Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Philadelphia Fed Non-Manufacturing Activity; 4:00ET Trump’s Infrastructure Announcement
Expected

Highlights and News:  

• Trump mulls imposing 25% tariffs on Canada and Mexico as soon as February 1
• World Health Organization regrets the US intends to withdraw under Trump
• Putin told Xi he is ready to talk with the US on Ukraine: IFX
• TikTok Ban Halted for 75 Days in Executive Order
  
• Trump said he wasn’t considering an immediate universal tariff
  

Global stocks were choppy as Donald Trump returned to the White House and investors digested his statements on economic policy and trade levies.  President Trump
did not enact tariffs immediately on Monday as he had previously suggested, but he indicated he might impose a 25% duty on imports from Canada and Mexico starting February 1, citing concerns over illegal immigration and the flow of fentanyl into the US.  Trump
repeated his call on the European Union to buy more American oil and gas if the bloc wants to avoid tariffs.  British pay growth stayed stubbornly strong in the three months to November but there were more signs of a softening jobs market, according to data
today. A reduction in interest rates next week by the ECB is all but certain and two to three more will probably follow, according to Governing Council member Peter Kazimir. ECB’s Villeroy said it’s plausible to cut at each of its upcoming meetings.       

EQUITIES:  

US equity futures climbed as markets calmed following a volatile session on Donald Trump’s first day as president. Investors seemed to shift focus from the risk of tariffs to the potential
economic uplift from fiscal stimulus and tax reductions. While stopping short of imposing new tariffs on his first day in office, Trump ordered his administration to address unfair practices globally and outlined levies he expects to place on two of America’s
biggest trade partners in the next few weeks. Traders will also keep an eye on earnings and comments from the World Economic Forum meeting in Davos. 

Futures ahead of the bell: E-Mini S&P +0.4%, Nasdaq +0.5%, Russell 2000 +0.7%, DJI +0.4%.

In pre-market trading, Schwab (SCHW) shares rose 4.7% after results exceeded estimates as it continues to attract record new inflows to its retail brokerage. Vista
Corp gains 4.4% as Evercore ISI resumed coverage of Vistra Corp. with a recommendation of outperform. 3M (MMM) rises 4% as management expects profit to grow this year. Apple (AAPL) falls 2% as sales of iPhones dived 18.2% in China during the December quarter.
D.R. Horton (DHI) gains 3% after affirming its forecasts for full-year revenue and deliveries. General Motors (GM) advances 1% after Deutsche Bank upgraded the automaker to buy. Urban Outfitters (URBN) gains 2% after Morgan Stanley upgraded its rating on the
clothing retailer. Walgreens (WBA) tumbles 7% after the Department of Justice sued the company for allegedly dispensing opioids and other controlled substances at pharmacies across the US while ignoring red flags that the prescriptions were likely illegal.

European gauges steadied after US President Donald Trump refrained from immediately targeting the region with trade tariffs. Sectors most exposed to trade plans slipped
however, as Trump’s pledge to impose 25% levies on Mexico and Canada hit shares in miners and automakers. Spanish stocks underperformed, dragged down by names exposed to Mexico. Investor confidence in Germany’s economy fell more than expected ahead of next
month’s snap election, underscoring persistent doubts in the country’s ability to escape its current bout of stagnation. The ZEW institute’s index of expectations dropped to 10.3 in January from 15.7 in December. Euro area Jan. ZEW investor expectations rose.
Among individual movers, Orsted A/S slumped after the renewable energy company recorded a $1.7 billion hit on earnings, due to rising cost of offshore wind farms. Sweden’s Avanza Bank Holding AB was the biggest riser after the stockbroker’s results beat expectations.
Stoxx 600 +0.1%, DAX -0.1%, CAC +0.1%, FTSE 100 ~flat. Basic Resources -1.1%, Autos -0.9%, Energy -0.6%, Banks -0.6%. Healthcare +0.9%, Personal Goods +0.6%. 

Shares in Asia mostly rose Tuesday, as investors awaited greater clarity on policies of US President Donald Trump following his inauguration. Hong Kong stocks were
at the top of the leaderboard as Trump avoided committing to a plan for tariffs on goods from China. The MSCI Asia Pacific Index was up 0.2% after swinging between gains and losses earlier.  Technology was among the best-performing sectors on the benchmark.
However, stocks related to renewable energy and electric vehicles fell as Trump pulled the US out of the Paris Agreement and signed executive orders rejecting environmentally-friendly policies. Trump also indicated that he could impose taxes on Chinese goods
if Beijing blocked the sale of the social media app TikTok to a US entity. He said he would be having “meetings and calls” with President Xi Jinping. Indian stocks dropped amid slowing corporate earnings. Hang Seng Tech +2.1%, Hang Seng Index +0.9%, Thailand
+0.9%, ASX 200 +0.7%, Nikkei 225 +0.3%, Taiwan +0.1%, CSI 300 +0.1%. Kospi -0.1%, Philippines -0.15%, Vietnam -0.3%, Singapore -0.3%, Sensex -1.6%.

