Daily Game Plan

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

TODAY’S ECONOMIC DATA:   8:30ET Advance Goods Trade Balance, Wholesale Inventories, Retail Inventories: 9:45ET Bank
of Canada Rate Decision; 2:00ET FOMC Rate Decision

Highlights and News:  

• OpenAI says they have evidence that DeepSeek illegally used their proprietary models
• Chinese, Iranian Hackers Among Groups Using Gemini Chatbot to Boost Cyberattacks – WSJ
• META, MSFT, TSLA quarterly reports after the bell
• Trump to sign a school choice executive order today
  

World markets calmly move higher as the week’s rollercoaster ride for stock markets awaits the Federal Reserve’s first rate meeting of the year and results from Microsoft,
Meta and Tesla. OpenAI says they have evidence that DeepSeek illegally used their “proprietary models to train its own open-source competitor,” per FT. OpenAI claims this was done through “distillation,” allowing DeepSeek to obtain better performance on smaller
models. Minutes from the Bank of Japan’s December meeting released today showed members discussed neutral interest rates. Sweden’s central bank lowered borrowing costs by a quarter point and signaled its easing campaign may be finished for now. Traders are
betting the European Central Bank will have to adopt a more aggressive approach to cutting interest rates as the risk of US tariffs and political turmoil in the region weighs on the bloc’s economy. A quarter-point cut is widely expected on Thursday.    

EQUITIES:  

US equity futures fluctuated as investors turned toward the first Fed policy decision of 2025. The Fed is widely expected to end a three-meeting run of rate cuts and stay on hold, giving
themselves more time to assess how President Trump’s policies will affect the economy. Investors will be paying close attention to Chairman Powell’s comments at his presser and then shift focus to META, MSFT, TSLA quarterly reports after the bell. Microsoft
and OpenAI are investigating whether data output from OpenAI’s technology was obtained in an unauthorized manner by a group linked to startup DeepSeek.

Futures ahead of the bell: E-Mini S&P -0.2%, Nasdaq +0.05%, Russell 2000 -0.1%, DJI -0.2%.

In pre-market trading, Apple (AAPL) shares are down over 1% after an Oppenheimer downgrade from Outperform to Perform due to lower iPhone sales forecasts for the next
12-18 months, citing increased competition in China and a lack of innovative AI features to boost device upgrades. American Axle (AXL) slips 3% after entering a deal to combine with Dowlais. Danaher (DHR) falls 5% after the life-sciences firm posted quarterly
profit that missed estimates. F5 Inc. (FFIV) jumps 14% after the network security company raised its forecast for full-year growth. Henry Schein (HSIC) rises 3% after KKR & Co. has taken a 12% strategic stake in the company. LendingClub (LC) drops 21% after
the operator of peer-to-peer loan website gave a first-quarter forecast that missed estimates. Manhattan Associates (MANH) tumbles 23% after the supply-chain software company gave a profit forecast for 2025 that disappointed. NEXTracker (NXT) surges 21% after
the solar equipment maker boosted its earnings guidance for the full year. Packaging Corp. (PKG) falls 4% after the containerboard producer provided a disappointing first quarter profit forecast. Paragon 28 (FNA) climbs 10% after Zimmer Biomet Holdings agreed
to buy the medical device company. Qorvo (QRVO) declines 6% after the semiconductor device company’s 2026 revenue forecast underwhelmed.

NVDA relative to the Semiconductor ETF (SMH); held the key 200dma in the pair.

European gauges rose as ASML Holding NV’s strong earnings reassured investors following this week’s tech-related jitters. The Stoxx 600 climbs to a record high, driven
by a surge in ASML shares of as much as 12% after the Dutch company booked more than twice as many orders as analysts expected in the fourth quarter, as the AI boom fuels demand.  Luxury stocks provide a drag as LVMH shares fall ~5% after sales of fashion
and leather goods declined.  Goldman analysts say to “buy on any weakness.”   Continental AG declined after the German company said its automotive unit will struggle to increase sales this year . Germany’s economic minister Habeck said the German economy is
in a difficult position to start the year and slashes 2025 GDP growth forecast to 0.3% from 1.1%.  Stoxx 600 +0.6%, DAX +0.7%, CAC -0.2%, FTSE 100 +0.3%. Technology +3.2%, Retail +1.4%, Industrial Goods +1.3%, Media +0.8%. Personal Goods -1%, Luxury -0.7%,
Chemicals -0.6%.

Shares in Asia gained, led by advances in Japan and India while most markets were shut for the Lunar New Year. The MSCI Asia Pacific Index rose 0.5%, with Sony and
Toyota among the biggest boosts. Most of the shares listed on the regional benchmark were not trading today. Japanese shares advanced as the DeepSeek-driven tech selloff subsided, following a rebound in Nvidia and other US AI stocks overnight.  Australia’s
main equity gauge climbed as data showing cooler-than-expected inflation was seen paving the way for an interest-rate cut as soon as next month. Stocks in India extended their rebound from recent selloffs, fueled by gains in bank stocks and shares of software
exporters Infosys and Tata Consultancy Services. Most of Asia is now closed for the rest of the week due to the Chinese New Year. Nikkei 225 +1%, Sensex +0.8%, ASX 200 +0.6%, Thailand -0.2%.

