Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Chicago Fed Nat Activity Index, Philadelphia Fed Non-Manufacturing Activity; 11:30ET
VP Harris speaks  

HIGHLIGHTS and News:  

• Secret Service Director Kimberly Cheatle will appear before the House Oversight Committee today
• 30 million people are under heat advisories or excessive heat warnings through Wednesday
• Kamala Harris won the backing of Biden as well as Bill & Hillary Clinton, Gavin Newsom and George Soros; Barack Obama and Nancy Pelosi didn’t endorse a replacement
  
• Since 1928, the S&P 500 has advanced roughly 5% on average in the third quarter of election years

Global equities steadied after President Biden’s decision to bow out of the election race at the weekend injected a degree of optimism into the markets, while a surprise
rate cut by China’s central bank failed to give Asian markets any energy. The PBOC cut the seven-day reverse repo rate in the first reduction in almost a year. Chinese banks followed the move by lowering their main benchmark lending rates, making it less costly
to borrow for mortgages and other loans. It comes a day after the party published a sweeping document upholding President Xi Jinping’s plan to put technology at the center of China’s economic future while tolerating slower growth in the near term. Elsewhere
this week, traders will be focused on economic activity data in Europe, US second-quarter growth and a Bank of Canada rate decision.              

EQUITIES:  

US equity futures are higher after a muted reaction to Biden’s exit from the presidential race. US tech stocks are poised to rebound from their worst week since April as investors looked
beyond Joe Biden ending his presidential reelection campaign and mainly focused on earnings. In a packed week of corporate earnings, Tesla and Alphabet will be the first of the “Magnificent Seven” to report on Tuesday. Nvidia shares rise premarket amid reports
the company is working on a version of its new flagship AI chips for the China market that will be compatible with current US export controls. Tesla, Google and many other big Nasdaq firms also rose. Delta canceled more than 200 flights today, FlightAware
data shows, as the fallout from CrowdStrike outage continues. Investors will turn their focus to US second-quarter growth data and the Fed’s preferred measure of inflation later in the week.

Futures ahead of the bell: E-Mini S&P +0.6%, Nasdaq +1%, Russell 2000 +0.55%, DJI +0.2%

In pre-market trading, 10X Genomics (TXG) climbs 4% after Jefferies raised its rating to buy on conviction of a recovery in the firm’s single-cell sequencing business. Bank of America
(BAC) slips 1% after Warren Buffett’s Berkshire Hathaway sold about 34 million shares. CrowdStrike (CRWD) falls 4% as Guggenheim cut its rating to neutral. Globe Life (GL) gains 1% after saying its audit committee completed its review of allegations raised
by short sellers Fuzzy Panda Research and Viceroy Research, and determined there is no merit to the short sellers’ various allegations regarding financial accounting. Tellurian (TELL) soars 64% after Woodside Energy Group agreed to buy the US liquefied natural
gas project developer. ON Semiconductor (ON) gains 2% after the company announced a multi-year pact with Volkswagen Group. Verizon Communications (VZ) slips 3% after posting 2Q results.

European gauges added to early gains as they look to snap a five-day losing streak. The Stoxx Europe 600 index is up more than 1% after dropping 2.7% last week, with technology, chemicals
and consumer product shares leading gains. Among individual names, Ryanair Holdings fell 15% after the Irish budget carrier cut its outlook for ticket prices in the crucial summer travel period as consumers grow more cautious. Rivals EasyJet and IAG SA also
fell, dragging down the travel and leisure subindex. Europe’s biggest banks report this week, with focus on whether the gains from higher interest rates have run out of steam. ECB Governing Council member Gabriel Makhlouf said at the weekend that a rapid interest-rate
action from the central bank isn’t required. Stoxx 600 +1.15%, DAX +1.4%, CAC +1.4%, FTSE 100 +0.8%. Technology +1.6%, Chemicals +1.6%, Industrial Goods +1.6%. Travel & Leisure -1.6%, REITs -1%.

