, dropping out of the top five handset makers
• The Olympic Games kick off today in Paris
  

World equities rebounded as markets stabilized after a week in which global shares have tumbled almost 2%. Most regions saw equity inflows in the week to Wednesday,
led by emerging markets and the US, Bank of America Global Research said in its weekly round-up of flows in and out of world markets. Emerging markets drew half of all inflows, the largest weekly figure since February. Policy decisions are due next week from
the Fed as well as the Bank of Japan. The Federal Reserve is likely to signal next week its plans to cut interest rates in September, according to economists surveyed by Bloomberg, a move they say will kick off reductions each quarter through 2025. Trains
to and from Paris were disrupted by what authorities called a coordinated sabotage effort ahead of the Olympic Games.  

EQUITIES:  

US equity futures rose overnight, with small caps outperforming, as investors awaited key US inflation data for clues on the timing of interest-rate cuts amid fears of a sharper-than-expected
economic slowdown. Stocks are clawing back losses after the exodus from technology giants morphed into a broader risk-off retreat this week. Traders are now awaiting monthly PCE statistics, the last big data point before next week’s Federal Reserve meeting.
Small caps have outperformed in a further sign investors are preparing for rate cuts that will support the broader economy. The rally in the biggest US technology stocks is at risk of fading further if the US economy continues to cool, according to BofA’s
Michael Hartnett. Futures ahead of the data

Futures ahead of the data: E-Mini S&P +0.8%, Nasdaq +1.2%, Russell 2000 +1.6%, DJI +0.6%

In pre-market trading, 3M (MMM) gains 6% after the company raised its full-year profit forecast. Baker Hughes (BKR) climbs 1.9% after the oil-services provider posted a 2Q earnings beat.
Biogen Inc. (BIIB) falls 6% after European drug regulators rejected an Alzheimer’s drug from the company and Eisai. Bristol Myers (BMY) climbs 4% as the company raised its 2024 profit forecast after demand for its new medicines helped it beat Wall Street’s
2Q sales estimates. Booz Allen (BAH) slips 5% after 1Q profit disappointed. Charter Communications (CHTR) gains 11% after posting 2Q profit that beat expectations. Coursera (COUR) soars 26% after the online educational company reported 2Q revenue that topped
estimates. Deckers Outdoor (DECK) rises 11% after the shoe company reported better-than-expected net sales for the first quarter and boosted its earnings forecast for the full year. Insulet (PODD) rallies 4% after the insulin delivery system maker reported
preliminary revenue for the 2Q that beat. Mohawk Industries (MHK) rises 15% after the company beat Wall Street estimates for both 2Q earnings and 3Q guidance. Newell Brands (NWL) rises 7% after boosting its operating cash flow forecast for the full year.

European gauges rose as a turbulent week of earnings reports wrapped up and investors looked forward to an update of the Federal Reserve’s preferred gauge of US inflation. The Stoxx 600
index climbed 0.5%, with consumer stocks leading the advance as Hermès rallied 5%. The Birkin bag maker reported a jump in sales, boosting sentiment toward the recently battered luxury sector and spurring gains in the likes of LVMH, Kering SA and Moncler SpA.
The food and beverage sector is the biggest laggard, dragged down by Nestle SA following several downgrades. In other corporate reports, Mercedes-Benz Group AG recovered from an early slump of as much as 3% after its earnings plummeted 19% in the second quarter
as sales of its passenger electric vehicles dropped sharply and demand in China weakened. Eni SpA gained 3.8% after increasing its full-year profit guidance. Amundi SA gained over 1% after posting second-quarter inflows that surpassed analysts’ estimates.
BASF SE fell over 2% after earnings declined slightly in the second quarter after prices fell across its chemicals business. Stoxx 600 +0.5%, DAX +0.3%, CAC +0.9%, FTSE 100 +0.6%. Luxury +2.5%, Personal Goods +1.1%, Construction +1%, Basic Resources +1%. REITS
-0.5%, Food & Bev -0.45%.

Shares in Asia were mixed. The MSCI Asia Pacific Index fell 0.4%, with tech stocks the biggest drag. Heavyweight TSMC sliding as investors continued to rotate out of overheated AI trades.
Taiwan dropped the most in the region as trading resumed after disruptions caused by a typhoon. The slide offset gains in Australia, South Korea and India. Chinese shares were mixed. Sensex +1.6%, CSI 1000 +1.5%, Thailand +1.2%, Kospi +0.8%, ASX 200 +0.75%,
Vietnam +0.7%, CSI 300 +0.3%, Hang Seng Index +0.1%. Singapore -0.1%, Nikkei 225 -0.5%, Taiwan -3.3%.

FIXED INCOME: 
 

Treasuries are little changed. Yields are mixed on the week with the curve steeper as short end benefited from increased conviction on Fed rate cuts this year. Curve
spreads slightly flatter on the day after 2s10s, 5s30s reached least-inverted or steepest levels since May 2023 on Thursday but failed to sustain the moves and ended at flatter. The US session includes June personal income and spending data, with embedded
PCE deflators expected to show deceleration. 10-year Treasury yield is lower by 1bp ahead of the data. Shorter-dated yields , which are more sensitive to interest rate expectations, have fallen 7 basis points this week. Futures markets are now fully pricing
a rate cut at the Fed’s September meeting due to signs inflation is heading back towards target and signals of slowing growth and a loosening labor market.

