Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:15ET ADP Employment Change; 9:45ET S&P Global US Services PMI, Canada Rate Decision; 10:00ET
ISM Services

May ADP Employment change 152K, Exp. 175K, Last 188K (downward revised)

HIGHLIGHTS and News:  

• BlackRock, Citadel and others are backing an upstart Texas stock market (TXSE) to rival the NYSE and Nasdaq
• NBA NEARS $76B DEAL WITH NBC, ESPN AND AMAZON: WSJ
  
• Dollar Tree is exploring a potential sale or spinoff of its Family Dollar business
  
• The owner of Madison Avenue’s “Le Penthouse” filed for bankruptcy to halt a foreclosure sale
• Gold hovers above 50dma for fourth straight day; Crude Oil below its 200-week mvg avg
• US$ Index firms back to the broken trend line

Global stocks rose with a European Central Bank policy meeting coming into focus following soft US labor market data that firmed up bets of a September rate cut by
the Federal Reserve. The ECB meets tomorrow and money markets price in an almost certain chance of a first interest rate cut, but there is uncertainty about the future path for rates in the euro zone. Bank of Canada is expected to begin its rate-cutting cycle
today. Elsewhere, Morgan Stanley downgraded Mexican stocks following the election of Claudia Sheinbaum.  Opposition leader Xochitl Galvez will ask authorities to recount 80% of the votes from Sunday’s election.    

EQUITIES:

US equity futures edge higher as investors looked to another key labor market reading and the first of two major central bank rate decisions to confirm a growing confidence that the Federal
Reserve will begin its policy easing later in the year. today’s National Employment Report from ADP is expected to show around 173,000 private sector jobs were created last month. May ADP Employment change came in at 152K, Exp. 175K, Last 188K (downward revised).
    

Futures ahead of the bell: E-Mini S&P +0.25%, Nasdaq +0.5%, Russell 2000 +0.3%, DJI +0.2%.  

In pre-market trading, CrowdStrike (CRWD) climbs 11% after the security software company raised its year forecast. HP Enterprise shares surged 14% after it reported a jump in sales of
servers built to handle AI. Discount retailer Dollar General (DG) gained as much as 3% higher following a report from the Wall Street Journal that suggested the group is looking to sell its Family Dollar division. Dollar Tree (DLTR) slips 2% after the retailer
reported weaker-than-expected comparable sales. 3D Systems (DDD) rises 15% after the 3D printing company won an orthodontics contract.  ASML ADRs (ASML) rises 3% after the semiconductor firm confirmed it will ship its latest chipmaking machine to TSMC and
Samsung this year. Psychedelic stocks fall after the drug MDMA failed to get backing from US regulatory advisers to treat post-traumatic stress disorder. Mind Medicine (MNMD) -13%, Compass Pathways (CMPS) -10%. Stitch Fix (SFIX) rises 14% after the personal
styling company posted a 3Q loss that’s smaller than feared.  WalkMe (WKME) soars 42% after SAP agreed to acquire the Israel-based software company.

European gauges rallied as Zara-owner Inditex SA’s solid outlook sparked a rally in retail stocks, while the expectation of a rate cut by the European Central Bank drove positive sentiment
among investors. Euro zone business activity expanded at its quickest rate in a year in May as growth in the region’s dominant services industry outpaced contraction in manufacturing, according to a private survey. Overall price pressures eased with output
prices increasing at the slowest pace in six months.  Among other individual movers, Elekta AB fell after it missed sales estimates, while Bayer AG gained after a US court reduced damages it had to pay on a case. SAP SE advanced after agreeing to acquire WalkMe,
an Israel-based software company. Stoxx 600 +0.8%, DAX +1%, CAC +1.3%, FTSE 100 +0.3%. Technology +2%, Telecomm +1.1%, Autos +1%, Healthcare +0.9%, Retail +0.8%. Basic Resources -0.4%.  

Asian equities were mixed with the MSCI Asia Pacific Index paring earlier losses to close -0.1%. TSMC, Tencent and Samsung provided main support, while Toyota and Hitachi were among the
biggest drags on the gauge. Elliott rebuilt a more than $2 billion stake in SoftBank, sending shares surging, and is pushing the company to launch a $15 billion stock buyback. The focus in Asia stayed on Indian markets, with stocks rising after Tuesday’s plunge
as voting results showed a slimmer-than-expected victory margin for PM Narendra Modi. India’s Sensex jumped over 3% after a key ally of the political alliance led by Modi’s party affirmed support for the formation of the next government.  Shares in Japan slid
as the yen’s rally versus the dollar over the past two trading sessions weighed on exporters. Benchmarks in Hong Kong pared earlier gains to close slightly lower, while mainland stocks also slipped despite the Caixin China services purchasing managers’ index
rising to the highest in 10 months. Sensex +3.2%, Kospi +1%, Philippines +0.9%, Taiwan +0.6%, ASX 200 +0.4%, Vietnam +0.05%. Hang Seng Index -0.1%, CSI 300 -0.6%, Topix -1.4%, Indonesia -2.1%.

