Daily Game Plan

TODAY’S GAME PLAN:  

DATA/HEADLINES:  8:15ET ECB Rate Decision; 8:30ET Trade Balance, Initial Jobless Claims; 8:45ET ECB’s Lagarde speaks;
9:45ET ECB issues quarterly economic forecasts; 10:00ET Fed’s Powell testifies before Senate Banking Committee; 11:30ET Fed’s Mester speaks; 12:00ET Household Change in Net Worth; 1:15ET Fed’s Mester on CNBC

Joe Biden delivers the State of the Union address tonight / ECB LEAVES MAIN REFINANCING RATE AT 4.50%; EST. 4.50% / ECB STAFF SEES INFLATION AT 2% TARGET IN 2025

TODAY’S HIGHLIGHTS and News:  

• US household interest payments on non-mortgage debt hit a record $573 billion over the past year
• Harvard drops Covid-19 vaccine mandate
• Hamas says cease-fire talks will resume next week
  
• Cancer-causing chemical found in Clinique, Up & Up and Clearasil acne treatments
• Apple spent about $1 billion a year on a car it never built
  
• Gold hits another record high

Global shares paused near record highs, while the yen soared as conviction grew that the Bank of Japan will finally start raising interest rates in March. There was
little cheer in markets to data showing China’s export and import growth in the January-February period beat forecasts, suggesting global trade is turning a corner. Investors fretted over geopolitics, with the China’s foreign minister blasting the US for imposing
a “bewildering” level of trade curbs. Hedge funds piled into global equities at the fastest pace in almost a year in February as investors become more bullish across all major regions worldwide, Goldman Sachs said.  In Europe, German factory orders fell 11.3%
m/m in January, more than expected (consensus -6.0% m/m). December’s expansion, however, was upwardly revised from 8.9% m/m to 12.0%.           

EQUITIES: 

US equity futures edged higher with renewed strength in tech stocks after Federal Reserve chair Jerome Powell said in his testimony yesterday that cutting interest rates would probably
be appropriate “at some point this year.”  Powell will continue his testimony to Congress, while the latest weekly employment benefits data will set the stage for Friday’s monthly non-farm payrolls data. Goldman strategists raised their forecast for buybacks
by S&P 500 firms to over $1 trillion in 2025, backed by strong earnings growth. Nvidia directors sold about $180 million in shares of the company in recent days. Joe Biden will propose increasing the minimum tax rates paid by major US and multinational corporations
to 21% in his State of the Union address tonight.  

Futures ahead of the data: E-Mini S&P +0.3%, Nasdaq +0.5%, Russell 2000 +0.2%, DJI +0.2%

In pre-market trading, ADT (ADT) falls 9% after an offering of 65m shares by a holder priced at $6.50 apiece, representing a ~13% discount to last close. Avangrid (AGR) gains 7% after
its owner, Spanish utility Iberdrola, offered about $2.5 billion to buy all the shares it doesn’t already own in the US subsidiary. Bilibili (BILI) drops 7% after the Chinese video-streaming platform reported fourth-quarter average daily active users that
fell short of expectations. Eli Lilly (LLY) slips less than 1% after Danish rival Novo Nordisk presented data showing its weight-loss drug amycretin helped patients in an early-stage clinical trial. Emergent Bio (EBS) sinks 16% after the company reported wider
than expected Q4 losses.  Full Truck Alliance (YMM) ADRs gain 4% after the freight-dispatch platform reported fourth-quarter net revenue that beat estimates. Honest Co. (HNST) soars 26% after the personal-care company reported fourth-quarter revenue and net
income that topped consensus estimates. Micron Technology (MU) rises 3% after Stifel raised its rating to buy. New York Community Bancorp (NYCB) falls 3% after the commercial real estate lender issued a statement to clarify and update certain details a day
after it received an equity investment of more than $1 billion. OneSpan (OSPN) soars 29% after the cybersecurity firm posted beats for fourth-quarter profit and sales. Victoria’s Secret (VSCO) sinks 28% after the beleaguered lingerie maker’s full-year sales
guidance fell short of analysts’ expectations. Yext Inc. (YEXT) jumps 17% after the infrastructure software company gave an outlook for adjusted full-year earnings that is ahead of expectations.JD.com falls ~2% after posting results.

European gauges are mixed after erasing early losses with the Stoxx 600 hitting a new record ahead of the ECB rate decision.  The ECB deposit rate will be left at 4%, according to economists,
though new economic projections are expected to bolster arguments for cuts to start later this year. Miners and health care stocks outperformed, with Novo Nordisk A/S jumping to a record high after it presented data on its weight-loss drug amycretin. Virgin
Money UK Plc soared as Nationwide Building Society said it has reached a preliminary agreement to buy the British lender. Continental AG shares fell after reporting full-year earnings for 2023 that broadly met expectations. Among other individual movers, Hugo
Boss AG slumped 19% after the German retailer’s outlook fell short of expectations. Stoxx 600 +0.5%, DAX ~flat, CAC +0.1%, FTSE 100 -0.05%. Healthcare +1.7%, Basic Resources +1.1%, Technology +1%. Autos -0.6%, Energy -0.4%. ECB staff said they see inflation
at 2% in 2025.

