Daily Game Plan

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

DATA/HEADLINES:   8:30ET CPI*

*US JAN. CORE CONSUMER PRICES RISE 0.4% M/M; EST. 0.3% / *US JAN. CONSUMER PRICES RISE 3.1% Y/Y; EST. 2.9%

TODAY’S HIGHLIGHTS and News:  

• US consumers expect to travel more this year; 91% expect to travel domestically, ~50% internationally
  
• Russia warns the West: we will be very tough if you ‘steal’ our assets
  
• Senate passes $95B foreign aid bill for Israel/Ukraine/Taiwan. Now onto the House 70-29
• Biden is forming a task force to address the issue of classified documents

World shares are mixed as Japanese shares touched a 34-year peak, while European stocks and US equity futures slipped as investors waited for a US inflation report
that could shape Federal Reserve policy. Global investors are at their most bullish in two years and no longer expect a recession, a Bank of America survey showed. Today’s CPI figures and British inflation and euro zone Gross Domestic Product data on Wednesday
are the focal points for the week. In geo-political news, Russia warned the West that Moscow would be extremely tough if the US and European Union seized hundreds of billions of dollars’ worth of Russian assets.  The EU on Monday adopted a law to set aside
windfall profits made on frozen Russian central bank assets. 

EQUITIES: 
 

US equity futures slipped away from recent highs before the release of highly awaited inflation data that could move the needle for the timing of the Federal Reserve interest-rate cuts.
Economists expect the consumer price index to rise 2.9% year-on-year, down from 3.4% in the previous month. A lower-than-estimate number could revive optimism for an early interest-rate cut this year. “Despite expecting CPI to print below 3% later, we still
think the market is over-exuberant when it comes to when that first cut comes in,” the head of global investment strategy at JPMorgan Private Bank said on Bloomberg TV. Derivatives markets point to the first fully-priced quarter-point rate cut in June.  Also
on deck is the next big wave of corporate results. Citi said long positioning on Nasdaq 100 futures is very extended and completely one-sided. BofA’s “Bull & Bear Indicator” reached 6.8, suggesting investor positioning a headwind for risk assets.

Futures ahead of the data: E-Mini S&P -0.3%, Nasdaq -0.7%, Russell 2000 -0.3%, DJI -0.2%    

In pre-market trading, 2U (TWOU) drops 22% after the online educational services company flagged “substantial doubt” about its ability to continue as a going concern. Arista Networks
(ANET) falls 7% after the cloud networking company’s outlook underwhelmed. Aspen Aerogels (ASPN), a maker of thermal insulation used in electric vehicles, gains 14% after providing a year adjusted Ebitda forecast that topped expectations. Beamr Imaging (BMR)
rises 13%, on track to extend gains after rallying more than 370% on Monday as the company said it teamed up with Nvidia on a joint research. Cadence Design System (CDNS) slips 7.8% after providing a disappointing first-quarter forecast. Children’s Place (PLCE)
slides 12% after B. Riley downgrades the apparel retailer to sell. Datadog (DDOG) tumbles 7.6% after the cloud software company gave a full-year forecast that was weaker than expected. G1 Therapeutics (GTHX) slumps 43% after saying results from a late-stage
study of an experimental cancer therapy didn’t meet the criteria to stop the trial early. JetBlue (JBLU) jumps 15% after activist investor Carl Icahn disclosed a 9.91% stake in the airline and said he had held talks with management about the possibility of
representation on the board. Lattice Semiconductor (LSCC) falls 6.6% after the chipmaker’s fourth-quarter revenue as well as 1Q forecast fell short of average estimates. Teradata (TDC) slides 14% after the infrastructure-software company issued guidance that
missed estimates. TripAdvisor (TRIP) climbs 12% after announcing the formation of a special committee to evaluate any proposals that may be brought forward for a potential deal. ZoomInfo Technologies (ZI) soars 20% after reporting fourth-quarter revenue that
beat consensus estimates.