FIXED INCOME: 
 

Treasury yields are adding to four straight days of declines and the biggest two-day pullback of the year. The CME Group’s FedWatch tool pegs the odds of a September
rate cut at around 65%, up from less than 50% late last month, with the chances of a second cut before the end of the year beginning to mount. 10-year yield is lower by ~1bp at 4.31% and the curve is slightly flatter. Focus today will be on the ADP employment
change, S&P Global services PMI and ISM services index.

METALS: 

Gold edged higher, with traders looking ahead to US data that may firm up expectations for interest-rate cuts later this year. Markets are shifting focus to a slew
of labor-market readings this week — including Friday’s US jobs report — for further clues on the timing of rate cuts. UBS boosted its yearly gold price forecasts out to 2028, expecting the metal to average $2,700 an ounce next year amid strong demand from
central banks.  Spot gold +0.3%, silver +0.3%.

ENERGY:   

Oil prices hovered near four-month lows as traders weighed an OPEC+ decision to boost supply later this year and an increase in US crude and fuel stocks. US gasoline
stockpiles jumped by 4 million barrels last week, the API said, signaling a subdued start to summer driving demand. That would be the biggest surge in more than four months if confirmed by the EIA. OPEC+’s surprise decision to return oil supply to the market
later this year has alarmed traders of physical cargoes, who say there’s limited evidence yet of a long-awaited improvement in the global market that would justify the move.  WTI +0.2%, Brent +0.2%, US Nat Gas +1.3%, RBOB -0.4%. WTI and Brent haven’t had a
weekly close below their respective 200 week moving averages since January 2021.

CURRENCIES:   

In currency markets, the yen erased its Tuesday advance after a preferred pay gauge of the Bank of Japan rose by 1.7%, less than the 1.9% increase in the prior month
and missing all estimates. The Canadian dollar was little changed as traders await the Bank of Canada policy decision. Most analysts expect an interest rate cut by the BOC, though Canada’s six biggest lenders are split. USDCHF is up after four days of declines;
Citigroup exited a USDCHF short position, saying “funders (CHF, JPY) have two-way risk as policymakers have become less a of a tailwind for shorts.”  US$ Index +0.2%, GBPUSD +0.1%, EURUSD -0.05%, USDJPY +0.8%, AUDUSD -0.05%, USDCHF +0.3%, NZDUSD +0.1%, USDCAD
is flat.

Spot Bitcoin +0.7%, Ethereum -0.1%.

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
• AbbVie (ABBV) Raised to Buy at HSBC; PT $185
• Applied Materials (AMAT) Raised to Equal-Weight at Barclays; PT $225
• Boston Beer (SAM) Raised to Equal-Weight at Morgan Stanley; PT $290
• Gap (GPS) Raised to Neutral at Daiwa; PT $29
• Instacart (CART) Raised to Buy at Gordon Haskett; PT $45
• KLA Corp (KLAC) Raised to Equal-Weight at Barclays; PT $765
• UnitedHealth (UNH) Raised to Buy at HSBC; PT $580
• Downgrades
• Medifast (MED) Cut to Underperform at DA Davidson; PT $17.50
• Pine Cliff Energy (PNE CN) Cut to Hold at Canaccord; PT C$1.10
• Relmada Therapeutics (RLMD) Cut to Sell at Goldman; PT $2
• Titan Machinery (TITN) Cut to Neutral at B Riley; PT $20
• Initiations
• Arrowhead Pharma (ARWR) Reinstated Neutral at Goldman; PT $31
• Corpay (CPAY) Rated New Equal-Weight at Wells Fargo; PT $285
• EVgo (EVGO) Rated New Buy at Benchmark; PT $3
• Fabrinet (FN) Reinstated Buy at William O’Neil
• Jazz Pharma (JAZZ) Reinstated Buy at Goldman; PT $169
• LifeMD (LFMD) Rated New Overweight at KeyBanc; PT $12
• Lionsgate Studios (LION) Rated New Neutral at Seaport Global Securities
• Old Dominion (ODFL) Rated New Outperform at BMO; PT $210
• Proto Labs (PRLB) Rated New Overweight at Cantor; PT $44
• Silvaco Group (SVCO) Rated New Buy at B Riley; PT $26
• Tidewater Midstream (TWM CN) Resumed Sector Perform at National Bank
• WEX (WEX) Reinstated Equal-Weight at Wells Fargo; PT $200
• Xometry (XMTR) Rated New Underweight at Cantor; PT $13

Data sources: Bloomberg, Reuters, CQG