Daily Game Plan

by Contributor
on January 16, 2025

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

TODAY’S ECONOMIC DATA:  8:30ET Philadelphia Fed Business Outlook, Retail Sales, Import Price Index, Export Price
Index; New York Fed Services, Jobless Claims; 10:00ET Business Inventories, NAHB Housing Market Index

Highlights and News:  

  • Israel Says New Demands by Hamas Casting Doubt on Gaza Deal
  • Canada Eyes Levies on $105 Billion of US Items If Trump Acts
  • China Begins Probe Into US Chip Grants, Alleged Dumping
  • TRUMP TEAM READIES SANCTIONS PLAN FOR RUSSIA DEAL, IRAN SQUEEZE
  • BofA, Morgan Stanley Results Add to Wall Street Wins

 

Global stocks gained, extending momentum from the prior session when data showed an easing in core US inflation that raised expectations for Federal Reserve cuts
and sent global bond yields lower. Strong results from blue-chip companies across the world added fuel to the rally and supported risk sentiment across a range of asset classes. Global unemployment remained steady last year at an historical low of 5%, where
it is set to stay in 2025, the International Labour Organization said in a report. Canada has drawn up an initial list of C$150 billion ($105 billion) of US-manufactured items that it would hit with tariffs if President-elect Donald Trump decides to levy tariffs
against Canadian goods, according to an official. That’s nearly a third of imports from the US. China is investigating allegations that the US is dumping lower-end chips and unfairly subsidizing its own chipmakers. Israeli Prime Minister Netanyahu accused
Hamas of reneging on parts of a ceasefire agreement, risking the completion of the deal.      

 

EQUITIES:  

US equity futures are mixed, a day after all three major indexes registered their biggest daily percentage gains since Nov. 6. Futures reverse earlier overnight gains as yields move higher.
BofA and Morgan Stanley shares rose premarket after profit topped estimates, continuing Wall Street’s stellar earnings season. BofA’s IB fees hit the highest in three years and NII outperformed. Morgan Stanley’s NII also beat while equities trading far outstripped
forecasts. TikTok may get a reprieve as Biden’s team is seeking ways to keep the app available and Trump is considering an executive order to delay the US ban, according to separate reports. Meanwhile, CEO Shou Chew will attend the inauguration, the NYT said.
Futures ahead of the data: E-Mini S&P flat, Nasdaq +0.15%, Russell 2000 -0.25%, DJI -0.3%.

Futures ahead of the data: E-Mini S&P flat, Nasdaq +0.15%, Russell 2000 -0.25%, DJI -0.3%.

In pre-market trading, shares in UnitedHealth Group (UNH) slid more than 4% after revenue fell short of expectations, dragging other health insurers lower. US Bancorp
(USB) slips 2% after posting 4Q results. Home BancShares (HOMB) slips 5% after the company posted a slight miss on its per-share adjusted earnings for the fourth quarter. Polestar (PSNY) falls 9% after the electric-vehicle maker posted disappointing quarterly
revenue. Target Corp. (TGT) rises less than 1% after raising its sales guidance following a better-than-expected holiday season. Symbotic (SYM) rises 17% after the robotics warehouse automation agreed to acquire the Advanced Systems and Robotics business from
Walmart.

European gauges are higher, driven by strong gains in luxury and technology sectors. Richemont’s robust sales and TSMC’s upbeat outlook lifted sentiment, following
Wednesday’s rally—the largest in nearly four months. The Stoxx 600 is on course for its largest two-day advance since November 2023. Luxury shares are leading gains after Richemont’s (CFR SW +17%) sales unexpectedly jumped by double digits during the holiday
shopping season, sending its shares to a record high. LVMH soared more than 8% and Hermes International gained 5.8%. The technology sector also outperformed following TSMC’s favorable outlook, buoying optimism about the artificial-intelligence spending cycle.
ASML Holding NV rose as much as 4.9%. Stoxx 600 +0.7%, DAX +0.3%, CAC +2%, FTSE 100 +0.6%. Luxury +7%, Personal Goods +4.3%, Technology +2%, Retail +0.7%. Real Estate -1.1%, Utilities -0.9%, Telecom -0.7%.

