Daily Game Plan

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

TODAY’S ECONOMIC DATA:  10:00ET Fed’s Jerome Powell speaks, Wholesale Trade Sales, Inventories; 1:00ET 10-Year Note
Auction; 1:30ET Biden/Zelensky meet; 2:30ET Fed’s Austan Goolsbee and Michelle Bowman speak

HIGHLIGHTS and News:  

• Swap traders continue to project two rate cuts in 2024
• AI-demand boosted TSMC’s sales growth by 40% in Q2 for the sole supplier of Nvidia and Apple’s most advanced chips
  
• Elon Musk defeated a $500mm severance lawsuit over the firing of 6,000 Twitter employees after his 2022 takeover
• Argentina coasted into the Copa America final after a 2-0 victory over Canada

Global stocks firmed after Fed Chair Powell was careful not to offer a timeline for interest-rate cuts but emphasized mounting signs of a cooling job market in remarks
to lawmakers on Tuesday. A high-profile gathering of China’s top leaders next week will be keenly watched as the latest inflation readings pointed to persistent deflationary pressure. China’s CPI unexpectedly cooled to 0.2% in June, underscoring the risk deflation
poses to the economic recovery. Factory-gate prices fell 0.8%, extending a run of declines that began in 2022. Brazil’s Lula da Silva pledged his government will reduce the fiscal deficit without affecting public spending. Reuters reported the BOJ will probably
trim this year’s growth forecast and maintain its inflation outlook in July.      

EQUITIES:

US equity futures edged higher after the S&P 500 climbed for a sixth consecutive session on Tuesday, its longest winning streak since January. Further Congressional testimony by the Fed
Chairman today, and key US inflation and jobs data tomorrow, may provide further clues on US policy path. In corporate news, Honeywell has struck a deal to acquire the liquefied natural-gas process technology and equipment business from Air Products for ~$1.8B.
Microsoft and Apple dropped plans to take board roles at OpenAI in a surprise decision that underscores growing regulatory scrutiny of Big Tech’s influence over artificial intelligence.      

Futures ahead of the bell: E-Mini S&P +0.3%, Nasdaq +0.4%, Russell 2000 +0.5%, DJI +0.1%.

In pre-market trading, Tesla shares rose as much as 1.2%, set to extend gains for an 11th consecutive session, as Goldman Sachs raised its target on the EV maker to $248 from $175 following
better-than-expected 2Q deliveries. Smart Global (SGH) climbs 6% after the semiconductor device company reported third-quarter results that beat expectations. Aehr Test Systems (AEHR) climbs 16% after the company reported preliminary fourth-quarter revenue
that exceeded estimates. LegalZoom.com (LZ) drops 30% after the legal services company cut its full-year revenue guidance and replaced its CEO. Walmart (WMT) advanced 0.3% after Piper Sandler assumed coverage on the retailer with an overweight recommendation,
noting that it’s in the “early stages of an unprecedented profit growth acceleration for a large and mature retailer.”  Illumina (ILMN) +3.5% after the gene-sequencing company said it has acquired Fluent BioSciences – a developer of single-cell technology.
Shares of competitor 10X Genomics (TXG) slump as much as 16% before the open on the news. Riskified (RSKD) falls 7% after Goldman Sachs cut its recommendation to sell.

TSLA relative to the Consumer Discretionary ETF, XLY

European gauges advanced, tracking a fresh record for US equities, as focus turns to testimony by Federal Reserve Chair Jerome Powell. The Stoxx 600 grinds higher with real estate outperforming,
while chemicals and media lag. France’s CAC 40 Index outperforms after three sessions of declines. Among individual stock moves in Europe, Spanish utility Enagas SA climbed more than 4% after agreeing to sell its 30% stake in US pipeline firm Tallgrass Energy
to Blackstone Infrastructure Partners. HSBC Holdings is revamping parts of its investment bank in a move that will make it look more like rivals such as Citigroup. Volkswagen declined after the German carmaker issued a profit warning. Stoxx 600 +0.5%, DAX
+0.6%, CAC +0.7%, FTSE 100 +0.5%. REITs +2%, Travel & Leisure +1.4%, Telecomm +1.2%. Chemicals -0.3%, Media -0.2%.

