Daily Game Plan

by Contributor
on January 13, 2025

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

TODAY’S ECONOMIC DATA:  11:00ET NY Fed 1-Yr Inflation Expectations

Highlights and News:  

  • KEVIN O’LEARY MET TRUMP LAST WEEKEND ON PLANS FOR TIKTOK
  • Chinese Trade Surplus Soars toward $1 Trillion Ahead of Trump Return to Office
  • Trudeau Says Canada Tariffs Ready If Trump Starts Trade War
  • Special Counsel Jack Smith resigned from the DOJ
  • Final draft of Gaza truce deal presented after ‘breakthrough’, official says

 

Global stocks are under pressure, hampered by the ongoing rise in government bonds yields following Friday’s bumper US jobs report that prompted investors to question
if interest rates will fall at all this year, just as earnings season is about to get underway. A surge in energy prices has added to concern about steadily rising inflation. The global selloff in bonds has battered the UK gilt market, sending long-term yields
to their highest since 1998 amid growing worries about the government needing to borrow more to fulfill its budgetary obligations. Data today showed China’s export growth picked up steam in December, while imports recovered. Meanwhile, ceasefire talks between
Israeli and Hamas envoys are making progress, according to both sides. Divisions remain between Hamas officials outside Gaza and those inside the war-ravaged territory who have taken a harder line, officials say.       

 

EQUITIES:  

US equity futures are lower, while the dollar and bond yields climbed amid fading hopes for interest-rate cuts ahead of this week’s key consumer inflation report. Traders are betting
there will be no rate cut until at least September, per the CME FedWatch tool, and that the Fed will lower borrowing costs by just 30 basis points in the whole of 2025. Attention will turn to producer-price data on Tuesday and then consumer-price figures Wednesday,
to further gauge the outlook for monetary policy. The CPI report could have an even greater impact on the market than usual, especially since investors are on the verge of dismissing the possibility of any interest rate cuts this year. LA is bracing for more
wildfires as the Santa Ana winds return early this week. AccuWeather raised its estimate for damages and economic losses to as much as $275 billion.

Futures ahead of the bell: E-Mini S&P -0.7%, Nasdaq -1%, Russell 2000 -1.1%, DJI -0.2%.

In pre-market trading, Intra-Cellular Therapies (ITCI) jumps 35% after Johnson & Johnson agreed to buy the biopharmaceutical company for about $14.6 billion. Abercrombie
& Fitch (ANF) slips 7% after raising its fourth-quarter sales outlook, but the increase isn’t enough to reassure investors the retailer could keep up the fast pace of growth. Howard Hughes Holdings (HHH) rises 10% after  Pershing Square Capital Management
LP has proposed a deal to merge one of its subsidiaries with real estate company. Humana (HUM) gains 5%, climbing with other  health insurers with Medicare Advantage plans, after Medicare released a proposed plan that could allow an increase in 2026 payments
for the companies. IRobot (IRBT) falls 7% after posting preliminary 4Q revenue. Lululemon (LULU) rises 3% as management expects fourth quarter sales to surpass the market’s expectations. Macy’s (M) slips 2% after issuing a more downbeat outlook for sales in
the current quarter. Moderna (MRNA) falls 19% after slashing its sales forecast for this year as the company continues to struggle with slow demand for its Covid and RSV vaccines. Sage Therapeutics (SAGE) soars 36% after Biogen made a non-binding proposal
to acquire the remaining shares of the biopharmaceutical company. Shake Shack (SHAK) climbs 2% after reporting fourth-quarter sales that surpassed expectations. Zumiez (ZUMZ) declines 4% after cutting its earnings per share guidance for the fourth quarter.
Magnificent Seven: Nvidia (NVDA -3%) leads the group lower as a fresh rise in bond yields weighed on tech and growth. stocks.

European equity gauges fell as rising bond yields stoked concerns over equity market valuations, while technology shares underperformed. Semiconductor stocks dropped,
notably suppliers to Apple after an influential analyst expected iPhone shipments to fall below Wall Street estimates this year. Energy stocks were a bright spot after oil hit a four-month high.  The European Central Bank should continue lowering borrowing
costs irrespective of what the US Federal Reserve does, according to Governing Council member Olli Rehn. Chief Economist Philip Lane said the ECB will probably cut rates further to ensure it delivers on its price stability mandate. Among individual stock moves,
Entain Plc shares rose after the online gambling firm maintained its 2024 guidance, while Porsche AG also gained after giving an update on the number of cars it delivered last year. Stoxx 600 -0.6%%, DAX -0.4%, CAC -0.5%, FTSE 100 -0.3%. Technology -1.5%,
Media -1.5%, Construction -1%, Travel -1%. Energy +0.7%, Basic Resources +0.5%, Utilities +0.4%, Telecom +0.4%.

