Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Philadelphia Fed Non-Manufacturing Activity, Chicago Fed Nat Activity Index; 10:00ET
Conf. Board Consumer Confidence, Richmond Fed Manufact. Index;  10:30ET Dallas Fed Services Activity; 12:00ET Fed’s Lisa Cook speaks; 1:00ET 2-Year Note Auction; 2:10ET Fed’s Bowman speaks

Fed’s Bowman: expect US inflation to remain elevated for some time, modest progress on US inflation this year

HIGHLIGHTS and News:  

• EU says Microsoft in breach of antitrust rules due to Teams and Office bundling
• Julian Assange will plead guilty to leaking US national security secrets and return to his home country of Australia
• White House “strongly disagrees” with court orders halting parts of a program to reduce student debt
  

Global markets remained close to record highs as investors shifted into less flashy names, including utilities, consumer staples and energy that have underperformed
tech. Regulators at the European Union said that Microsoft is breaching antitrust rules in the region with “abusive” bundling of Teams and Office. There are signs that calm is returning to French markets, with yield spreads over Germany retreating from the
highest level in over a decade. Jordan Bardella, the leader of the National Rally party, which is leading the polls, sought to reassure investors on Monday with assurances that he will not upend the country’s finances if his party wins an absolute majority.

EQUITIES:

US equity futures are mixed after a sell-off in favored technology names led the Nasdaq Composite to its worst day since April. Nasdaq futures outperform with Nvidia shares up more than
3% after dropping more than 6% on Monday, down 16% from an intraday record set last week. A slew of quarterly corporate earnings are also scheduled for the day, with parcel delivery giant FedEx after the bell. Boeing offered to buy Spirit AeroSystems in a
mostly-stock deal that values the supplier at about $35 per share. Meanwhile investors awaited further cues on the monetary policy path based on remarks by US Federal Reserve officials this week. 

Futures ahead of the bell: E-Mini S&P +0.2%, Nasdaq +0.4%, Russell 2000 -0.1%, DJI -0.1%.

In pre-market trading, SolarEdge Technologies (SEDG) tumbles 17% after the solar equipment maker said a customer filed for bankruptcy and the company may fail to collect the $11.4 million
it is owed. Pool Corp (POOL) dropped 11% after adjusting its guidance downward. Trump Media & Technology Group rose as much as 14%, set to extend Monday’s strong gains. The company had announced it expected $69.4 million in proceeds from cash exercise of warrants.
Birkenstock (BIRK) falls 3% after holder L. Catterton Management offered 14 million shares. Gap (GPS) advances 4% after TD Cowen upgraded the retailer to buy, saying the company is in the “early innings” of a transformation across all four of its brands.

Consumer Discretionary sector relative to Staples

European gauges fell after a sharp drop in chipmaker Nvidia dragged down US tech companies on Monday, in a sign of nervousness about the artificial intelligence boom. The CAC and DAX
lead losses in the region, weighed by a drop of more than 10% for plane maker Airbus SE, which lowered its guidance amid persistent supply-chain issues. Germany’s Merck KGaA also tumbled, following a second surprise failure of a promising medicine. Shares
of Novo Nordisk rose 2.2% after the company said that its Wegovy weight loss treatment has been approved in China. Shares of Zealand Pharma, which is developing its own contender weight loss drug, rose 6%. In Europe today, there are no major earnings. Stoxx
600 -0.3%, DAX -1%, CAC -0.9%, FTSE 100 -0.2%. Industrial Goods & Services -2%, Financial Services -0.9%, Retail -0.9%, Banks -0.9%. Energy +0.5%, Chemicals +0.4%.  

Shares in Asia rebounded as advances in some value stocks helped offset weakness in the tech sector. The MSCI Asia Pacific Index rose 0.9%, led by consumer discretionary and industrial
shares. Japan and Australia were the biggest gainers in the region, while Chinese stocks listed in Hong Kong climbed as traders moved away from semiconductors into other parts of the market. Japanese bank shares climbed on growing expectation the Bank of Japan
will raise interest rates as early as next month, and as investors rotated into lagging value stocks. Chinese machinery stocks rose after President Xi Jinping urges scientists and researchers to enhance technological innovation with a greater sense of urgency.
Topix +1.7%, ASX 200 +1.4%, Sensex +0.9%, Philippines +0.4%, Singapore +0.4%, Kospi +0.35%, Taiwan +0.3%, Hang Seng Index +0.25%. CSI 300 -0.5%, Hang Seng Tech Index -0.6%.

FIXED INCOME: 
 

Treasury yields are narrowly mixed with the curve flatter following muted activity overnight. In core European rates, bunds and gilts outperform despite heavy auction
slate that included Italy, UK and Germany.  Federal Reserve Governor Michelle Bowman said this morning that she sees a number of upside risks to the inflation outlook and reiterated the need to keep borrowing costs elevated for some time. The US Treasury kicks
off this week’s trio of bond sales with an offering of $69 billion in two-year notes; 5- and 7-year notes follow over the next two days. US 10-year around 4.22% is richer by ~1bp on the day.  Long-end outperformance deepens inversion of 2s10s spread past 50bp
for first time since December.  

