Daily Game Plan

by Contributor
on January 24, 2025

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

TODAY’S ECONOMIC DATA:  9:45ET S&P Global US Manufacturing PMI, US Services PMI; 10:00ET U. of Mich. Sentiment,
Existing Home Sales; 11:00ET Kansas City Fed Services Activity

Highlights and News:  

  • President Trump said he would “rather not” impose tariffs on China
  • Apple and Google have removed TikTok from their app stores
  • Trump to go to CA today as firefighters across Southern Cal made progress battling new blazes, with rain in the forecast
  • Israel to continue phased withdrawal from Lebanon beyond deal

 

Global stocks are ending the week at record highs after President Trump appeared to soften his approach toward tariffs on China. The president said in an interview
with Fox News that he would “rather not” use tariffs against the world’s second-largest economy. Trump has reason to avoid alienating Beijing with early trade outbursts, as he tries to convince Russian President Vladimir Putin — a close diplomatic partner
of Xi — to end the war in Ukraine. Chinese Foreign Ministry spokeswoman Mao Ning said there were “huge common interests” between the US and China on Friday, and “the two sides should step up dialogue and consultation.”  Meanwhile, the Bank of Japan raised
its key policy rate to 0.5%, the highest level since 2008, and took a more bullish view on inflation.     

 

EQUITIES:  

US equity futures are slightly lower, a day after the S&P 500 index hit a record closing high following President Donald Trump’s call to lower interest rates and crude prices. Optimism
toward Trump’s pro-business policies pushed risk assets higher this week. Apple and Google have removed TikTok from their app stores, while Oracle keeps the app operational, despite President Trump’s pledge not to enforce a national security law. Oracle’s
decision to keep TikTok operational may be due to its close relationship with Trump and its lucrative business deal with TikTok, which is worth over $1 billion. Boeing shares fell premarket after preliminary quarterly revenue missed. Its Jeppesen unit has
attracted interest from RTX, Honeywell and others, according to sources. Verizon stock rose premarket after it beat estimates for new mobile-phone and broadband customers. American Express reported increased profit.  

Futures ahead of the bell: E-Mini S&P -0.1%, Nasdaq -0.1%, Russell 2000 -0.2%, DJI -0.2%.

In pre-market trading, Affirm Holdings (AFRM) rise 4% after the Wall Street Journal reported that the asset-management unit of Liberty Mutual will provide $750 million
in funding to the buy-now-pay-later company. American Express (AXP) falls 3% after posting quarterly results. Boeing (BA) slips 1.6% after the plane maker suffered another quarter of fresh charges and losses. Grindr (GRND) jumps 7% after the dating company
boosted its forecast for revenue growth for 2024. Intuitive Surgical (ISRG) slips 2% after the robotic-surgery company gave a profit margin forecast for the year that trailed expectations and warned that the potential impact of new tariffs could be material.
Middleby (MIDD) climbs 6% after the Wall Street Journal reported that Garden Investments has built an activist position in kitchen-equipment maker. Texas Instruments (TXN) falls 4% after the chipmaker gave a disappointing earnings forecast. Twilio (TWLO) surges
16% after the software company reported preliminary fourth-quarter revenue growth that topped estimates and authorized a $2 billion share buyback plan.

European gauges are mixed to higher, as traders hoped US President Donald Trump could take a softer-than-feared stance on tariffs. The Stoxx 600 index is on track for
a fifth weekly advance after hitting a record. Luxury stocks, led by Burberry, and miners were among the top gainers, while Ericsson AB fell 10% after missing earnings forecasts. Burberry Group rose as much as 17% after a pickup in US demand boosted the trench-coat
maker’s results, raising investor hopes for a luxury-market recovery. Novo shares jumped over 12% after an experimental shot delivered as much as 22% weight loss in an early-stage trial. France’s CAC 40 index rose to the highest level since early June as it
extended gains to a ninth-straight session, its longest such streak since 2015. Meanwhile, the euro area’s private sector returned to growth in January, surprising analysts. The FTSE 100 underperforms as UK jobs were slashed at a pace last seen in the aftermath
of the financial crisis, S&P Global’s PMI for January showed. Stoxx 600 +0.4%, DAX +0.3%, CAC +0.8%, FTSE 100 -0.3%. Basic Resources +2.1%, Healthcare +1.9%, Luxury +1.6%, Autos +1.6%, Technology +0.6%. Telecom -1.8%, Utilities -0.9%.

