Daily Game Plan

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

TODAY’S ECONOMIC DATA:  10:00ET Wholesale Trade Sales; 11:00ET: Fed’s Jefferson speaks; 11:45ET Fed’s Collins speaks;
1:00ET 10 Year Note Auction; 1:30ET Fed’s Cook speaks; 5:30ET Brazil Rate Decision

HIGHLIGHTS and News:  

• Household debt hits $17.5 trillion for 1st time ever
• In its lawsuit to fight the forced sale legislation, TikTok uses the Biden campaign’s presence on the platform to undercut the national security concerns around the company
• Oxford-AstraZeneca Covid vaccine is being withdrawn worldwide
• 10-year yield holding a key short term trend line ahead of today’s auction
• WTI holding below its 200dma, looking for a test of $75.30 area (s/t .618)
• No real momentum for major US gauges after closing above 50dma
• XLK vs SPY holds key s/t trend line and 200dma resistance

Global stocks were mixed as some analysts now worry positioning is showing signs of caution. Hamas said Cairo talks are the ‘last chance’ for Israel to recover hostage
talks, according to Al Arabiya. A Hamas official said the group set red lines in the ceasefire negotiations that cannot be conceded, according to Sky News Arabia. CIA Director Bill Burns will travel to Israel today for talks with the Israeli Prime Minister
Netanyahu and other top officials. Meanwhile, Russia launched an air attack on energy facilities in Kyiv, and other regions. Sweden’s Riksbank kicked off its rate cutting cycle, easing policy for the first time in eight years.    

EQUITIES: 

US equity futures are lower as higher-for-longer commentary from the Federal Reserve dampens optimism. Late yesterday, Federal Reserve Bank President Neel Kashkari said it’s likely the
central bank will keep rates where they are “for an extended period of time.” Lack of conviction among investors to buy into the ongoing bounce in US stocks shows the market is far from turning fully bullish, say Citigroup strategists. Investors appear hesitant
to add to the existing bullish positions, a team led by Chris Montagu wrote in a note. For the tech-heavy Nasdaq 100, flows have turned net bearish even as the index gained last week. US prosecutors are examining whether Tesla committed securities or wire
fraud by misleading investors and consumers about its electric vehicles’ self-driving capabilities, three sources told Reuters.       

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

In pre-market trading, Shopify (SHOP) shares tumbled as much as 19% after the Canadian e-commerce company said gross margins would decrease 50bps in the current quarter as a result of
the sale of its logistics business. Uber Technologies (UBER) falls 6% as gross bookings in the first quarter missed analysts’ estimates.  Lyft (LYFT) gained 5% after the ride-hailing firm’s results and outlook beat estimates. Arista Networks (ANET) gains 6.8%
after the cloud-networking company posted a 1Q profit that beat estimates amid strong AI demand trends. Confluent (CFLT) climbs 7.6% after the application software company reported first-quarter results that beat expectations. Coupang (CPNG) falls 7.8% after
earnings per share missed estimates, driven mostly by losses attributable to its Farfetch acquisition. DoubleVerify (DV) plummets 42% after the digital media measurement software company cut its full-year forecast. Dutch Bros (BROS) jumps 7.8% after the drive-thru
coffee chain lifted full-year projections for revenue. Luminar (LAZR) rises 6% after the LiDAR sensor maker’s results broadly met expectations. Reddit (RDDT) rises 13% after the social-media company reported first-quarter results that beat expectations. Rivian
(RIVN) drops 6.8% after the EV-maker reported a wider-than-expected adjusted loss for the first quarter. Shoals Technologies (SHLS) falls 16% after the solar energy equipment supplier cut its revenue guidance for the year. Treace Medical (TMCI) tumbles 59%
after the medical device company cut its full-year revenue guidance. TripAdvisor (TRIP) drops 16% after management determined that there is no transaction with a third party that is in the best interests of the company and its stockholders. Twilio (TWLO) falls
8% after the software company’s second-quarter guidance fell short of the average analyst estimate. Upstart (UPST) declines 12% after the consumer finance company forecast revenue for the second quarter that missed analysts’ expectations. ZoomInfo Technologies
(ZI) slumps 23% after the infrastructure software company’s forecasts for revenue and profit trailed expectations.

