Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Personal Income, Personal Spending, PCE*, 8:40ET Fed’s Mary Daly appears on CNBC;
9:45ET MNI Chicago PMI:; 10:00ET U. of Mich. Sentiment: 11:00ET Kansas City Fed Services Activity; 12:00ET Fed’s Michelle Bowman speaks; 12:40ET Fed’s Daly speaks

*US MAY CORE PCE PRICE INDEX RISES 2.6% Y/Y; EST. +2.6%

HIGHLIGHTS and News:  

• Biden told reporters he intends to stay on the ticket
• PredictIt futures now indicate Trump has a 28-point lead over Biden; It was about 4 points yesterday

Global stocks rose ahead of US inflation data that investors hope will bolster the chances of a Federal Reserve interest rate cut in September. Economists expect
the Federal Reserve’s preferred inflation gauge, the core PCE Price Index, slowed to an annualized rate 2.6% last month from 2.8%. The MSCI All Country Stock Index edged higher and is up about 10.5% for the year. France heads to the polls for its first round
of voting on Sunday with Marine Le Pen’s far-right National Rally party continuing to widen its lead. Meanwhile, Iran votes for its next president today, with one of three hardliners expected to win. French inflation slowed slightly in June to 2.5%. Spain’s
index eased to 3.5% and in Italy it quickened to 0.9%, as expected. UK GDP growth was revised up to 0.7% in the first quarter.  

EQUITIES: Russell rebalance today

US equity futures gained as investors’ focus turned from the presidential debate to the PCE data, the Fed’s preferred inflation measure, that will likely solidify the case for lower interest
rates. Economists expect the core PCE index for May to slow to 2.6% from 2.8%, the lowest reading since March 2021. Dow futures lag as Nike tumbled post-market on a cautious revenue growth outlook. Apple’s China iPhone shipments rose 40% in May, off the previous
month’s pace of growth despite steep discounts. On the last trading day of the first half of the year, stocks hovered near recent record highs.   

Futures ahead of the bell: E-Mini S&P +0.3%, Nasdaq +0.3%, Russell 2000 +0.8%, DJI +0.02%.

Equal weight S&P 500

In pre-market trading, Nike (NKE) tumbles 14% after the sneaker company’s full-year outlook missed expectations, reinforcing investor concerns about waning demand and ground lost to German
rival Adidas AG. Accolade (ACCD) tumbles 27% after the software company cut its full year revenue guidance. Esperion (ESPR) rises 18% after saying it will receive about $304.7 million in cash from a royalty purchase agreement with OMERS Life Sciences. Infinera
(INFN) soars 19% after Nokia agreed to buy the maker of digital optical telecommunications equipment for $2.3B. Trump Media & Technology Group (DJT) jumps 13% following Thursday’s presidential debate between President Joe Biden and Donald Trump, with the latter
coming away looking stronger.

European gauges are mixed with shares in France underperforming as French political uncertainty weighs. The CAC  is lower, dragged lower by L’Oreal SA, which expects slower growth for
the overall beauty market this year. Britain’s economy pulled out of recession at a faster pace than previously thought in the first quarter, revised official data showed, but the broader economic backdrop remains fragile ahead of next week’s election. The
Stoxx 600 is flat, giving up early gains. Miners and energy sectors lead gains while chemicals and food & beverage shares decline. Stoxx 600 +0.02%, DAX +0.3%, CAC -0.6%, FTSE 100 +0.3%. Basic Resources +0.8%, Energy +0.75%, REITs +0.4%. Retail -0.6%, Food
& Bev -0.7%, Chemicals -0.7%.

