Daily Game Plan

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

DATA/HEADLINES:   10:30ET Dallas Fed Manf. Activity

TODAY’S HIGHLIGHTS and News:  

• BRAZIL FEDERAL POLICE SERVE SEARCH AND SEIZURE WARRANT AGAINST SON OF FORMER PRESIDENT BOLSONARO
• Goldman Warns That March Rate-Cuts Not Off The Table For The Fed, ECB, Or BoE
  
• Biden says “We shall respond” after 3 US service members killed in a drone attack in Jordan on Sunday

Global stocks opened the week on a cautious note ahead of a Federal Reserve policy decision Wednesday, one from the Bank of England Thursday, and US payroll numbers
Friday. Sentiment was weighed down by China’s property crisis and escalating geopolitical tensions in the Middle East.  Iran sought to distance itself from a deadly attack on a US base in Jordan by Tehran-backed militants that killed three American soldiers,
as President Biden faced mounting pressure to respond. Washington’s response will be stronger than its most recent retaliations against Iranian proxies, according to a person familiar with the US position.  Meanwhile, Benjamin Netanyahu said “significant gaps”
remain in Gaza ceasefire talks, but negotiations for the return of hostages in exchange for a two-month end of hostilities were constructive.                          

EQUITIES: 
 

US equity futures fluctuated as investors awaited the FOMC meeting mid-week and a flurry of key US earnings including Microsoft, Apple, Alphabet and Meta. The US wants Amazon, Microsoft
and other cloud services providers to actively investigate and call out foreign clients developing AI applications on their platforms. UBS analyst David Vogt expects Apple to report December quarter revenue roughly $1B above the firm’s $117.8B forecast, driven
by 2-3 months of inventory build of iPhone units in China.             

members killed in a drone attack in Jordan on Sunday

In pre-market trading, SoFi Technologies (SOFI) rises 13% after the fintech reached profitability for the first time. C4 Therapeutics (CCCC) gains 2.7% after JPMorgan upgrades the biotech
to neutral on a more optimistic view of the company’s drug pipeline.  Vera Therapeutics (VERA) drops over 6% after offering $200 million shares. Warner Bros Discovery (WBD) slips 1.4% as Wells Fargo cut its recommendation to equal-weight. Zim Integrated Shipping
Services (ZIM) gains more than 9% as Jefferies upgrades to buy. Revance Therapeutics (RVNC) drops 2.3% after Mizuho cuts its recommendation to neutral and says guidance for 2024 product sales seems too high.

European gauges are hovering near their highest level in two years ahead of a packed week with big corporate earnings, European inflation data and Bank of England meeting. The Stoxx 600
Index is roughly flat with losses in banks and telecom countering gains in energy shares. Holcim shares jumped after the Swiss building-materials announced that it intends to spin out its North America operations into a separate US-listed entity.  Royal Philips
NV fell after the Dutch company said it was suspending sales of sleep apnea devices and ventilators in the US, while Ryanair Holdings slipped after it trimmed its profit guidance for this fiscal year. Bayer AG slumped over 5% after its Monsanto unit was ordered
by a Pennsylvania jury to pay more than $2.2 billion to a former user of the Roundup weedkiller. Stoxx 600 -0.05%, DAX -0.5%, CAC -0.1%, FTSE 100 +0.1%. Energy +1.3%, Healthcare +0.4%, Food & Beverage +0.3%. Telecom -1%, Banks -0.9%. 

Asian markets were mostly higher as new steps by Beijing to stabilize the local market outweighed the drag on sentiment from the liquidation of property giant China Evergrande. Trading
in the company’s shares were suspended after it tumbled 21%. Shares in Hong Kong trimmed gains of nearly 2% made after China’s securities regulator said on Sunday it would fully suspend the lending of restricted shares.  Chinese Vice Premier He Lifeng said
on Monday that improving the performance and restoring willingness to invest of listed companies should be prioritized as an important measure to promote economic progress. The MSCI Asia Pacific Index gained 1%, boosted by Toyota, Reliance Industries and Samsung
Electronics.  India’s key stock index rallied the most in nearly two months, buoyed by gains in Adani Enterprises and Reliance Industries.  Sensex +1.8%, Topix +1.3%, Kospi +0.9%, Hang Seng Index +0.8%, Taiwan +0.7%, ASX 200 +0.3%. Singapore -0.6%, Philippines
-0.8%, CSI 300 -0.9%.        