Shares in Asia fell for a fourth session as sentiment remained downbeat, weighed by reduced expectations of the Federal Reserve’s interest-rate cuts and an ongoing
selloff in Chinese shares. A holiday in Japan made for thin trading. The MSCI Asia Pacific excluding Japan Index dropped 1.7% to touch its lowest level since August. Benchmarks in Taiwan and Philippines led declines in the region, while stocks in India sank
as the rupee hit a new low.  Stocks in China were only marginally lower after data showed exports rose a surprisingly steep 10.7% and imports added 1%.  Concern over increased trade tensions under Donald Trump pushed the MSCI China Index into a bear market
last week. Goldman Sachs strategists said they remain bullish on Chinese stocks despite the ongoing rout, predicting that benchmarks will rise about 20% by year-end. Philippines -2.4%, Taiwan -2.3%, Sensex -1.4%, ASX 200 -1.2%, Kospi -1%, Hang Seng Index -1%,
CSI 300 -0.3%, CSI 1000 +0.3%, Vietnam +0.4%.

FIXED INCOME: 
 

Treasuries are extending Friday’s slide — with front-end yields cheaper by as much as 3bp as traders scaled back bets on Federal Reserve interest-rate cuts following
Friday’s blowout US employment report. Economists at Barclays now expect just one Federal Reserve interest-rate cut this year, as they no longer see a reduction in March.  10-year yield rose as much as four basis points to 4.80%, the highest level since November
2023. Currently 10-year yield is around 4.76%, up 1bp on the day. Fed-dated OIS prices in only about 4bp of Fed easing over the next two policy meetings and just 23bp by the end of the year.

 

 

METALS: 

Gold edged lower amid an increase in global bond yields and uncertainty around the Federal Reserve’s interest-rate path in 2025. The US jobs report Friday showed
exceptional resilience in the labor market, leading economists at some big banks to pare back forecasts for additional rate cuts. Traders are awaiting a raft of further economic data, including the New York Fed’s one-year inflation expectations due later today,
producer prices Tuesday and the consumer price index Wednesday. Spot gold -0.7%, Silver -1.8%, Copper +0.1%.

 

 

ENERGY:   

 

Oil prices rose another 2%, after a drop in Russia’s seaborne exports to their lowest since August 2023 fueled concern about supply.  Oil hit the highest level in
more than four months as investors took stock of the potential market implications of the latest US-Russia sanctions package. Morgan Stanley boosted oil price forecasts, saying the measures went further than expected. With less than two weeks left in office,
the Biden administration imposed sweeping sanctions against Russia’s energy sector, targeting two major producers and dozens of vessels shipping Russian oil. The measures are expected to disrupt oil trade with China and India.
According to Goldman Sachs, the vessels targeted transported 1.7 million barrels a day of oil last year, equivalent to 25% of Russia’s exports.  WTI +2.2%, Brent +1.8%, US Nat
Gas +2.5%, RBOB +1.3%

 

 

CURRENCIES: 

In currency markets, the shift in Fed expectations is buoying the dollar, which hit a 26-month high. The dollar may rally 5% or more with higher tariffs and a strong
US economy, according to Goldman strategists. Fiscal concerns continue to plague the pound, which is the weakest of the G-10 currencies today.  China announced more tools to support its weak currency today, unveiling plans to park more dollars in Hong Kong
to bolster the yuan and to improve capital flows by allowing companies to borrow more overseas. The offshore yuan edged higher.  US$ Index +0.4%, GBPUSD -0.75%, EURUSD -0.6%, USDJPY -0.3%, AUDUSD +0.05%, NZDUSD -0.1%, EURCHF -0.5%.   

 

 

 

Spot Bitcoin -3.8%, Spot Ethereum -6.3%.   

 

