Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET CPI*, Initial Jobless Claims, Hourly Earnings, Blinken meets with G-7 foreign ministers;
11:15ET Fed’s Raphael Bostic speaks; 1:00ET 30-Year Bond Auction, Fed’s Musalem speaks   

HIGHLIGHTS and News:  

• Biden is holding an unscripted press conference today, his first solo news conference in ~eight months
  
• Democratic donors warned that funding for the November election effort is “drying up” – FT
• US to transfer ~3,000 medium-weight bombs with precision armament to Israel from frozen shipment
• The NBA has finalized an 11-year TV rights deal worth $76B with NBC, Amazon, and ESPN
• HAMAS SAY HAVEN’T YET RECEIVED ANY UPDATES ON CEASE-FIRE TALKS
  

Global stocks hit new all-time highs as traders counted down to US data that is expected to show inflation easing and pave the way for the Fed to start its long-awaited
interest rate cut cycle as soon as September. After all-time highs in both the US and Tokyo indexes overnight, MSCI’s main all-country world index scaled its own new record peak. The Bank of Korea stood pat on interest rates but left out a warning on inflation,
while telling reporters that it was time to prepare to pivot to rate cuts. Malaysia held its rates steady too. Japan’s core machinery orders unexpectedly fell for a second straight month in May, government data showed, stoking worries about the sustainable
recovery needed for the Bank of Japan to raise interest rates. The UK economy grew 0.4% in May from April, twice the pace expected and the fastest in almost a year.       

EQUITIES:

US equity futures fluctuated as traders awaited inflation data for reassurance that bets on Federal Reserve interest rate cuts are warranted. The core CPI reading Thursday is expected
to rise 0.2% in June for a second month. That would mark the smallest back-to-back gains since August. Meanwhile, Goldman Sachs strategists said investors are growing increasingly concerned that US technology megacaps are spending too much on artificial intelligence.
Valuations could be due for a de-rating unless revenue and earnings rise to justify the capex spending, they said. Meanwhile, Joe Biden’s reelection bid faces mounting opposition within his party. Chuck Schumer privately signaled to donors he’s open to replacing
him as the nominee, Axios reported.

Futures ahead of the data: E-Mini S&P -0.15%, Nasdaq -0.1%, Russell 2000 +0.05%, DJI -0.2%.

In pre-market trading, Costco (COST) rises 2% after hiking its membership fee for the first time since 2017. Pfizer shares rose after it advanced the development of its once-daily weight-loss
pill. Airline stocks drop after Delta Air Lines (DAL -9%) forecast a quarterly profit short of Wall Street’s expectations as heavy competition in the domestic market drives ticket prices down. Alcoa (AA) gains 2% after the aluminum producer provided preliminary
2Q results. PepsiCo (PEP) slipped 2% after reporting weaker-than-expected revenue. Pfizer (PFE) rises 2% after the drugmaker said it is advancing the development of its once-daily weight-loss pill, danuglipron. QuantumScape (QS) soars 30% after entering a
pact with Volkswagen Group’s battery company PowerCo for lithium-metal technology. WD-40 (WDFC) climbs 12% after the oil lubricant maker reported third-quarter earnings per share that beat the average analyst estimate.

Big bank earnings tomorrow. The KBWB bank ETF has been underperforming the S&P 500, hovering at the 200dma in KBWB vs SPY.

European gauges edged higher, extending gains into a second day, ahead of a key US inflation print that’s expected to show price pressures continuing to ease. Europe’s Stoxx 600 advanced,
led by utilities and consumer products and services. DNB Bank ASA surged over 5% after the Norwegian lender reported earnings that beat analysts’ estimates. Swiss chocolate maker Barry Callebaut AG dropped more than 10% after disappointing results affected
by high cocoa-bean prices. In Europe, analysts have been revising earnings slightly lower, and some reckon earnings disappointment could be the catalyst for some equity-market softness. Stoxx 600 +0.3%, DAX +0.3%, CAC +0.4%, FTSE 100 +0.2%. Utilities +0.9%,
Fin Services +0.6%, Construction +0.5%. Media -0.5%, Energy -0.3%.

Shares in Asia gained following the rally in the US as tech boosts a risk-on mood. Japan’s Nikkei 225 rose to a new record high, as did Taiwan’s main index, as Australia’s ASX 200 closed
within a whisker of its all-time top. The MSCI Asia Pacific Index rose 1.1%, with TSMC the biggest boost. Taiwan Semiconductor Manufacturing Co. traded at record levels after the sole supplier of the most-advanced chips for Nvidia and Apple said second-quarter
sales grew the fastest since 2022. Equities in mainland China and Hong Kong rebounded. Chinese authorities cracked down further on short selling, with higher margin requirements for the activity. Hang Seng Index +2.1%, Philippines +1.8%, Taiwan +1.6%, CSI
300 +1.1%, Nikkei 225 +0.9%, ASX 200 +0.9%, Kospi +0.8%, Sensex ~flat, Vietnam -0.2%.