Asian stocks continued to be dragged lower by a weak tech sector ahead of key corporate earnings.  Chinese stocks fell, as investors continued to express disappointment at a lack of strong
stimulus measures from a recent major Communist Party meeting. The MSCI Asia Pacific Index fell 0.7%, with TSMC and Samsung among the biggest contributors to the decline. Taiwan’s benchmark index was the worst performer in the region, taking its 4-day plunge
to more than 7%. Hong Kong stocks climbed, outperforming the region. Morgan Stanley recommended investors take profits on Asian and emerging-market tech and pivot to consumer staples. Taiwan -2.7%, Philippines -1.2%, Topix -1.15%, Kospi -1.15%, Vietnam -0.8%,
CSI 300 -0.7%, ASX 200 -0.5%, Sensex -0.1%. Indonesia +0.4%, Hang Seng Index +1.25%, Hang Seng Tech Index +2.1%.

FIXED INCOME: 
 

Treasuries are mixed with the short-end underperforming, as investors awaited key economic data slated for the week and markets considered the latest US political
developments. There was muted market reaction to weekend upheaval in the US presidential race. Long-dated yields are lower by as much as 2.5bp, off session lows, with short maturities little changed; 2s10s and 5s30s curve spreads are flatter by ~2bps and near
the low end of last week’s range. Curve-flattening has support from Treasury auction cycle beginning Tuesday with $69b 2-year new issue. According to CME Group’s FedWatch tool, traders were last pricing in around a 96% chance of a September rate cut. 10 year
yield ~4.2%.   

METALS: 

Gold held steady as markets reacted to President Biden’s decision to end his reelection bid, sparking fresh questions about the impact on Donald Trump’s chances of
returning to the White House. A potential Trump victory could support the dollar and increase Treasury yields, typically headwinds for gold.  On the data front, China’s gold imports plunged 60% to less than 59 tons in June, the lowest in more than two years.
Spot gold +0.1%, silver -0.7%.

ENERGY:   

Oil prices edged lower, struggling to recover from a selloff last week that saw crude fall to five-week lows on concerns about the outlook for demand from China.
Meanwhile, there was little sign of progress on a ceasefire deal in Gaza as Israeli forces battled Palestinian fighters in the southern city of Rafah on Sunday. Expectations for a November victory by Donald Trump have been cited as a positive for fossil fuels
and the energy sector – though his calls to expand drilling could be a negative for crude prices. Kamala Harris is seen as a tougher opponent of the oil industry than Biden. WTI -0.3%, Brent -0.3%, US Nat Gas +3%, RBOB -0.2%.

CURRENCIES:   

In currency markets, the yen is the strongest of the G-10 currencies while the Aussie$ underperforms. The dollar slipped after Joe Biden ended his reelection campaign
and endorsed Vice President Kamala Harris. NZD/USD is lower after reversing an earlier gain of 0.3% as New Zealand’s trade surplus widened in June. JPMorgan Chase is warning the pound’s peer-beating rally could be vulnerable to a correction, as bullish bets
in the currency climb to a record high. US$ Index -0.1%, GBPUSD +0.2%, EURUSD +0.05%, USDJPY -0.5%, AUDUSD -0.3%, NZDUSD -0.2%, USDCHF -0.1%.

Spot Bitcoin +0.2%, Spot Ethereum -0.2%. Bitcoin steadied after having fallen on Sunday following Biden’s announcement.

