Daily Game Plan

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

TODAY’S ECONOMIC DATA:  9:40ET Fed’s Goolsbee speaks; 10:00ET Existing Home Sales; 1:00ET 20-Year Bond Auction;
2:00ET FOMC Meeting Minutes*

HIGHLIGHTS and News:  

• Ireland, Spain, Norway announce recognition of Palestinian state, Israel recalls its ambassadors
• The average age of cars and light trucks in the US has risen again to a new record of 12.6 years
• US$ holding 5-month trend line; WTI seems likely to test $75.30 area (s/t .618); RBOB nears 200dma
• NVDA has breakout potential above trend line around $957.20

Global stocks slipped as stronger-than-expected inflation in Britain offset investor hopes that AI-heavyweight Nvidia could meet sky-high expectations, with investors
also waiting for possible clues on interest rates from today’s FOMC minutes. China is considering raising tariffs on some car imports, a move that would counter EU and US trade actions against Chinese-made electric vehicles. In a statement on Tuesday evening,
the China Chamber of Commerce to the EU (CCCEU) announced that it had been “informed by insiders that China may consider increasing temporary tariff rates on imported cars equipped with large-displacement engines”. Elsewhere, emerging market credit ratings
are finally looking up again. According to Bank of America, nearly 75% of all sovereign rating moves by S&P, Moody’s and Fitch this year have been in a positive direction. Moody’s now has 15 developing economies on a positive outlook – one of its highest numbers
ever.

EQUITIES: 

US equity futures are little changed as investors looked ahead to FOMC minutes followed by the widely-anticipated release of Nvidia’s latest earnings report due after the close. Options
priced for a swing of 8.7% in either direction for NVDA, which has rallied nearly 93% this year.  In Tuesday’s extended trading, Urban Outfitters gained 5% after the clothing retailer posted beats on the top and bottom line. Homebuilder Toll Brothers inched
higher by 1% after surpassing analysts’ estimates and raising its full-year delivery guidance.

Futures ahead of the bell: E-Mini S&P -0.15%, Nasdaq -0.02%, Russell 2000 -0.3%, DJI -0.2%

In pre-market trading, Analog Devices (ADI) rises 6% after the company reported second-quarter results that beat expectations. Bentley Systems (BSY) falls 5% after Schneider Electric
says talks with the software firm regarding a potential strategic transaction have been mutually terminated. LifeStance Health (LFST) slumps 15% after the mental health care provider priced the offering of 20 million shares at $6.25 each. Lululemon (LULU)
declines 4% after the company said its chief product officer was leaving. Modine (MOD) falls 8% after the maker of heating and air conditioning products provided a fiscal 2025 earnings forecast that fell short. Petco (WOOF) gains 21% after the pet health and
wellness company reported better-than-expected 1Q results. Rezolute (RZLT) jumps 26% after the biopharmaceutical company said the Phase 2 study of RZ402 for some patients with diabetic macular edema met primary endpoints. Target (TGT) slides 7% as a key measure
of sales fell for the fourth consecutive quarter and the retailer remains cautious about discretionary spending for the coming months. Tesla (TSLA) slips 1.9% as the EV maker got off to a sluggish start to the second quarter in Europe. Viasat (VSAT) falls
11% after the broadband digital satellite communications company swung to a fourth-quarter loss.

NVDA has breakout potential above $957.20 area trend line

Utilities continue to outperform even though overbought with 14 day RSI most extended since August 2022

Transports have underperformed and we will keep an eye on the 200dma in the transportation ETF (IYT).

European gauges opened lower, with all major bourses starting the day in the red, following the release of fresh UK inflation data. UK inflation came in at 2.3% on an annual basis in
April, well below March’s reading of 3.2% but above the forecast of 2.1%. Core inflation dipped to 3.9% in April from 4.2% in March.  Auto stocks led European markets lower on concerns about tariffs from China that could go as high as 25% on gasoline-powered
cars with large engines, according to China’s Global Times. Marks & Spencer shares surged over 7% after the British retailer posted a 58% annual profit jump. Stoxx 600 -0.45%, DAX -0.3%, CAC -0.6%, FTSE 100 -0.6%. Autos -1.6%, Basic Resources -1.5%, Energy
-1.1%. Technology outperforms, +0.6%.

Asian shares were mixed following a slew of economic data out of Japan. The Nikkei 225 led losses in the region, despite a slight improvement in business sentiment. Japan’s machinery
orders rose 2.7% year-on-year, compared to expectations of +2.3%. According to Japan’s Cabinet Office, core orders are forecast to fall by 1.6% q-o-q in the April to June period, after climbing 4.4% in the first quarter. The nation also swung back into a trade
deficit, highlighting concerns over the economic outlook from the yen’s plunge. Shares of Xpeng soared more than 13% in Hong Kong, after the Chinese EV maker reported an improvement in profit margin and an upbeat outlook for second-quarter deliveries. MSCI
Asia Pacific Index -0.1%, Nikkei 225 -0.85%, Vietnam -0.8%, Philippines -0.4%, Hang Seng Index -0.1%, ASX 200 -0.05%. CSI 300 +0.2%, Sensex +0.35%, Taiwan +1.5%. Markets were closed for holidays in Singapore, Malaysia and Thailand.

FIXED INCOME: 
 

Treasury yields are higher ahead of the Fed policy meeting minutes, as investors considered the latest comments from Federal Reserve speakers about the outlook for
inflation and interest rates. A series of Fed officials on Tuesday urged patience when it comes to rate cuts. US session focus also includes supply pressure with $16 billion 20-year bond sale. US yields are cheaper by 2bp to 3.5bp across the curve with belly-led
losses on the day flattening 5s30s spread by around 1bp; 10-year yields around 4.54%, cheaper by 3.5bp versus Tuesday’s close. Meanwhile, the yield on Japan’s 10-year government bond rose to an 11-year high, topping 1% at one point. 