METALS: 

Gold is higher as investors await the PCE numbers, the Fed’s preferred underlying inflation measure. The data are expected to show a slowdown in price pressures,
which may encourage traders to raise bets on rate cuts as policymakers continue to seek evidence inflation is cooling toward their 2% target. Gold funds had $1.3 billion of inflows, notching their biggest two-week inflows since March 2022, according to BofA,
citing EPFR data. Spot gold +0.4%, silver -0.4%.

ENERGY:   

Oil prices slipped and are on track for a third consecutive weekly decline, driven by sluggish demand in China. Expectations of a potential Gaza ceasefire deal have
added pressure to oil prices by easing Middle East tensions and associated supply concerns. U.S. officials believe parties are closer than ever to agreeing on a six-week ceasefire in exchange for the release of hostages by Hamas. WTI -0.3%, Brent -0.4%, US
Nat Gas +0.5%, RBOB -0.03%

CURRENCIES:   

In currency markets, the dollar regained some ground against the yen after a sharp drop this week, as investors awaited US inflation data. The Japanese yen, which
has rallied 2% this week, slipped from around a 12-week high as investors took pause ahead of Bank of Japan and Federal Reserve interest rate decisions next Wednesday. USDJPY, which slid 6% from the July 3 high, has bounced after testing the 200 day moving
average yesterday. The Aussie$ is higher, rising for the first time in 10 sessions: it’s down 1.8% on a weekly basis, the most in eight months. US$ Index +0.02%, GBPUSD +0.15%, EURUSD +0.15%, USDJPY +0.4%, AUDUSD +0.4%, USDNOK -0.4%, USDCHF +0.2%.

Spot Bitcoin +3.2%, Spot Ethereum +3.1%.

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
• Aecon Group (ARE CN) Raised to Buy at Stifel Canada; PT C$25
• Alexander & Baldwin (ALEX) Raised to Overweight at Piper Sandler
• CBRE (CBRE) Raised to Outperform at Evercore ISI; PT $123
• Lockheed (LMT) Raised to Buy at Deutsche Bank; PT $600
• Mullen Group (MTL CN) Raised to Outperform at BMO; PT C$17
• Netflix (NFLX) Raised to Buy at First Shanghai; PT $742
• Tenaz Energy Corp (TNZ CN) Raised to Buy at Mackie Research Capital
• Tesla (TSLA) Raised to Buy at President Capital Management; PT $255
• Universal Health (UHS) Raised to Overweight at Barclays; PT $256
• Downgrades
• Amerant Bancorp (AMTB) Cut to Neutral at Janney Montgomery; PT $25
• Bally’s (BALY) Cut to Hold at TD Cowen; PT $18.25
• Cut to Hold at Truist Secs; PT $18.25
• BJ’s Restaurants (BJRI) Cut to Hold at Benchmark
• Dexcom Inc (DXCM) Cut to Neutral at Baird; PT $80
• Cut to Neutral at JPMorgan; PT $75
• First Financial Northwest (FFNW) Cut to Neutral at Piper Sandler
• GlycoMimetics (GLYC) Cut to Hold at TD Cowen
• Huntington Bancshares (HBAN) Cut to Neutral at Baird; PT $15
• Innergex Renewable Energy (INE CN) Cut to Hold at TD Cowen; PT C$10
• Instructure (INST) Cut to Neutral at BTIG
• Cut to Hold at Jefferies; PT $23.60
• L3Harris (LHX) Cut to Hold at Deutsche Bank; PT $257
• Lamb Weston (LW) Cut to Equal-Weight at Consumer Edge Research
• Laureate Education (LAUR) Cut to Equal-Weight at Morgan Stanley; PT $17
• Reliance (RS) Cut to Underperform at Wolfe; PT $262
• RPM International (RPM) Cut to Neutral at JPMorgan; PT $120
• Tesla (TSLA) Cut to Sell at Phillip Secs; PT $135
• Visa (V) Cut to Neutral at Fubon; PT $280
• WW International (WW) Cut to Equal-Weight at Morgan Stanley; PT $1.25
• Initiations
• Acumen Pharma (ABOS) Rated New Buy at Citi; PT $7
• AG Mortgage (MITT) Rated New Overweight at Piper Sandler; PT $9
• CervoMed Inc (CRVO) Rated New Overweight at Morgan Stanley; PT $35
• Dianthus Therapeutics Inc (DNTH) Rated New Outperform at Baird; PT $58
• DoorDash (DASH) Rated New Buy at Redburn; PT $170
• HCA Healthcare (HCA) Rated New Buy at William O’Neil
• Macom (MTSI) Rated New Outperform at Haitong Intl; PT $123
• Nestle (NESN SW) ADRs Rated New Hold at Berenberg; PT $112
• Netflix (NFLX) Rated New Hold at LBBW; PT $672
• Riot Platforms (RIOT) Rated New Speculative Buy at Stifel Canada
• Rated New Speculative Buy at Stifel; PT $18
• UnitedHealth (UNH) Reinstated Buy at William O’Neil
• Verona Pharma (VRP LN) ADRs Rated New Buy at Kempen & Co; PT $31.50

Data sources: Bloomberg, Reuters, CQG