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
• 10X Genomics (TXG) Raised to Buy at Jefferies; PT $24
• Abercrombie & Fitch (ANF) Raised to Overweight at JPMorgan; PT $194
• Autoliv (ALV) Raised to Buy at Danske Bank Markets; PT $120
• EastGroup (EGP) Raised to Outperform at Wedbush; PT $208
• Fiserv (FI) Raised to Overweight at Morgan Stanley; PT $175
• Henry Schein (HSIC) Raised to Outperform at Baird; PT $92
• Independent Bank Corp (INDB) Raised to Buy at Seaport Global Securities
• International Flavors (IFF) Raised to Buy at Stifel; PT $115
• PagSeguro (PAGS) Raised to Outperform at Itau BBA; PT $16
• Portland General (POR) Raised to Overweight at KeyBanc; PT $52
• Selective Insurance (SIGI) Raised to Outperform at KBW; PT $99
• Stag Industrial (STAG) Raised to Outperform at Wedbush; PT $44
• Downgrades
• Chuy’s Holdings (CHUY) Cut to Neutral at Wedbush; PT $37.50
• Comerica (CMA) Cut to Hold at Truist Secs; PT $53
• Con Edison (ED) Cut to Underweight at Barclays; PT $92
• CrowdStrike (CRWD) Cut to Sector Perform at Scotiabank; PT $300
• Cut to Neutral at President Capital Management
• Cut to Neutral at Guggenheim
• Estee Lauder (EL) Cut to Market Perform at Raymond James
• Fidelity National (FIS) Cut to Equal-Weight at Morgan Stanley
• Hippo Holdings (HIPO) Cut to Market Perform at KBW; PT $20
• Interpublic (IPG) Cut to Underweight at Morgan Stanley; PT $28
• Lennar (LEN) Cut to Neutral at Goldman; PT $174
• Mr Cooper (COOP) Cut to Market Perform at KBW; PT $95
• Nubank (NU) Cut to Neutral at JPMorgan; PT $14.50
• PennyMac (PFSI) Cut to Market Perform at KBW; PT $102
• Redwire (RDW) Cut to Neutral at B Riley; PT $8
• Savers Value Village (SVV) Cut to Neutral at JPMorgan; PT $12
• Stifel Financial (SF) Cut to Peerperform at Wolfe
• Texas Capital (TCBI) Cut to Sell at Citi; PT $60
• Initiations
• AES Corp (AES) Rated New Buy at Baptista Research; PT $22.80
• Amphenol (APH) Rated New Buy at Freedom Capital; PT $78
• AnaptysBio (ANAB) Rated New Buy at HC Wainwright; PT $55
• Axsome Therapeutics (AXSM) Rated New Buy at Needham; PT $130
• Benitec Biopharma (BNTC) Rated New Outperform at Leerink; PT $13
• Berkshire Hathaway (BRK/A) Rated New Hold at TD Cowen; PT $465
• Bridgeline Digital (BLIN) Rated New Hold at WestPark Capital; PT $1
• Burke & Herbert Financial Services (BHRB) US Rated New Market Perform at KBW; PT $66
• Cargo Therapeutics (CRGX) Rated New Buy at HC Wainwright; PT $33
• Celcuity (CELC) Rated New Outperform at Leerink; PT $29
• Corbus Pharmaceuticals (CRBP) Resumed Buy at HC Wainwright; PT $80
• Driven Brands (DRVN) Rated New Market Perform at BMO; PT $14
• Enovix (ENVX) Rated New Buy at Benchmark; PT $25
• Essential Utilities (WTRG) Rated New Hold at Baptista Research; PT $45
• Evergy (EVRG) Rated New Hold at Baptista Research; PT $60.10
• Futu Holdings (FUTU) ADRs Reinstated Buy at GF Securities; PT $88.68
• LexinFintech (LX) ADRs Rated New Add at Huatai Research; PT $2.10
• Lyft (LYFT) Rated New Hold at Melius; PT $15
• nCino (NCNO) Rated New Market Outperform at JMP; PT $43
• Neumora Therapeutics (NMRA) Rated New Buy at Needham; PT $23
• Talos Energy (TALO) Rated New Buy at Goldman; PT $14
• Tamboran Resources (TBN) Rated New Overweight at Piper Sandler; PT $41
• Rated New Sector Perform at RBC; PT $31
• Texas Instruments (TXN) Rated New Outperform at Haitong Intl; PT $240
• Uber (UBER) Rated New Hold at Melius; PT $77
• Webtoon Entertainment (WBTN) Rated New Market Perform at Raymond James
• Rated New Outperform at Evercore ISI
• Rated New Equal-Weight at Morgan Stanley
• Rated New Buy at Goldman; PT $62
• Rated New Neutral at JPMorgan; PT $23

Data sources: Bloomberg, Reuters, CQG