Daily Game Plan

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

DATA/HEADLINES:  8:30ET CPI*, Hourly Earnings;
8:45ET Fed’s Bowman speaks; 9:45ET BOC Rate Decision; 10:00ET Wholesale Trade; 1:00ET $39B 10-Year Note Auction; 12:45ET Fed’s Goolsbee and Barkin speak;  2:00ET FOMC Meeting Minutes

TODAY’S HIGHLIGHTS and News:  

• Fitch Cuts China Outlook to Negative
• Biden says he is examining power to shut US border on his own
• Peru claims 124-year-old man born in 1900 is oldest human ever
  
• US Approves $138 Million in Air Defense Equipment for Ukraine
  
• Argentina is running out of bug spray as it confronts its worst-ever outbreak of dengue

Global shares traded higher, and bonds steadied on Wednesday, largely unfazed by ratings agency Fitch downgrading its China outlook, while traders awaited crucial
US inflation data due today. Fitch affirmed China’s sovereign rating at ‘A+’ though the outlook was downgraded to negative, and it forecast economic growth this year would slow. Sweden’s economy unexpectedly grew 0.1% in February. Norway’s underlying inflation
slowed more than expected last month to 4.5%. The US approved the emergency sale of $138 million in air-defense equipment for Ukraine. A far larger assistance package remains stuck in Congress.  

EQUITIES:  

US equity futures nudge higher before the inflation data, which is expected to show some moderation in price pressures following stronger readings at the start of the year. Economists
forecast that consumer prices rose 0.3% in March on a monthly basis. Today’s figures probably won’t settle the debate on rate-cut timing.  Meanwhile, Wall Street strategists are optimistic that corporate America can help fuel the next leg of the stock market
rally by delivering another bumper earnings season. S&P 500 companies are expected to post a “healthy” 10% gain in first-quarter headline numbers from a year ago, according to Deutsche Bank.   

Futures ahead of the data: E-Mini S&P +0.2%, Nasdaq +0.2%, Russell 2000 +0.6%, DJI +0.25%

In pre-market trading, Alphabet (GOOGL) rises 0.7%, set to extend gains for a fourth consecutive session, as Google unveiled a host of updates to its artificial intelligence offerings.
Certara (CERT) gains 3% after KeyBanc upgrades to overweight. Delta Air Lines (DAL) rises 4% after the carrier said it expects second-quarter profit and revenue to exceed Wall Street’s projections. Luminar Technologies (LAZR) slips 4% after BofA downgraded
the autonomous vehicle technology company to underperform.  PriceSmart (PSMT) climbs 3.9% after the operator of membership warehouse clubs reported 2Q profit that beat analysts’ estimates. Revolution Medicines (RVMD) rises 5% as Raymond James raised its rating
to a strong buy.  International Flavors (IFF) rises 1% after Citi turns bullish on the stock and boosts the price target to $100.

European shares are broadly higher, rebounding from yesterday’s losses as investors awaited key US inflation figures. The Stoxx 600 index is near its highs on the day, led by Retail,
REITs and Technology shares. Surging sales at Taiwan Semiconductor from the boom in global AI development boosted tech stocks. The gains come a day before an interest-rates announcement from the ECB that’s widely expected to prepare markets for an initial
rate cut in June as price pressures in the region ease. Tesco Plc rose as it forecast higher retail profit and announced a share buyback. Defense stocks were in focus again, down nearly 1% after tumbling 3.8% the day before as traders grew nervous about the
sector’s record-breaking run and analysts pointed to potentially stretched valuations. Swiss chocolate maker Barry Callebaut AG jumped 9% after its revenue beat analyst estimates for the fiscal first half.  Stoxx 600 +0.7%, DAX +0.8%, CAC +0.6%, FTSE 100 +0.8%.
Retail +1.4%, REITs +1.3%, Technology +1.2%, Autos +1.2%.