Shares in Asia were mostly higher, with Trump’s reluctance to impose tariffs on Chinese goods sparking a risk-on tone, which helped make shares in Hong Kong and China
the region’s best performers. The MSCI Asia Pacific Index gained 0.8%, ending its biggest weekly increase since September at 2.5%. Technology shares including Tencent, Alibaba and Xiaomi contributed the most to the gains. Japan’s Topix Index ended little changed
after gaining as much as 0.8%, after the BOJ raised its key policy rate, as expected, with a hawkish message from the committee.  The BOJ governor hinted at further rate hikes, but did not indicate a specific timing. Japan’s key inflation gauge jumped to a
16-month high of 3% in December on higher energy costs. Hang Seng Tech +3.1%, Hang Seng Index +1.9%, Kospi +0.9%, CSI 300 +0.8%, Thailan +0.75%, Vietnam +0.4%, ASX 200 +0.35%. Topix -0.03%, Singapore -0.05%, Sensex -0.4%, Indonesia -0.9%, Philippines -1.3%.

FIXED INCOME: 
 

Treasuries are slightly richer led by short maturities, extending Thursday’s pronounced steepening of 2s10s curve, after US President Trump appeared to soften his
approach toward tariffs on China. Focal points of US session include S&P Global US PMIs. US 2-year yields are 1.5bp richer on the day, steepening 2s10s curve by about a basis point following Thursday’s 4bp increase in the spread; 10-year, little changed at
around 4.64%. Next week’s Treasury auctions begin Monday with both 2- and 5-year note sales and conclude with 7-year note Tuesday, ahead of Wednesday’s Fed policy announcement.

 

 

METALS: 

Gold prices rose near a record high due to dollar weakness and President Trump’s less aggressive approach to China. Spot gold traded near $2,770 an ounce, the highest
since October when it posted the previous all-time high. Traders have been glued to Trump’s commentary on trade and tariffs since he took office. Tariffs should benefit gold, in spite of accompanying dollar strength, according to strategists for UBS Group.
Spot gold +0.8%, Silver +1.4%, Copper +1%.

 

 

ENERGY:   

 

Crude oil erased an early loss to trade marginally higher as President Trump’s dovish remark toward China pulled the dollar sharply lower.  Trump’s call for higher
oil supply from OPEC underscores his focus on securing relatively low prices — especially as sanctions on Russia and Iran bring significant disruption risk. President Trump said he would ask Saudi Arabia and other OPEC nations to “bring down the cost of oil,”
to heighten pressure on Russia and help end the war in Ukraine.  “If the price came down, the Russia-Ukraine war would end immediately,” Trump told world leaders gathered in Davos, Switzerland, on Thursday. WTI +0.7%, Brent +0.7%, US Nat Gas -2.5%, RBOB +0.05%. 

 

CURRENCIES: 

In currency markets, signs that President Trump is open to negotiation on trade has helped lift assets around the world under the shadow of a trade war, from stocks
to currencies. Emerging markets currencies are on course for their best week since July 2023. The yuan extended gains and rose 0.6% in both onshore and offshore markets after Trump’s latest comments. US dollar slipped to a one-month low as investors switched
to higher-yielding assets. The yen strengthened briefly after the Bank of Japan raised interest rates for the first time since July.  A hike was almost fully priced into market expectations ahead of the announcement.  The euro climbed, heading for its best
week in over a year, as PMI data showed the region’s private sector unexpectedly grew in January.   US$ Index -0.4%, GBPUSD +0.6%, EURUSD +0.7%, USDJPY +0.05%, AUDUSD +0.5%, NZDUSD +0.6%, USDCHF -0.2%, USDCAD -0.3%.    

 

 

Spot Bitcoin +2.1%, Spot Ethereum +4.5%.