Shares in Asia rose with the MSCI Asia Pacific Index gaining nearly 1%, driven by technology shares after cooler-than-expected US inflation, which bolstered hopes for
a Federal Reserve rate cut. Taiwan’s market led gains in the region as TSMC’s strong quarterly outlook boosted sentiment. Taiwan Semiconductor (TSMC) reported record quarterly profit and projected quarterly sales and capital expenditure ahead of analysts’
estimates, driven by strong demand for AI hardware. South Korean stocks gained as the nation’s central bank defied expectations of a rate cut. Japan’s Topix index erased early gains to end slightly lower after a report that BOJ officials see a good chance
of an interest rate hike next week.  Taiwan +2.3%, ASX 200 +1.4%, Kospi +1.2%, Hang Seng Index +1.2%, Singapore +0.8%, Vietnam +0.5%, Sensex +0.4%, Nikkei 225 +0.3%, CSI 300 +0.1%. Topix -0.1%, Philippines -1%. 

FIXED INCOME: 
 

Treasury yields resumed their rise after 10-year yield slid 10 basis points Wednesday when traders revived bets on Federal Reserve interest-rate cuts. US 10-year
yield is up 3bps at 4.68% while 2-year yield lifts ~5bps, flattening 2s10s curve. The inflation report led traders to price in a 50% chance of a second 25 basis point Fed rate cut this year. Before the data, there was growing belief that the Fed might not
cut again this year.

 

 

METALS: 

Gold hit a one-month high above $2,700 an ounce after a surprise slowdown in US inflation raised expectations for Federal Reserve rate cuts this year. Swap traders
now fully price in a rate cut by July, though Fed officials cautioned that the fight against inflation isn’t over. Spot gold +0.4%, Silver +0.1%, Copper +0.1%.

 

 

ENERGY:   

 

Oil prices eased as traders monitor a fragile cease-fire agreement between Israel and Hamas. South Korea is considering buying more oil and gas from the US to diversify
energy sources and head off the threat of Trump’s tariffs. The US Energy Information Administration on Wednesday reported that commercial crude inventories fell for an eighth week in a row, but gasoline and distillate stockpiles each posted weekly increases.
WTI -0.7%, Brent -0.7%, US Nat Gas +1.8%, RBOB -0.7%

 

 

CURRENCIES: 

In currency markets, the Japanese yen firmed after a report that BOJ officials see a good chance of an interest-rate hike next week as long as Trump’s return to the
White House doesn’t trigger too many negative surprises.  Maintaining the dollar as the world’s reserve asset is critical to US economic health and the nation’s future, Scott Bessent, Trump’s nominee for Treasury secretary, will tell a Senate committee today,
according to prepared remarks. The dollar is slightly higher. Sterling fell after data showed Britain’s economy narrowly returned to growth in November but fell short of expectations.  Oil-sensitive currencies like the Loonie and Norway’s krone weakened as
crude prices eased. US$ Index +0.15%, GBPUSD -0.35%, EURUSD -0.2%, USDJPY -0.2%, AUDUSD -0.45%, NZDUSD -0.5%, USDCAD +0.3%, USDNOK +0.6%.

 

 

 

Spot Bitcoin -0.25%, Spot Ethereum -2.2%.   

 

