Daily Game Plan

by Contributor
on February 16, 2024

 

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

DATA/HEADLINES:    8:30ET PPI, Housing Starts; 10ET UMich Sentiment – 8:00ET Fed’s Barkin speaks; 9:10ET Fed’s Barr
speaks; 12:10ET Fed’s Daly speaks

TODAY’S HIGHLIGHTS and News:  

  • Thousands homeless after DR Congo’s worst floods in sixty years
  • Nike announced it will cut its global workforce by 2%
  • Israel raids main Gaza hospital, claiming Hamas militants and hostages were hiding there
  • The Labour Party overturned large majorities to win two parliamentary seats
  • Jeff Bezos sold another 12 million shares of Amazon, bringing the total to over $6 billion this past week

Global equities were broadly higher as good news in corporate America and encouraging Chinese consumption numbers helped the MSCI world index reach 2-year highs.
Japan’s Nikkei soared again, just shy of its record at the height of Japan’s property bubble in 1990. Hong Kong’s Hang Seng index rallied over 2% prior to China’s reopening next week. Mining stocks led an advance in Europe that took Europe’s Stoxx 600 index to
its fourth consecutive week of gains. Over the past month, money flowed into global equity funds at the fastest pace since February 2022 per BofA. Markets will look ahead to today’s PPI reading for further clarity on interest rates.

 

EQUITIES: 
 

 

US equity futures are higher, looking to extend gains on Thursday’s climb to all-time highs. Tech shares lead the way as tech-heavy Nasdaq 100 paced gains. Applied
Materials Inc., the largest US maker of chipmaking machinery, jumped 12% in premarket trading after giving a bullish revenue forecast.
Data on US producer prices later will draw higher-than-usual scrutiny after a hot consumer price index earlier this week roiled financial markets. Strong Q4 earnings have muted
some of the market’s worries of the elevated CPI data and look to continue heading into the extended holiday weekend.

 

Futures ahead of the bell: E-Mini S&P +0.1%, Nasdaq +0.48%, Russell 2000 -0.2%, DJI -0.1%

 

In pre-market trading, Coinbase (COIN) shares jump 15% after the cryptocurrency exchange reported revenue
and earnings per share for the fourth quarter that beat the average analyst estimate.
DraftKings (DKNG) shares slip 5% after the online-sports betting company’s 4Q adjusted Ebitda missed estimates. DoorDash (DASH) shares drop 7.3% after the online-food
delivery’s guidance for full-year marketplace gross order value trailed the average analyst estimate at the midpoint.
Dropbox (DBX) shares drop 11.5% after the file management software company reported weak fourth-quarter results. Bloom Energy (BE) shares fall 18.8% after the
company’s 2024 revenue guidance missed the average analyst estimate. Coupled with well-respected CFO’s departure, this has triggered downgrades by two brokerage.
Toast (TOST) shares are up 8.6% after the restaurant software company gave a full year forecast for adjusted Ebitda that was stronger than expected.
Trade Desk (TTD) shares rise 18% after the advertising technology company gave a first-quarter forecast that is much stronger than expected.

European indexes are higher amid investor optimism about rate cuts and strong retail sales reports.
The Stoxx 600 is up ~0.6%, with mining and auto stocks outperforming while defensive sectors like telecom and utilities lagged. Mixed signals are coming from the ECB. Francois Villeroy said officials shouldn’t wait too long to cut rates, while Isabel Schnabel
warned again against lowering too early.
NIBE Industrier (NIBEB) dropped over 7% as it reported a lower-than-expected dividend per share for the full year while announcing a cost-cutting program. Stoxx 600 +0.6%,
DAX +0.7%, CAC +0.6%, FTSE 100 +1.0%.

Asian stocks advanced boosted by a surge in Japanese and Hong Kong shares. The regional gauge at its
highest since April 2022. The MSCI Asia Pacific Index climbed as much as 1.1% with Tencent, Alibaba and Mitsubishi UFJ contributing
the most to the gains. Per Reuters, the Bank of Japan is on track to end its negative-rate policy in coming months. An increased spending in travel over the Lunar New Year holiday helped Hong Kong’s Hang Seng index to a massive 2.48% gain.
Singapore stocks capped their best day this year behind their government’s announcement of fresh support measures for citizens to tackle high inflation and economic
slowdown. NKY225 +0.9%, Hang Seng +2.5%, ASX 200 +0.7%, Philippines flat, KOSPI +1.3%.

FIXED INCOME: 
 

Treasury yields rose after Federal Reserve Bank of Atlanta President Raphael Bostic said it’s not yet clear that inflation is heading sustainably to the central bank’s 2% target. US yields
cheaper by 2bp-3bp across the curve with 5s30s spread flatter by around 1bp as belly and front-end underperform. US 10-year yields hovering around 4.26% while 2-year yields at 4.6%.

METALS: 
   

Gold climbed back above $2,000 an ounce on Thursday amid softer-than-expected retail sales and weekly
jobs claims data. The precious metal is still down on the week following the large drop after Tuesday’s inflation data. Fed Vice Chair for Supervision Michael Barr said on Wednesday that US policymakers needed to see more data showing inflation is heading
back to target levels before they start cutting rates. Spot gold +0.16%, Silver +0.4%.  