METALS: 

Gold slipped as investors prepared for minutes from the Fed’s most recent policy meeting for further insights on the timeline for interest rate cuts. The latest economic
data has pointed towards a downtrend in inflation, but policymakers said on Tuesday that the Fed should wait several more months to ensure that inflation really is back on track to its 2% target before cutting interest rates. Spot gold -0.5%, silver -1.4%.

ENERGY:   

Oil prices fell for a third straight session on the expectations the Fed may keep US interest rates higher for longer due to sustained inflation, potentially impacting
fuel use in the world’s largest oil consumer. US gasoline supplies gained by more than 2 million barrels last week, API data showed. That would take total holdings to the highest in eight weeks if confirmed by the EIA today. Ahead of this weekend’s Memorial
Day holiday, which kicks off the US peak summer driving season, retail gasoline prices fell for the fourth consecutive week. WTI -1.2%, Brent -1.1%, US Nat Gas -0.9%, RBOB -1.5%.

WTI seems likely to test the short term .618 retracement; Brent has its 200 week mvg avg as pivotal support, RBOB is nearing its 200dma support area.

CURRENCIES:   

In currency markets, inflation in Britain fell by less than expected in April and a key core measure barely dropped, sparking a jump in the pound and in British government
bond yields, as well as prompting investors to cut their bets on a Bank of England interest rate cut in June. Sterling has since reversed those gains. The dollar inched up as traders awaited the Fed minutes for more insight on the central bank’s rate path.
Meanwhile, the kiwi jumped after New Zealand’s central bank offered a sobering assessment of its inflation problems, warning that rates would have to be higher for longer. US$ Index +0.2%, GBPUSD -0.05%, EURUSD -0.3%, USDJPY +0.25%, AUDUSD -0.25%, USDCHF +0.5%,
NZDUSD +0.3%, USDNOK +0.4%.

Spot Bitcoin +0.4%, Ethereum -1%. Crypto is quickly becoming an election issue, and Ethereum is the biggest winner so far, gaining 21% this week — its best two-day
run since January 2021.

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
• Ametek (AME) Raised to Outperform at Oppenheimer; PT $200
• Bombardier (BBD/B CN) Raised to Buy at BofA; PT C$120
• Brown & Brown (BRO) Raised to Neutral at BofA
• Edwards Life (EW) Raised to Buy at Citi; PT $105
• Gatos Silver (GATO) Raised to Outperform at CIBC; PT $16
• Kraft Heinz (KHC) Raised to Overweight at Piper Sandler; PT $42
• Lincoln National (LNC) Raised to Buy at Jefferies; PT $34
• PAR Technology (PAR) Raised to Buy at Benchmark; PT $59
• Prudential Financial (PRU) Raised to Buy at Jefferies; PT $143
• RTX Corp (RTX) Raised to Buy at CFRA
• Shopify (SHOP CN) Raised to Buy at Goldman; PT C$101.02
• Stryker (SYK) Raised to Buy at Needham; PT $392
• Tandem Diabetes (TNDM) Raised to Buy at Citi; PT $57
• Willis Towers (WTW) Raised to Neutral at BofA
• Downgrades
• Akamai (AKAM) Cut to Neutral at President Capital Management; PT $108
• Aon PLC (AON) Cut to Underperform at BofA
• Bio-Techne (TECH) Cut to Neutral at Citi; PT $85
• Box (BOX) Cut to Equal-Weight at Morgan Stanley; PT $32
• CAE (CAE CN) Cut to Hold at Canaccord; PT C$30
• Danimer Scientific (DNMR) Cut to Hold at Jefferies; PT 80 cents
• Establishment Labs (ESTA) Cut to Neutral at Citi; PT $60
• Garmin (GRMN) Cut to Underperform at BofA; PT $150
• Generac (GNRC) Cut to Market Perform at Oppenheimer
• Hims & Hers Health (HIMS) Cut to Neutral at Citi; PT $20
• Li Auto (LI) ADRs Cut to Accumulate at CLSA; PT $25
• Middleby (MIDD) Cut to Underweight at JPMorgan; PT $118
• Nevro (NVRO) Cut to Sell at Citi; PT $9
• NMI Holdings (NMIH) Cut to Neutral at UBS; PT $39
• Nutanix (NTNX) Cut to Hold at CFRA
• Ouster (OUST) Cut to Neutral at Cantor; PT $13
• Initiations
• Aon PLC (AON) Resumed Neutral at Citi; PT $309
• Atlanticus (ATLC) Rated New Market Perform at KBW; PT $33
• Brunswick (BC) Rated New Buy at Benchmark; PT $100
• Confluent (CFLT) Rated New Hold at Baptista Research; PT $35.60
• Gitlab (GTLB) Rated New Buy at Citic Securities; PT $80
• Huize Holding (HUIZ) ADRs Rated New Buy at UOB Kay Hian; PT $2
• ITT Inc (ITT) Rated New Hold at Baptista Research; PT $148.50
• KBR (KBR) Rated New Buy at William O’Neil
• Malibu Boats (MBUU) Rated New Buy at Benchmark; PT $44
• OneWater Marine (ONEW) Rated New Hold at Benchmark
• Ryan Specialty (RYAN) Rated New Buy at BofA
• Trane Technologies (TT) Rated New Underperform at Baptista Research
• Triple Flag (TFPM CN) Rated New Buy at William O’Neil
• Viking Holdings (VIK) Rated New Buy at Melius

Data sources: Bloomberg, Reuters, CQG