FIXED INCOME: 
 

Treasuries are slightly richer across the curve with futures near highs of the day, led by core European rates after weekend remarks from ECB’s Francois Villeroy
de Galhau, who said the central bank could cut rates at any time this year. US yields richer by 2bp to 3.5bp across the curve with front-end lagging slightly, flattening 2s5s and 2s10s spreads by 1.2bp and 1.5bp on the day. US 10-year yields around 4.11%. 
Economists mostly predict June for the first cut, but traders are pricing the risk of a March move at essentially a coin toss, according to CME Group’s FedWatch Tool. 

METALS: 
   

Gold rose as investor speculation continues on mixed US data that could influence the Federal Reserve’s messaging about the pace of interest-rate cuts when it meets
on Wednesday. Investors are assigning roughly even odds to the prospect that the US central bank will start lowering borrowing costs in March. While data released on Friday showed the Fed’s preferred gauge of underlying inflation cooled to an almost three-year
low, consumer spending topped estimates.  Spot gold +0.5%, silver +1%.              

ENERGY:  

Oil prices briefly jumped to their highest levels since late November after a Houthi missile attack caused a fire on a fuel tanker in the Red Sea and a drone attack
killed three US troops in Jordan. President Biden vowed retaliation.  Oil initially rose 1.5%, with Brent climbing above $84 a barrel, though it later pared all those gains. A move by Iran aimed at closing off the Strait of Hormuz, the world’s biggest oil-transportation
chokepoint, remains a top worry. Russia, meanwhile, said it has carried out its pledge to deepen cuts in oil exports by 500,000 b/d this quarter. WTI -0.1%, Brent -0.2%, US Nat Gas -2%, RBOB -0.7%.         

CURRENCIES:   

In currency markets, the euro struggles after remarks by the ECB’s Francois Villeroy de Galhau over the weekend. The Bank of France Governor said they could cut interest
rates at any moment this year and all options are open at upcoming meetings. The market responded by firming wagers on a quarter-point decrease as early as April, which is now fully priced. His colleague Mario Centeno also leaned dovish, calling for lower
rates sooner rather than later.  ECB Governing Council member Peter Kazimir wrote in an opinion piece Monday that the ECB won’t rush into easing, saying that June is more likely for a first move. Australian and New Zealand dollars outperformed as China’s stock-market
support measures bolstered investor sentiment.  US$ Index +0.15%, EURUSD -0.35%, GBPUSD -0.1%, USDJPY -0.15%, AUDUSD +0.4%, NZDUSD +0.5%, USDSEK +0.5%.

Bitcoin +0.3%, Ethereum -0.5%.   

