Daily Game Plan

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

DATA/HEADLINES:  8:30ET Philadelphia Fed Business Outlook, Jobless Claims; 9:05ET Fed’s Bowman speaks; 9:15ET Fed’s
Williams speaks; 10:00ET Leading Index, Existing Home Sales; 11:00ET Fed’s Bostic speaks; 1:00ET 5-year TIPS Auction; 5:45ET Fed’s Bostic speaks

ECB’S VILLEROY: BARRING MAJOR SURPRISE WE SHOULD CUT RATES IN NEXT MEETING

TODAY’S HIGHLIGHTS and News:  

• AI computing is on pace to use more energy than India, ARM says
  
• UAE and Saudi officials said they want US guarantees for their security, as Israel received
• Biden called China “xenophobic” while highlighting its economic woes
  

Global equities steadied as the risk-off pullback showed signs of easing, while oil prices fell, easing inflation worries a bit. The MSCI World Equity Index was up
0.2%, but still down nearly 2% on the week. Israel will make its own decisions about how to defend itself, Prime Minister Benjamin Netanyahu said today, as Western countries pleaded for restraint in responding to the attack from Iran. The US, EU and G7 group
of industrialized nations all announced plans to consider tighter sanctions on Iran, aimed at appeasing Israel.  Israel’s Air Force said its fighter jets had struck the “terrorist infrastructure” of Iran-backed Hezbollah in eastern Lebanon. 

EQUITIES: 

US equity futures edge higher, as the S&P 500 and Nasdaq vie for their first gains in five days. Investors have been unwinding gains from a record rally in the first quarter as they come
to grips with a resilient US economy and stubborn inflation that’s forced them to recalibrate rate bets. Fed President Loretta Mester said late Tuesday that she expects price pressures to ease further this year. Fed Governor Michelle Bowman, on the other hand,
said progress on lowering US inflation may have stalled and questioned the degree to which monetary policy is restraining the economy.    

Futures ahead of the bell: E-Mini S&P +0.2%, Nasdaq +0.2%, Russell 2000 +0.15%, DJI +0.2%.

US equity futures edge higher, as the S&P 500 and Nasdaq vie for their first gains in five days. Investors have been unwinding gains from a record rally in the first quarter as they come
to grips with a resilient US economy and stubborn inflation that’s forced them to recalibrate rate bets. Fed President Loretta Mester said late Tuesday that she expects price pressures to ease further this year. Fed Governor Michelle Bowman, on the other hand,
said progress on lowering US inflation may have stalled and questioned the degree to which monetary policy is restraining the economy.

Russell 2000 Index has next key support at its 200dma. Nasdaq vs S&P500 has key support at its 200dma.

In pre-market trading, EBay (EBAY) climbs 3% after Morgan Stanley issued a double-upgrade, seeing a further 25% gain for the shares over the next year. Etsy (ETSY) falls 4% as Morgan
Stanley downgrades to underweight. Alcoa (AA) gains 1.9% after the aluminum producer reported adjusted Ebitda for the first quarter that beat. Duckhorn Portfolio (NAPA) declines 3% after Barclays downgraded the wine company. Genuine Parts (GPC) gains 2% after
the auto-parts-replacement distributor boosted its adjusted earnings per share guidance. Las Vegas Sands (LVS) declines 3% after quarterly results at its Macau locations broadly missed. Micron (MU) advances 2% after Bloomberg reported that the largest maker
of US computer memory-chips is poised to get more than $6 billion in grants from the Commerce Department to help pay for domestic factory projects. Synovus Financial (SNV) drops 6% after first-quarter net interest income missed estimates. Tesla (TSLA) drops
2% as Deutsche Bank downgrades to hold on the likelihood that the company will delay plans to produce its Model 2 mass market vehicle.

European shares inched higher as investors weighed a slate of upbeat corporate earnings reports against concerns around higher-for-longer interest rates. The Stoxx 600 trades in a tight
range and is marginally higher as banks and utilities outperform, with energy the biggest laggard after a drop in oil prices. Yogurt maker Danone SA gained as it reported first-quarter sales that beat analysts’ expectations, bolstered by growing demand for
bottled water. ABB Ltd. rallied over 5% as it raised its profitability outlook for the year after stronger-than-expected orders led by demand in electrification products. Stoxx 600 is flat, DAX -0.1%, CAC +0.25%, FTSE 100 +0.2%. Utilities +1.1%, Banks +1%,
REITs +0.7%. Energy -0.8%, Financial Services -0.7%.  

Asian stocks rose as sentiment stabilized with the region’s currencies regaining some footing. The MSCI Asia Pacific Index rose 0.7% after a six day selloff. Tencent, Samsung Electronics
and BHP Group were among the biggest contributors to the advance. Chip stocks were in focus as the world’s biggest chipmaker, TSMC, reported its first profit rise in a year and delivered a better-than-projected revenue outlook. Gains in Hong Kong and China
were likely driven by continued policy optimism after the nation’s securities watchdog released a slew of measures to improve the quality of listed companies. South Korean equities outperformed, helped by foreign investors who turned buyers as the won halts
its drop against the dollar. Shares in India declined ahead of the start of national polls on Friday. Kospi +2%, Philippines +1.1%, Singapore +1%, Hang Seng Index +0.8%, Topix +0.5%, ASX 200 +0.5%, Taiwan +0.4%, CSI 300 +0.1%, Sensex -0.6%.

FIXED INCOME: 
 

Treasuries slightly richer across the curve, consolidating Wednesday’s gains on the back of strong demand for 20-year bond auction. US 10-year is ~1bp lower on the
day at 4.58%; 2-year yield ~4.94%. curve spreads remain within 1bp of Wednesday’s close, inverted 2s10s around -35bps. US session includes a packed Fed speaker slate and 5-year TIPS new-issue auction. Traders will be watching initial jobless claims for signs
of a loosening in the US labor market, although swaps markets now see just a 16% chance of a reduction in borrowing costs in June.