FIXED INCOME: 
 

Bond markets are broadly steady with price action muted ahead of June CPI data. European bonds lag, led by gilts after UK GDP rose 0.4% in May, double the median
estimate. Along with CPI, US session includes 30-year bond auction at 1pm, following good results earlier this week for 3- and 10-year offerings. Yields are mixed across the curve but within 1bp of Wednesday’s closing levels. US 10-year is around 4.29%.

METALS: 

Gold edged higher for a third day in choppy trade ahead US CPI data. Gold is benefiting from further emerging data showing that central banks are continuing to hoard
all over the world. This comes despite the news on Sunday that the largest consumer of Gold, the People’s Bank of China, stopped buying the precious metal for the second month running in June, following an 18-month buying spree. Spot gold +0.4%, silver +0.3%.

ENERGY:   

Oil climbed for a second day as a decline in US crude inventories countered the IEA’s call that demand growth is slowing. Global oil demand growth will slow to just
under a million barrels per day this year and next, the International Energy Agency said, as Chinese consumption contracted in the second quarter due to economic problems. “China’s pre-eminence is fading. Last year the country accounted for 70% of global demand
gains – this will decline to around 40% in 2024 and 2025,” the IEA said. The IEA left its forecast for relatively low oil demand growth this year largely unchanged from its outlook last month. WTI +0.3%, Brent +0.4%, US Nat Gas -0.4%, RBOB +0.2%.

CURRENCIES:   

In currency markets, the dollar struggled for direction ahead of US inflation data. Sterling rose to a nearly one year high after British GDP data beat expectations
and after the Bank of England’s chief economist on Wednesday sounded more vague about the timing of rate cuts than many traders had expected. The New Zealand dollar continued to find support at its 200-day moving average, while the Australian dollar rose 0.2%
to a six-month high. China’s yuan rallied from an almost eight-month low. US$ Index -0.2%, GBPUSD +0.2%, EURUSD +0.2%, USDJPY -0.1%, AUDUSD +0.05%, NZDUSD +0.05%, USDNOK +0.6%.

Spot Bitcoin +2.2%, Ethereum +1.6%.

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
• Astrana Health Inc (ASTH) Raised to Buy at Truist Secs; PT $50
• Atlassian (TEAM) Raised to Overweight at Capital One; PT $211
• Big Lots (BIG) Raised to Hold at Loop Capital; PT $1
• Bilibili (BILI) ADRs Raised to Buy at BOC Intl; PT $20
• Itron (ITRI) Raised to Buy at Guggenheim; PT $130
• Owens Corning (OC) Raised to Buy at Citi; PT $191
• Republic Services (RSG) Raised to Buy at Truist Secs; PT $220
• Spotify (SPOT) Raised to Buy at Jefferies; PT $385
• Vivo (VIVT3 BZ) ADRs Raised to Overweight at Morgan Stanley; PT $11
• Downgrades
• Albemarle (ALB) Cut to Equal-Weight at Wells Fargo; PT $100
• Chuy’s Holdings (CHUY) Cut to Hold at Jefferies; PT $24
• Darden (DRI) Cut to Underperform at Jefferies; PT $124
• Innoviz Technologies (INVZ) Cut to Neutral at Goldman; PT $1
• Interactive Brokers (IBKR) Cut to Market Perform at KBW; PT $135
• Lamar (LAMR) Cut to Neutral at Citi; PT $122
• Microchip (MCHP) Cut to Equal-Weight at Morgan Stanley
• ON Semi (ON) Cut to Underweight at Morgan Stanley
• Ryan Specialty (RYAN) Cut to Equal-Weight at Wells Fargo; PT $60
• Starbucks (SBUX) Cut to Negative at OTR Global
• Tenaris (TEN IM) ADRs Cut to Underperform at Grupo Santander; PT $35
• Trilogy Metals (TMQ CN) Cut to Hold at TD Cowen
• United Therapeutics (UTHR) Cut to Equal-Weight at Morgan Stanley
• Williams-Sonoma (WSM) Cut to Sell at CFRA
• Initiations
• Citizens Financial (CFG) Rated New Market Perform at Raymond James
• CoreCivic (CXW) Rated New Hold at JonesTrading
• Digital Realty (DLR) Rated New Outperform at Mizuho Securities
• DoorDash (DASH) Rated New Sector Weight at KeyBanc
• Equinix (EQIX) Rated New Outperform at Mizuho Securities; PT $873
• Geo Group (GEO) Rated New Buy at JonesTrading; PT $18.75
• Instacart (CART) Rated New Sector Weight at KeyBanc
• NiSource (NI) Rated New Outperform at Mizuho Securities; PT $33
• Ribbon (RBBN) Rated New Buy at Rosenblatt Securities Inc; PT $5
• Saturn Minerals (SOIL CN) Rated New Sector Perform at National Bank
• Stella-Jones (SJ CN) Rated New Buy at Veritas Investment Research Co
• Unum (UNM) Rated New Overweight at Piper Sandler; PT $57
• Vanda Pharma (VNDA) Rated New Overweight at Cantor; PT $11
• Zapata Computing (ZPTA) Rated New Speculative Buy at Benchmark

Data sources: Bloomberg, Reuters, CQG