Daily Game Plan

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

DATA/HEADLINES:  8:30ET PPI Final Demand, Initial Jobless Claims; 8:45ET  ECB’s Lagarde speaks,
 Fed’s Williams speaks; 10:00ET Fed’s Barkin speaks; 12:00ET Fed’s Collins speaks; 1:00ET 30 Year Auction; 1:30ET Fed’s Bostic speaks

ECB LEAVES MAIN REFINANCING RATE AT 4.50%; EST. 4.50%

TODAY’S HIGHLIGHTS and News:  

• The European Parliament today approved the EU’s new “Asylum and Migration Pact”
• Ukraine says Kyiv region’s largest power plant destroyed
• A Vietnamese property tycoon was sentenced to death for her role in a $12 billion fraud case
  

Global shares slipped, after yesterday’s hot US inflation print, while investors watched for a potential attack on Israel by Iran or its proxies, which could spark
a significant escalation of hostilities in the Middle East. Meanwhile, the ECB is forecast to keep borrowing costs on hold at a record high for a fifth straight meeting but is widely expected to signal that easing will start in June. Traders trimmed their
bets on ECB rate cuts after the US inflation report and now anticipate less than 75 basis points of easing this year. Policymaker Megan Greene said UK rate cuts should still be a way off, according to an article in the Financial Times today. A sharp repricing
of rate-cut expectations has sparked tumult in markets this week. When the year started, investors were looking forward to six Fed rate reductions totaling 1.5% percentage points over 2024. Now, they are pricing just two. In overnight news, Russia destroyed
Kyiv’s largest power plant.

EQUITIES: 

US equity futures edged lower following Wednesday’s slump when the S&P 500 fell 1% as resilient inflation forces investors to reduce their expectations for Federal Reserve interest-rate
cuts. Yesterday’s data showed the 36th consecutive month with inflation above 3% and second straight monthly increase. There’s more US data for traders to pore over today as they contemplate the Fed’s next move, with a slew of Fed speakers throughout the day.
The DOJ opened an extended antitrust probe into Nippon Steel’s bid for US Steel.   

Futures ahead of the bell: E-Mini S&P -0.4%, Nasdaq -0.3%, Russell 2000 -0.9%, DJI -0.4%

Nasdaq is holding its initial key support at the
50dma (436.94
in QQQ)

In pre-market trading, Alpine Immune Sciences (ALPN) surges 36% after Vertex Pharmaceuticals said it agreed to acquire the kidney drug developer for $65 per share. Vera Therapeutics (VERA),
another company developing a similar approach to autoimmune disorders, is up 9%. Avita Medical (RCEL) slides 11% after the medical equipment company cut its commercial revenue guidance. Fastenal (FAST) drops ~6% after the distributor of threaded fasteners
reported first-quarter sales and profit that fell short of estimates. Janux Therapeutics (JANX) climbs 5% after Bloomberg reported that drugmaker is exploring options including a potential sale after receiving takeover interest from larger pharmaceutical companies.
Rallybio (RLYB) soars 92% after the biotechnology company announced late Wednesday a partnership with Johnson & Johnson to develop therapies for a rare disease that affects fetuses and newborns. Rent the Runway (RENT) climbs 29% after the clothing-rental company
reported fourth-quarter revenue and adjusted Ebitda that topped the average analyst estimate. Robinhood Markets (HOOD) drops 3.5% after Citigroup cut the recommendation to sell after shares had rallied 44% to start the year. CarMax (KMX) missed analysts’ estimates
for fourth-quarter results and delayed a long-term financial target on Thursday, sending its shares down as much as 13% ahead of the bell.

US CPI was up 11.4% in the 24 months preceding the start of the Fed’s tightening cycle in March 2022. US CPI is now up 8.6% in the 24 months since the start of the
Fed’s tightening cycle in March 2022. @bespokeinvest

European shares fell as traders trimmed their wagers on how much monetary easing central banks in the US and Europe might deliver this year. The Stoxx 600 Index is 0.4% lower, with energy
and utilities leading gains while travel and telecoms slide over 2%. Investors are awaiting a meeting of the European Central Bank, which is expected to leave interest rates steady at 4% but could affirm a June rate cut. Among individual stock movers, Marks
& Spencer Group rose after JPMorgan raised its recommendation to overweight, while VAT Group also gained as it reported better-than-expected orders. Darktrace Plc jumped after the cybersecurity firm raised guidance for a third time this year. Stoxx 600 -0.4%,
DAX -0.6%, CAC -0.2%, FTSE 100 -0.2%. Utilities +1%, Energy +0.8%, Healthcare +0.3%. Travel & Leisure -2%, Telecom -2%, Banks -1.4%. 