Consumer Discretionary relative to Staples, holding below pivotal 200dma.

European gauges rose with a new record high for Europe’s Stoxx 600 Index as a batch of solid company reports provided evidence that the earnings recovery is filtering through to a wider
swathe of the economy. German industrial production declined in March, although less than expected, printing -0.4% M/M vs -0.6% consensus and -1.7% prior. The Stoxx 600 gained as brewer Anheuser-Busch InBev NV rallied more than 4% on better-than-expected North
American sales and Siemens Energy surged 12% after boosting guidance. Stoxx 600 +0.25%, DAX +0.3%, CAC +0.8%, FTSE 100 +0.3%. Food & Bev +1.4%, Insurance and Media both +1%, Construction +0.8%. Autos -1.6%, Basic Resources -1.5%.

Stocks in Asia were mostly lower, with the MSCI Asia Pacific Index slipping 1% after closing at a two-year high in the previous session. Nikkei 225 underperformed as investors digested
earnings including disappointing guidance by Nintendo (-5.4%). Chinese onshore benchmarks posted their first decline this week amid a warning from Morgan Stanley strategists that the recent rally is likely to abate.  Focus was also on President Xi Jinping’s
trip to Europe and how trade relations will develop. In another sign of geopolitical tensions between China and the West, the US has revoked licenses allowing Huawei Technologies to buy semiconductors from Qualcomm and Intel, according to sources. Nikkei 225
-1.6%, Singapore -1.1%, CSI 300 -0.8%, Indonesia -0.5%, Sensex -0.05%. Vietnam +0.15%, Taiwan +0.2%, Kospi +0.4%, Philippines +0.6%. 

FIXED INCOME: 
 

Treasuries are slightly cheaper across the curve with losses led by intermediate- to long-end sectors, steepening curve spreads. US long-end yields cheaper by ~2bp,
steepening 2s10s spread by 1.5bp. Supply concession is a factor for Treasuries with 10-year note sale later today and 30-year bond auction Thursday. Tuesday’s 3-year note sale drew good demand, stopping through by 0.3bp. WI 10-year yield at around 4.48% is
8bp richer than April’s, which tailed by 3.1bp in a poor result. 

METALS: 
   

Gold steadied as the US dollar strengthened amid hawkish comments from Federal Reserve policymaker Neel Kashkari, who said interest rates would likely remain on hold
for an “extended period.” Traders are also monitoring tensions in the Middle East after Israeli forces entered the Gaza city of Rafah, with a truce between Israel and Hamas still elusive. Further escalation could boost gold’s safe-haven appeal. While China’s
central bank continued adding to its gold reserves for the 18th straight month in April, the slower pace of buying may remove a key pillar of support for gold. Spot gold +0.1%, silver +0.3%.    

ENERGY:   

Oil fell to the lowest level since mid-March, with a mildly bearish US stockpile report adding to signals that the decline has further to go. Crude stockpiles at
Cushing rose by more than 1 million barrels last week, with higher nationwide holdings of gasoline and distillates, based on an industry estimate from API.  Official US government data on stockpiles is due later today with expected US crude oil inventories
to have fallen by about 1.1 million barrels last week. Oil has been on a downtrend since early April as much of the geopolitical premium from tensions in the Middle East has unwound, bringing traders’ focus back to a cooling market.  Iran plans to raise oil
output by as much as 400,000 barrels per day this year, Iranian Oil Minister Owji said. WTI -1.2%, Brent -1.2%, US Nat Gas +0.1%, RBOB -1.9%.

CURRENCIES:   

In currency markets, the US$ Index is headed for a third day of gains while the yen weakened to trade through 155, despite jawboning by BOJ Governor Kazuo Ueda. Japan’s
finance minister said he is watching FX movements with a sense of urgency, saying they will take a thorough response for forex and don’t believe that resources for intervention are limited. SEK is weaker as the Riksbank cut rates and leaves the door open to
another two cuts in the second half of the year. US$ Index +0.15%, GBPUSD -0.2%, EURUSD -0.1%, USDJPY +0.5%, AUDUSD -0.5%, USDSEK +0.4%.

