Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Housing Starts, Building Permits; 1:10ET Fed’s Schmid speaks

Highlights and News:  

• Kyiv has carried out its first attack inside Russia with an ATACMS missile
• Risk off sentiment as Russia’s Kremlin suggests nuclear response
  
• Putin has announced Russia will share nuclear deterrence with Russia’s allies – Newsweek
• Lebanon and Hezbollah agreed to a US proposal for a cease-fire with Israel
• US Treasury data showed that Japan and China were big sellers of USTs ahead of the election

World stocks are lower and global bonds climbed on worries over the latest escalation in Russia’s war against Ukraine. Markets were rattled by a report that Ukrainian
forces reportedly carried out their first strike on a border region in Russia using Western-supplied missiles. Earlier, President Putin approved an updated nuclear doctrine that expands the conditions for Russia to use atomic weapons, including in response
to a conventional attack on its soil.  It will also view aggression against itself or allies by a non-nuclear state backed by other nuclear powers as a joint attack.  The decision by President Biden to authorize the use of powerful weapons in Russia was made
in response to the arrival of thousands of North Korean troops in Russia’s Kursk border region.  Some positive news coming out of the Middle East after Lebanon and Hezbollah agreed to a US proposal for a ceasefire with Israel, according to Reuters late yesterday.
    

EQUITIES:  

US equity futures are lower, led by small caps, as geopolitical tensions weighed on sentiment. Putin warned the US today that the threshold for the use of nuclear weapons has been lowered.
This comes as traders await key earnings from Nvidia tomorrow. Alphabet slipped premarket after people familiar said the DOJ will push for Google to sell its Chrome browser to break its monopoly. Officials are also seeking action on data licensing and AI.
Walmart shares rose premarket after boosting its outlook for the year on strong spending from value-seekers. Lowe’s raised its sales forecast for the year.

Futures ahead of the bell: E-Mini S&P -0.2%, Nasdaq -0.1%, Russell 2000 -0.5%, DJI -0.4%. 

In pre-market trading, Super Micro Computer (SMCI) shares surge as much as 37% after the company hired a new auditor and filed a plan to comply with Nasdaq listing
requirements.  Bakkt (BKKT) jumps 18% after the Financial Times reported that Trump Media and Technology Group is in advanced talks to buy the crypto trading firm. Incyte (INCY) drops 11% after the company announced it will pause enrollment in a Phase 2 study
which is aimed at a chronic skin condition. Symbotic (SYM) soars 30% after the robotics warehouse automation company provided a 1Q revenue outlook that beat estimates. Walmart (WMT) rises 4% after the company boosted its outlook for the year on strong demand
from US consumers searching for value. XPeng ADRs (XPEV) gains 5% after the electric-vehicle maker’s fourth-quarter forecast beat estimates.

European gauges reversed course after starting the day higher, with the Stoxx 600 Index down as much as 1% to a more than three-month low.  Almost all sectors are in
negative territory, with banks and automakers leading losses. Italian shares underperformed, dragged down by the country’s biggest lenders. Among individual moves, Siemens AG shares dropped after Bank of America downgraded its rating to neutral. Nestle SA
declined as investors regard the Swiss food maker’s updated guidance as still too ambitious after its troubled year. Stoxx 600 -0.7%, DAX -0.9%, CAC -1%, FTSE 100 -0.3%. Banks -2.2%, Autos -1.7%, Travel & Leisure -1.3%, Industrial Goods -1.1%. Real Estate
+0.1%, Healthcare +0.03%.

Shares in Asia rose, led by Taiwan and Australia after gains in US peers overnight. The MSCI Asia Pacific Index climbed 1.1%, with TSMC and Commonwealth Bank of Australia
among the biggest boosts. Shares of Tesla suppliers in Asia rose after a report that the Trump team is seeking to ease US rules for self-driving cars.  Chinese Vice Premier He Lifeng vowed to boost Hong Kong’s competitiveness by investing in the city’s innovation
and strengthening its financial policies. Taiwan +1.3%, ASX 200 +0.9%, Indonesia +0.9%, Singapore +0.7%, Topix +0.7%, CSI 300 +0.7%, Philippines +0.6%, Nikkei 225 +0.5%, Hang Seng Index +0.4%, Sensex +0.3%, Kospi +0.1%. Vietnam -1%.

FIXED INCOME: 
 

Treasuries hold a risk-off bid on the Russia tensions. Yields are off session lows and remain 4bp-5bp richer across the curve.  US 10-year yield is lower by 4 basis
points to 4.37%. The moves were steeper in Europe, with German bond yields dropping to the lowest since October. Treasury coupon auctions this week include $16b 20-year new issue Wednesday and $17b 10-year TIPS reopening Thursday.  

METALS: 

Gold rose for a second day, following a nearly 2% surge in the previous session. The recent gains follow a string of losses driven by a strengthening dollar following
Donald Trump’s US-election win, as well as signs the Federal Reserve may have to slow the pace of interest rate cuts.  Analysts at Goldman Sachs Group have said the recent dip presents a buying opportunity. Investors will also be parsing comments by Fed policymakers
ahead of next month’s rate decision meeting, with several officials due to speak this week.  Spot gold +0.9%, Silver +0.7%, Copper -0.3%.

