Daily Game Plan

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

TODAY’S ECONOMIC DATA:  10:00ET Leading Index; 10:10ET Ukraine President Zelenskiy speaks; 1:00ET 20-Year Bond Auction

Highlights and News:  

• China’s Xi and Putin held a video call on deepening relations on the back of US tariff threats
• MrBeast, the internet’s highest-earning content creator, has joined a new bid to buy TikTok
• Elon Musk says the companies behind Stargate AI don’t have the money
• Barclays Sees M&A Wave in US and Europe
  

Global stocks rose as a wave of new policies from President Trump and robust corporate earnings bolstered investor optimism. Late on Tuesday, Trump announced that
OpenAI, SoftBank and Oracle will form a joint venture called Stargate and invest up to $500 billion in artificial intelligence infrastructure. The threat of US import tariffs lingers, with Trump again vowing to hit the European Union with fresh levies and
saying his administration was discussing imposing a 10% tariff on goods from China. China’s Vice Premier on Tuesday said China would expand its imports, saying the country did not seek a “trade surplus.”   Barclays CEO said he expects a surge in dealmaking
on both sides of the Atlantic as Trump ushers in a more business-friendly regulatory environment.      

EQUITIES:  

US equity futures are adding to this week’s gains, lifted by a slew of robust corporate results and renewed optimism around artificial intelligence after Trump unveiled a joint venture
to fund the sector. A catch-up trade is building for stock market laggards on bets that Trump will take a softer approach on tariffs, according to Bank of America’s monthly survey of fund managers. The Big Tech long trade got more vindication as Netflix surged
post-market on fourth-quarter results that beat estimates. Oracle shares jumped as the company teams up with SoftBank Group and OpenAI to form a $100 billion joint venture that will fund artificial intelligence infrastructure. Seagate Technology shares rose
after its earnings beat estimates.    

Futures ahead of the bell: E-Mini S&P +0.5%, Nasdaq +1%, Russell 2000 ~flat, DJI +0.3%.

In pre-market trading, Netflix (NFLX) shares surged ~15% as the streaming giant added a record number of subscribers last quarter, enabling it to increase prices for
most service plans globally. Nvidia (NVDA) rises 3% after a joint venture led by Softbank, OpenAI and Oracle detailed data center investment plans at a White House AI event. Oracle (ORCL) climbs 8%. Procter & Gamble (PG) rises 3% after reporting organic sales
that surpassed estimates. Seagate (STX) climbs 6% after the computer hardware and storage company reported quarterly earnings and revenue that beat estimates. United Airlines (UAL) rises 3% as management expects a first-quarter profit well ahead of Wall Street’s
estimates as the carrier capitalizes on unusually strong demand for premium and international travel. Agilysys (AGYS) declines 21% after the hospitality software company reduced its fiscal 2025 revenue forecast. Aptiv (APTV) rises 5.2% after the company’s
board approved a plan to separate its electrical distribution systems business. J&J (JNJ) beat on strong sales of its cancer drug Darzalex, though shares slipped.

The 18.6% combined weighting of the Magnificent Seven in the global equity market is more than the weighting of all the stocks in Japan, the UK, China, Canada and India
combined. Bullish bets on Mag 7 stocks ranked as the most crowded trade in BofA’s survey.

Apple nearly back to its 200dma after falling over 15% from the Dec. 26 all-time high.

European gauges are higher with technology stocks the key drivers in pushing the Stoxx Europe 600 towards a new record high as President Trump’s early pronouncements
on trade tariffs appear softer than some investors had feared. UK government borrowing reached £17.8 billion in December, more than double the previous year and the highest since the pandemic. The government will push ahead with controversial infrastructure
projects to spur growth, Chancellor Rachel Reeves said. Investors are focusing on corporate earnings, with Adidas AG gaining 7% after reporting better-than-expected results, while Barry Callebaut AG fell 7% after lowering its sales outlook. Swedish stocks
also hit a record, while France’s CAC 40 Index is set for the highest close since June. Stoxx 600 +0.7%, DAX +1.3%, CAC +1%, FTSE 100 +0.2%. Technology +1.75%, Insurance +1.7%, Industrials +1.5%. Utilities -0.8%, Telecom -0.7%. 

Shares in Asia were mostly higher on optimism over President Trump’s push for investment in artificial intelligence, offsetting losses in China. The MSCI Asia Pacific
Index rose 0.2%, with Taiwan’s TSMC and Japan’s SoftBank the biggest contributors. The regional benchmark pared its gain as Chinese equities slumped amid renewed concern over US tariffs. Hong Kong and mainland China led declines after Trump said his threat
to impose 10% tariffs on all Chinese imports was still being considered. China rolled out a basket of measures to stabilize its stock markets, including plans to boost the amount pension can invest in the nation’s listed companies. Chinese artificial intelligence-related
stocks jumped after a report that ByteDance plans to spend more than $12B on AI infrastructure in 2025. Nikkei 225 +1.6%, Kospi +1.15%, Indonesia +1%, Taiwan +1%, Sensex +0.75%, Thailand +0.7%, ASX 200 +0.3%. Vietnam -0.3%, Singapore -0.4%, CSI 300 -0.9%,
Hang Seng Index -1.6%. 

FIXED INCOME: 
 

Treasuries inch higher, with US 10-year yields falling 1 bps to 4.57%. Gilts and bunds are little changed, showing little reaction to a flurry of ECB speak out of
Davos, including from President Lagarde who said they are not lowering interest rates too slowly. US session includes a 20-year bond auction. WI 20-year yield at about 4.89% is ~20bp cheaper than last month’s, which tailed by 1.5bp.