Shares in Asia were mostly higher as the lack of hawkish comments in the US presidential debate offered some respite for Chinese stocks. The MSCI Asia Pacific Index gained 0.3%. Japan’s
Topix reached its highest level since 1990 due to a rally in financial firms, while tech heavy-markets such as Taiwan and South Korea also advanced. South Korea’s industrial production unexpectedly fell in May from April, pointing to slower GDP growth. In
Japan, output rose 2.8%, beating estimates.  China’s June PMIs, due Sunday, are expected to show manufacturing contracting at a slightly faster pace and services broadly stagnating. Indonesia +1.4%, Shanghai Composite +0.7%, Topix +0.6%, Taiwan +0.55%, Kospi
+0.5%, CSI 300 +0.2%, ASX 200 +0.1%, Hang Seng Index was flat. Sensex -0.3%, Singapore -0.3%, Vietnam -1.1%.

FIXED INCOME: 
 

Treasuries ease lower following similar losses seen in core European rates where French bonds underperform with the 10-year yield reaching its highest since November.
Worries about the outcome of the two-stage French parliamentary elections that start on Sunday pushed the risk premium on French government bonds over German bonds to its widest since the euro zone debt crisis in 2012.  US 10-year yields trade around 4.31%
ahead of the key PCE inflation data. Traders are now pricing in a 64% chance of a first Fed cut in September, up from 50% a month ago, according to the CME FedWatch tool. 

METALS: 

Gold inched higher ahead of an expected softer PCE reading that could bolster expectations for monetary easing and further support gold prices. Gold rose more than
1% in the previous session after data showed a slowdown in US economic activity. Meanwhile, Fed Governor Michelle Bowman maintained her stance that she is still not ready to support a central bank rate cut with inflation pressures still elevated. Spot gold
+0.3%, silver +1.4%.

ENERGY:   

Oil prices rose and are on course for a third straight weekly gain buoyed by growing expectations that the US Federal Reserve will soon start cutting interest rates.
Brent and WTI futures have gained roughly 2% this week, with both benchmarks on track for gains of slightly more than 6% month on month. Oil futures reached their highest levels in nearly two months, driven by escalating tensions in the Middle East, including
Israel’s potential war with Hezbollah and increased Houthi attacks on shipping. WTI +0.4%, Brent +0.3%, US Nat Gas +2.7%, RBOB +0.4%

CURRENCIES:   

In currency markets, the dollar was steady near an eight-month high, on track for a sixth weekly gain. The greenback initially rose as markets assessed former president
Trump was the victor in the debate with President Biden, whose performance intensified worries about his ability to win the November election. Japan got a new currency czar just as the yen traded near its weakest levels in almost four decades. The yen’s slide
to a 38-year low fueled expectations over intervention. US$ Index +0.03%, GBPUSD +0.05%, EURUSD ~flat, USDJPY -0.1%, AUDUSD +0.15%, NZDUSD -0.05%, USDCHF +0.15%.

Spot Bitcoin +0.3%, Ethereum +0.3%.

