Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Retail Sales; 9:15ET Industrial Production, Capacity Utilization,
Manufacturing (SIC) Production ; 10:00ET Business Inventories,
Fed’s Barkin speaks; 11:40ET Fed’s Collins speaks; 1:00ET 20-Year Bond Auction; Fed’s Logan speaks, Fed’s Kugler speaks; 1:20ET Fed’s Musalem speaks; 2:00ET Fed’s Goolsbee speaks;
4:00ET TIC Flows

HIGHLIGHTS and News:  

• Today, Biden will announce protections for undocumented spouses of US citizens and ease work visa access for some
• Half a million immigrants could eventually get US citizenship under new plan from Biden – AP
• Elon Musk plans a Venmo-like payments feature for X across the US
  
• Philip Morris stopped online sales of nicotine pouch brand Zyn in the US
  

World stocks ticked higher as MSCI’s world share index hovers near last week’s all-time highs, as an uneasy calm held in Europe and investors awaited remarks from
a bevy of US Fed officials. Global investors remained bullish in June, with cash allocations holding at three-year lows and equity allocations elevated, according to Bank of America’s monthly fund manager survey. Holdings of euro zone stocks rose 12% compared
to May’s survey. The Reserve Bank of Australia was first up in a busy week for central banks. It kept rates at a 12-year high, as expected, but warned there were still reasons to be vigilant against inflation risks. Central banks in Norway, Britain and Switzerland
are also due to meet this week, with the SNB to ease by another 25 bps. Petrobras agreed to pay 19.8 billion reais ($3.5 billion) in back taxes, boosting Brazilian President Lula da Silva’s efforts to balance the budget.  

EQUITIES:
6th straight record for the Nasdaq

US equity futures are steady after the S&P 500 advanced to an all-time high for the 30th time this year, defying concern about narrow breadth and higher-for-longer US interest rates.
The Nasdaq 100’s relative strength index was the most overbought reading since 2018 as investors increasingly view tech as a safe haven. Ahead of Wednesday’s holiday in the US, traders prepared for retail-sales data and a slew of Federal Reserve speakers. 
Six Fed speakers are on the docket today, and they could provide further clues on the US interest rate outlook. Citi will showcase its services business at today’s investor day.

Futures ahead of the bell: E-Mini S&P +0.02%, Nasdaq +0.2%, Russell 2000 -0.1%, DJI -0.05%.

Massive momentum in some of the largest tech stocks in the world heading into the mid-year index rebalances. There has been some chatter about the impact of the XLK rebalancing on names
like NVDA, AAPL, and AVGO. There is approximately $10 billion that will change hands between AAPL and NVDA while AVGO will see approximately $2 billion in selling
Microsoft and Nvidia will likely have a weight of around 21% in this tech ETF, while Apple will be down to about 4.5%, according to SPDR Americas Research.

link  The chart is XLK relative to SP 500 (SPY). Rebalance Date: Friday, June 21

In pre-market trading, Broadcom (AVGO) climbs 2.4%, putting the stock on track for an eighth consecutive session of gains. Chegg (CHGG) jumps 20% after the online-education firm announced
a cut to its workforce and a growth plan that includes developing a “single platform” with artificial-intelligence tools. La-Z-Boy (LZB) rises 9.4% after the furniture company reported quarterly profit and sales that topped estimates. Lennar (LEN) slips 2.7%
after the homebuilder’s orders outlook missed estimates. NextEra Energy (NEE) falls 4.3% on plans to sell $2 billion of equity to raise money for new energy projects. Philip Morris (PM) declines 2.9% after the company stopped online sales of its popular nicotine
pouch brand Zyn in the US after an affiliate received a subpoena in the District of Columbia. Rocket Lab USA (RKLB) rises 7.4% after the space systems company signed the largest Electron launch agreement in the firm’s history. Silk Road Medical (SILK) rallies
23% after Boston Scientific agreed to acquire the medical device maker. Zentalis Pharma (ZNTL) drops 28% after the FDA placed a partial hold on azenosertib studies.

European gauges are higher, trying to regain opening highs in a bit of a choppy trade, as investors keep a close eye on political developments in France. Germany’s investor expectations
improved less than expected, casting doubts on a recovery. Euro area final May consumer prices came in at +2.6%, as expected. The Stoxx 600 is up 0.4% with banks, travel and construction shares leading gains, while food & beverage underperforms. Lenders in
the region are at the top of the leaderboard, continuing to recover from sharp declines last week. Barclays strategists said that a drop in shares in sectors including banks, leisure, utilities and construction could be overdone. Shares in supermarket group
Carrefour dropped as much as 9.6% after reports that the finance ministry was recommending a “record fine” against the company for management of its franchise network. Stoxx 600 +0.4%, DAX +0.15%, CAC +0.4%, FTSE 100 +0.4%. Construction and Banks +1.1%, Travel
& Leisure +1%. Food & Bev -0.05%. 