Asian stocks were mostly higher, as gains in Chinese technology shares helped counter declines in Japan, with a number of markets closed for holidays. The MSCI Asia Pacific Index rose
0.2%, with Alibaba, Tencent and Meituan among the top contributors to the regional benchmark’s advance. Alibaba co-founder Jack Ma posted a memo to employees expressing support for the internet giant’s restructuring efforts, a rare move from the billionaire
after spending the last few years out of the spotlight.  Alibaba’s Hong Kong-listed shares surged 5% after the post. Taiwan Semiconductor edged lower before reporting quarterly sales after the close. TSMC’s quarterly revenue grew at its fastest pace in more
than a year. The main chipmaker to Nvidia and Apple reported a better-than-expected 16% rise in March-quarter sales. TSMC’s full earnings report is due next week. Markets were shut in South Korea, Singapore, Indonesia, Malaysia and the Philippines. Hang Seng
Index +1.9%, Sensex +0.5%, ASX 200 +0.3%, Taiwan -0.15%, Vietnam -0.3%, Topix -0.4%, CSI 300 -0.8%.  

FIXED INCOME: 
 

Treasuries were fairly quiet ahead of the CPI data, with the benchmark 10-year yield slightly lower on the day at 4.345%. US session also includes 10-year note reopening
at 1pm, following soft reception for Tuesday’s 3-year note auction, and 2pm release of minutes of March FOMC meeting.  A JPM survey showed respondents were no longer net long Treasuries for first time in a year. Accounts have now started to extend short positions,
according to CFTC data. The FT also reports this morning that there has been a further shift away from US bonds moving into European bonds. Market pricing now reflects roughly a 50% chance the first Fed rate cut will come in June.

METALS: 
   

Gold inched lower, although still near record highs as investors awaited US inflation data that could influence the Federal Reserve’s interest rate decisions. Geopolitical
tensions and central bank purchases continue to support gold’s upward trajectory. Spot Gold -0.2%, Silver -0.2%.

ENERGY:   

Oil edged higher, shaking off earlier weakness seen after an industry group pointed to a larger than expected rise in US crude inventories. US crude stockpiles rose
by 3.03 million barrels last week while gasoline supplies fell, API data showed. If EIA data confirms that increase today it would be the third weekly gain in crude stockpiles.  Oil futures have pulled back this week as talks toward a potential cease-fire
between Israel and Hamas have served to cool worries somewhat about an escalation of hostilities in the region. The Wall Street Journal reported that Hamas largely rejected a US plan for a temporary cease-fire in Gaza, planning instead to put forward its own
road map for an end to the conflict with Israel. WTI +0.6%, Brent +0.6%, US Nat Gas +2.9%, RBOB +0.3%.

CURRENCIES:   

In currency markets, the Japanese yen continued to attract much of the attention, holding near the 152 per dollar level. Traders fear intervention from Japanese authorities
to support the currency, should it break too far or too quickly past that level. Kazuo Ueda said the BOJ won’t change policy in direct response to currency moves, but it’ll monitor the effect of the weak yen on the economy and prices. The dollar trades mixed
versus its major peers, with investors awaiting US inflation data this morning to gauge the timing of any Federal Reserve pivot. The Loonie inches higher ahead of the Bank of Canada policy decision. The BOC is expected to hold its key rate steady at 5% for
a sixth straight meeting while reiterating a cautious optimism that they should be able to start lowering rates sometime this year. New Zealand’s dollar climbed after the Reserve Bank kept policy restrictive. The RBNZ kept its key rate at 5.5%, saying policy
needs to remain restrictive for a sustained period. US$ Index -0.1%, USDJPY +0.03%, GBPUSD +0.2%, EURUSD is flat, AUDUSD -0.1%, USDCHF is flat, NZDUSD +0.3%.

Spot Bitcoin -0.1%, Ethereum +0.1%.