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
• Cincinnati Financial (CINF) Raised to Buy at Citi; PT $135
• Digital Realty (DLR) Raised to Overweight at JPMorgan; PT $175
• Equity Residential (EQR) Raised to Overweight at Piper Sandler; PT $80
• Guardant Health (GH) Raised to Buy at Guggenheim; PT $36
• International Paper (IP) Raised to Buy at Seaport Global Securities
• McCormick (MKC) Raised to Strong Buy at CFRA
• Polestar (PSNY) ADRs Raised to Strong Buy at CFRA
• SAP (SAP GR) ADRs Raised to Outperform at BMO; PT $237
• Downgrades
• Acuity Brands (AYI) Cut to Equal-Weight at Wells Fargo; PT $260
• Alphabet (GOOGL) Cut to Neutral at Rosenblatt Securities Inc; PT $181
• American Financial (AFG) Cut to Neutral at Citi; PT $137
• Chubb (CB) Cut to Underperform at William Blair
• Hartford Financial (HIG) Cut to Neutral at Citi; PT $114
• Infinera (INFN) Cut to Hold at Stifel; PT $6.65
• Nike (NKE) Cut to Market Perform at Raymond James
• Cut to Neutral at JPMorgan; PT $83
• Cut to Neutral at UBS; PT $78
• Cut to Equal-Weight at Morgan Stanley; PT $79
• Cut to Hold at Stifel; PT $88
• Sagimet Biosciences (SGMT) Cut to Neutral at Goldman; PT $6
• Sea Ltd (SE) ADRs Cut to Hold at DBS Bank; PT $75
• Travelers (TRV) Cut to Sell at Citi; PT $200
• Cut to Market Perform at William Blair
• Initiations
• Addus HomeCare (ADUS) Rated New Outperform at Macquarie; PT $136
• Affirm Holdings (AFRM) Rated New Market Perform at JMP
• AGCO (AGCO) Rated New Market Perform at Raymond James
• Allison Transmission (ALSN) Reinstated Outperform at Raymond James
• Array (ARRY) Rated New Positive at Susquehanna; PT $14
• BASF (BAS GR) ADRs Rated New Buy at Berenberg; PT $14.40
• Brookdale (BKD) Reinstated Outperform at Macquarie; PT $7.50
• CalciMedica (CALC) Rated New Buy at Rodman & Renshaw; PT $8
• Caterpillar (CAT) Reinstated Market Perform at Raymond James
• CNH Industrial (CNH) Rated New Market Perform at Raymond James
• Cummins (CMI) Reinstated Market Perform at Raymond James
• Deere (DE) Rated New Outperform at Raymond James; PT $420
• Donaldson (DCI) Rated New Market Perform at Raymond James
• Eaton Corp (ETN) Rated New Outperform at Raymond James; PT $375
• Ensign Group (ENSG) Rated New Outperform at Macquarie; PT $134
• Essential Properties (EPRT) Reinstated Buy at Goldman; PT $33
• First Community Bankshares (FCBC) US Rated New Market Perform at Hovde Group; PT $38
• H&E Equipment (HEES) Rated New Market Perform at Raymond James
• Intuitive Machines (LUNR) Rated New Buy at B Riley; PT $8
• Madrigal Pharma (MDGL) Rated New Neutral at Cantor
• Merit Medical (MMSI) Rated New Outperform at Baird; PT $96
• MFS Charter Income Trust (MCR) Rated New Equal-Weight at Wells Fargo
• Middleby (MIDD) Rated New Market Perform at Raymond James
• Nektar (NKTR) Rated New Neutral at Rodman & Renshaw; PT $2
• NEXTracker (NXT) Rated New Positive at Susquehanna; PT $59
• Orrstown (ORRF) Rated New Buy at Janney Montgomery; PT $32
• Paccar (PCAR) Reinstated Market Perform at Raymond James
• Pacs Group (PACS) Rated New Outperform at Macquarie; PT $35
• PagerDuty Inc (PD) Rated New Sector Perform at Scotiabank
• Parker-Hannifin (PH) Rated New Outperform at Raymond James; PT $610
• RBC Bearings (RBC) Rated New Market Perform at Raymond James
• Regal Rexnord (RRX) Rated New Market Perform at Raymond James
• Simulations Plus (SLP) Rated New Outperform at William Blair
• Surgery Partners (SGRY) Rated New Outperform at Macquarie; PT $31
• Synchrony Financial (SYF) Rated New Outperform at Baird; PT $56
• Syndax Pharmaceuticals (SNDX) Rated New Buy at Jefferies; PT $37
• Terex (TEX) Reinstated Market Perform at Raymond James
• Timken (TKR) Rated New Market Perform at Raymond James
• United Rentals (URI) Rated New Outperform at Raymond James; PT $750
• VSE (VSEC) Rated New Buy at Stifel; PT $101
• Xerox (XRX) Rated New Sell at Citi; PT $11
• Y-mAbs (YMAB) Rated New Buy at Truist Secs; PT $21

Data sources: Bloomberg, Reuters, CQG