Shares in Asia advanced, with most markets in the region making gains. Chip stocks were among the biggest contributors to gains in the MSCI Asia Pacific index, which
rose 0.6%.  Shares of Tesla China suppliers advanced after news the electric-car maker had gained approval to test its advanced driver-assistance system on some Shanghai streets. Shares of SK Hynix rose 5.2% after peer Micron finished at a record. TSMC rose
2.4% after a number of brokers raised their price targets.  Australian stocks held gains after the nation’s central bank left its key interest rate unchanged at a 12-year high. Taiwan +1.2%, ASX 200 +1%, Nikkei 225 +1%, Kospi +0.7%, Sensex +0.4%, Vietnam +0.4%,
CSI 300 +0.3%. Hang Seng Index -0.1%, Philippines -0.2%. 

FIXED INCOME: 
 

Treasuries are narrowly mixed with yields mostly within 1bp of Monday’s closing levels. In Europe, French bonds outperform slightly as haven bid for bunds continues
to fade. The US 10-year treasury yield is steady at 4.29% and the curve is roughly flat. Goldman said the US labor market stands at an inflection point as economic activity slows. It stuck to its call for two rate reductions this year, despite the Fed’s “surprisingly
hawkish” projections. US session includes several Fed speakers, May retail sales data and 20-year bond auction.

METALS: 

Gold reversed early small gains and is slightly lower as risk-on dominates the market, preferencing riskier assets over safe-havens. A survey by the World Gold Council
expects central-bank demand to remain sturdy in 2024, adding a backwind to Gold price. About 20 central banks plan to boost their gold reserves in the coming year, spurred by heightened geopolitical and financial risks, the WGC survey showed. That’s the highest
since at least 2018. Spot gold -0.25%, silver -0.9%. Gold futures remain negative s/t below the
50dma.

ENERGY:   

Oil prices struggle for direction as traders gauge global demand outlook. Asian refiners are bringing back as much as 400,000 b/d of idled capacity this month after
maintenance.  Oil futures inch lower, consolidating after a substantial rebound from mid-month lows as investors gauged signals on the outlook for crude demand. WTI and Brent rallied Monday, extending a rebound off mid-June lows to end at their highest since
April 30. WTI futures are bumping against 50 and 200-day moving averages around 79.85 area. WTI -0.05%, Brent -0.05%, US Nat Gas +2%, RBOB +0.3%.

CURRENCIES:   

In currency markets, the dollar rose versus all Group-of-10 peers except the Swiss franc as traders focused on upcoming US data and series of speeches from Fed officials.
Focus is on SNB policy meeting on Thursday; money markets assign a 65% chance of a quarter point interest-rate cut. The Aussie erased a 0.3% advance to trade flat after the RBA left the official cash rate unchanged and highlighted that inflation is proving
sticky.  The yen is lower against the dollar for a fourth day; the reduction in bond buying and a policy rate hike are separate issues, Bank of Japan Governor Kazuo Ueda said in response to questions in parliament. New Zealand dollar is the worst performer
in the G-10, falling as much as 0.6% and down a fourth day. US$ Index +0.25%, GBPUSD -0.25%, EURUSD -0.2%, USDJPY +0.2%, AUDUSD -0.05%, NZDUSD -0.5%, USDCHF -0.15%.

Spot Bitcoin -1.4%, Ethereum -2.6%.

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
• Kroger (KR) Raised to Outperform at BMO; PT $60
• STMicroelectronics (STMPA FP) ADRs Raised to Neutral at Goldman; PT $45.80
• Sunoco (SUN) Raised to Buy at Citi; PT $65
• Downgrades
• Aerovate Therapeutics (AVTE) Cut to Inline at Evercore ISI; PT $2
• Cut to Hold at TD Cowen
• Apple (AAPL) Cut to Neutral at Phillip Secs; PT $220
• Coeptis Therapeutics (COEP) Cut to Neutral at Ladenburg Thalmann
• Equitable Holdings (EQH) Cut to Neutral at UBS; PT $43
• Independent Bank Group (IBTX) Cut to Equal-Weight at Stephens; PT $52
• Ovid Therapeutics (OVID) Cut to Market Perform at Oppenheimer
• Initiations
• Autoliv (ALV) Re-Initiated Neutral at BNPP Exane; PT $120
• Canopy Growth (WEED CN) Rated New Sector Perform at ATB Capital; PT C$10
• Celldex (CLDX) Rated New Buy at Stifel; PT $58
• CRH (CRH) Rated New Overweight at Stephens; PT $95
• Innoviva (INVA) Rated New Overweight at Cantor
• Knife River Corp (KNF) Rated New Overweight at Stephens; PT $85
• Omega Therapeutics (OMGA) Rated New Outperform at Raymond James; PT $12
• Praxis Precision (PRAX) Rated New Buy at Guggenheim; PT $155
• RB Global Inc (RBA CN) Reinstated Outperform at CIBC; PT C$130.54
• Repligen (RGEN) Rated New Neutral at Guggenheim
• Third Harmonic Bio (THRD) Rated New Buy at Stifel; PT $23

Data sources: Bloomberg, Reuters, CQG