FIXED INCOME: 
 

US Treasuries held onto recent gains ahead of the Federal Reserve’s interest-rate decision as traders ratcheted up bullish bets in hope that Chair Jerome Powell will
signal a cut in March is firmly on the table. Yields were little changed across the curve, with two-year rates hovering around the lowest level in more than a month. The US central bank is overwhelmingly expected to keep rates steady this week, though swaps
are pricing in a roughly 30% chance of a cut in March. JPMorgan’s latest client survey released Tuesday shows the biggest net long position in US government debt in almost 15 years. Morgan Stanley sees today’s meeting as a catalyst for another leg lower in
Treasury yields. US 10-year yields fall ~1 bps to 4.52%; 2s10s is flat.

METALS: 

Gold inched cautiously lower ahead of the Federal Reserve’s interest rate decision, with traders also weighing President Trump’s latest tariff threats. Policymakers
are expected to keep rates steady this week, though Fed Chair Jerome Powell is expected to give a press conference that may offer clues on the outlook for the next gathering in March. Spot gold -0.2%, Silver +0.7%, Copper +0.7%.

ENERGY:   

Oil prices slipped, following a rise in US crude stockpiles and easing worries over Libyan supply, while focus turned to potential US tariffs on Canadian and Mexican
imports. The White House said on Tuesday that President Trump still plans to issue 25% tariffs on Canada and Mexico on Saturday.  Supply concerns eased after Libya’s National Oil Corp said on Tuesday export activity was running normally after it held talks
with protesters. API reported a 2.9 million barrel rise in U.S. crude inventories last week. The Energy Information Administration will release official inventory data this morning. OPEC+ Joint Ministerial Monitoring Committee meets next Monday. WTI -0.5%,
Brent -0.5%, US Nat Gas +0.7%, RBOB -0.2%.

CURRENCIES: 

In currency markets, the dollar rose ahead of the Federal Reserve decision, while the Loonie fell to its lowest in a week as traders position for the Bank of Canada
meeting. Bank of Canada is seen cutting by 25bp to 3%. The Aussie dollar is the weakest of the G-10 currencies, falling against the dollar after core inflation eased by more than expected. The Swedish krona weakens after the Riksbank cut interest rates 25
bps as expected.  Markets are positioning for the euro to weaken in the coming months as the ECB eases policy. EURUSD surged by more than 3% in the past two weeks on bets levies would be delayed or watered down. Those gains were partly reversed on Tuesday
after Trump vowed across-the-board tariffs that are “much bigger” than 2.5%.  US$ Index +0.2%, GBPUSD -0.2%, EURUSD -0.3%, USDJPY -0.1%, AUDUSD -0.5%, NZDUSD -0.4%, USDCHF +0.3%, USDCAD +0.25%. 

Spot Bitcoin +2%, 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
• AT&T (T) Raised to Buy at DZ Bank; PT $27
• Beam Therapeutics (BEAM) Raised to Overweight at Cantor
• Brighthouse Financial (BHF) Raised to Overweight at Barclays
• Coinbase (COIN) Raised to Neutral at Mizuho Securities; PT $290
• HealWELL AI (AIDX CN) Raised to Buy at Beacon Securities; PT C$3.50
• Metro Inc (MRU CN) Raised to Outperform at BMO; PT C$96
• NBT Bancorp (NBTB) Raised to Overweight at Stephens; PT $53
• NEXTracker (NXT) Raised to Overweight at Barclays; PT $60
• Open Lending (LPRO) Raised to Buy at Needham; PT $7
• Sanmina (SANM) Raised to Neutral at BofA; PT $92
• Verizon (VZ) Raised to Hold at DZ Bank; PT $40
• Western New England (WNEB) Raised to Buy at Seaport Global Securities
• Downgrades
• Caterpillar (CAT) Cut to Hold at Melius; PT $390
• DarioHealth (DRIO) Cut to Hold at TD Cowen; PT $1
• Datadog (DDOG) Cut to Hold at Stifel
• Galiano Gold Inc (GAU CN) Cut to Market Perform at BMO; PT C$1.50
• Leap Therapeutics (LPTX) Cut to Neutral at HC Wainwright
• Cut to Neutral at Baird; PT $1.25
• Moderna (MRNA) Cut to Neutral at Goldman
• Paragon 28 (FNA) Cut to Market Perform at William Blair
• Synchrony Financial (SYF) Cut to Neutral at Compass Point; PT $70
• Third Coast (TCBX) Cut to Market Perform at KBW; PT $42
• Transcat (TRNS) Cut to Market Perform at Oppenheimer
• Initiations
• Chartwell Retirement (CSH-U CN) Re-Initiated Outperform at BMO; PT C$18
• Curbline Properties Rated New Equal-Weight at Morgan Stanley
• Extendicare (EXE CN) Rated New Market Perform at BMO; PT C$11
• Galaxy Digital (GLXY CN) Rated New Overweight at Cantor; PT C$44
• Larimar Therapeutics Inc (LRMR) Rated New Buy at Truist Secs; PT $18
• MicroStrategy (MSTR) Rated New Outperform at Mizuho Securities; PT $515
• OneSpaWorld (OSW) Reinstated Buy at William O’Neil
• OnKure Therapeutics Inc (OKUR) Rated New Buy at Jones; PT $32
• Rivian (RIVN) Rated New Underperform at Bernstein
• Sienna Senior Living (SIA CN) Re-Initiated Outperform at BMO; PT C$17

Data sources: Bloomberg, Reuters, CQG

David Wienke