Daily Game Plan

by Contributor
on January 14, 2025

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

TODAY’S ECONOMIC DATA:  8:30ET PPI Final Demand; 9:00ET France PM Francois Bayrou’s inaugural policy speech; 10:00ET
Fed’s Schmid Speaks; 3:05ET Fed’s Williams speaks

Highlights and News:  

  • Trump Team Studies Gradual Tariff Hikes Under Emergency Powers
  • Chinese officials weigh having Elon Musk acquire TikTok’s US operations if the app is banned
  • HAMAS SAYS CEASEFIRE TALKS HAVE REACHED FINAL STAGES
  • Southern California faces another round of dangerous fire weather, with winds exceeding 70mph

 

Global stocks rose following a report that US President-elect Donald Trump might opt to impose gradual tariff hikes in a strategy that could avert inflation spikes.
The bond market sell-off moderated, yet investors maintained a cautious stance with US inflation data due on Wednesday and the beginning of President-elect Donald Trump’s second term next week. The China Securities Regulatory Commission said stability is top
of its agenda in 2025. Goldman Sachs Group and HSBC Holdings have said they expect Chinese shares to rally this year, with the former citing a favorable risk-reward ratio and the latter encouraged by a relatively more positive policy backdrop. Meanwhile, Israel
and Hamas appeared to narrow in on a ceasefire deal, even after deadly overnight strikes on Gaza.     

 

EQUITIES:  

US equity futures are positive, but well off their overnight highs as investors digested a report that the incoming Trump administration could hike tariffs gradually, with a key wholesale
inflation reading on deck. Members of President-elect Trump’s incoming economic team are considering a strategy of incrementally increasing tariffs about 2% to 5% each month. This gradual approach is designed to enhance their negotiating leverage while minimizing
the risk of sudden inflation increases. Meanwhile, Chinese officials are evaluating a potential option that involves Elon Musk acquiring the US operations of TikTok if the company fails to fend off a controversial ban on the app, according to people familiar.
Magnificent Seven tech names advanced in premarket trading, with Nvidia and Tesla up more than 2%. Focus is also turning to the US corporate earnings season, with banks including Citigroup, JPMorgan and Goldman Sachs reporting on Wednesday.

Futures ahead of the data: E-Mini S&P +0.15%, Nasdaq +0.15%, Russell 2000 +0.4%, DJI +0.15%.

In pre-market trading, H&E Equipment Services (HEES) soars 105% after United Rentals Inc. agreed to buy the company for $3.4 billion in cash. Applied Digital (APLD)
gains 15% after the Wall Street Journal reported that Macquarie will invest as much as $5 billion in data centers being built by the digital infrastructure company. Shares of KB Home (KBH) jumped almost 10% after the home builder’s fourth quarter earnings
beat. Aehr Test Systems (AEHR) slides 20% after the semiconductor manufacturing company reported quarterly results. Angi (ANGI) climbs 9% after IAC announced it would spin off its stake in the home services company to shareholders. Signet Jewelers (SIG) plummets
22% after the owner of Kay Jewelers cut its fourth-quarter sales forecast. Teladoc (TDOC) gains 4% after the company said its diabetes, hypertension, pre-diabetes and weight management programs will be accessible via Amazon’s Health Benefits Connector.

Both semiconductor and utilities ETFs are testing their key 200 day moving averages.

European gauges recouped some losses after falling for two straight sessions. Automobiles and parts, a sector that has been under pressure lately due to the tariff
threats, is at the top of the leader board. France’s CAC 40 index outperforms in the region on the possibility of a political agreement that could prevent a government collapse. French Prime Minister Francois Bayrou is set to outline in a speech the framework
of an agreement where pension reforms would be moderated in exchange for backing from the left to pass the budget. The Stoxx 600 climbs 0.5%, led autos, banks and technology stocks. Energy shares lag, with heavyweight BP Plc falling after the company flagged
broad weakness across its business in the fourth quarter.  Stoxx 600 +0.35%, DAX +0.8%, CAC +0.9%, FTSE 100 -0.1%. Autos +1.6%, Banks +1.3%, Tech +1.25%. Energy -0.6%, Retail -0.3%.

