Daily Game Plan

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

DATA/HEADLINES:  8:30ET 10:30 Fed’s Goolsbee speaks

TODAY’S HIGHLIGHTS and News:  

• Biden is weighing more than $1 billion in new arms for Israel
• Almost 1 billion Indians began voting today in the world’s biggest election
• A man is threatening to blow himself up at the Iran consulate in Paris

Global equity markets fell, oil prices surged and bond yields fell after reports that Israel attacked Iran, targeting military installations. Tehran played down the
incident and indicated it had no plans for retaliation. The US received last-minute notice of the strike on Iran and played no role in it. The limited scale of the attack and Iran’s muted response eased global market tensions as markets reversed course with
oil markets now lower on the day. Countries around the world called for both sides to avert further escalation. Officials on both sides played-down the strikes, with Israel not claiming formal responsibility and Iran dismissing them as a failed effort by “infiltrators”
that caused limited damage.   

EQUITIES: 

US equity futures pared losses and the bid for haven assets unraveled after Iranian media appeared to downplay the impact of Israeli strikes. Friday’s session started on weak footing
after hawkish commentary from Federal Reserve officials, indicating rate cuts could be pushed back toward the end of the year if they occur at all in 2024.  Raphael Bostic reiterated his view that the Fed shouldn’t lower rates until closer to the end of the
year, while Neel Kashkari raised the prospect of holding all year. Netflix will be an initial focus this morning after its shares fell after-hours when the company reported results that included a downbeat second-quarter revenue forecast and unexpectedly announced
that it will stop reporting subscriber numbers each quarter. Paramount rose premarket after the NYT reported Sony and Apollo may team up in a bid for the company.

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

In pre-market trading, Paramount (PARA) jumps 9% as Apollo Global and Sony are said to be considering a joint offer for the media company. Netflix (NFLX) falls 5% after the streaming-video
company provided a 2Q revenue forecast that was a slight disappointment. International Paper (IP) slips 1% as Mondi backs out of a potential bidding war for DS Smith. Intuitive Surgical (ISRG) climbs 2.2% after the medical equipment manufacturer posted 1Q
profit that beat the average analyst estimate. Nordstrom (JWN) gains 1.2% after the department-store chain formed a special committee in response to Erik and Pete Nordstrom’s interest in taking the company private. Tesla (TSLA) slips 2% after recalling 3,878
Cybertruck pickups to rework or replace accelerator pedals.

European shares trimmed a decline sparked by cautious sentiment amid revived tensions in the Middle East, while L’Oreal SA rallied after better-than-expected quarterly sales. The Stoxx
Europe 600 Index is lower by 0.3% but near the highs of the session. Energy and retail sectors are weighing the most on the index.  Among other individual movers, Royal Unibrew A/S shares soared 16% after the brewer reported preliminary net revenue and Ebit
that came ahead of consensus expectations. Stoxx 600 -0.2%, DAX -0.5%, CAC -0.1%, FTSE 100 -0.4%. Energy and Retail -1%. Telecom +0.9%.   

Asian stocks slid as broad risk aversion swept through markets on renewed concerns over an escalation of tensions in the Middle East. The MSCI Asia Pacific Index fell as much as 2.6%
before paring its loss to 1.7%. Heavyweight Taiwan Semiconductor Manufacturing Co. was the biggest drag on the regional benchmark after scaling back its outlook for expansion, cautioning that the smartphone and personal-computing markets remain weak. Taiwan’s
equity benchmark closed 3.8% lower, leading losses in key regional equity gauges. India’s Sensex overcame initial slump to rally 1% as voting in the nation’s weekslong election kicked off Friday. Taiwan -3.8%, Nikkei -2.7%, Thailand -2.1%, TOPIX -1.9%, Kospi
-1.6%, Vietnam -1.5%, ASX 200 -1%, Hang Seng Index -1%, CSI 300 -0.8%. Sensex +0.8%. 

FIXED INCOME: 
 

Treasury yields halved an early move that drove the 10-year yield 14 basis points lower after Israel launched a retaliatory attack on Iran less than a week after
Tehran’s rocket and drone barrage. An Iranian military official signaled Tehran doesn’t feel compelled to react to the blasts. Yields lower by 4bp to 6bp as US trading gets under way, back toward middle of day’s range. US 10-year yields around 4.59% after
briefly dropping below 4.50%. Treasury coupon auctions next week — final ones of the February-to-April financing quarter — include 2-, 5- and 7-year notes Tuesday to Thursday.