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
• Albemarle (ALB) Raised to Buy at BofA; PT $156
• Certara (CERT) Raised to Overweight at KeyBanc; PT $23
• EQT Corp (EQT) Raised to Market Perform at Bernstein
• FirstCash (FCFS) Raised to Buy at Cowen; PT $145
• GoodRx Holdings (GDRX) Raised to Overweight at KeyBanc; PT $9
• International Flavors (IFF) Raised to Buy at Citi; PT $100
• Ionis Pharma (IONS) Raised to Outperform at Wolfe; PT $58
• Revolution Medicines (RVMD) Raised to Strong Buy at Raymond James
• UDR (UDR) Raised to Neutral at Piper Sandler; PT $40
• Visteon (VC) Raised to Overweight at Barclays; PT $145
• Downgrades
• Adient (ADNT) Cut to Equal-Weight at Barclays; PT $37
• Arch Resources (ARCH) Cut to Market Perform at BMO; PT $165
• Arthur J Gallagher (AJG) Cut to Hold at Truist Secs; PT $255
• CF Industries (CF) Cut to Neutral at BofA; PT $88
• Deckers Outdoor (DECK) Cut to Hold at Truist Secs; PT $864
• Health Catalyst (HCAT) Cut to Sector Weight at KeyBanc
• Hexcel (HXL) Cut to Neutral at Northcoast
• Linde (LIN) Cut to Neutral at Citi; PT $500
• Model N (MODN) Cut to Equal-Weight at Morgan Stanley; PT $30
• Monday.com (MNDY) Cut to Neutral at Citi; PT $250
• RCM (RCM) Cut to Sector Weight at KeyBanc
• Initiations
• Ameren (AEE) Rated New Sell at Goldman
• Antero Resources (AR) Rated New Equal-Weight at Barclays; PT $32
• APA Corp (APA) Rated New Equal-Weight at Barclays; PT $40
• California Resources (CRC) Rated New Equal-Weight at Barclays; PT $62
• CBRE (CBRE) Rated New Hold at Jefferies; PT $107
• Chesapeake Energy (CHK) Rated New Equal-Weight at Barclays; PT $102
• Chevron (CVX) Rated New Overweight at Barclays; PT $203
• Comerica (CMA) Rated New Hold at Deutsche Bank; PT $59
• Conoco (COP) Rated New Overweight at Barclays; PT $158
• Coterra Energy Inc (CTRA) Rated New Overweight at Barclays; PT $36
• Cushman & Wakefield (CWK) Rated New Buy at Jefferies; PT $13
• Devon (DVN) Rated New Equal-Weight at Barclays; PT $59
• Diamondback (FANG) Rated New Equal-Weight at Barclays; PT $214
• Edison International (EIX) Rated New Neutral at Goldman
• EOG Resources (EOG) Rated New Equal-Weight at Barclays; PT $144
• Eversource (ES) Reinstated Buy at Goldman; PT $73
• Exxon (XOM) Rated New Overweight at Barclays; PT $147
• FirstEnergy (FE) Reinstated Buy at Goldman; PT $45
• Floor & Decor (FND) Rated New Hold at Cowen; PT $125
• Funko (FNKO) Rated New Buy at B Riley; PT $10
• G2 Goldfields Inc (GTWO CN) Rated New Buy at Stifel Canada; PT C$1.65
• Hammond Power Solutions (HPS/A CN) Rated New Sector Perform at National Bank; PT C$164
• Hims & Hers Health (HIMS) Rated New Buy at Canaccord; PT $20
• Jones Lang (JLL) Rated New Buy at Jefferies; PT $246
• LENZ Therapeutics Inc (LENZ) Rated New Buy at Citi; PT $34
• Marathon Oil (MRO) Rated New Overweight at Barclays; PT $35
• Murphy Oil (MUR) Rated New Equal-Weight at Barclays; PT $54
• Net Power (NPWR) Rated New Equal-Weight at Barclays; PT $13
• NextEra Energy Partners (NEP) Rated New Equal-Weight at Barclays
• Occidental (OXY) Rated New Equal-Weight at Barclays; PT $73
• Ovintiv (OVV) Rated New Overweight at Barclays; PT $69
• PG&E (PCG) Reinstated Buy at Goldman; PT $21
• Range Resources (RRC) Rated New Underweight at Barclays; PT $35
• Sitio Royalties Corp. (STR) Rated New Underweight at Barclays; PT $26
• Solventum (SOLV) Rated New Equal-Weight at Morgan Stanley; PT $70
• Texas Roadhouse (TXRH) Rated New Hold at Benchmark
• Viper Energy Inc (VNOM) Rated New Overweight at Barclays; PT $44
• Vital Farms (VITL) Rated New Outperform at William Blair
• WEC Energy (WEC) Rated New Neutral at Goldman
• Zions (ZION) Rated New Hold at Deutsche Bank; PT $47

Data sources: Bloomberg, Reuters, CQG