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
    • Akamai (AKAM) Raised to Buy at President Capital Management; PT $105
    • BILL Holdings Inc (BILL) Raised to Overweight at Morgan Stanley
    • BlackLine Inc (BL) Raised to Buy at Citi; PT $73
    • Blue Owl Capital (OWL) Raised to Buy at TD Cowen; PT $28
    • CACI (CACI) Raised to Buy at Jefferies
    • Canadian National (CNR CN) Raised to Buy at Stifel; PT C$172.04
    • Dana (DAN) Raised to Buy at UBS; PT $18
    • Dexcom Inc (DXCM) Raised to Outperform at Baird; PT $104
    • DigitalOcean (DOCN) Raised to Overweight at Morgan Stanley; PT $41
    • Expand Energy Corp (EXE) Raised to Overweight at JPMorgan; PT $112
    • First Solar (FSLR) Raised to Buy at Seaport Global Securities; PT $274
    • Freshworks (FRSH) Raised to Outperform at Oppenheimer; PT $22
    • Ingram Micro (INGM) Raised to Overweight at Morgan Stanley; PT $27
    • Monday.com (MNDY) Raised to Buy at Citi; PT $298
    • Netflix (NFLX) Raised to Buy at Seaport Global Securities
    • OneStream (OS) Raised to Overweight at Morgan Stanley; PT $37
    • Paylocity (PCTY) Raised to Buy at Citi; PT $231
  • Downgrades
    • AMD (AMD) Cut to Peerperform at Wolfe
    • Ardagh Metal Packaging (AMBP) Cut to Equal-Weight at Wells Fargo
    • Ball (BALL) Cut to Underweight at Wells Fargo; PT $49
    • Confluent (CFLT) Cut to Equal-Weight at Morgan Stanley; PT $30
    • Datadog (DDOG) Cut to Equal-Weight at Morgan Stanley; PT $143
    • Edwards Life (EW) Cut to Underperform at Wolfe; PT $60
    • Enphase Energy (ENPH) Cut to Hold at Truist Secs
    • First Quantum Minerals (FM CN) Cut to Hold at Canaccord; PT C$20
    • Haivision Systems (HAI CN) Cut to Hold at Canaccord; PT C$5.50
    • Hormel (HRL) Cut to Sell at CFRA
    • Intapp (INTA) Cut to Neutral at Citi; PT $78
    • Nokia (NOKIA FH) ADRs Cut to Sell at Goldman; PT $3.60
    • PagSeguro (PAGS) Cut to Neutral at Citi; PT $7
      • Cut to Neutral at Grupo Santander; PT $7.50
    • Paycor HCM (PYCR) Cut to Hold at Truist Secs
    • Piedmont Office (PDM) Cut to Neutral at Baird; PT $10
    • Regeneron (REGN) Cut to Neutral at UBS
    • Southwest Air (LUV) Cut to Sell at Citi; PT $29.50
    • StoneCo (STNE) Cut to Neutral at Citi; PT $9
      • Cut to Neutral at Grupo Santander; PT $9.50
  • Initiations
    • A&W Food Services of Canada (AW CN) Rated New Neutral at CIBC; PT C$38
    • AAR (AIR) Rated New Overweight at KeyBanc; PT $83
    • Altria (MO) Rated New Equal-Weight at Morgan Stanley; PT $54
    • Constellation Energy (CEG) Rated New Buy at William O’Neil
    • Converge Technology (CTS CN) Rated New Hold at Stifel Canada; PT C$4
    • Firan Technology (FTG CN) Rated New Buy at Beacon Securities; PT C$12
    • Genuine Parts (GPC) Rated New Buy at Loop Capital; PT $155
    • Heico (HEI) Rated New Sector Weight at KeyBanc
    • Interparfums Inc (IPAR) Rated New Buy at Canaccord; PT $158
    • Mobileye (MBLY) Rated New Outperform at Oppenheimer; PT $28
    • MSC Industrial (MSM) Rated New Outperform at Wolfe; PT $95
    • Peakstone Realty Trust (PKST) Rated New Buy at UBS; PT $15
    • Philip Morris (PM) Rated New Overweight at Morgan Stanley; PT $140
    • Sally Beauty (SBH) Rated New Buy at Canaccord; PT $14
    • SharkNinja (SN) Reinstated Buy at William O’Neil
    • Strawberry Fields REIT (STRW) Rated New Buy at Compass Point; PT $14
    • Symbotic (SYM) Rated New Outperform at Oppenheimer; PT $35
    • Telus International CDA (TIXT CN) Rated New Buy at Stifel Canada
    • Vital Farms (VITL) Rated New Buy at William O’Neil

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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