European gauges fell as tech stocks retreated from the highest closing level in more than 23 years on Monday. Semiconductor stocks weighed on the sector, with ASML Holding NV and other
peers falling after big gains this year.  Drugmaker GSK Plc gained after getting its first buy recommendation from Citi in seven years, and French tiremaker Michelin also rose after reporting results and a buyback. The German ZEW future expectations sub-index
came in higher than expected at 19.9 up from 15.2 previously. The current conditions sub-index in contrast slipped to -81.7 down from -77.3 previously. UK wage growth slowed less than expected in the fourth quarter, supporting the BOE’s caution over rate cuts.
Swiss inflation unexpectedly eased to 1.3% in January which could open the door to earlier SNB rate cuts. Stoxx 600 -0.5%, DAX -0.5%, CAC -0.5%, FTSE 100 -0.3%. Technology -2.7%, Media -1.4%, Travel & Leisure -1.2%. Utilities +0.8%, Energy +0.8%, Autos +0.6%. 

European gauges fell as tech stocks retreated from the highest closing level in more than 23 years on Monday. Semiconductor stocks weighed on the sector, with ASML Holding NV and other
peers falling after big gains this year.  Drugmaker GSK Plc gained after getting its first buy recommendation from Citi in seven years, and French tiremaker Michelin also rose after reporting results and a buyback. The German ZEW future expectations sub-index
came in higher than expected at 19.9 up from 15.2 previously. The current conditions sub-index in contrast slipped to -81.7 down from -77.3 previously. UK wage growth slowed less than expected in the fourth quarter, supporting the BOE’s caution over rate cuts.
Swiss inflation unexpectedly eased to 1.3% in January which could open the door to earlier SNB rate cuts. Stoxx 600 -0.5%, DAX -0.5%, CAC -0.5%, FTSE 100 -0.3%. Technology -2.7%, Media -1.4%, Travel & Leisure -1.2%. Utilities +0.8%, Energy +0.8%, Autos +0.6%. 

FIXED INCOME: 
 

Treasuries are slightly richer across the curve amid outperformance by bunds during European morning. US 10-year yield is lower by ~3bps at 4.15%; 2-year yield is
down 3bpps at 4.450%.  The US yield curve is just a month away from its longest inversion ever.  Market pricing shows investors think there’s currently a 70% chance of an interest rate cut by May.   

METALS: 
   

Gold edged higher ahead of the release of US inflation data that could offer more clarity on when the Federal Reserve will pivot to cutting interest rates. January’s
US consumer price index report is forecast to show the first reading below 3% for annual inflation since March 2021. Citigroup warns that traders should be wary of a brief period of monetary easing followed by more rate increases shortly thereafter. Spot gold
+0.4%, silver +0.7%.     

ENERGY:  

Oil prices moved higher as uncertainty over fighting in the Middle East kept markets on edge. But changing expectations over the path of US interest rates have limited
price gains. The Secretary General of OPEC emphasized today that Saudi Arabia’s decision to postpone its oil capacity expansion plans should not be construed as an assessment of declining crude demand. The group predicts an increase in demand of more than
2 million barrels a day this year. OPEC only partially delivered new oil production cuts in the first month of its latest supply pact, according to a report from the group. Iraq cut by 98,000 barrels a day in January — about a third of the reduction needed
to meet its target. WTI +0.7%, Brent +0.7%, US Nat Gas -0.1%, RBOB +0.6%. 

CURRENCIES:   

In currency markets,  the dollar was little changed before the inflation numbers. Sterling outperformed all G-10 currencies after strong UK jobs data underscored
the possibility that the Bank of England will wait until the second half of the year to start cutting interest rates. The Swiss franc tumbled to a two-month low against the euro and the dollar after weak Swiss inflation figures raised the risk that the Swiss
National Bank may start cutting rates in March, ahead of other G-10 central banks. The Japanese yen , which is sensitive to US rates, is flat while trading in a narrow range overnight. US$ Index -0.1%, GBPUSD +0.4%, EURUSD +0.1%, USDCHF +0.35%, AUDUSD is flat,
NZDUSD -0.2%.

