Daily Game Plan

by Contributor
on January 17, 2025

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

TODAY’S ECONOMIC DATA:  8:30ET Housing Starts, Building Permits; 9:15ET Industrial Production, Capacity Utilization,
Manufacturing Production; 2:00ET TIC Flows

Highlights and News:  

  • ISRAEL SECURITY CABINET APPROVES GAZA CEASEFIRE DEAL
  • Hamas set to release first hostages under Gaza ceasefire deal on Sunday
  • Trump Plans to Designate Cryptocurrency as a National Priority
  • NOVO’S OZEMPIC, WEGOVY TARGETED IN MEDICARE PRICE NEGOTIATIONS

 

Global stocks edged higher while investors awaited a wave of policy changes under the incoming Trump administration. Eyes are also on developments around the ceasefire
deal to the Middle East conflict. Israel’s Prime Minister Benjamin Netanyahu announced that an agreement with Hamas to pause the war in Gaza has been finalized and is set to begin on Sunday. The cabinet has ratified the pact during its meeting that is currently
underway.  Meanwhile, China’s economy grew 5.4% in the final quarter of 2024, exceeding expectations and marking the fastest pace in six quarters.      

 

EQUITIES:   In nominal terms, the 50 largest
stocks are worth more than $30 TRILLION. That’s ~50% of the entire US stock market’s value.

US equity futures are moving higher with the S&P 500 and the Dow looking set to log their biggest weekly advances since the November election week.  Trump is due to take over the White
House on Monday and investors will be on edge for any insights into his plans on tax cuts, tariffs, loose regulations and immigration at his inauguration speech. Trump has already prepared about 100 executive orders, the WSJ reported, as he aims to take swift
action following Monday’s inauguration.

Futures ahead of the bell: E-Mini S&P +0.6%, Nasdaq +0.8%, Russell 2000 +0.7%, DJI +0.5%.

In pre-market trading, Bank OZK (OZK) ticks 1% higher after the bank posted 4Q net interest income that topped estimates. Fastenal (FAST) falls 6% after the construction
supplies company reported 4Q sales that slightly missed as a “slow rate of growth reflects continuation of the soft manufacturing environment.” JetBlue (JBLU) and Southwest Airlines (LUV) shares fall about 2% after BofA downgraded the carriers to underperform
from neutral. JB Hunt (JBHT) shares drop 9% after the transportation and logistics company reported fourth-quarter earnings per share that trailed consensus expectations. Lumentum (LITE) gains 6% after Barclays turned bullish on the photonics products maker.
Truist Financial (TFC) gains 2% after Charlotte-based lender reported net interest income that was broadly in line with analyst estimates. Magnificent Seven: Alphabet (GOOGL) +0.4%, Amazon (AMZN) +0.5%, Apple (AAPL) +0.7%, Microsoft (MSFT) +0.3% , Meta Platforms
(META) +0.3%, Nvidia (NVDA) +0.9%, and Tesla (TSLA) +0.7%.

Since January 2023, the Magnificent 7 stocks have added a massive $10.5 trillion in market value. This is more than the size of the UK, French, and German stock markets
combined. The group’s market cap has reached a record $16.8 trillion, more than the entire value of the European stock market – The Kobeissi Letter

European gauges are broadly higher with the Stoxx 600 index on course for its strongest week since September. Basic resources sector leads gains after Bloomberg News
reported that Glencore Plc and Rio Tinto Group held early-stage talks about combining their businesses. The news helped London’s FTSE 100 hit a record high. China-focused European sectors such as retail and auto climbed after data suggested Beijing’s stimulus
blitz is succeeding in shoring up economic growth. Monetary policy easing should continue “with a series of interest-rate cuts at the next ECB Governing Council meetings,” ECB Governing Council member Yannis Stournaras said.  Stoxx 600 +0.7%, DAX +1%, CAC
+1%, FTSE 100 +1.3%. Basic Resources +1.8%, Chemicals +1.4%, Construction +1.4%, Utilities +1.4%. Healthcare -0.2%.

