Daily Game Plan

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

DATA/HEADLINES:  8:30ET Housing Starts, Building Permits, New York Fed Services Business Activity; 9:00ET Fed’s
Jefferson speaks; 9:15ET Industrial Production, Capacity Utilization, Manufacturing (SIC) Production; 12:30ET Fed’s Williams speaks; 1:00ET Fed’s Barkin speaks, BOE’s Bailey speaks; 1:15ET Fed’s Powell speaks; 4:30ET Fed’s Collins speaks  

TODAY’S HIGHLIGHTS and News:  

• The House will send articles of impeachment for Mayorkas to the Senate at 2 pm EST
• Trump has to be in the courtroom every day for his criminal trial in New York or will be arrested
• JPMorgan Analyst Says Earnings Unlikely to Boost Lofty Stocks

Global equities dropped amid concerns that conflict in the Middle East may escalate, while fresh worries about China’s economic growth also weighed on sentiment.
A slew of China’s economic data points showed that the nation’s economic rebound remains patchy, even though GDP was stronger than expected. China weakened its daily reference rate for the yuan, adding to the selling pressure in Asia. Israel’s top military
officials emphasized that their nation has no choice but to retaliate against Iran’s drone and missile attack over the weekend. This comes as European and US officials urge Israel to refrain from engaging in a tit-for-tat escalation that might lead to a broader
conflict. The danger of a global recession has largely been averted but growth will be meager, German government sources said, referring to IMF forecasts that will be published today.

EQUITIES: 

US equity futures fluctuated, in a sign of stability after the S&P 500 fell more than 1% in two straight sessions. The latest Bank of America survey found fund managers’ allocation to
equities has hit the highest in over two years, while data from Goldman Sachs and Citigroup showed that funds have little room to keep buying stocks after this year’s record rally. There are $52 billion of long positions on the S&P 500 and 88% of them are
in a loss, according to Citigroup strategists. JPMorgan’s equity strategists have remained among the more bearish voices on Wall Street. Stocks are primed for a comeback as investors deploy their outsized holdings of cash, including almost $9 trillion sitting
in money market funds, BlackRock’s Robert Kapito said. Economic data continues to underscore US economic strength while conflict in the Mideast fans the risk of higher energy prices and inflation, frustrating hopes for imminent US interest rate cuts. With
earnings season underway, there’s growing concern that the mega-cap leaders will struggle to justify their steep valuations.    

Futures ahead of the bell: E-Mini S&P +0.1%, Nasdaq +0.05%, Russell 2000 -0.5%, DJI +0.5%

In pre-market trading, Live Nation Entertainment (LYV) fell over 9% after people familiar said the DOJ may file an antitrust complaint as soon as next month aimed at forcing a Ticketmaster
spinoff. Morgan Stanley (MS) rises 2% after posting a 1Q revenue beat. BofA (BAC +0.3%) beat across the board in the first quarter, including trading revenue and net interest income. BNY Mellon’s (BK +2%) revenue topped estimates as the lender benefited from
higher market values and increased client activity. Macatawa Bank (MCBC) jumps 38% following a deal that will see Wintrust Financial acquire it for $14.85 a share in an all-stock transaction. Trump Media & Technology Group drops 0.6%, paring a decline of as
much as 4.2%. The stock is set to extend losses after tumbling Monday when the company took a first step toward allowing the former president and other insiders to capitalize on their stakes.  Hims & Hers (HIMS) declines 5% after Jefferies downgraded the telehealth
firm to hold. Intra-Cellular Therapies (ITCI) climbs 18% after posting positive top-line results from a late-stage trial of its investigative treatment for depression. Tesla (TSLA) falls 2.4%, set to extend losses for a third consecutive session, as two of
the electric carmaker’s top executives leave amid the company’s largest-ever round of job cuts. UnitedHealth Group (UNH) rises 6% after reporting first-quarter profit that beat Wall Street’s expectations and affirmed its outlook for the year.

European shares are broadly lower, echoing moves in Asian and US equities. The Stoxx Europe 600 Index fell as much as 1.5%, with miners leading declines, after data suggested China’s
first-quarter economic rebound is already fading. The UK jobless rate jumped to a six-month high of 4.2% but wage gains also topped estimates, which may prompt the BOE to move more slowly than expected on rate cuts.  German investor expectations rose more
than expected. The ZEW gauge climbed to 42.9 in April, topping the 35.5 consensus. Among individual movers, UBS Group AG shares fell over 3% after the Swiss Finance Minister told local media that the bank faces an increase in regulatory capital requirements
that could reach as much as $25 billion. Ericsson AB jumped after earnings beat estimates. Stoxx 600 -1.1%. All sectors are in the red except for utilities +0.1%. DAX -0.9%, CAC -0.9%, FTSE 100 -1.3%. Basic Resources -2.8%, Financial Services -1.7%, Autos
-1.6%.  