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
    • American Well (AMWL) Raised to Overweight at Wells Fargo; PT $15
    • Amplitude (AMPL) Raised to Equal-Weight at Morgan Stanley
    • Ardagh Metal Packaging (AMBP) Raised to Equal-Weight at Morgan Stanley
    • Bradesco (BBDC4 BZ) ADRs Raised to Buy at HSBC; PT $2.80
    • Canadian National (CNR CN) Raised to Buy at TD Cowen; PT C$170
    • Canadian Tire (CTC/A CN) Raised to Hold at Jefferies; PT C$155
    • Caterpillar (CAT) Raised to Inline at Evercore ISI; PT $365
    • CF Industries (CF) Raised to Overweight at Piper Sandler; PT $105
    • Chewy (CHWY) Raised to Outperform at Evercore ISI; PT $47
    • Crown Castle (CCI) Raised to Overweight at Barclays; PT $104
    • Crown Holdings (CCK) Raised to Overweight at Morgan Stanley; PT $105
    • DHT Holdings (DHT) Raised to Buy at SEB Equities; PT $11.80
    • Douglas Emmett (DEI) Raised to Overweight at Piper Sandler; PT $20
    • Elf Beauty (ELF) Raised to Overweight at Morgan Stanley; PT $153
    • Essex Property (ESS) Raised to Outperform at BMO; PT $310
    • Etsy (ETSY) Raised to Hold at Jefferies; PT $55
    • Expand Energy Corp (EXE) Raised to Overweight at Morgan Stanley
    • Frontline PLC (FRO) Raised to Buy at SEB Equities; PT $20.45
    • IGM Biosciences (IGMS) Raised to Neutral at JPMorgan
    • Instacart (CART) Raised to Buy at Needham; PT $56
    • Itau (ITUB4 BZ) ADRs Raised to Buy at HSBC; PT $6.80
    • KLA Corp (KLAC) Raised to Buy at Needham; PT $750
    • Kratos (KTOS) Raised to Buy at B Riley; PT $35
    • LegalZoom (LZ) Raised to Overweight at JPMorgan; PT $9
    • Linde (LIN) Raised to Buy at TD Cowen; PT $515
    • LSB Industries (LXU) Raised to Overweight at Piper Sandler; PT $11
    • Mosaic (MOS) Raised to Neutral at Piper Sandler
    • Nutrien (NTR CN) Raised to Overweight at Piper Sandler; PT $58
      • Raised to Neutral at JPMorgan; PT C$72.20
    • RH (RH) Raised to Overweight at Morgan Stanley; PT $530
    • SEMrush (SEMR) Raised to Overweight at Morgan Stanley; PT $20
    • U.S. Bancorp (USB) Raised to Overweight at Piper Sandler
    • Wix.com (WIX) Raised to Overweight at Morgan Stanley; PT $276
  • Downgrades
    • 4D Molecular (FDMT) Cut to Market Perform at BMO; PT $15
    • Accolade (ACCD) Cut to Equal-Weight at Stephens; PT $7.03
    • Akoya Biosciences (AKYA) Cut to Hold at Canaccord; PT $3.50
    • Cohu (COHU) Cut to Hold at Needham
    • Constellation Brands (STZ) Cut to Hold at Jefferies; PT $201
      • Cut to Neutral at JPMorgan; PT $203
    • Definitive Healthcare (DH) Cut to Underweight at Barclays
    • Disney (DIS) Cut to Neutral at President Capital Management; PT $115
    • FormFactor (FORM) Cut to Hold at Needham
    • Hesai Group (HSAI) ADRs Cut to Equal-Weight at Morgan Stanley; PT $15
    • Ichor (ICHR) Cut to Hold at Needham
    • JinkoSolar (JKS) ADRs Cut to Sell at Daiwa; PT $20
    • LiveRamp (RAMP) Cut to Equal-Weight at Morgan Stanley
    • NeoGenomics (NEO) Cut to Hold at Benchmark
    • NextEra Energy Partners (NEP) Cut to Market Perform at BMO; PT $18
    • Paycor HCM (PYCR) Cut to Market Perform at Raymond James
    • Pinterest (PINS) Cut to Hold at Jefferies; PT $32
    • PJT Partners (PJT) Cut to Market Perform at JMP
    • STMicro (STMPA FP) ADRs Cut to Hold at TD Cowen; PT $25
    • Terreno Realty (TRNO) Cut to Equal-Weight at Barclays; PT $60
  • Initiations
    • Axis Capital (AXS) Rated New Market Perform at BMO; PT $93
    • Cadence Design (CDNS) Reinstated Buy at Redburn; PT $350
    • California Resources (CRC) Rated New Buy at Truist Secs; PT $75
    • Cameco (CCO CN) Rated New Add at Huatai Research; PT C$80.72
    • Camtek/Israel (CAMT) Rated New Neutral at Cantor; PT $100
    • Compugen (CGEN) Reinstated Outperform at Oppenheimer; PT $4
    • First Northwest Bancorp (FNWB) Resumed Outperform at Hovde Group
    • Newmont Corp (NEM) Reinstated Buy at Goldman; PT $47.20
    • Nova (NVMI) Rated New Overweight at Cantor; PT $275
    • Onto Innovation Inc (ONTO) Rated New Overweight at Cantor; PT $250
    • PG&E (PCG) Reinstated Outperform at BMO; PT $21
    • Skyward Specialty (SKWD) Rated New Hold at TD Cowen
    • Synopsys (SNPS) Reinstated Buy at Redburn; PT $600
    • VICI Properties (VICI) Rated New Overweight at Barclays; PT $36

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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