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
• Alvotech (ALVO) Raised to Overweight at Barclays; PT $17
• American Air (AAL) Raised to Buy at Citi; PT $20
• Beam Therapeutics (BEAM) Raised to Overweight at JPMorgan; PT $40
• C4 Therapeutics (CCCC) Raised to Neutral at JPMorgan; PT $6
• Capital One (COF) Raised to Peerperform at Wolfe
• Colgate-Palmolive (CL) Raised to Outperform at Raymond James
• Dollar Tree (DLTR) Raised to Overweight at JPMorgan; PT $157
• Evolus (EOLS) Raised to Overweight at Barclays; PT $16
• Flywire (FLYW) Raised to Overweight at Morgan Stanley; PT $27
• Hershey (HSY) Raised to Outperform at Bernstein; PT $235
• Horace Mann (HMN) Raised to Outperform at KBW; PT $40
• MidWestOne Financial (MOFG) Raised to Overweight at Stephens; PT $31
• ZIM Integrated Shipping (ZIM) Raised to Buy at Jefferies; PT $20
• Downgrades
• Albemarle (ALB) Cut to Market Perform at Cowen; PT $130
• Baker Hughes (BKR) Cut to Peerperform at Wolfe
• Brown-Forman (BF/B) Cut to Equal-Weight at Morgan Stanley; PT $58
• Dollarama (DOL CN) Cut to Sector Perform at Scotiabank; PT C$107
• Goeasy (GSY CN) Cut to Neutral at CIBC; PT C$160
• KLA Corp (KLAC) Cut to Neutral at Susquehanna; PT $675
• Meridian (MRBK) Cut to Neutral at Piper Sandler; PT $13
• Norfolk Southern (NSC) Cut to Market Perform at Cowen; PT $236
• Cut to Underweight at Morgan Stanley; PT $175
• Cut to Hold at Stifel; PT $233
• Piedmont Lithium (PLL) Cut to Market Perform at Cowen
• Revance Therapeutics (RVNC) Cut to Neutral at Mizuho Securities; PT $9
• Vir Biotechnology (VIR) Cut to Neutral at JPMorgan; PT $9
• Warner Bros Discovery (WBD) Cut to Equal-Weight at Wells Fargo; PT $12
• Initiations
• AAR (AIR) Rated New Outperform at William Blair
• Afya (AFYA) Rated New Neutral at Citi; PT $23
• American Eagle (AEO) Rated New Hold at Baptista Research; PT $21.30
• ArcBest (ARCB) Reinstated Buy at Deutsche Bank; PT $148
• Armstrong World (AWI) Rated New Underperform at Baptista Research
• ATS Corp (ATS CN) Rated New Outperform at Baptista Research
• Axcelis Technologies (ACLS) Rated New Buy at Baptista Research
• Bristol Myers (BMY) Mirati Therapeutics Rated New Underperform at Baptista Research
• Cadeler (CADLR NO) ADRs Rated New Buy at Jefferies; PT $24
• CalciMedica (CALC) Rated New Buy at HC Wainwright; PT $20
• Casey’s (CASY) Rated New Hold at Baptista Research; PT $310.40
• Emcor (EME) Rated New Hold at Baptista Research; PT $235
• Evercore (EVR) Reinstated Market Perform at KBW; PT $193
• Houlihan Lokey (HLI) Reinstated Market Perform at KBW; PT $127
• Huntington Ingalls (HII) Rated New Hold at Baptista Research
• Immunome (IMNM) Rated New Outperform at Leerink; PT $30
• Inter Parfums (IPAR) Rated New Buy at Baptista Research; PT $171.30
• Lazard Inc (LAZ) Reinstated Outperform at KBW; PT $51
• Lightspeed Commerce Inc (LSPD CN) Rated New Hold at Baptista Research
• Marriott Vacations (VAC) Rated New Hold at Baptista Research
• Moelis & Co (MC) Reinstated Market Perform at KBW; PT $56
• Natura &Co (NTCO3 BZ) ADRs Rated New Outperform at Baptista Research
• NuScale Power (SMR) Rated New Buy at Canaccord; PT $4.25
• Perella Weinberg Partners (PWP) Reinstated Outperform at KBW; PT $16
• Pinstripes (PNST) Rated New Buy at BTIG; PT $6
• PJT Partners (PJT) Reinstated Market Perform at KBW; PT $101
• Plains All American (PAA) Rated New Underperform at Baptista Research
• Plexus (PLXS) Rated New Hold at Baptista Research; PT $108.90
• PowerSchool (PWSC) Rated New Hold at Baptista Research; PT $26.70
• Salesforce Inc (CRM) Rated New Buy at CMB International; PT $329.30
• ServiceNow (NOW) Rated New Buy at CMB International; PT $897.80
• Snowline Gold (SGD CN) Rated New Outperform at National Bank; PT C$9
• Southwest Gas (SWX) Rated New Hold at Baptista Research
• TFI International (TFII CN) Rated New Buy at Deutsche Bank
• Toll Brothers (TOL) Rated New Hold at Baptista Research; PT $108.90
• TopBuild (BLD) Rated New Underperform at Baptista Research; PT $383.10
• Upstart (UPST) Rated New Underperform at Baptista Research; PT $30
• Urban Outfitters (URBN) Rated New Underperform at Baptista Research
• Western Midstream Partners (WES) US Rated New Underperform at Baptista Research; PT $30.70
• Yelp (YELP) Rated New Hold at Baptista Research; PT $49.50
• Zegna Group (ZGN) Rated New Buy at Baptista Research; PT $13.70

Data sources: Bloomberg, Reuters, CQG