Asian stocks were mixed. The MSCI Asia Pacific Index pared gains of nearly 1% to settle 0.4% higher. TSMC was among the biggest contributors, lifting Taiwanese shares higher. JD.com also
rallied after better-than-expected earnings. Chinese blue chips fell, weighed a more than 3% plunge in the healthcare sector on the news that a US bill targeting Chinese biotech companies like BGI and WuXi AppTec was moving ahead. The sharp rally in the yen
had also seen the Nikkei 225 slide back over 1% after it had hit a fresh all-time high earlier in the session. Taiwan +1%, Indonesia’s Jakarta Index +0.6% (record high), Vietnam +0.4%, ASX 200 +0.4%, Kospi +0.2%, Sensex +0.05%. Topix -0.4%, Philippines -0.6%,
CSI 300 –0.6%, Nikkei 225 -1.2%, Hang Seng Index -1.3%. 

FIXED INCOME:
 

Treasuries hold small gains across the curve, with futures near Wednesday’s highs ahead of the data. Treasury yields richer by up to 1bp across long-end of the curve
which outperforms slightly on the day; 10-year yields around 4.09%, 2s10s curve flatter by 1bp. JGBs extended recent declines on heaviest futures volumes of the year so far as conviction grows that the Bank of Japan will start raising interest rates in March.
IG dollar issuance slate empty so far and expected to remain light for rest of week.

METALS:
   

Gold extended its rapid rise for a seventh straight day, hitting a new all-time high overnight on geopolitical tensions and increased buying by macro funds. Bullion
has also been supported by strong central bank buying.  China’s central bank added gold to its reserves for a 16th straight month in February, extending a long buying spree that’s helped to support the precious metal’s surge to a record high. Spot gold +0.5%,
silver +0.4%.

ENERGY:

Oil prices slipped as expectations that US interest rate cuts could be delayed capped gains, though upbeat Chinese trade data was a promising signal for demand in
the world’s top oil importer. China’s oil imports eased in the first two months of the year. Inflows averaged 10.8 million barrels a day, about 6% lower than December’s pace. WTI jumped 1.3% on Wednesday amid further tensions in the Middle East, including
the first confirmed deaths of commercial crew after Houthi militants began attacks in the region. WTI -0.4%, Brent -0.4%, US Nat Gas +0.2%, RBOB -0.15%.

CURRENCIES:

The yen surged by as much as 1% against the dollar, fueled by accelerated wage growth and comments from a BOJ board member, sparking speculation that Japan’s interest
rates may rise for the first time since 2007. The biggest pay hike demand in 30 years from Japan’s top union, added to momentum. The dollar is lower for a fifth straight day, the longest losing streak in nearly five months. US$ Index -0.2%, GBPUSD +0.1%, EURUSD
+0.2%, USDJPY -1%, AUDUSD +0.6%, NZDUSD +0.5%.

Bitcoin +0.4%, Ethereum -2%.

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
  • Akamai (AKAM) Raised to Outperform at Baird; PT $135
  • EVgo (EVGO) Raised to Outperform at RBC; PT $4
  • Micron (MU) Raised to Buy at Stifel; PT $120
  • Shake Shack (SHAK) Raised to Outperform at Cowen; PT $125
  • Toast (TOST) Raised to Outperform at BNPP Exane; PT $30
  • Vizio Holding (VZIO) Raised to Outperform at Barrington Research
• Downgrades
  • Agiliti (AGTI) Cut to Neutral at UBS
  • AMD (AMD) Cut to Hold at DZ Bank; PT $200
  • Bird Construction (BDT CN) Cut to Neutral at CIBC; PT C$20
  • Foot Locker (FL) Cut to Market Perform at Telsey; PT $28
  • Nordstrom (JWN) Cut to Hold at Jefferies; PT $17
  • TriplePoint Venture Growth BDC (TPVG) Cut to Sell at Compass Point
    • Cut to Market Perform at JMP
  • Victoria’s Secret (VSCO) Cut to Underweight at JPMorgan; PT $15
• Initiations
  • Adobe (ADBE) Rated New Buy at Fubon; PT $660
  • AMD (AMD) Rated New Overweight at Guotai Junan Sec; PT $232
  • Arcellx (ACLX) Rated New Overweight at Morgan Stanley; PT $81
  • Broadstone Net Lease (BNL) Reinstated Sell at Goldman; PT $14
  • Despegar.com (DESP) Rated New Overweight at Cantor; PT $11
  • Edgewise Therapeutics (EWTX) Rated New Overweight at Piper Sandler
  • Jack Henry (JKHY) Rated New Peerperform at Wolfe
  • Microsoft (MSFT) Rated New Buy at Huatai Research; PT $483.03
  • Netease (NTES) ADRs Rated New Buy at ABC International; PT $128
  • Rivian (RIVN) Rated New Buy at Jefferies; PT $16
  • TKO (TKO) Rated New Buy at Goldman; PT $102
  • Vext Science (VEXT CN) Rated New Buy at Eight Capital
  • Viking Therapeutics (VKTX) Rated New Buy at Jefferies; PT $110
  • Voyager Therapeutics (VYGR) Rated New Buy at Citi; PT $16

Data sources: Bloomberg, Reuters, CQG