Asian stocks were mostly lower, with the MSCI Asia Pacific Index falling as much as 0.8% before paring some losses to 0.3%.  Chinese stocks listed in Hong Kong finished slightly lower.
Chinese consumer inflation slowed in March to 0.1%, lower than estimates and underscoring the deflationary pressures that remain a threat to economic recovery. The US added four Chinese companies to an export blacklist for buying US-origin goods to support
China’s military modernization efforts. South Korean stocks erased early losses as investors said the negative impact of a setback for President Yoon Suk Yeol’s party in parliamentary elections will be short-lived. Shanghai Composite +0.2%. TOPIX +0.15%, KOSPI
+0.1%, CSI 300 was little changed. Taiwan -0.05%, Hang Seng Index -0.25%, Nikkei 225 -0.3%, ASX 200 -0.4%, Philippines -0.9%.

FIXED INCOME: 
 

Treasury yields are narrowly higher, adding to yesterday’s surge in yields when the US consumer price index beat forecasts for a third month. The curve slightly steeper,
unwinding a fraction of Wednesday’s post-CPI flattening move. At front end, 2-year yields are flat on the day after rising 23bps on Wednesday. 10-year yield +1bp, near 4.56% after eking out a new YTD high at 4.568%; 2s10s, 5s30s spreads are ~1.5bp steeper
on the day. Auction cycle concludes with $22b 30-year bond reopening; Wednesday’s 10-year was poorly received, with 3.1bp tail.  Bonds in Europe dropped as traders trimmed their wagers on easing, with attention focused on the European Central Bank’s policy
announcement. Traders pared ECB rate-cut bets to less than 75 bps this year and BOE moves to less than 50 bps. The yield on the 10-year German benchmark rose to the highest since early March. UK bonds climbed across the curve and Japanese benchmark yields
hit a five-month high.

METALS: 
   

Gold steadied from yesterday’s decline after a hot US inflation report, which fueled concerns the Federal Reserve will cut interest rates less than expected this
year. Gold fell the most in almost a month after the release.  Gold was supported by escalating tensions in the Middle East, with concerns about potential missile or drone strikes by Iran or its allies against Israeli military and government targets. Spot
Gold +0.2%, Silver +0.1%

ENERGY:   

Oil prices edged lower, consolidating the previous session’s gain, as investors weighed the potential for Iranian attacks in retaliation for a strike on the country’s
embassy in Syria that was attributed to Israel. The US and its allies believe major missile or drone strikes by Iran or its proxies against military and government targets in Israel are imminent, in what would mark a significant widening of the conflict. Oil
traders are awaiting a better picture of potential Iran escalation before taking on more risk, MLIV said. Rystad Energy sees the tight market potentially pushing Brent above $100 a barrel in the summer. Macquarie said it can’t be sustained above $90 and will
enter a bear market in the second half. WTI -0.6%, Brent -0.5%, US Nat Gas -1.5%, RBOB +0.1%.

CURRENCIES:   

In currency markets, the dollar inched higher, adding to Wednesday’s advance to the highest this year. The yen steadied after weakening to levels not seen since 1990
against the greenback in the prior session. Japan’s 10yr yield rose 9bps on 20yr supply and on weaker currency concerns.  The Australian dollar skidded, and bond yields soared after US inflation came in hotter than expected. In China, the central bank ramped
up support for the yuan against a resurgent dollar by setting the daily reference exchange rate at a level that topped estimates by a record. China’s state banks sold the greenback in large amounts today to support the yuan, traders said. The euro is modestly
lower ahead of the ECB policy decision. US$ Index +0.02%, USDJPY -0.1%, GBPUSD -0.01%, EURUSD -0.1%, AUDUSD +0.2%, USDCHF -0.05%, NZDUSD +0.3%.

Spot Bitcoin +0.5%, Ethereum +0.8%.