METALS: 

Gold advanced to its highest in 11 weeks as investors weigh Trump’s tariff and tax policies. Bullion traded around $2,760 an ounce after surging 1.4% in the previous
session, as Trump’s tariff threats bolstered demand for haven assets. The president later said that he is considering placing a 10% levy on Chinese goods in retaliation for the flow of fentanyl from the country, and reiterated he intends to hit Canada and
Mexico with import duties as high as 25% in coming weeks.  Spot gold +0.5%, Silver +0.3%, Copper -0.5%.

ENERGY:   

Oil prices are roughly flat, having fallen more than 2% on Tuesday on Trump’s plans to boost US energy production. Citi raised its oil price outlook for 2025 due
to geopolitical risks centered on Russia and Iran, but noted prices were likely to ease through the second half of the year. A flood of Canadian oil is heading to the US to beat Trump’s potential tariffs. The influx may help refill inventories in the Midwest,
Rystad said.  WTI +0.05%, Brent +0.05%, US Nat Gas -0.6%, RBOB ~flat.

CURRENCIES: 

In currency markets, the dollar touched its lowest in a month, signaling relief that President Trump has held back from slapping harsher penalties on trade partners
at the outset of his presidency. The yen is the weakest of the G-10 currencies ahead of the next BOJ policy announcement due Friday. The euro is bouncing after testing key Fibonacci (.618 retracement) support last week. The ECB isn’t lowering interest rates
too slowly and will maintain its measured approach to easing monetary policy, President Christine Lagarde said. NZDUSD reverses losses that came at the back of local inflation data, which pushed up bets on an interest-rate cut next month.  US$ Index -0.1%,
GBPUSD +0.05%, EURUSD +0.1%, USDJPY +0.2%, AUDUSD +0.2%, NZDUSD is flat, USDCHF -0.1%, USDNOK -0.3%.   

Spot Bitcoin -1.4%, 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
• 3M Co (MMM) Raised to Overweight at Wells Fargo; PT $170
• Cerence (CRNC) Raised to Buy at Needham; PT $16
• Crinetics Pharma (CRNX) Raised to Buy at Jefferies; PT $55
• Darden (DRI) Raised to Outperform at Bernstein; PT $215
• Mercantile Bank (MBWM) Raised to Outperform at Hovde Group; PT $54
• Millicom (TIGO) Raised to Buy at HSBC; PT $34
• Netflix (NFLX) Raised to Equal-Weight at Barclays; PT $900
• Raised to Buy at Canaccord; PT $1,150
• Nordson (NDSN) Raised to Buy at Loop Capital; PT $280
• Olympic Steel (ZEUS) Raised to Overweight at KeyBanc; PT $42
• Schwab (SCHW) Raised to Overweight at Wells Fargo; PT $93
• Seagate (STX) Raised to Buy at Benchmark; PT $120
• Raised to Buy at Summit Insights
• Downgrades
• Ambev (ABEV3 BZ) ADRs Cut to Neutral at Grupo Santander; PT $3.56
• America Movil (AMXB MM) ADRs Cut to Hold at HSBC; PT $15.50
• Apple (AAPL) Cut to Fully Valued at DBS Bank; PT $210
• CAE (CAE CN) Cut to Sector Perform at National Bank; PT C$38
• Celsius Holdings (CELH) Cut to Hold at TD Cowen; PT $29
• Charles River (CRL) Cut to Market Perform at William Blair
• Elevance (ELV) Cut to Equal-Weight at Stephens; PT $440
• Fluence Energy (FLNC) Cut to Hold at Jefferies; PT $15
• Ford (F) Cut to Equal-Weight at Barclays; PT $11
• HEPS US Cut to Hold at HSBC; PT $3.50
• Intra-Cellular (ITCI) Cut to Sector Perform at RBC; PT $132
• New Oriental Education (EDU) ADRs Cut to Underperform at Macquarie
• ADRs Cut to Neutral at JPMorgan
• US Cut to Equal-Weight at Morgan Stanley; PT $52
• Paycor HCM (PYCR) Cut to Underweight at JPMorgan; PT $22.50
• Reddit (RDDT) Cut to Neutral at Roth Capital Partners
• Yum (YUM) Cut to Market Perform at Bernstein; PT $135
• Initiations
• Absci (ABSI) Rated New Buy at Needham; PT $9
• ACV Auctions (ACVA) Rated New Equal-Weight at Stephens; PT $20.50
• APi Group (APG) Rated New Buy at Truist Secs; PT $45
• BBB Foods (TBBB) Rated New Market Perform at Itau BBA; PT $32
• Cytokinetics (CYTK) Rated New Buy at Stifel; PT $80
• Disney (DIS) Resumed Buy at Citi; PT $125
• Edgewise Therapeutics (EWTX) Rated New Hold at Stifel; PT $30
• ExlService (EXLS) Reinstated Buy at William O’Neil
• OPENLANE Inc (KAR) Rated New Equal-Weight at Stephens; PT $20
• Orthofix (OFIX) Reinstated Buy at Canaccord; PT $24
• Sea Ltd (SE) ADRs Rated New Buy at William O’Neil
• Sun Country Airlines (SNCY) Rated New Overweight at JPMorgan; PT $23
• Viking Holdings (VIK) Rated New Neutral at Goldman; PT $49
• WeRide (WRD) ADRs Rated New Outperform at CICC; PT $19

Data sources: Bloomberg, Reuters, CQG

David Wienke