Shares in Asia were mixed to higher, with Chinese stocks leading gainers as news that Trump’s team is considering taking a gradual approach to raising tariffs buoyed
sentiment. The MSCI China Index snapped a six-day losing streak, climbing more than 2.5%, as the nation’s top securities regulator said it will work on building a mechanism to stabilize the market. Small-cap Chinese shares rallied even more, with the tech-heavy
ChiNext Index jumping nearly 5%. More broadly, the MSCI Asia Pacific Index rose 0.6%, with Tencent and Meituan among the top contributors. The Asian benchmark’s advance was held back by losses in Japan, with chip-related companies falling after new US restrictions
on semiconductor exports fueled caution toward the sector. Hang Seng Tech +3.1%, CSI 300 +2.6%, Hang Seng Index +1.8%, Taiwan +1.4%, ASX 200 +0.5%, Kospi +0.3%, Sensex +0.2%. Singapore -0.1%, Vietnam -0.5%, Philippines -0.7%, Thailand -1%, Nikkei 225 -1.8%.

FIXED INCOME: 
 

Treasuries hold small losses as US session gets under way, and ahead of US producer price data, with 10-year yields up 1bp at 4.79%. Japan’s 40-year government bond
yield reached the highest level since its debut as BOJ Deputy Governor Himino signaled a rate hike may come next week. The US session includes December PPI data, and another heavy slate of investment-grade corporate bond offerings is expected. 5s30s spread
is steeper by ~2.5bp; 2s10s is ~flat.

 

METALS: 

Gold inched higher, boosted by a softer dollar and concerns over the impact of potential US trade tariffs on inflation after President-elect Donald Trump takes office.
Traders also await key US inflation data for more cues on the path of monetary policy. Investors will now be focusing on the producer price index due this morning and consumer price index data set to be released on Wednesday, as stronger-than-expected figures
could further damp the rate-cut outlook for this year. Spot gold +0.25%, Silver +0.4%, Copper +0.2%.

 

 

 

ENERGY:   

 

Oil fluctuated near a five-month high as progress in ceasefire talks between Hamas and Israel helped cool a rally fueled by risks to Russian and Iranian supplies.
Brent crude retreated slightly below $81 a barrel as Qatar and Hamas said that negotiations with Israel have reached their final stages, building on earlier comments from Donald Trump and Joe Biden.  Canadian heavy oil prices soared to the highest since April
as buyers in Asia avoid Russian and Iranian barrels. Chinese and Indian refiners are seeking alternative fuel supplies after freight rates for supertankers jumped following the US expansion of sanctions on Russia’s oil industry. This prompted traders to quickly
secure ships to transport oil from other countries to China and India. WTI -0.3%, Brent -0.4%, US Nat Gas -4%, RBOB -0.3%

 

 

CURRENCIES: 

In currency markets, the dollar is on course to snap a five-day winning streak after Bloomberg News reported that Donald Trump’s incoming economic team is discussing
taking a gradual approach in implementing US tariffs. The pound struggles to snap its longest losing run since mid-November. Bank of Japan Deputy Governor Ryozo Himino signaled an interest rate hike may happen next week by saying that the board will discuss
it. The yen weakened after Himino said the bank will adjust policy if its economic outlook materializes. China will continue to keep the yuan stable and ensure ample liquidity, officials from the central bank pledged. US$ Index -0.3%, GBPUSD -0.3%, EURUSD
+0.05%, USDJPY +0.25%, AUDUSD -0.1%, NZDUSD +0.15%, USDCHF ~flat.

 

 

 

Spot Bitcoin +2%, Spot Ethereum +2.5%.   

 