Asian stocks dropped by the most in eight months, in line with a global selloff, as worries deepened that US monetary policy will remain tighter for longer and the latest batch of data
from China failed to spark hopes of an economic recovery.  China’s economy grew faster-than-expected in the first quarter, data showed today, with 1Q GDP growing 5.3% y/y versus estimates of 4.8%. But the data left investors unimpressed with the retail sales
and industrial output a miss. The CSI 2000 Index of small caps tumbled nearly 7.2%, as tighter market oversight pledged by the cabinet sparked fears of delisting for those with weak financial health. The MSCI Asia Pacific Index slid more than 2%, with technology
shares the biggest drag. Gauges in Taiwan, South Korea and Japan posted the largest drops, and Australia’s benchmark erased its 2024 gain. Taiwan -2.7%, Philippines -2.4%, Kospi -2.3%, Hang Seng Index -2.1%, TOPIX -2%, ASX 200 -1.8%, Shanghai Composite -1.6%,
CSI 300 -1.1%, Sensex -0.6%, Vietnam -0.1%. 

FIXED INCOME: 
 

Treasury yields extended gains after strong US retail sales spurred bets the Federal Reserve will be in no rush to cut rates. Traders are no longer fully pricing
in a Fed rate cut before November, while UBS Group strategists warned there may be no pivot at all and that US policymakers will instead embark on a hiking cycle. Fed President Mary Daly reiterated there’s no urgency to adjust interest rates, pointing to solid
economic growth, a strong labor market and still-elevated inflation. Treasury yields are cheaper by 2.5bp to 4.5bp with intermediates leading the selloff, steepening 2s10s spread by 1.5bp; 10-year around 4.64% is ~4bp higher on the day. Treasury coupon sales
this week include $13b 20-year bond reopening Wednesday and $23b 5-year TIPS new issue Thursday.

METALS: 
   

Gold slipped from Friday’s record high, testing a rally that has been fueled in part by the risk of an all-out conflict between Israel and Iran. Israeli military
officials reasserted they have no choice but to respond to Tehran’s attack, even as the US and Europe urged restraint. The tension helped bullion chalk a 1.7% gain on Monday. Gold shrugged off a move higher in Treasury yields, which would typically be a headwind.
Gold will hit $3,000 an ounce over the next six to 18 months, Citi analysts said. Spot gold -0.5%, silver -2%.     

ENERGY:   

Crude oil nudged lower after a brief overnight bump in prices reversed early Tuesday as traders bet that the White House’s opposition to an Israeli counterattack
against Iran would help to de-escalate a standoff. Oil prices have been consolidating around $85 a barrel for WTI, reversing most of the gains from earlier this month, as traders appeared to shrug off the risk of further escalation between Israel and Iran.
The House imposed sanctions on Chinese financial institutions for buying Iranian crude, part of a package in response to Tehran’s attack on Israel. The bill’s fate in the Senate remains uncertain. China’s oil refining in March rose to 15.1 million barrels
a day, the largest volume since October. Russia’s seaborne crude exports soared to an 11-month high in the second week of April with flows from all major ports near peak levels.  WTI -0.6%, Brent -0.5%, US Nat Gas +0.4%, RBOB -0.2%.

CURRENCIES:   

 In currency markets, the resurgent dollar barreled through global currencies, prompting South Korea officials to push back on the moves and Indonesia to intervene.
A global gauge of emerging market currencies dropped, with South Korea’s won and the Indonesia rupiah weakening to multi-year lows. The dollar has benefited from bets that rates will stay high for longer and demand for haven assets, especially after Israeli
military officials vowed to respond to Iran’s missile attack.  The Japanese yen remained under pressure, after surging to a new 34-year low against the dollar. Japan’s finance minister said he’s continuing to watch currency market moves closely, while refraining
from declaring whether recent movements by the yen could be considered rapid.  US$ Index -0.05%, USDJPY +0.3%, GBPUSD +0.05%, EURUSD +0.15%, AUDUSD -0.3%, USDCHF +0.15%, USDSEK +0.45%.

Spot Bitcoin -0.3%, Ethereum -0.2%.