 

ENERGY:  

Oil is lower due to lackluster demand across markets and continued opinion from the IEA that oil markets
could be in surplus all year. “The market is not showing much appetite to charge higher, with traders booking some profit,” said Ole Hansen, head of commodities strategy at Saxo Bank. WisdomTree’s Brent Crude Oil ETF registered its biggest daily outflow since
September as more than $280 million was pulled. Russia, Iraq, and Kazakhstan appear to be complying with supply cuts. WTI -0.7%, Brent-0.9 %, US Nat Gas +0.5%, RBOB -1.5%

CURRENCIES:   

The dollar is slightly higher
ahead of the release of home construction and producer price index data for January. USD/JPY advanced 0.2% to 150.2 after falling in the previous two sessions.
GBP/USD declined as UK Chancellor Jeremy Hunt dropped a plan to cut income tax. Fed Governor Christoper Waller said Thursday he does not expect the US dollar to be replaced as the world’s reserve currency any time soon or lose its primary place in trade and
finance. US$ Index +0.04%, GBPUSD -0.1%, EURUSD is flat, USDJPY -0.2%, AUDUSD -0.05%, USDNOK +0.18%, NZDUSD +0.02%.

 

Bitcoin +1.95%, Ethereum +1.66%. Bitcoin’s climb above $52,000 has helped crypto market capitalization eclipse $2 trillion.

 

  • Upgrades
    • America Movil (AMXB MM) ADRs Raised to Buy at Jefferies; PT $22.22
    • Applied Materials (AMAT) Raised to Buy at Fubon; PT $215
    • Coinbase (COIN) Raised to Market Perform at KBW; PT $160
    • Epam Systems (EPAM) Raised to Sector Outperform at Scotiabank; PT $350
    • GCM Grosvenor (GCMG) Raised to Outperform at Cowen; PT $10
    • Informatica (INFA) Raised to Buy at Goldman
    • Mullen Group (MTL CN) Raised to Outperform at CIBC; PT C$17
    • PVH (PVH) Raised to Outperform at Cowen; PT $150
    • UPS (UPS) Raised to Outperform at Baird; PT $170
    • Wayfair (W) Raised to Strong Buy at Raymond James
  • Downgrades
    • Alnylam (ALNY) Cut to Neutral at Goldman; PT $173
    • American Water (AWK) Cut to Inline at Evercore ISI; PT $135
    • ARM Holdings PLC (ARM) ADRs Cut to Neutral at Daiwa; PT $130
    • Bloom Energy (BE) Cut to Neutral at JPMorgan; PT $14
    • Cut to Sector Weight at KeyBanc
    • Booking (BKNG) Cut to Hold at Edward Jones
    • Carvana (CVNA) Cut to Underperform at Raymond James
    • Cisco (CSCO) Cut to Hold at CFRA
    • Digital Realty (DLR) Cut to Sector Perform at Scotiabank; PT $157
    • Dropbox (DBX) Cut to Market Perform at JMP
    • Cut to Neutral at JPMorgan; PT $30
    • Inter&Co (INTR) Cut to Neutral at Citi; PT $6
    • Iridium Communications (IRDM) Cut to Market Perform at William Blair
    • Manulife Financial (MFC CN) Cut to Reduce at Veritas Investment Research Co; PT C$32
    • Nike (NKE) Cut to Market Perform at Oppenheimer; PT $110
    • Palantir (PLTR) Cut to Neutral at President Capital Management; PT $25
    • Quipt Home Medical Corp (QIPT CN) Cut to Market Perform at Raymond James
    • Roku (ROKU) Cut to Perform at Oppenheimer
    • Royal Gold (RGLD) Cut to Hold at Cantor; PT $115
    • Snap (SNAP) Cut to Neutral at President Capital Management; PT $13
    • Stellantis (STLA) Cut to Hold at Intesa Sanpaolo; PT $25.20
    • SunPower (SPWR) Cut to Sell at Guggenheim; PT $1
  • Initiations
    • AnaptysBio (ANAB) Rated New Overweight at Piper Sandler; PT $80
    • Biohaven (BHVN) Rated New Outperform at RBC; PT $62
    • CalciMedica (CALC) Rated New Buy at JonesTrading; PT $22
    • Check Point Software (CHKP) Rated New Hold at Baptista Research
    • Longboard Pharmaceuticals (LBPH) Rated New Buy at Citi; PT $40
    • Mister Car Wash (MCW) Rated New Neutral at JPMorgan; PT $9.50
    • NanoXplore (GRA CN) Reinstated Speculative Buy at Echelon Wealth; PT C$4
    • Nvidia (NVDA) Rated New Buy at Loop Capital; PT $1,200
    • Peyto Exploration (PEY CN) Rated New Outperform at ATB Capital; PT C$15
    • Piedmont Lithium (PLL) Rated New Market Perform at BMO; PT $20
    • Standard Lithium Ltd (SLI CN) Rated New Outperform at BMO; PT C$3.75
    • Super Micro Computer (SMCI) Rated New Equal-Weight at Wells Fargo
    • Talen Energy Corp (TLNE) Rated New Outperform at Wolfe; PT $81

 

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

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