Daily Game Plan

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

DATA/HEADLINES:  8:30ET GDP, Core PCE Price Index, Advance Goods Trade Balance, Retail Inventories, Weekly Jobless
Claims; 10:00ET Pending Home Sales; 11:00ET KC Fed Manuf. Activity; 1:00ET 7-year note auction

US 1Q ECONOMY GROWS AT 1.6% ANNUAL RATE: EST. 2.5%

TODAY’S HIGHLIGHTS and News:  

• There are now more bars and nightclubs in Kyiv than before the war began – CBS
• About 1 in 4 US adults 50 and older who aren’t yet retired expect to never retire, AARP study
  
• Hiring in professional services, finance and tech is running at one-third the rate of the overall labor market
• US fund managers with ESG mandates suffered their worst-ever outflows in Q1 – Morningstar
  

Global equities snapped a three-day winning streak as disappointing forecasts from Meta hammered tech, while the yen’s drop through 155 per dollar for the first time
since 1990 kept FX traders on intervention alert. The BOJ started its two-day rate-setting meeting today, with expectations it will keep its key short-term interest rate target unchanged. Investors focus today will be on US GDP data and more big tech earnings.
European earnings and M&A deals were flooding in too. Fighting in the Gaza Strip between Israel and Hamas is expected to expand as Israel may start an assault on Rafah. Meanwhile, Secretary of State Antony Blinken began two days of talks in China, with the
threat of US sanctions targeting Beijing over its support of Russia’s war in Ukraine looming over his visit. 

EQUITIES: 

US equity futures are lower as technology stocks lead declines after Meta Platform’s disappointing outlook late Wednesday. Nasdaq 100 contracts fell 0.9%, with Meta accounting for more
than half of that decline. Alphabet, which reports earnings along with Microsoft today, also dropped.  Aside from results, traders are keenly awaiting US economic growth figures due today. Economists predict GDP likely cooled to around 2.5% in the first quarter,
with the data still potentially suggesting persistent inflationary pressures.     

Futures ahead of the data: E-Mini S&P -0.7%, Nasdaq -1.1%, Russell 2000 +0.4%, DJI -0.6%.

In pre-market trading, META tumbled as much as 15% after it projected second-quarter sales below analyst expectations and increased spending estimates for the year. The drop followed
Meta’s announcement that it plans to spend billions on AI, raising concerns over tech sector earnings. Caterpillar (CAT) shares fell 3.7% after saying it expects lower second-quarter sales compared with a year ago. American Airlines (AAL) shares rise 5% after
saying it expects a second-quarter profit greater than Wall Street’s expectations. Arista Networks (ANET) climbs 2% as analysts note that the cloud-networking company could benefit from Meta’s increased spending plans. Ford (F) gains 1.8% after posting first-quarter
results that beat expectations. ImmunityBio (IBRX) climbs 7% after the biotech gave results from a trial examining its drug, Anktiva, in non-small cell lung cancer. International Business Machines (IBM) slips 8% after the company reported results that showed
weak demand for the company’s consulting unit. Royal Caribbean Cruises (RCL) rises 4% after boosting its full-year profit forecast. ServiceNow (NOW) falls 4% after the software company gave a full-year subscription revenue forecast that was slightly weaker
than expected. Southwest Airlines (LUV) declines 7% after plans to end service at four airports and offering voluntary leaves to address “significant challenges” in 2024 and 2025. Teradyne (TER) rises 8% after the semiconductor-manufacturing company reported
first-quarter results that beat expectations and gave an outlook that is ahead of the consensus forecast.

European gauges are mixed to lower as traders processed a deluge of corporate updates on the busiest day of the earnings season. UK shares are bucking the trend on strong corporate earnings
reports. London’s FTSE 100 hit another record high as Anglo American soared 14% after rival BHP Group made an all-share takeover proposal in a deal that would create the world’s largest copper miner. Anglo is separately considering a sale of its De Beers diamond
unit.  Barclays gained 5% after posting first-quarter revenue that topped analyst estimates. AstraZeneca (+5%) and Unilever (+5.5%) beat estimates.    Europe’s Stoxx 600 Index slipped as tech stocks lagged after a disappointing earnings report from Meta Platforms
hit sentiment. STMicroelectronics made a “hefty” cut to its full-year sales expectations and BE Semiconductor fell as quarterly order intake and guidance came in well below expectations. Nestle shares fell as it said sales growth sputtered in Q1. Stoxx 600
-0.4%, DAX -0.7%, CAC -1%, FTSE 100 +0.6%. Food & Bev -1.5%. Insurance and Construction -0.9%, Technology -0.8%. Basic Resources +1.9%, Banks +0.6%.

Asian stocks fell with the MSCI Asia Pacific Index lower by 1.1% as shares in South Korea and Japan tumbled. Japan’s tech-heavy Nikkei 225 fell more than 2%. Traders will be closely watching
the decision due Friday from the Bank of Japan for signs of a more hawkish tone, as well as any potential intervention by the nation to defend its currency. Stocks outperformed in Hong Kong amid increased purchases by Chinese investors. Mainland traders have
snapped up $20 billion of Hong Kong stocks since March, putting the market on track for the biggest two-month inflow since 2021, according to BNP strategists.
The UBS analyst who shocked markets with a sell call on Evergrande long before it defaulted is forecasting a recovery in China’s property sector. Nikkei 225 -2.15%, Kospi -1.8%,
Taiwan -1.4%, Hang Seng Tech Index -0.5%, Singapore -0.2%, Vietnam -0.05%. CSI 300 +0.25%, Hang Seng Index +0.5%, Sensex +0.65%. Australia and New Zealand were closed for a holiday.   