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
• Acadian Timber (ADN CN) Raised to Outperform at CIBC; PT C$20
• Albemarle (ALB) Raised to Buy at Berenberg; PT $160
• Ashland Inc (ASH) Raised to Overweight at Wells Fargo; PT $112
• Atlassian (TEAM) Raised to Overweight at Barclays
• C.H. Robinson (CHRW) Raised to Peerperform at Wolfe
• Chevron (CVX) Raised to Sector Outperform at Scotiabank; PT $195
• DoorDash (DASH) Raised to Buy at MoffettNathanson LLC; PT $164
• EQT Corp (EQT) Raised to Sector Outperform at Scotiabank; PT $52
• Fortinet (FTNT) Raised to Buy at CFRA
• Hamilton Insurance Group Raised to Overweight at Wells Fargo
• Masonite (DOOR) Raised to Buy at MoffettNathanson LLC; PT $164
• Nike (NKE) Raised to Buy at BofA; PT $113
• Occidental (OXY) Raised to Sector Outperform at Scotiabank
• Paramount Resources (POU CN) Raised to Sector Outperform at Scotiabank
• PPG Industries (PPG) Raised to Overweight at Wells Fargo; PT $163
• Roots Corp. (ROOT CN) Raised to Buy at Cowen
• Soundhound (SOUN) Raised to Neutral at Cantor
• StepStone (STEP) Raised to Overweight at JPMorgan; PT $49
• T. Rowe (TROW) Raised to Market Perform at KBW; PT $120
• Warrior Met (HCC) Raised to Buy at Citi; PT $75
• Downgrades
• Alpine Immune (ALPN) Cut to Neutral at Wedbush
• Cut to Sector Perform at RBC; PT $65
• Cut to Equal-Weight at Morgan Stanley; PT $65
• Altice USA (ATUS) Cut to Underweight at JPMorgan
• Apartment Income REIT (AIRC) Cut to Hold at Truist Secs
• Cut to Neutral at Wedbush; PT $39
• Cut to Peerperform at Wolfe
• Arbor Realty Trust (ABR) Cut to Neutral at Wedbush; PT $13
• Avita Medical Inc (RCEL) Cut to Neutral at BTIG
• Clipper Realty (CLPR) Cut to Market Perform at JMP
• Exelixis (EXEL) Cut to Equal-Weight at Barclays; PT $25
• Gen Digital (GEN) Cut to Equal-Weight at Barclays; PT $25
• Hamilton Lane (HLNE) Cut to Neutral at JPMorgan; PT $115
• Marsh & McLennan (MMC) Cut to Equal-Weight at Wells Fargo; PT $212
• Range Resources (RRC) Cut to Sector Perform at Scotiabank; PT $45
• Redwood Trust (RWT) Cut to Neutral at Wedbush; PT $6.50
• Reliance (RS) Cut to Neutral at Citi; PT $380
• Robinhood (HOOD) Cut to Sell at Citi; PT $16
• Saia (SAIA) Cut to Peerperform at Wolfe
• Southwestern Energy (SWN) Cut to Sector Perform at Scotiabank
• Toromont Industries (TIH CN) Cut to Market Perform at Raymond James
• Initiations
• Airbnb (ABNB) Rated New Buy at Benchmark
• AnaptysBio (ANAB) Rated New Overweight at Wells Fargo; PT $56
• Aquestive Therapeutics (AQST) Rated New Overweight at Piper Sandler
• Carisma Therapeutics Inc (CARM) Rated New Buy at BTIG; PT $6
• Chartwell Retirement (CSH-U CN) Rated New Buy at Desjardins; PT C$15
• EastGroup (EGP) Rated New Neutral at JPMorgan; PT $190
• FactSet (FDS) Rated New Underperform at Wolfe; PT $430
• First Citizens (FCNCA) Rated New Equal-Weight at Barclays; PT $1,850
• Gaotu Techedu (GOTU) ADRs Rated New Buy at GF Securities; PT $8.12
• Isabella Bank (ISBA) Reinstated Neutral at Piper Sandler; PT $20
• Kenvue (KVUE) Rated New Underperform at Bernstein; PT $18
• Lavoro (LVRO) Rated New Outperform at Oppenheimer; PT $11
• Mastercard (MA) Rated New Buy at Cowen; PT $545
• Q32 Bio Inc (QTTB) Rated New Outperform at Oppenheimer; PT $50
• Sienna Senior Living (SIA CN) Rated New Buy at Desjardins; PT C$15.50
• Snowflake (SNOW) Rated New Overweight at KeyBanc; PT $185
• Visa (V) Rated New Buy at Cowen; PT $320

Data sources: Bloomberg, Reuters, CQG