METALS: 
   

Gold steadied after earlier gains on reports from US officials that Israel had struck targets in Iran. Spot bullion initially rose as much as 1.6% as concerns over
a wider regional conflict in the Middle East roiled global markets, while base metals also jumped before paring their gains. Traders have been girding for an Israeli response to Iran’s unprecedented missile and drone attack last weekend, with the rhetoric
between the two escalating as Tehran warned against striking its nuclear facilities. Spot gold +0.1%, silver +0.2%.             

ENERGY:   

Oil erased initial sharp gains after an earlier spike on reports that Israel had attacked Iran as market fears of a major escalation to hostilities in the Mideast
appeared to ease. Brent crude traded below $87 a barrel after earlier soaring more than 4% to top $90 on renewed concerns over the potential for a wider conflict that could endanger oil supplies. Israel launched a strike on Iran, according to two US officials,
but the Islamic Republic’s state media said the attack failed. WTI -0.8%, Brent -0.7%, US Nat Gas -1.5%, RBOB -0.6%.

CURRENCIES:   

In currency markets, the dollar pared its Asia-session rally as demand for haven assets took a breather. Moves in the spot market eased as Iran’s semi-official Tasnim
news agency denied the reports of foreign attack and said that the Isfahan nuclear facility was safe. Safe-haven yen rallied as much as 0.7% against the dollar but was last trading little changed on the day. The Swiss franc was about 0.3% higher versus the
dollar, paring earlier gains of as much as 1.2%. Underscoring the earlier surge in risk aversion, the Mexican peso dropped more than 6% before paring the bulk of the losses amid signs that Japanese retail investors dumped the currency. The euro saw modest
gains after comments from ECB Governing Council member Edward Scicluna highlighted concerns about the eurozone economy and the importance of interest rate adjustments. Scicluna said the euro zone’s stuttering economy would face a twin blow should interest
rates not be lowered both at home and in the US.  US$ Index -0.1%, USDJPY -0.05%, GBPUSD +0.15%, EURUSD +0.15%, AUDUSD -0.02%, USDCHF -0.4%.

Spot Bitcoin +3%, Ethereum +1.5%. Bitcoin ‘halving’ due to begin this evening.

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
• Bank of America (BAC) Raised to Outperform at Wolfe; PT $42
• Credicorp (BAP) Raised to Outperform at Bradesco BBI; PT $207
• Equifax (EFX) Raised to Strong Buy at CFRA; PT $290
• First Solar (FSLR) Raised to Overweight at Wells Fargo; PT $250
• Ichor (ICHR) Raised to Buy at B Riley; PT $48
• Lam Research (LRCX) Raised to Buy at B Riley; PT $1,100
• Shift4 Payments (FOUR) Raised to Neutral at Redburn; PT $53.37
• Shopify (SHOP CN) Raised to Overweight at Morgan Stanley; PT C$117.10
• Downgrades
• Anglogold (AU) Cut to Reduce at HSBC
• ARM Holdings PLC (ARM) ADRs Cut to Neutral at BNPP Exane; PT $100
• DermTech (DMTK) Cut to Neutral at BTIG
• Hershey (HSY) Cut to Hold at Edward Jones
• Infosys (INFO IN) ADRs Cut to Hold at HSBC; PT $20.10
• Magnolia Oil & Gas (MGY) Cut to Neutral at Piper Sandler; PT $29
• Netflix (NFLX) Cut to Hold at Canaccord; PT $585
• O-I Glass (OI) Cut to Neutral at BofA
• ON Semi (ON) Cut to Underperform at BNPP Exane; PT $55
• Pure Storage (PSTG) Cut to Outperform at Raymond James
• Southwestern Energy (SWN) Cut to Neutral at Piper Sandler; PT $7
• Sunnova Energy (NOVA) Cut to Equal-Weight at Wells Fargo; PT $6
• Ulta Beauty (ULTA) Cut to Hold at Jefferies; PT $438
• Initiations
• ADENTRA Inc (ADEN CN) Reinstated Sector Outperform at Scotiabank; PT C$51
• AZEK (AZEK) Rated New Buy at Benchmark; PT $55
• Delek Logistics Partners (DKL) Rated New Buy at Truist Secs; PT $46
• Deluxe (DLX) Rated New Buy at Northcoast; PT $27
• DoorDash (DASH) Rated New Buy at Loop Capital; PT $170
• Ellington Financial Inc (EFC) Rated New Hold at JonesTrading
• EQT Corp (EQT) Reinstated Hold at Cowen
• Inspire Medical (INSP) Rated New Outperform at RBC; PT $285
• Instacart (CART) Rated New Buy at Loop Capital; PT $46
• RMR Group (RMR) Reinstated Market Perform at JMP

Data sources: Bloomberg, Reuters, CQG