METALS: 
   

Gold rebounded from Wednesday’s drop which was spurred by Fed Chair Jerome Powell flagging a likely delay in the much-anticipated pivot after a series of surprisingly
high inflation readings. Wall Street banks are forecasting the rally still has plenty of room to run. Citigroup Inc. raised its 2024 gold estimate to $2,350 an ounce this week and made a “massive 40% upward revision” in its 2025 forecast to $2,875. That came
after Goldman Sachs Group Inc. raised its year-end prediction to $2,700. Spot gold +1%, silver +0.9%.           

ENERGY:   

Oil prices fell for a fourth day as geopolitical risks subsided and US inventories reached their highest levels since June. US sanctions were also in focus as the
Biden administration reimposed restrictions on Venezuelan oil, ending a six-month reprieve. At the same time, new sanctions on Iranian oil were included as part of a foreign aid package released by House Republicans that is slated for a floor vote later this
week. WTI -0.7%, Brent -0.7%, US Nat Gas +2.8%, RBOB -1.25%

CURRENCIES:   

In currency markets, the dollar pulled back from recent gains, while finance chiefs of the US, Japan and Korea issued a rare warning about currency weakness. The
United States, Japan and South Korea agreed to “consult closely” on foreign exchange markets, acknowledging concerns from Tokyo and Seoul over their currencies’ recent sharp declines. US$ Index -0.1%, USDJPY -0.03%, GBPUSD +0.15%, EURUSD +0.05%, AUDUSD +0.2%,
USDCHF -0.2%, USDSEK -0.4%.

Spot Bitcoin +2.6%, Ethereum +2.3%.

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
• Barnes Group (B) Raised to Buy at DA Davidson; PT $45
• EBay (EBAY) Raised to Overweight at Morgan Stanley; PT $62
• First Community/SC (FCCO) Raised to Outperform at Raymond James; PT $21
• International Flavors (IFF) Raised to Equal-Weight at Barclays
• JetBlue (JBLU) Raised to Neutral at JPMorgan; PT $7
• Kite Realty (KRG) Raised to Buy at Jefferies; PT $23
• Linde (LIN) Raised to Buy at Mizuho Securities; PT $510
• Mueller Water (MWA) Raised to Outperform at Oppenheimer; PT $19
• North American Construction (NOA CN) Raised to Buy at Cowen; PT C$34
• Six Flags (SIX) Raised to Buy at B Riley; PT $31
• SL Green (SLG) Raised to Outperform at BMO; PT $58
• StoneCo (STNE) Raised to Neutral at Grupo Santander; PT $18
• Western Midstream Partners (WES) Raised to Peer perform at Wolfe
• Zoom Video (ZM) Raised to Buy at Rosenblatt Securities Inc; PT $75
• Zscaler (ZS) Raised to Overweight at KeyBanc; PT $220
• Downgrades
• Arch Resources (ARCH) Cut to Neutral at Citi
• ASML (ASML NA) ADRs Cut to Neutral at Fubon; PT $980
• BJ’s Wholesale (BJ) Cut to Hold at Loop Capital; PT $80
• Duckhorn Portfolio (NAPA) Cut to Equal-Weight at Barclays
• Etsy (ETSY) Cut to Underweight at Morgan Stanley; PT $55
• Knight-Swift (KNX) Cut to Hold at Loop Capital; PT $53
• Match Group (MTCH) Cut to Equal-Weight at Morgan Stanley
• Pacific Bio (PACB) Cut to Neutral at Goldman; PT $2.50
• Synovus (SNV) Cut to Market Perform at Raymond James
• Tenaris (TEN IM) ADRs Cut to Underweight at Morgan Stanley; PT $40
• Tesla (TSLA) Cut to Hold at Deutsche Bank; PT $123
• U.S. Bancorp (USB) Cut to Market Perform at KBW; PT $45
• Williams Cos (WMB) Cut to Underperform at Wolfe; PT $34
• Initiations
• AES Corp (AES) Rated New Buy at Mizuho Securities; PT $21
• Beacon Roofing (BECN) Rated New Buy at Benchmark; PT $135
• Boralex (BLX CN) Reinstated Sector Outperform at Scotiabank; PT C$38
• Broadcom (AVGO) Rated New Buy at Fubon; PT $1,850
• Chart Industries (GTLS) Resumed Equal-Weight at Morgan Stanley; PT $200
• Energy Fuels (EFR CN) Rated New Buy at B Riley; PT C$12.43
• Ftai Infrastructure (FIP) Rated New Buy at BTIG; PT $10
• GE Vernova (GEV) Rated New Outperform at Evercore ISI; PT $174
• Greif (GEF) Rated New Hold at Truist Secs; PT $71
• Innergex Renewable Energy (INE CN) Reinstated Sector Outperform at Scotiabank; PT C$10.50
• Northland Power (NPI CN) Reinstated Sector Perform at Scotiabank; PT C$27
• Oracle (ORCL) Rated New Perform at Oppenheimer
• Regency Centers (REG) Rated New Neutral at Mizuho Securities; PT $60
• Rezolute (RZLT) Rated New Buy at JonesTrading; PT $10
• Samsara (IOT) Rated New Buy at Loop Capital; PT $42
• Sprout Social (SPT) Rated New Outperform at Oppenheimer
• Vistra Corp (VST) Rated New Buy at Janney Montgomery; PT $82

Data sources: Bloomberg, Reuters, CQG