Shares in Asia were mixed as major markets saw varied moves following Federal Reserve Chairman Jerome Powell’s testimony to Congress. The MSCI Asia Pacific Index traded in a tight range,
ending flat on the day, while Singapore shares closed at a six-year high.  Japanese stocks gained, led by insurance and bank shares on speculation the BOJ will further tighten monetary policy after megabanks called for deep cuts to its debt purchases. Benchmarks
in Hong Kong and mainland China reversed earlier gains to end lower on the day. Baidu’s shares jumped as much as 13% in Hong Kong on signs of growing popularity for its Apollo Go Robotaxi in China. TSMC gained as second-quarter sales grew at their fastest
pace since 2022, buoyed by the AI boom that’s fueling data center investment worldwide.  Singapore +1%, Nikkei 225 +0.6%, Taiwan +0.4%, Indonesia +0.2%, Kospi was flat. ASX 200 -0.15%, Hang Seng Index -0.3%, CSI 300 –0.3%, Sensex -0.5%, Vietnam -0.6%, Philippines
-1%.

FIXED INCOME: 
 

Treasury yields dip amid a bigger bull-flattening move in European bonds in the wake of Jerome Powell’s cautious comments yesterday. Yields on two-year Treasuries
traded near a three-month low, spurring a popular bet that the US yield curve will normalize toward a steeper slope. Bond traders have been increasingly betting on a rally in the US Treasury market, with open interest in 10-year note futures rising every day
in July. US session features a 10-year note reopening as well as Fed Chair Powell’s testimony to the House Financial Services Committee. Tuesday’s 3-year sale drew strong demand, stopping through by 0.8bp. 10-year yield around 4.27% is more than 2bp richer
on the day. 2s10s and 5s30s spreads are tighter by ~1bp, unwinding a portion of Tuesday’s curve-steepening move.

METALS: 

Gold rose following testimony from US Federal Reserve Chair Jerome Powell that sustained expectations for an interest-rates pivot this year. Powell stated that the
US jobs market has “cooled considerably,” a key focus for the central bank as it seeks to tame inflation before easing policy. Focus now turns to consumer-price index data on Thursday. Spot gold +0.5%, silver +0.7%.

ENERGY:   

Oil prices are steady, recovering from earlier losses. Data from China, the world’s largest oil importer, revealed ongoing economic hurdles. Factory-gate prices continued
to fall, indicating persistent deflationary pressures. This follows earlier signals of diminished crude appetite from some Chinese refiners. Key OPEC+ nations Iraq, Kazakhstan and Russia continue to pump above output limits intended to shore up global oil
prices, the group’s data showed. While Russia made a noticeable cutback in June, the three countries are still collectively supplying several hundred thousand barrels a day above quotas set at the start of the year, according to a monthly report from OPEC+. 
WTI -0.05%, Brent -0.1%, US Nat Gas +1%, RBOB -0.5%.

CURRENCIES:   

In currency markets, the Norwegian krone underperforms G-10 FX after underlying inflation fell to the lowest level in more than two years.  The New Zealand dollar
also underperforms after the Reserve Bank toned down its hawkish rhetoric, suggesting it could ease monetary policy sooner than previously signaled. The US$ Index -0.05%, GBPUSD +0.15%, EURUSD +0.1%, USDJPY +0.1%, AUDUSD ~flat, NZDUSD -0.7%, USDNOK +1.2%

Spot Bitcoin %, Ethereum %. Crypto stocks rise pre-market as bitcoin rises for a second straight day.

