Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Empire Manufacturing; 12:00ET Fed’s Williams speaks; 1:00ET Fed’s Harker speaks;

HIGHLIGHTS and News:  

• Citi upgraded US equities to overweight
• Gasoline margins slump across major trading hubs
  
• “Inside Out 2” debuted with an estimated $155 million domestically at the box office this weekend

World stocks fluctuated while French stocks and bonds steadied as traders weighed assurances from far-right leader Marine Le Pen that she’d work with President Macron
should she prevail in national elections later this month. ECB Chief Economist Philip Lane said policy makers see no reason to be overly concerned about the financial turbulence in France. Meanwhile, China’s housing slump deepened in May and triggered new
calls for the government to pump cash and credit into the economy, while industrial output fell short of forecasts. The PBOC kept a key interest rate unchanged for a tenth straight month. This week, traders will be watching inflation readings in Europe and
the UK for more clues on the global rates outlook. Central banks in Australia, Norway and the UK are all expected to hold rates steady at meetings this week, though the Swiss National Bank might ease given the recent strength of the Swiss franc.  

EQUITIES:

US equity futures are mixed as traders start a holiday-shortened week with markets closed Wednesday for the Juneteenth holiday. Goldman boosted its year-end target for the S&P 500 to
5,600 and Evercore upped its call to 6,000. Citi upgraded US equities to overweight. The main US data of the week will be retail sales for May on Tuesday, where a 0.4% bounce is expected after a 0.3% drop in April, while markets have a holiday on Wednesday.
At least 10 policymakers from the Federal Reserve are due to speak this week and will likely address the market’s wagers for two rate cuts this year. Minneapolis Federal Reserve President Neel Kashkari said on Sunday it was a “reasonable prediction” that the
US central bank would cut interest rates once this year, waiting until December to do it.

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

In pre-market trading, Aaron’s (AAN) soars 31% after agreeing to be acquired by IQVentures for $10.10 per share in cash. AMC Networks (AMCX) slides 10% after the entertainment company
said it intends to offer $125 million in convertible senior notes due 2029 in a private offering. Autodesk (ADSK) gains 4% after the Wall Street Journal reported that activist investor Starboard Value has taken a $500 million stake in the design-software maker.
Ollie’s Bargain Outlet (OLLI) climbs 3.7% after JPMorgan upgraded the retailer to overweight. Zymeworks (ZYME) rises 8% after saying the FDA has cleared the investigational new drug application for ZW171.

Consumer Staples relative to Discretionary

European gauges fell from early highs before stabilizing. France’s CAC 40 benchmark erased all of its opening 1% advance before edging higher. Markets appear unconvinced by far-right
leader Marine Le Pen’s assurances that she will respect France’s political institutions if she wins the election. Citi analysts downgraded Europe to neutral from overweight, warning about the risk of a French far-right majority. China launched an anti-dumping
probe on pork imports from the EU, adding to simmering trade tensions. Technology, banks and autos sectors led gains, while basic resources lagged. Among single stock movers, SSP Group PLC shares dropped after Goldman Sachs cut the stock to sell. Karnov Group
slumped after Greenoaks and Long Path withdrew its offer following the closing of the offer period. Stoxx 600 -0.03%, DAX +0.2%, CAC +0.4%, FTSE 100 ~flat.  Banks +0.9%, Autos 0.9%, Technology +0.7%. Basic Resources -1%.  

Shares in Asia fell, with Japanese equities the session’s biggest losers as investors now face a six-week wait to hear details of the BOJ’s next tightening steps. Chinese equities were
mixed after a slew of disappointing economic data. The MSCI Asia Pacific Index fell 0.8%, with Toyota, Samsung and Sony among the biggest drags.  In China, declines in real estate investment and home prices both gathered pace last month. Industrial production
rose 5.6% from a year earlier, slowing from April and missing estimates. Retail sales, however, picked up more than expected due to a holiday boost. Markets in Singapore, India, Indonesia, Malaysia and the Philippines were closed. Nikkei 225 -1.8%, Thailand
-0.8%, Kospi -0.5%, Vietnam -0.4%, ASX 200 -0.3%, CSI 300 -0.15%, Taiwan -0.05%, Hang Seng Index -0.03%.

FIXED INCOME: 
 

Treasury yields rose after Neel Kashkari told CBS the Fed is well placed to take its time before cutting rates. 10-year yield around 4.26% and the curve is slightly
steeper amid similar bear-steepening in German bonds, while French bonds stabilize as investors weighed assurances from far-right leader Marine Le Pen that she’d work with President Emmanuel Macron. US session includes three Fed speakers and June Empire manufacturing
gauge. Coupon issuance this week includes $13b 20-year bond reopening Tuesday and $21b 5-year TIPS reopening Thursday.