Shares in Asia were mixed. Japanese shares declined ahead of the Bank of Japan meeting next week and India’s benchmark fell after weak earnings caused a selloff in
bank shares. The MSCI Asia Pacific Index declined as much as 0.7% before erasing most of the loss to end 0.1% lower, with Hyundai and Samsung among the worst performers. Shares in Hong Kong and mainland China advanced after data showed the world’s second-largest
economy hit the government’s growth target last year. Chinese semiconductor stocks rose as the nation begins investigating allegations that the US dumps lower-end chips and unfairly subsidizes its own chipmakers. Philippines +1.4%, Indonesia +0.7%, Vietnam
+0.5%, Taiwan +0.5%, CSI 300 +0.3%, Hang Seng Index +0.3%. Kospi -0.2%, ASX 200 -0.2%, Topix -0.3%, Sensex -0.5%, Thailand -0.9%.

FIXED INCOME: 
 

Treasuries hold gains as the US session gets under way, with yields at or near weekly lows. Long-end tenors lead, richer by more than 5bps, flattening the curve.
2s10s spread is ~4bp flatter on the day; US 10-year around 4bp richer at 4.57%. UK gilts pace gains for government bonds globally for a second straight day after weaker-than-expected UK retail sales figures boosted wagers on BOE easing.

 

 

METALS: 

Gold fluctuates and silver falls as focus shifts away from safe-haven demand as Israel and Hamas agree to a ceasefire, and towards interest rate cut expectations.
The market is pricing in slightly more US rate cuts following recent inflation data, halting a surge in the dollar and prompting a fall in bond yields. Kazakhstan’s central bank will sell gold on international markets to support the national currency, with
estimated annual sales of $6 billion. Spot gold -0.15%, Silver -1.3%, Copper -1%.

 

 

ENERGY:   

 

Oil is slightly lower but set for a fourth weekly gain, with Brent crude trading above $81 a barrel amid tightened global supply driven by cold weather and US sanctions.
Sanctions targeting Russia, Iran, and Venezuela under the incoming Trump administration, alongside proposed tariffs on Canadian oil, have heightened supply risks. China’s economy meeting its growth target added further demand optimism, though looming US tariffs
could dampen expansion. Weaker fuel demand and depressed refining margins in 2024 resulted in the first annual decline in China’s refinery throughput in over 20 years, excluding the pandemic lockdown year of 2022, government data showed.  WTI -0.1%, Brent
-0.25%, US Nat Gas -4.3%, RBOB -0.5%.

 

 

CURRENCIES: 

In currency markets, the US dollar index edged higher, with options traders turning the most bullish on the dollar in nearly two years ahead of Donald Trump’s inauguration. 
Sterling fell to near the weakest level since November 2023 after UK retail sales saw a surprise decline in December. The yen is weaker even as traders boost bets on the BOJ raising rates next week. It’s still up more than 1% versus the dollar for the week.
The Aussie$ slipped despite China meeting its 2024 growth target of 5%. Analysts say the growth report for 2024 is overshadowed by looming US tariffs on Chinese exports. US$ Index +0.15%, GBPUSD -0.4%, EURUSD -0.05%, USDJPY +0.4%, AUDUSD -0.4%, NZDUSD -0.4%,
USDCHF +0.2%, USDNOK +0.45%.

 

 

Spot Bitcoin +2.7%, Spot Ethereum +2.7%.  President-elect Donald Trump is planning to release an executive order elevating crypto as a policy priority and giving
industry insiders a voice within his administration, according to people familiar with the plans. That will no doubt add to excitement at tonight’s $2,500-a-ticket Crypto Ball in DC, a giant party thrown in honor of the digital-currency-skeptic-turned-cheerleader
president-elect. 