 

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
    • Air Products (APD) Raised to Overweight at Barclays
    • American Homes (AMH) Raised to Overweight at Morgan Stanley; PT $40
    • Interpublic (IPG) Raised to Overweight at Barclays; PT $36
    • Intl Seaways (INSW) Raised to Buy at SEB Equities; PT $50
    • Magna Intl (MG CN) Raised to Outperform at RBC; PT C$74.56
    • Mid-America (MAA) Raised to Overweight at Morgan Stanley; PT $168
    • Netflix (NFLX) Raised to Outperform at Bernstein; PT $1,200
    • Oshkosh (OSK) Raised to Overweight at KeyBanc; PT $113
    • Restaurant Brands (QSR CN) Raised to Buy at Guggenheim; PT $71
    • Sherwin-Williams (SHW) Raised to Buy at Berenberg; PT $420
    • Sonic Automotive (SAH) Raised to Overweight at Stephens; PT $83
    • Steel Dynamics (STLD) Raised to Buy at Jefferies; PT $145
    • Travelers (TRV) Raised to Overweight at Piper Sandler; PT $310
    • Twilio (TWLO) Raised to Outperform at Baird; PT $160
  • Downgrades
    • Asur (ASURB MM) ADRs Cut to Equal-Weight at Morgan Stanley; PT $280
    • AutoNation (AN) Cut to Equal-Weight at Stephens; PT $192
    • AvalonBay (AVB) Cut to Equal-Weight at Morgan Stanley; PT $223
    • Brinker (EAT) Cut to Sector Weight at KeyBanc
    • CF Industries (CF) Cut to Underweight at JPMorgan; PT $75
    • Esquire Finl (ESQ) Cut to Market Perform at Raymond James
    • Exelixis (EXEL) Cut to Perform at Oppenheimer; PT $33
    • Freeport (FCX) Cut to Hold at Jefferies; PT $40
    • GE Vernova (GEV) Cut to Neutral at Guggenheim
    • Invitation Homes (INVH) Cut to Equal-Weight at Morgan Stanley; PT $35
    • New Oriental Education (EDU) ADRs Cut to Neutral at Citi; PT $50
    • PVH (PVH) Cut to Neutral at JPMorgan; PT $113
    • Textron (TXT) Cut to Neutral at BofA; PT $85
  • Initiations
    • Arhaus (ARHS) Rated New Hold at Loop Capital; PT $12
    • Brookfield Infrastructure (BIPC CN) Rated New Equal-Weight at Morgan Stanley; PT C$67.39
    • Brookfield Renewable Partners (BEP-U CN) Rated New Overweight at Morgan Stanley; PT C$45.88
      • Brookfield Renewable Rated New Overweight at Morgan Stanley
    • Capital Clean Energy Car (CCEC) Rated New Outperform at Raymond James
    • Cheetah Mobile (CMCM) ADRs Rated New Buy at Guoyuan Securities (HK) Ltd
    • DigitalOcean (DOCN) Rated New Buy at Citi; PT $45
    • Duolingo (DUOL) Rated New Hold at Jefferies; PT $370
    • Iridium Communications (IRDM) Rated New Overweight at Cantor
    • Kraken Sonar (PNG CN) Rated New Outperform at Raymond James; PT C$3.50
    • Kroger (KR) Reinstated Neutral at Citi; PT $61
    • Mid-America (MAA) Rated New Inline at Evercore ISI; PT $155
    • Par Pacific (PARR) Rated New Outperform at Raymond James; PT $25
    • Planet Labs (PL) Rated New Overweight at Cantor
    • Southwest Gas (SWX) Rated New Buy at Ladenburg Thalmann; PT $84
    • Toast (TOST) Rated New Outperform at Oppenheimer; PT $46
    • Trustmark (TRMK) Rated New Buy at Janney Montgomery; PT $42
    • Viasat (VSAT) Rated New Neutral at Cantor
    • Vizsla Silver (VZLA CN) Rated New Outperform at BMO; PT C$4.50
    • WeRide (WRD) ADRs Rated New Overweight at JPMorgan; PT $21

 

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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