ENERGY:   

Oil traders appeared unfazed by the latest developments in Russia, with prices easing after Europe’s largest oil field gradually restarted following a power outage. 
Crude oil futures edged slightly lower after rallying about 3% in the prior session on fears that the war between Ukraine and Russia is escalating. Russia’s seaborne crude exports fell to the lowest since September, with shipments from the country’s Baltic
ports running well below last month’s rate. WTI -0.4%, Brent -0.3%, US Nat Gas -1.3%, RBOB -0.1%.

CURRENCIES: 

In currency markets, traditional havens including the Japanese yen and Swiss franc gained amid the escalating tensions with the United States over Ukraine. Use of
Western non-nuclear missiles by Ukraine against Russia may cause a nuclear response, according to new Russian doctrine.  The yen was also supported by comments from Japanese Finance Minister Katsunobu Kato, who reiterated today that the government would “respond
appropriately to excessive moves” in the yen. USDJPY was down by as much as 0.9%, before paring losses. US$ Index +0.1%, GBPUSD -0.2%, EURUSD -0.2%, USDJPY -0.4%, AUDUSD -0.1%, NZDUSD -0.05%, USDCHF -0.1%, USDNOK +0.2%.

Spot Bitcoin +1%, Spot Ethereum -0.6%. Trump Media & Technology Group is in talks to buy digital-asset marketplace Bakkt Holdings. Nasdaq is planning to list options
on the $43 billion iShares Bitcoin Trust as early as today. 

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
• Aclaris (ACRS) Raised to Buy at Jefferies; PT $7
• Raised to Buy at BTIG; PT $8
• Raised to Overweight at Piper Sandler; PT $13
• American Water (AWK) Raised to Buy at UBS
• Bank of Nova Scotia (BNS CN) Raised to Buy at BofA; PT C$90
• Raised to Buy at Canaccord; PT C$84
• BioNTech (BNTX) ADRs Raised to Outperform at Evercore ISI
• Comfort Systems USA (FIX) Raised to Buy at UBS; PT $525
• QuantumScape (QS) Raised to Hold at HSBC; PT $5.30
• Downgrades
• Academy Sports & Outdoors (ASO) Cut to Hold at Truist Secs
• Blink Charging (BLNK) Cut to Hold at Needham
• ChargePoint (CHPT) Cut to Hold at Needham
• Embraer (EMBR3 BZ) ADRs Cut to Sell at UBS
• Entree (ETG CN) Cut to Hold at TD Cowen; PT C$2
• Kraft Heinz (KHC) Cut to Neutral at Piper Sandler; PT $35
• Old Dominion (ODFL) Cut to Sell at CFRA
• Qualcomm (QCOM) Cut to Hold at President Capital Management; PT $178
• Sabre (SABR) Cut to Underperform at Bernstein
• Sea Ltd (SE) ADRs Cut to Reduce at Phillip Secs; PT $100
• Initiations
• ACNB (ACNB) Rated New Buy at Janney Montgomery; PT $53
• Apollo Global (APO) Rated New Overweight at Piper Sandler; PT $188
• Archer Aviation (ACHR) Rated New Buy at Needham; PT $11
• Arq Inc (ARQ) Rated New Buy at Canaccord; PT $10
• Asana (ASAN) Rated New Sector Perform at Scotiabank; PT $15
• Atyr Pharma (ATYR) Rated New Buy at Lucid Capital Markets; PT $11
• Autodesk (ADSK) Rated New Sector Outperform at Scotiabank; PT $360
• BioNTech (BNTX) ADRs Rated New Buy at Berenberg; PT $130
• Compass Minerals (CMP) Rated New Buy at Baptista Research; PT $18.10
• Dayforce (DAY) Rated New Sector Perform at Scotiabank; PT $75
• InflaRx (IFRX) Rated New Buy at Lucid Capital Markets; PT $10
• Intuit (INTU) Rated New Sector Perform at Scotiabank; PT $700
• InvenTrust Properties (IVT) Rated New Hold at Jefferies; PT $33
• Joby Aviation (JOBY) Rated New Buy at Needham; PT $8
• Moderna (MRNA) Rated New Hold at Berenberg; PT $42
• Monday.com (MNDY) Rated New Sector Outperform at Scotiabank; PT $325
• Okta (OKTA) Rated New Equal-Weight at Barclays; PT $81
• Princeton (BPRN) Rated New Market Perform at Hovde Group; PT $40
• Salesforce Inc (CRM) Rated New Sector Outperform at Scotiabank
• Septerna (SEPN) Rated New Overweight at Cantor; PT $50
• Rated New Buy at TD Cowen
• Rated New Overweight at Wells Fargo; PT $43
• Rated New Overweight at JPMorgan; PT $38
• ServiceNow (NOW) Rated New Sector Outperform at Scotiabank
• Sprinklr (CXM) Rated New Sector Perform at Scotiabank
• Sprout Social (SPT) Rated New Sector Perform at Scotiabank
• Veeva (VEEV) Rated New Sector Perform at Scotiabank
• Viavi (VIAV) Rated New Neutral at UBS
• WeRide (WRD) ADRs Rated New Overweight at Morgan Stanley; PT $23
• Workday (WDAY) Rated New Sector Outperform at Scotiabank
• Zoom Video (ZM) Rated New Sector Perform at Scotiabank
• ZoomInfo (ZI) Rated New Sector Perform at Scotiabank

Data sources: Bloomberg, Reuters, CQG

David Wienke