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 Outperform at Oppenheimer; PT $88
    • Acuity Brands (AYI) Raised to Overweight at Morgan Stanley; PT $370
    • Air Products (APD) Raised to Overweight at Wells Fargo; PT $350
    • Aon PLC (AON) Raised to Overweight at Wells Fargo; PT $410
    • APi Group (APG) Raised to Outperform at RBC; PT $45
    • Capital One (COF) Raised to Hold at HSBC; PT $176
    • Celanese (CE) Raised to Buy at BofA
    • CommScope (COMM) Raised to Neutral at JPMorgan; PT $5
    • CSX (CSX) Raised to Buy at CFRA
    • Cummins (CMI) Raised to Neutral at BofA
    • Devon (DVN) Raised to Buy at Benchmark; PT $44
    • Eastman Chemical (EMN) Raised to Buy at BofA; PT $109
    • First Citizens (FCNCA) Raised to Outperform at KBW; PT $2,500
    • Fiserv (FI) Raised to Buy at Seaport Global Securities
    • FMC Corp (FMC) Raised to Neutral at BofA; PT $61
    • Hesai Group (HSAI) ADRs Raised to Buy at Goldman; PT $18.40
    • Instacart (CART) Raised to Buy at BTIG; PT $58
    • Monarch Casino (MCRI) Raised to Buy at Truist Secs
    • Olin (OLN) Raised to Buy at BofA
    • Paccar (PCAR) Raised to Buy at BofA
    • United Rentals (URI) Raised to Neutral at Baird; PT $658
    • Visa (V) Raised to Buy at Seaport Global Securities
  • Downgrades
    • Archer-Daniels-Midland (ADM) Cut to Underperform at BofA
    • B2Gold (BTO CN) Cut to Underperform at BofA
    • Chegg (CHGG) Cut to Underweight at Morgan Stanley; PT $1.25
    • Choice Hotels (CHH) Cut to Underweight at Morgan Stanley; PT $131
    • Element Solutions (ESI) Cut to Neutral at BofA; PT $28
    • Enfusion (ENFN) Cut to Equal-Weight at Morgan Stanley; PT $11.25
    • Flywire (FLYW) Cut to Neutral at Seaport Global Securities
    • Fortinet (FTNT) Cut to Market Perform at Raymond James
    • General Dynamics (GD) Cut to Neutral at Baird; PT $283
    • Intra-Cellular (ITCI) Cut to Neutral at Piper Sandler; PT $132
      • Cut to Market Perform at Leerink; PT $132
    • Las Vegas Sands (LVS) Cut to Equal-Weight at Morgan Stanley; PT $51
    • Mastercard (MA) Cut to Neutral at Seaport Global Securities
    • Match Group (MTCH) Cut to Neutral at BTIG
    • Origin Materials (ORGN) Cut to Underperform at BofA
    • RumbleON (RMBL) Cut to Neutral at DA Davidson; PT $5
    • Stellantis (STLA) Cut to Underperform at Mediobanca SpA; PT $12.83
    • Sunstone Hotel (SHO) Cut to Underweight at Morgan Stanley; PT $10
    • Super Hi (9658 HK) ADRs Cut to Equal-Weight at Morgan Stanley; PT $25
    • Voya Financial (VOYA) Cut to Equal-Weight at Wells Fargo; PT $76
    • Zegna Group (ZGN) Cut to Underperform at Mediobanca SpA; PT $7.45
  • Initiations
    • Albemarle (ALB) Rated New Buy at Clarksons; PT $112
    • AMD (AMD) Rated New Buy at Loop Capital; PT $175
    • BeiGene (ONC) ADRs Rated New Buy at ICBC Research; PT $316
    • Fidelity National (FIS) Reinstated Equal-Weight at Wells Fargo; PT $88
    • FirstService (FSV CN) Rated New Outperform at CIBC; PT C$304.03
    • HUTCHMED China (HCM LN) ADRs Rated New Buy at ICBC Research; PT $30.30
    • Instacart (CART) Rated New Outperform at Mizuho Securities; PT $55
    • Jack Henry (JKHY) Rated New Underweight at Wells Fargo; PT $155
    • Lockheed (LMT) Rated New Buy at Truist Secs; PT $579
    • Mister Car Wash (MCW) Rated New Equal-Weight at Stephens; PT $8
    • Mr Cooper (COOP) Rated New Market Outperform at JMP; PT $115
    • Northrop Grumman (NOC) Rated New Buy at Truist Secs; PT $544
    • Pony AI (PONY) ADRs Rated New Buy at Deutsche Bank; PT $20
    • Roblox (RBLX) Rated New Outperform at CICC; PT $63
    • Southside Bancshares (SBSI) Rated New Market Perform at Raymond James
    • Southwest Gas (SWX) Reinstated Hold at Jefferies; PT $73
    • TerraVest Capital (TVK CN) Rated New Sector Outperform at Scotiabank

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

Categories:

Charts

Tags:

aucldxesngqqqsp500tyusdvixwtiX

Comments are closed