METALS: 

Gold steadied, remaining range-bound as investors cautiously await fresh macroeconomic and political developments, while weaker Chinese currency was supporting demand
in Asia. The market is particularly focused on the upcoming US Personal Consumption Expenditures Price Index for May, set to be released on Friday. Meanwhile, global physically-backed gold exchange traded funds saw inflows last week of $212 million, or 2.1
metric tons, according to the World Gold Council. It estimates the net outflows since the start of 2024 at $7.3B. Spot gold -0.2%, silver -0.2%, copper -0.3%.

ENERGY:   

Oil prices slipped as worries about China’s economic recovery prospects offset supply concerns stemming from tensions in the Middle East and Ukrainian attacks on
Russian refineries. Consumers in China, the world’s biggest oil importer, have been reluctant to spend amid concerns about their personal wealth fueled by a real estate slump, stunted wage growth and high youth unemployment.  Russia’s weekly crude exports
fell by the most in more than three months, due to maintenance at key ports. India’s state-owned refiners are seeking a term deal for Russian crude supplies following a similar agreement struck between Moscow and Reliance Industries.  WTI -0.6%, Brent -0.6%,
US Nat Gas -1.7%, RBOB -0.4%.

CURRENCIES:   

In currency markets, the dollar index traded within tight ranges against major currencies, while the yen gained for a second day. USD/JPY falls as much as 0.3%, hitting
the 159.19 session low as liquidity thinned out just after the Tokyo fix. Japan and South Korea agreed to seek ways to bolster their currency swap deal in an effort to address persistent weakness in both the yen and won that has exacerbated inflationary pressure
via import costs. US$ Index +0.1%, GBPUSD -0.05%, EURUSD -0.2%, USDJPY -0.1%, AUDUSD -0.1%, USDNOK +0.4%, USDCHF +0.1%.

Spot Bitcoin +2.7%, Ethereum +1.9%.

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
• Ascendis Pharma (ASND) ADRs Raised to Buy at TD Cowen; PT $175
• Ball (BALL) Raised to Buy at Truist Secs; PT $76
• C.H. Robinson (CHRW) Raised to Outperform at Evercore ISI; PT $99
• Capri Holdings (CPRI) Raised to Overweight at Wells Fargo; PT $43
• Comtech Telecom (CMTL) Raised to Hold at Jefferies; PT $3.50
• Credo Technology (CRDO) Raised to Buy at TD Cowen; PT $35
• Flotek Industries (FTK) Raised to Buy at Johnson Rice; PT $6
• Gap (GPS) Raised to Buy at TD Cowen; PT $30
• Honest Co. (HNST) Raised to Buy at Loop Capital; PT $3
• Inter&Co (INTR) Raised to Buy at Citi; PT $6.80
• Marqeta (MQ) Raised to Overweight at Wells Fargo; PT $7
• XPeng (XPEV) ADRs Raised to Neutral at Citi; PT $8.30
• Downgrades
• Alimera Sciences (ALIM) Cut to Neutral at HC Wainwright
• Cut to Hold at Craig-Hallum; PT $5.50
• Beyond Air Inc (XAIR) Cut to Neutral at BTIG
• DoubleVerify (DV) Cut to Equal-Weight at Morgan Stanley; PT $21
• Hub Group (HUBG) Cut to Inline at Evercore ISI; PT $44
• Old Dominion (ODFL) Cut to Inline at Evercore ISI; PT $196
• Penn Entertainment Inc (PENN) Cut to Market Perform at Raymond James
• ResMed (RMD) Cut to Market Perform at Oppenheimer
• Sea Ltd (SE) ADRs Cut to Neutral at JPMorgan; PT $78
• Victoria Gold (VGCX CN) Cut to Market Perform at BMO
• Initiations
• Blackstone Mortgage (BXMT) Reinstated Peerperform at Wolfe
• Celsius Holdings (CELH) Rated New Hold at Truist Secs
• Clearside Biomedical (CLSD) Rated New Outperform at Oppenheimer; PT $5
• Comcast (CMCSA) Reinstated Buy at Goldman; PT $44
• Disney (DIS) Reinstated Buy at Goldman; PT $125
• Diversified Energy (DEC LN) Rated New Buy at Truist Secs; PT $18
• Fox Corp (FOXA) Reinstated Buy at Goldman; PT $42
• FTAI Aviation (FTAI) Rated New Buy at Jefferies; PT $120
• Gossamer Bio (GOSS) Rated New Outperform at Oppenheimer; PT $9
• Keros Therapeutics (KROS) Rated New Outperform at Oppenheimer; PT $102
• Ladder Capital (LADR) Reinstated Outperform at Wolfe; PT $13
• Liquidia (LQDA) Rated New Perform at Oppenheimer
• MoonLake Immunotherapeutics (MLTX) Rated New Outperform at Oppenheimer
• Paramount Global (PARA) Reinstated Sell at Goldman; PT $9.50
• Rivian (RIVN) Rated New Buy at Guggenheim; PT $18
• SM Energy (SM) Rated New Hold at Truist Secs; PT $51
• Stagwell (STGW) Reinstated Neutral at Goldman; PT $6.50
• Starwood Property (STWD) Rated New Peerperform at Wolfe
• Viking Holdings (VIK) Rated New Buy at HSBC; PT $36
• Warner Bros Discovery (WBD) Reinstated Neutral at Goldman; PT $8.50
• Zeta (ZETA) Rated New Outperform at RBC; PT $20

Data sources: Bloomberg, Reuters, CQG