Spot Bitcoin -1%, Ethereum -1.7%. FTX will amass as much as $16.3 billion in cash once it sells all of its assets, far more than it needs to cover what customers
lost. The extra will be used to pay them interest but nothing will be left for equity holders.

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
• Alignment Healthcare (ALHC) Raised to Overweight at Piper Sandler
• Block (SQ) Raised to Buy at Phillip Secs; PT $96
• Boston Beer (SAM) Raised to Hold at Deutsche Bank
• Confluent (CFLT) Raised to Buy at Canaccord; PT $35
• Datadog (DDOG) Raised to Outperform at Baird; PT $140
• Energizer Holdings (ENR) Raised to Equal-Weight at Morgan Stanley
• Envestnet (ENV) Raised to Hold at Jefferies; PT $59
• Hexcel (HXL) Raised to Overweight at Wells Fargo; PT $95
• HireRight Holdings (HRT) Raised to Outperform at William Blair
• International Flavors (IFF) Raised to Overweight at JPMorgan; PT $100
• Nutanix (NTNX) Raised to Outperform at Raymond James
• Old Dominion (ODFL) Raised to Outperform at Baird; PT $205
• Orthofix (OFIX) Raised to Buy at Roth MKM; PT $20
• Real Matters (REAL CN) Raised to Buy at TD; PT C$7
• Raised to Buy at Canaccord; PT C$7
• Redfin (RDFN) Raised to Overweight at Stephens; PT $9
• Downgrades
• Beyond Inc (BYON) Cut to Hold at Needham
• Definitive Healthcare (DH) Cut to Equal-Weight at Morgan Stanley
• DoubleVerify (DV) Cut to Equal-Weight at Wells Fargo; PT $28
• Cut to Market Perform at William Blair
• Cut to Sector Weight at KeyBanc
• Cut to Equal-Weight at Capital One; PT $23
• Golub Capital (GBDC) Cut to Market Perform at Raymond James
• Jacobs (J) Cut to Market Perform at William Blair
• Mercantile Bank (MBWM) Cut to Neutral at Janney Montgomery; PT $41
• Nasdaq Inc. (NDAQ) Cut to Neutral at Rosenblatt Securities Inc; PT $64
• Pet Valu (PET CN) Cut to Hold at Stifel Canada; PT C$32
• Premier (PINC) Cut to Hold at Canaccord; PT $21
• Runway Growth Finance (RWAY) Cut to Neutral at Compass Point; PT $12.75
• Saratoga Investment (SAR) Cut to Market Perform at Oppenheimer; PT $23
• Shoals Technologies (SHLS) Cut to Neutral at Roth MKM; PT $8
• Timbercreek Financial (TF CN) Cut to Hold at Cowen; PT C$8
• Treace Medical (TMCI) Cut to Hold at Truist Secs; PT $7
• Cut to Hold at Stifel; PT $6
• Cut to Neutral at BTIG
• Cut to Neutral at JPMorgan; PT $8
• Victoria’s Secret (VSCO) Cut to Underweight at Barclays; PT $14
• Vishay Precision (VPG) Cut to Neutral at B Riley; PT $36
• WideOpenWest (WOW) Cut to Market Perform at Raymond James
• WK Kellogg (KLG) Cut to Underperform at BNPP Exane; PT $20
• ZoomInfo (ZI) Cut to Sell at Goldman; PT $12
• Cut to Neutral at Mizuho Securities; PT $14
• Cut to Neutral at Piper Sandler; PT $15
• Initiations
• Advanced Drainage (WMS) Rated New Buy at Northcoast; PT $190
• BBB Foods (TBBB) Rated New Reduce at HSBC; PT $21
• Dexcom Inc (DXCM) Rated New Buy at Mirae Asset Daewoo; PT $159
• Lululemon (LULU) Reinstated Buy at BTIG; PT $425
• Pinterest (PINS) Reinstated Buy at William O’Neil
• Sutro Biopharma (STRO) Rated New Buy at BofA

Data sources: Bloomberg, Reuters, CQG