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
• AMD (AMD) Raised to Buy at HSBC; PT $225
• Avalo Therapeutics (AVTX) Raised to Outperform at Oppenheimer; PT $35
• CNO Financial (CNO) Raised to Overweight at Piper Sandler; PT $29
• Crown Holdings (CCK) Raised to Outperform at Baird; PT $90
• Descartes Systems (DSG CN) Raised to Outperform at CIBC; PT C$139
• Kroger (KR) Raised to Overweight at Wells Fargo; PT $65
• Progressive (PGR) Raised to Buy at CFRA
• Tyson (TSN) Raised to Overweight at Barclays; PT $69
• Downgrades
• Alpine Immune (ALPN) Cut to Hold at Cowen
• Berry Global (BERY) Cut to Neutral at Baird; PT $65
• Encore Wire (WIRE) Cut to Neutral at DA Davidson; PT $295
• Endeavor Group (EDR) Cut to Neutral at Citi; PT $27.50
• Fusion Pharmaceuticals (FUSN) Cut to Hold at Cowen
• Hims & Hers Health (HIMS) Cut to Hold at Jefferies
• Honeywell (HON) Cut to Hold at Deutsche Bank; PT $215
• Integral Ad Science (IAS) Cut to Equal-Weight at Morgan Stanley
• Marinus Pharma (MRNS) Cut to Neutral at Baird; PT $2
• Pilgrim’s Pride (PPC) Cut to Equal-Weight at Barclays; PT $38
• Snap One (SNPO) Cut to Hold at Truist Secs; PT $10.75
• Cut to Hold at Jefferies; PT $10.75
• Initiations
• Allegro MicroSystems (ALGM) Rated New Outperform at Evercore ISI
• AMD (AMD) Rated New Outperform at Evercore ISI; PT $200
• Analog Devices (ADI) Rated New Outperform at Evercore ISI; PT $254
• Applied Materials (AMAT) Rated New Outperform at Evercore ISI; PT $260
• ARM Holdings PLC (ARM) ADRs Rated New Outperform at Evercore ISI
• Astera Labs (ALAB) Rated New Outperform at Evercore ISI
• Auna (AUNA) Rated New Overweight at JPMorgan; PT $16
• Rated New Overweight at Morgan Stanley; PT $14
• Broadcom (AVGO) Rated New Outperform at Evercore ISI; PT $1,620
• Camtek/Israel (CAMT) Rated New Outperform at Evercore ISI; PT $100
• Cheniere Energy (LNG) Rated New Neutral at Redburn; PT $162.44
• DraftKings (DKNG) Rated New Buy at Goldman; PT $60
• Fair Isaac (FICO) Rated New Neutral at Redburn; PT $1,113
• FormFactor (FORM) Rated New Inline at Evercore ISI; PT $50
• Gartner (IT) Rated New Hold at Deutsche Bank; PT $507
• GE Vernova (GEV) Rated New Buy at Goldman; PT $154
• Genius Sports (GENI) Reinstated Buy at Goldman; PT $7.50
• GlobalFoundries (GFS) Rated New Outperform at Evercore ISI
• Impinj (PI) Rated New Outperform at Evercore ISI
• Intel (INTC) Rated New Inline at Evercore ISI
• Janux Therapeutics (JANX) Rated New Buy at JonesTrading; PT $70
• KLA Corp (KLAC) Rated New Outperform at Evercore ISI; PT $800
• Klaviyo (KVYO) Rated New Overweight at Cantor; PT $31
• Lam Research (LRCX) Rated New Outperform at Evercore ISI; PT $1,200
• Macom (MTSI) Rated New Outperform at Evercore ISI
• Marvell Technology (MRVL) Rated New Outperform at Evercore ISI; PT $88
• Microchip (MCHP) Rated New Outperform at Evercore ISI; PT $106
• Nova Ltd (NVMI) Rated New Outperform at Evercore ISI; PT $210
• Nvidia (NVDA) Rated New Outperform at Evercore ISI; PT $1,160
• NXP Semi (NXPI) Rated New Outperform at Evercore ISI; PT $300
• On Holding (ONON) Rated New Outperform at William Blair
• ON Semi (ON) Rated New Outperform at Evercore ISI
• Onto Innovation Inc (ONTO) Rated New Outperform at Evercore ISI
• Penn Entertainment Inc (PENN) Rated New Hold at Benchmark
• PepsiCo (PEP) Rated New Outperform at CICC; PT $183
• Qualcomm (QCOM) Rated New Inline at Evercore ISI
• Reddit (RDDT) Rated New Buy at Deutsche Bank; PT $50
• Standard BioTools Inc (LAB) Rated New Buy at Cowen; PT $3.50
• Teradyne (TER) Rated New Outperform at Evercore ISI; PT $130
• WNS Holdings Reinstated Outperform at Barrington Research

Data sources: Bloomberg, Reuters, CQG