 

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
    • American Air (AAL) Raised to Neutral at BofA; PT $20
    • Applied Materials (AMAT) Raised to Overweight at KeyBanc; PT $225
    • AT&T (T) Raised to Neutral at Arete; PT $19
    • Axalta (AXTA) Raised to Outperform at Wolfe; PT $41
    • Clearwater Analytics (CWAN) Raised to Overweight at Morgan Stanley
    • Cloudflare (NET) Raised to Buy at Citi
    • DuPont de Nemours (DD) Raised to Outperform at Wolfe
    • Edison International (EIX) Raised to Overweight at JPMorgan; PT $96
    • EnerSys (ENS) Raised to Outperform at Oppenheimer; PT $115
    • Lam Research (LRCX) Raised to Overweight at KeyBanc; PT $95
    • Life360 (360 AU) Raised to Buy at UBS
    • Lumentum (LITE) Raised to Overweight at Barclays; PT $125
    • MoonLake Immunotherapeutics (MLTX) Raised to Buy at Goldman; PT $82
    • Salesforce Inc (CRM) Raised to Buy at TD Cowen; PT $400
    • SAP (SAP GR) ADRs Raised to Buy at TD Cowen; PT $305
    • Ultrapar (UGPA3 BZ) ADRs Raised to Buy at HSBC; PT $3.70
    • Ventas (VTR) Raised to Outperform at Baird; PT $65
  • Downgrades
    • Crocs (CROX) Cut to Hold at Williams Trading; PT $112
    • HubSpot (HUBS) Cut to Hold at TD Cowen; PT $725
    • JetBlue (JBLU) Cut to Underperform at BofA; PT $6.50
    • Lucky Strike (LUCK) Cut to Neutral at JPMorgan; PT $12
    • Paycor HCM (PYCR) Cut to Hold at TD Cowen; PT $22.50
    • Polestar (PSNY) ADRs Cut to Neutral at Cantor
    • Southwest Air (LUV) Cut to Underperform at BofA; PT $31
    • Spotify (SPOT) Cut to Peerperform at Wolfe
  • Initiations
    • Apogee Enterprises (APOG) Rated New Buy at Singular Research; PT $66.50
    • Atlassian (TEAM) Rated New Neutral at Cantor; PT $264
    • Builders FirstSource (BLDR) Rated New Outperform at Raymond James
    • Commvault Systems Inc (CVLT) Reinstated Neutral at Cantor; PT $159
    • Conoco (COP) Reinstated Buy at TD Cowen; PT $125
    • DigitalOcean (DOCN) Rated New Neutral at Cantor; PT $39
    • Dynatrace (DT) Rated New Neutral at Cantor; PT $58
    • Elastic (ESTC) Rated New Neutral at Cantor; PT $108
    • Exelixis (EXEL) Rated New Buy at William O’Neil
    • Expand Energy Corp (EXE) Rated New Hold at TD Cowen; PT $108
    • Flutter (FLUT) Rated New Buy at Stifel; PT $320
    • Informatica (INFA) Rated New Neutral at Cantor; PT $29
    • Microsoft (MSFT) Rated New Overweight at Cantor; PT $509
    • Monday.com (MNDY) Rated New Overweight at Cantor; PT $292
    • MongoDB (MDB) Rated New Overweight at Cantor; PT $344
    • Nice Ltd (NICE IT) ADRs Rated New Neutral at Cantor; PT $176
    • Oracle (ORCL) Reinstated Overweight at Cantor; PT $214
    • Orion Group (ORN) Reinstated Buy at DA Davidson; PT $11
    • Palantir (PLTR) Rated New Neutral at Cantor; PT $72
    • Penumbra (PEN) Rated New Buy at William O’Neil
    • ServiceNow (NOW) Rated New Overweight at Cantor; PT $1,332
    • Snowflake (SNOW) Rated New Overweight at Cantor; PT $201
    • Sterling Infrastructure (STRL) Rated New Outperform at William Blair
    • Teradyne (TER) Reinstated Buy at William O’Neil
    • Veolia (VIE FP) ADRs Rated New Buy at Berenberg; PT $18
    • Watsco (WSO) Rated New Market Perform at Raymond James
    • Zoom Communications Inc (ZM) Reinstated Neutral at Cantor; PT $87

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

Categories:

Charts

Tags:

aucldxesngqqqsp500tyusdvixwtiX

Comments are closed