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
• Agilent (A) Raised to Buy at Citi; PT $150
• Artemis Gold (ARTG CN) Raised to Outperform at CIBC; PT C$13.50
• Braze (BRZE) Raised to Sector Outperform at Scotiabank; PT $56
• Brighthouse Financial (BHF) Raised to Buy at Jefferies; PT $54
• Canadian National (CNR CN) Raised to Sector Outperform at Scotiabank
• Canadian Pacific Kansas (CP CN) Raised to Sector Outperform at Scotiabank; PT C$130
• Carvana (CVNA) Raised to Buy at Needham; PT $160
• Endeavour Mining (EDV CN) Raised to Outperform at CIBC; PT C$45
• Illumina (ILMN) Raised to Buy at Citi; PT $140
• Ivanhoe Mines (IVN CN) Raised to Overweight at Nedbank CIB; PT C$23
• Newmont Corp (NEM) Raised to Outperform at CIBC; PT $61
• Paymentus (PAY) Raised to Outperform at Baird; PT $23
• PennyMac Mortgage (PMT) Raised to Outperform at KBW; PT $15.50
• Quest Diagnostics (DGX) Raised to Buy at Citi; PT $165
• Sunstone Hotel (SHO) Raised to Outperform at Wolfe; PT $12
• Downgrades
• 10X Genomics (TXG) Cut to Hold at Deutsche Bank; PT $25
• Aaron’s Co (AAN) Cut to Hold at Jefferies; PT $10.10
• Avantor (AVTR) Cut to Neutral at Citi; PT $23
• Centerra Gold (CG CN) Cut to Neutral at CIBC; PT C$13
• FTAI Aviation (FTAI) Cut to Peerperform at Wolfe
• Glaukos (GKOS) Cut to Neutral at Citi; PT $132
• Helen of Troy (HELE) Cut to Neutral at DA Davidson; PT $67
• Hudson Pacific (HPP) Cut to Underweight at Morgan Stanley; PT $4.25
• LegalZoom (LZ) Cut to Market Perform at JMP
• Cut to Neutral at JPMorgan; PT $9
• Lennox (LII) Cut to Equal-Weight at Wells Fargo; PT $570
• Mastercard (MA) Cut to Neutral at BofA
• Spirit Aero (SPR) Cut to Peerperform at Wolfe
• Spotify (SPOT) Cut to Sell at Redburn; PT $230
• Super Micro Computer (SMCI) Cut to Neutral at Nomura
• Visa (V) Cut to Neutral at BofA
• Warner Music (WMG) Cut to Sell at Redburn; PT $24
• Western Midstream Partners (WES) Cut to Hold at Stifel; PT $39
• Yum China (YUMC) Cut to Negative at OTR Global
• Initiations
• 10X Genomics (TXG) Rated New Hold at Nephron Research; PT $22
• Applied Materials (AMAT) Rated New Buy at President Capital Management
• Atkore (ATKR) Rated New Overweight at KeyBanc; PT $175
• Azenta Inc (AZTA) Rated New Sell at Nephron Research; PT $43
• Bausch + Lomb (BLCO CN) Bausch + Lomb Rated New Outperform at Raymond James; PT $19
• Bausch Health (BHC CN) Rated New Market Perform at Raymond James; PT $8
• Bio-Techne (TECH) Rated New Buy at Nephron Research; PT $90
• CareDx (CDNA) Rated New Hold at Nephron Research; PT $15
• Collective Mining (CNL CN) Rated New Buy at Roth MKM; PT C$5
• Core Scientific (CORZ) Rated New Outperform at Bernstein(Earlier)
• Daiichi Sankyo (4568 JP) ADRs Rated New Buy at TD Cowen; PT $40
• Elanco Animal Health (ELAN) Rated New Buy at Nephron Research; PT $21
• Encompass Health (EHC) Rated New Outperform at Leerink; PT $100
• Fluence Energy (FLNC) Rated New Buy at Truist Secs; PT $25
• Hillenbrand (HI) Rated New Overweight at KeyBanc; PT $50
• Idexx Labs (IDXX) Rated New Hold at Nephron Research; PT $542
• Iris Energy (IREN) Rated New Outperform at Bernstein; PT $17(Earlier)
• J Jill Inc (JILL) Rated New Buy at BTIG; PT $44
• Lexaria Bioscience (LEXX) Rated New Buy at HC Wainwright; PT $10
• Mineralys Therapeutics (MLYS) Rated New Buy at HC Wainwright; PT $30
• Natera (NTRA) Rated New Buy at Nephron Research; PT $147
• NeoGenomics (NEO) Rated New Hold at Nephron Research; PT $16
• Neogen (NEOG) Rated New Buy at Nephron Research; PT $23
• Quanterix (QTRX) Rated New Buy at Nephron Research; PT $23
• Repligen (RGEN) Rated New Buy at Nephron Research; PT $170
• Rexford Industrial (REXR) Rated New Outperform at Evercore ISI; PT $54
• Smurfit WestRock (SW) Rated New Equal-Weight at Wells Fargo; PT $53
• Twist Bioscience (TWST) Rated New Buy at Nephron Research; PT $62
• Ulta Beauty (ULTA) Rated New Buy at President Capital Management
• Veracyte (VCYT) Rated New Buy at Nephron Research; PT $31
• West Pharma (WST) Rated New Hold at Nephron Research; PT $375
• Zoetis (ZTS) Rated New Buy at Nephron Research; PT $225

Data sources: Bloomberg, Reuters, CQG