FIXED INCOME: 
 

Treasury yields are mostly within 1bp of Wednesday’s closing levels as stock futures sag. Core European rates outperform Treasuries, with little reaction in Spanish
short-end bonds to Prime Minister Pedro Sanchez’s threat to resign. US 10-year yields around 4.64% are near flat on the day.  Treasury coupon auction cycle concludes with $44b 7-year note sale, following solid results for both 2- and 5-year sales this week.
2/10 and 5/30 curves are steeper by ~2bps.

METALS: 
   

Gold rebounded after a three-day decline ahead of inflation data that will shape expectations for US monetary policy and the trajectory of the dollar. Bullion traded
above $2,300 an ounce, after declining by more than 3% in the week’s first three sessions as geopolitical risks in the Middle East eased, hurting demand for haven assets. Spot gold +0.6%, silver +1%.   

ENERGY:   

Oil prices edge up as traders digest the US Crude Inventory release, which was taken as bullish for near-term prices.  Wednesday’s supply report from the EIA showed
gasoline stockpiles fell less than forecast while distillate stockpiles rose against expectations of a decline, reflecting signs of slowing demand. US crude inventories unexpectedly fell sharply last week, the EIA report also showed, as exports jumped. Exports
ticked above 5 million barrels a day amid robust flows to Europe. This puts the US inventory at its lowest level since January 19 by 453.6 million barrels. This might trigger some buying from the US Energy Department in order to build up stockpiles again. 
WTI +0.3%, Brent +0.3%, US Nat Gas -1.2%, RBOB +0.7%.

CURRENCIES:   

In currency markets, the dollar fell versus all Group-of-10 peers except the yen.  The yen extended losses after weakening beyond 155 per dollar for the first time
in more than three decades on Wednesday, heightening the chances of intervention ahead of Bank of Japan’s policy decision tomorrow. The yen is down 9% this year, the worst performing G-10 currency.  The Australian and New Zealand dollars advance although local
markets were shut for a holiday. US$ Index -0.2%, GBPUSD +0.3%, EURUSD +0.1%, USDJPY +0.15%, AUDUSD +0.45%, NZDUSD +0.35%.

Spot Bitcoin -0.3%, Ethereum -0.5%.

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
• Doximity (DOCS) Raised to Neutral at JPMorgan; PT $25
• Five Below (FIVE) Raised to Overweight at Wells Fargo; PT $180
• MAG Silver (MAG CN) Raised to Buy at Canaccord; PT C$22
• Manhattan Associates (MANH) Raised to Buy at DA Davidson; PT $240
• Sherwin-Williams (SHW) Raised to Overweight at KeyBanc; PT $400
• Silicon Labs (SLAB) Raised to Buy at Needham; PT $150
• Tandem Diabetes (TNDM) Raised to Outperform at Leerink; PT $45
• TJX (TJX) Raised to Buy at Goldman; PT $110
• Trustmark (TRMK) Raised to Outperform at KBW; PT $36
• UPS (UPS) Raised to Buy at HSBC; PT $170
• Downgrades
• Calix (CALX) Cut to Hold at Jefferies; PT $30
• Deckers Outdoor (DECK) Cut to Neutral at BofA; PT $860
• Endeavour Mining (EDV CN) Cut to Hold at Liberum; PT C$27.65
• First Industrial Realty (FR) Cut to Neutral at Wedbush; PT $49
• HashiCorp (HCP) Cut to Hold at Needham
• Cut to Sector Perform at Scotiabank; PT $35
• Cut to Hold at Truist Secs; PT $35
• Cut to Market Perform at William Blair
• Cut to Hold at Stifel; PT $35
• Li Auto (LI) ADRs Cut to Equal-Weight at Barclays; PT $25
• Meta Platforms (META) Cut to Hold at Punto Casa de Bolsa; PT $514.43
• Monster Beverage (MNST) Cut to Sell at Truist Secs; PT $46
• Cut to Neutral at JPMorgan; PT $59
• Public Storage (PSA) Cut to Hold at CFRA; PT $278
• Initiations
• Air Liquide (AI FP) ADRs Rated New Buy at Berenberg; PT $45
• Americold Realty Trust I (COLD) Rated New Equal-Weight at Wells Fargo
• Chord Energy (CHRD) Rated New Outperform at Baptista Research
• Civitas Resources Inc (CIVI) Rated New Outperform at Baptista Research
• Dell Technologies (DELL) Rated New Buy at Citic Securities; PT $145
• Frontline PLC (FRO) Rated New Outperform at Baptista Research; PT $28
• General Motors (GM) Rated New Outperform at Bernstein; PT $55
• Handelsbanken (SHBA SS) ADRs Rated New Hold at Berenberg; PT $4.21
• Kinetik (KNTK) Rated New Underperform at Baptista Research; PT $4
• Lloyds (LLOY LN) ADRs Rated New Hold at Berenberg; PT $2.75
• Processa Pharmaceuticals (PCSA) Rated New Buy at HC Wainwright; PT $8
• Uber (UBER) Rated New Buy at Fubon; PT $93
• Victoria’s Secret (VSCO) Rated New Sell at Goldman; PT $14

Data sources: Bloomberg, Reuters, CQG