FIXED INCOME: 
 

Treasuries rallied as fears that Trump’s policies will fuel inflation eased after President Trump refrained from imposing China-specific tariffs for now. 10-year
US yield fell as much as 10 basis points to 4.53% on Tuesday, as the market reopened after a US holiday. The rally in US bonds was also supported by falling crude prices after Trump revoked offshore oil and gas leasing bans. Yields still 2bp-5bp richer on
the day with curve flatter. 10-year around 4.58% is more than 4bp richer on the day; 2s10s flatter by ~3bps. Treasury auctions resume Wednesday with $13b 20-year bond reopening, followed by $20b 10-year TIPS new issue Thursday.

METALS: 

Gold prices rose after Trump announced potential tariffs on Mexico and Canada, with prices nearing $2,730 an ounce. Bullion added to a modest gain on Monday — on
course for the highest close since early November — as traders weighed the potential implications of US tariffs of as much as 25% against its neighbors. Trump’s domestic agenda and potential trade war could drive bullish momentum in gold and increase demand
for haven assets. Spot gold +0.75%, Silver +0.15%, Copper -1.3%.

ENERGY:   

Oil prices fell following Trump’s first-day executive orders invoking a national energy emergency meant to clear away hurdles to increased domestic energy exploration
and production. Within hours of his inauguration on Monday, Trump issued multiple executive orders aimed at increasing the nation’s oil and gas production, already at record levels, while reversing former President Biden’s climate policies. Trump also issued
an executive action suspending offshore wind leasing from all areas of the US outer continental shelf pending an environmental and economic review. Global natural gas supplies will remain tight this year as demand continues to grow, potentially keeping European
prices higher for longer, the IEA said. WTI -2.4%, Brent -1.6%, US Nat Gas -4.2%, RBOB -1.4%. 

CURRENCIES: 

In currency markets, the dollar rebounded sharply after plunging on Monday as Trump’s messaging on tariffs were mixed. Earlier he said the administration would probe
trade issues but stop short of day-one tariffs. The dollar rose as much as 0.7% and all Group-of-10 currencies fell, reversing the index’s steepest drop in 14 months seen on Monday. The Mexican peso and Canadian dollar tumbled on Monday night – reversing sharp
gains from earlier in the day – after Trump said he was mulling imposing 25% tariffs on the countries as soon as Feb. 1.  Sterling fell as UK employment plunged in the weeks after Labour increased payroll taxes in its first budget, reinforcing the case for
the Bank of England to continue cutting interest rates.   Moves from Friday’s close: US$ Index -0.55%, GBPUSD -0.65%, EURUSD -0.6%, USDJPY +0.1%, AUDUSD -0.8%, NZDUSD -0.8%, USDCHF +0.5%, USDNOK +1.1%, USDCAD +0.95%, USDMXN +1%.  

Spot Bitcoin +1.6%, Spot Ethereum +0.5%.   