METALS: 

Gold slipped while investors looked forward to economic data and comments from Federal Reserve officials for clarity on the rate cut timeline. Fed President Neel
Kashkari on Sunday said it’s a “reasonable prediction” that the US central bank will cut interest rates once this year. A slew of Fed policymakers are due to speak this week. Spot gold -0.5%, silver -1%.

ENERGY:   

Oil prices held firm after the bumpy economic data from China offset hopes for a boost to demand from the summer driving season in the northern hemisphere. Oil refiners
are making less money selling their gasoline as demand during the peak summer driving season has fallen short of what they expected when many of them boosted production. US gasoline demand was 9 million barrels per day in the first week of June, 1.7% below
last year and seasonally the lowest since 2021, government data showed. In Asia, weakness in the gasoline market has already led to run cuts, and refiners elsewhere are also likely to pull back in weeks ahead. On the geopolitical front, concerns of a wider
Middle East war lingered after the Israeli military said on Sunday that intensified cross-border fire from Lebanon’s Hezbollah movement into Israel could trigger serious escalation.   WTI +0.3%, Brent +0.3%, US Nat Gas -2%, RBOB +0.8%.

CURRENCIES:   

In currency markets, the fluctuated while the euro traded in a tight range as traders balanced concerns over the French political landscape ahead of elections. The
yuan held close to a multi-month low after China released a slew of economic data that pointed to an uneven recovery in the world’s second-largest economy. The yen is likely to keep weakening after the Bank of Japan disappointed the market by failing to provide
many details about its plans to cut bond purchases, analysts said. At the same time, declines in the currency may be limited after BOJ Governor Kazuo Ueda signaled at his press conference that the reduction in debt buying will be substantial and a rate hike
is possible in July, they added. Britain’s inflation pressures still appear too hot for the Bank of England to cut rates at its June 20 meeting. US$ Index ~flat; GBPUSD -0.15%, EURUSD +0.05%, USDJPY +0.3%, AUDUSD -0.3%; USDCHF +0.25%, NZDUSD -0.5%.

Spot Bitcoin +0.5%, Ethereum -2%.

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
• Brighthouse Financial (BHF) Raised to Market Perform at KBW; PT $47
• Fate Therapeutics (FATE) Raised to Overweight at Piper Sandler
• ICU Medical (ICUI) Raised to Outperform at Raymond James
• Keurig Dr Pepper (KDP) Raised to Hold at Truist Secs; PT $34
• Newmont Corp (NEM) Raised to Buy at UBS; PT $50
• Ollie’s Bargain (OLLI) Raised to Overweight at JPMorgan; PT $105
• PSEG (PEG) Raised to Buy at Guggenheim; PT $82
• Toll Brothers (TOL) Raised to Neutral at Goldman; PT $124
• Downgrades
• Louisiana-Pacific (LPX) Cut to Sell at Goldman; PT $81
• MSC Industrial (MSM) Cut to Hold at Loop Capital; PT $80
• Cut to Sector Weight at KeyBanc
• Shattuck Labs (STTK) Cut to Neutral at BTIG
• Union Pacific (UNP) Cut to Hold at Loop Capital; PT $238
• Initiations
• Alkermes (ALKS) Rated New Buy at TD Cowen; PT $34
• Bowhead Specialty Rated New Market Perform at KBW; PT $30
• Bowhead Specialty Rated New Market Outperform at JMP; PT $31
• Bowhead Specialty Rated New Equal-Weight at Morgan Stanley
• Bowhead Specialty Rated New Neutral at JPMorgan; PT $27
• Bowhead Specialty Rated New Outperform at RBC; PT $32
• Faraday Copper (FDY CN) Rated New Outperform at BMO; PT C$1
• Kayne Anderson BDC (KBDC) Rated New Overweight at Wells Fargo; PT $17
• Rated New Market Perform at KBW; PT $17
• Rated New Outperform at RBC; PT $17
• Legend Biotech (LEGN) ADRs Rated New Buy at Truist Secs; PT $88
• Lexicon Pharma (LXRX) Rated New Buy at HC Wainwright; PT $10
• Li Auto (LI) ADRs Rated New Neutral at JPMorgan; PT $21
• Life360 (360 AU) Rated New Buy at Canaccord; PT $40
• Rated New Outperform at Evercore ISI; PT $37
• Rated New Buy at Loop Capital; PT $36
• Q32 Bio Inc (QTTB) Rated New Buy at Guggenheim; PT $100
• RenovoRx (RNXT) Rated New Buy at Ascendiant Capital Markets; PT $8
• Trade Desk (TTD) Rated New Outperform at Wedbush; PT $110
• Unusual Machines (UMAC) Rated New Buy at ThinkEquity; PT $4
• Veralto (VLTO) Rated New Hold at TD Cowen; PT $95

Data sources: Bloomberg, Reuters, CQG