Bitcoin %, Ethereum Bitcoin remained just above $50,000 after crossing the threshold for the first time in over two years, thanks to inflows into exchange-traded
funds.  

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
• Chart Industries (GTLS) Raised to Strong Buy at CFRA; PT $200
• Equifax (EFX) Raised to Outperform at Evercore ISI; PT $310
• Fortinet (FTNT) Raised to Outperform at Daiwa; PT $75
• Philip Morris (PM) Raised to Hold at SocGen; PT $87.50
• Trimble (TRMB) Raised to Overweight at Piper Sandler
• Downgrades
• 2U (TWOU) Cut to Hold at Needham
• AN2 Therapeutics (ANTX) Cut to Market Perform at Leerink; PT $7
• Cadence Design (CDNS) Cut to Neutral at Rosenblatt Securities Inc
• Children’s Place (PLCE) Cut to Sell at B Riley; PT $4
• Cloudflare (NET) Cut to Hold at DZ Bank; PT $110
• CymaBay (CBAY) Cut to Neutral at BTIG
• Cut to Neutral at HC Wainwright
• Cut to Market Perform at Raymond James
• Cut to Neutral at Cantor; PT $32.50
• Cut to Neutral at B Riley; PT $32.50
• Cut to Hold at JonesTrading
• Dream Impact Trust (MPCT-U CN) Cut to Hold at TD; PT C$7
• Duckhorn Portfolio (NAPA) Cut to Underperform at BofA; PT $8
• PayPal (PYPL) Cut to Neutral at Daiwa; PT $62
• United Airlines (UAL) Cut to Neutral at Redburn; PT $50
• Initiations
• 3D Systems (DDD) Rated New Overweight at Cantor; PT $8.50
• Accuray (ARAY) Rated New Buy at Roth MKM; PT $9
• Agree Realty (ADC) Rated New Outperform at BMO; PT $69
• Block (SQ) Rated New Buy at Benchmark; PT $89
• CompoSecure (CMPO) Rated New Buy at Benchmark; PT $7
• Dynatrace (DT) Rated New Equal-Weight at Morgan Stanley; PT $60
• Enovis Corp (ENOV) Rated New Overweight at Stephens; PT $72
• Essential Properties (EPRT) Rated New Outperform at BMO; PT $29
• Extra Space (EXR) Rated New Sector Underperform at Scotiabank; PT $131
• Global Net Lease (GNL) Rated New Outperform at BMO; PT $11
• Hilton Grand Vacations (HGV) Rated New Market Outperform at JMP
• Iqvia (IQV) Rated New Buy at BTIG; PT $285
• Knife River Corp (KNF) Rated New Buy at Loop Capital; PT $81
• Marriott Vacations (VAC) Reinstated Market Outperform at JMP; PT $105
• NextEra Energy Partners (NEP) Rated New Outperform at Evercore ISI
• PAR Technology (PAR) Rated New Hold at Benchmark
• Payoneer Global (PAYO) Rated New Buy at Benchmark; PT $7
• Public Storage (PSA) Rated New Sector Perform at Scotiabank; PT $267
• Quanta Services (PWR) Rated New Outperform at Evercore ISI; PT $237
• Realty Income (O) Rated New Market Perform at BMO; PT $57
• Repay Holdings Corp (RPAY) Rated New Buy at Benchmark; PT $10
• Shift4 Payments (FOUR) Rated New Buy at Benchmark; PT $95
• Transcontinental (TCL/A CN) Reinstated Sector Outperform at Scotiabank
• Travel + Leisure Co (TNL) Travel + Leisure Co Rated New Market Outperform at JMP; PT $50

Data sources: Bloomberg, Reuters, CQG