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
• Advantage Energy Ltd (AAV CN) Raised to Outperform at National Bank
• Ameren (AEE) Raised to Outperform at Evercore ISI; PT $104
• American Eagle (AEO) Raised to Equal-Weight at Morgan Stanley; PT $16
• AppLovin (APP) Raised to Buy at Arete; PT $180
• Bank OZK (OZK) Raised to Equal-Weight at Wells Fargo; PT $48
• DHT Holdings (DHT) Raised to Buy at Arctic Securities; PT $14.70
• Equity LifeStyle (ELS) Raised to Buy at Deutsche Bank; PT $73
• Essex Property (ESS) Raised to Buy at Deutsche Bank; PT $310
• Exelon (EXC) Raised to Outperform at Evercore ISI; PT $44
• Frontline PLC (FRO) Raised to Buy at Arctic Securities; PT $26.65
• General Motors (GM) Raised to Buy at Deutsche Bank; PT $60
• Genpact (G) Raised to Buy at Jefferies; PT $55
• Intl Seaways (INSW) Raised to Buy at Arctic Securities; PT $63.40
• Navient (NAVI) Raised to Buy at Seaport Global Securities; PT $18
• Nordic American Tankers (NAT) Raised to Buy at Arctic Securities
• Northrop Grumman (NOC) Raised to Buy at Citi; PT $587
• NRG Energy (NRG) Raised to Outperform at Evercore ISI; PT $126
• O’Reilly Automotive (ORLY) Raised to Overweight at Morgan Stanley
• OGE Energy (OGE) Raised to Outperform at Evercore ISI; PT $47
• Qorvo (QRVO) Raised to Overweight at Morgan Stanley; PT $106
• RTX Corp (RTX) Raised to Buy at Citi; PT $153
• Tencent Music (TME) ADRs Raised to Overweight at Morgan Stanley
• Texas Roadhouse (TXRH) Raised to Overweight at Morgan Stanley; PT $213
• Trigon Metals Inc (TM CN) Raised to Buy at Beacon Securities; PT C$1.11
• Ulta Beauty (ULTA) Raised to Overweight at Morgan Stanley; PT $500
• Urban Outfitters (URBN) Raised to Overweight at Morgan Stanley; PT $63
• Wingstop (WING) Raised to Overweight at Morgan Stanley; PT $389
• Wipro (WPRO IN) ADRs Raised to Hold at Jefferies; PT $3.46
• Downgrades
• Affirm Holdings (AFRM) Cut to Neutral at Susquehanna; PT $57
• American Homes (AMH) Cut to Hold at Deutsche Bank; PT $37
• Apple (AAPL) Cut to Hold at Loop Capital; PT $230
• Cut to Underperform at Jefferies; PT $200.75
• Astera Labs (ALAB) Cut to Equal-Weight at Morgan Stanley; PT $142
• Barrick Gold (ABX CN) Cut to Sector Perform at Scotiabank; PT C$27.43
• CF Industries (CF) Cut to Sector Perform at RBC; PT $100
• EBay (EBAY) Cut to Sell at Arete; PT $52
• Femsa (FEMSAUBD MM) ADRs Cut to Equal-Weight at Barclays; PT $99
• Freshworks (FRSH) Cut to Underweight at Wells Fargo; PT $13
• Harley-Davidson (HOG) Cut to Equal-Weight at Morgan Stanley; PT $33
• Invitation Homes (INVH) Cut to Hold at Deutsche Bank; PT $33
• Keros Therapeutics (KROS) Cut to Neutral at Cantor
• Mondelez (MDLZ) Cut to Hold at Jefferies; PT $62
• Polaris (PII) Cut to Equal-Weight at Morgan Stanley; PT $60
• Ross Stores (ROST) Cut to Equal-Weight at Morgan Stanley; PT $140
• Teradyne (TER) Cut to Underweight at Morgan Stanley; PT $117
• Valvoline (VVV) Cut to Equal-Weight at Morgan Stanley; PT $38
• Wendy’s (WEN) Cut to Underweight at Morgan Stanley; PT $14
• Wolfspeed Inc (WOLF) Cut to Hold at CFRA
• Yum (YUM) Cut to Equal-Weight at Morgan Stanley; PT $140
• ZTO Express (ZTO) ADRs Cut to Hold at HSBC; PT $20
• Initiations
• Amprius Technologies (AMPX) Rated New Overweight at Cantor; PT $10
• Bravo Mining (BRVO CN) Rated New Buy at Beacon Securities; PT C$5
• Caterpillar (CAT) Rated New Outperform at Haitong Intl; PT $427.41
• Cognex (CGNX) Rated New Buy at President Capital Management; PT $45.50
• Curtiss-Wright (CW) Rated New Buy at Citi; PT $440
• Dollarama (DOL CN) Reinstated Sector Outperform at Scotiabank; PT C$150
• EBay (EBAY) Rated New Neutral at President Capital Management; PT $74
• Firstsun Capital (FSUN) Rated New Outperform at KBW; PT $46
• Forte Biosciences Inc (FBRX) Rated New Buy at TD Cowen
• Headwater Exploration Inc (HWX CN) Rated New Outperform at CIBC; PT C$9
• Kinder Morgan (KMI) Rated New Outperform at Haitong Intl; PT $38.13
• MongoDB (MDB) Rated New Buy at China Renaissance; PT $351
• National Energy Services (NESR) Rated New Buy at Benchmark; PT $15
• Roku (ROKU) Rated New Market Outperform at JMP; PT $95
• Smurfit WestRock (SW) Rated New Buy at Truist Secs; PT $62
• Sprott (SII CN) Reinstated Buy at Canaccord; PT C$67
• Synergy CHC (SNYR) Rated New Buy at Roth Capital Partners; PT $10
• Trade Desk (TTD) Rated New Market Outperform at JMP; PT $150
• Transcontinental (TCL/A CN) Rated New Buy at TD Cowen; PT C$23
• TSMC (2330 TT) ADRs Rated New Buy at Sealand Securities; PT $245.19
• V2X Inc (VVX) Rated New Buy at Citi; PT $64
• Vistra Corp (VST) Resumed Outperform at Evercore ISI; PT $202

Data sources: Bloomberg, Reuters, CQG

David Wienke