Daily Game Plan

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

TODAY’S ECONOMIC DATA:   8:15ET ECB Rate Decision; 8:30ET GDP, Core PCE Price Index, Jobless Claims; 8:45ET ECB’s
Christine Lagarde speaks; 10:00ET Pending Home Sales

ECB CUTS DEPOSIT FACILITY RATE BY 25BPS TO 2.75%; EST. 2.75%. ECB TO FOLLOW DATA-DEPENDENT, MEETING-BY-MEETING APPROACH. DISINFLATION PROCESS IS WELL ON TRACK

Highlights and News:  

• Israel gets list of hostages to be freed by Hamas today, 82 remain
• Sam Altman in DC today to show new tech to White House staff and lawmakers: Axios
• France Seeks Budget Compromise to Stave Off Government Collapse
• Chinese, Iranian Hackers Use AI To Bolster Attacks – WSJ
• US figure skaters were on board plane that crashed into Potomac River; DCA airport halted all flights until 11:00ET; No survivors reported
  

World shares nudged higher as investors digested earnings from Microsoft and Meta, while the dollar steadied after the Federal Reserve left rates unchanged. In contrast
to the Fed, the European Central Bank is almost certain to cut rates by 25 basis points to 2.75% today. French lawmakers will try to reach a budget compromise today that can get enough support to avert another government collapse.  Elsewhere, Japan’s real
rates clearly remain in negative territory even with last week’s interest rate hike, and the Bank of Japan will keep raising rates if its economic outlook is realized, according to Deputy Governor Ryozo Himino. The BOJ made a significant step toward shrinking
its massive balance sheet last week. Flows were quiet in APAC as most of Asia is celebrating the Lunar Holiday.

EQUITIES:  

US equity futures edge higher as upbeat commentary from Meta and Tesla aided sentiment and software stocks are in vogue again on DeepSeek’s efficiency promise. Software stocks are beating
their semiconductor counterparts in the benchmark equities gauge by 11 percentage points over the past three sessions. If that holds through Friday, it would be the widest weekly gap since June 2002. Goldman Sachs says companies such as Microsoft, ServiceNow
and Salesforce could benefit from more efficient AI computing and that a wider mix of software companies could emerge because of the innovation. US data today is expected to show the economy grew at a slower pace in the final quarter of the year, while the
Fed’s preferred inflation gauge due on Friday is forecast to show a slight acceleration in consumer price growth in December.

Futures ahead of the bell: E-Mini S&P +0.3%, Nasdaq +0.5%, Russell 2000 +0.9%, DJI -0.1%.

In pre-market trading, American Airlines (AAL) declines 2% after a regional jet flown for the carrier collided with a military helicopter near Ronald Reagan Washington
National Airport. Arista Networks (ANET) rises 3% following positive AI-investment commentary from Meta and Microsoft. AI infrastructure stocks also advance, including Broadcom (AVGO) +4%, Marvell Technology (MRVL) +3%. International Business Machines (IBM)
gains 8% after fourth-quarter results beat. Lam Research (LRCX) advances 5% after the semiconductor equipment company gave a forecast that beat. Meta shares gained 1% after Mark Zuckerberg predicted its AI assistant will reach over 1 billion people in 2025.
Microsoft (MSFT) fell 4% as analysts said its forecast for weak Azure growth overshadowed a solid revenue beat. subscription revenue that’s weaker than expected. Tesla (TSLA) rises 2% after the electric-vehicle maker unveiled plans to start robotaxi operations
and forecast a sales recovery this year. ServiceNow (NOW) falls 9% after the software company forecast full-year subscription revenue that’s weaker than expected. Tractor Supply (TSCO) declines 5% after the retailer reported a miss. United Parcel Service (UPS)
slides 10% after the courier tempered expectations for a long-awaited rebound this year.  

European gauges advance as investors digested a slew of earnings updates while awaiting an interest rate decision from the European Central Bank. The Stoxx 600 hit
another record high, led by real estate and technology names while banks lag. Earnings updates boosted shares of BBVA, CaixaBank, and ABB Ltd., while Deutsche Bank, Wizz Air, and Swatch Group declined after disappointing results. The euro zone unexpectedly
stagnated in the fourth quarter, defying estimates for a little growth. Germany’s GDP fell by a bigger-than-expected 0.2%. France’s economy unexpectedly contracted 0.1%. French lawmakers meet today to pursue a budget compromise. Stoxx 600 +0.6%, DAX +0.3%,
CAC +0.6%, FTSE 100 +0.5%. Rea; Estate +1.6%, Technology +1.3%, Media +1.1%, Energy +1.1%. Banks -0.4%.

Shares in Asia were mixed to higher, with the MSCI Asia Pacific Index +0.1%. Australian stocks gained for a second day amid hopes for easier monetary policy, ending
just below its record high. Japanese stocks inched higher, and chip-equipment makers Tokyo Electron and Advantest giving a boost. SoftBank is in talks to invest as much as $25 billion in OpenAI, on top of its $15 billion commitment to JV Stargate. Indonesia
led losses, with its key equity benchmark falling more than 1% as trading resumed for the first time since last week. Most major Asian markets including China, South Korea, Taiwan and Hong Kong remained closed for the Lunar New Year.  ASX 200 +0.55%, Sensex
+0.3%, Topix +0.2%, Thailand -0.55%, Philippines -0.7%, Indonesia -1.3%.

FIXED INCOME: 
 

Treasuries hold gains into early US session, following bunds and gilts ahead of the ECB policy decision due 8:15ET. US long-end yields lead move, falling as much
as 5bp and flattening the 2s10s curve by ~3.5bps, with the 10-year rate trading at 4.49%. Focal points of US session include first estimate of 4Q GDP and weekly jobless claims.  Euro area bonds jumped following data showing the bloc’s top two economies contracted
at the end of last year and the region unexpectedly stagnated.

METALS: 

Gold rose while investors looked ahead to US economic data after the Federal Reserve offered few clues on its next policy steps. Fed Chair Jerome Powell said officials
won’t rush to lower US interest rates, adding that the central bank is pausing easing to see further progress on inflation. Gold exports to the US from Switzerland jumped 11-fold to 64.2 tons in December, the most since March 2022, on tariff fears.  Spot gold
+0.8%, Silver +1.1%, Copper +0.5%.

ENERGY:   

Oil prices fluctuated as traders waited for clarity on US trade policy, after Donald Trump’s pick for commerce secretary said Canada and Mexico, the country’s top
crude suppliers, may avoid high tariffs if they swiftly act to close their borders to fentanyl.  Data on the European economy painted a gloomy picture, with unexpected stagnation casting a fresh cloud over consumption. Investors are also looking ahead to a
meeting by OPEC+, scheduled for February 3. WTI +0.03%, Brent +0.1%, US Nat Gas +0.6%, RBOB -0.1%.

CURRENCIES: 

In currency markets,  the dollar steadied while the yen gained strength as anticipation grows that the Bank of Japan will continue to increase interest rates, even
as other central banks are lowering theirs. The euro is headed for a fourth daily decline ahead of an expected 25bp rate cut from the ECB today. The euro came under pressure after today’s data showed Germany and France contracted at the end of last year. Output
fell 0.2% in Germany and 0.1% in France, while euro zone 4Q GDP was unchanged from the previous three months.  US$ Index +0.05%, GBPUSD -0.15%, EURUSD -0.3%, USDJPY -0.5%, AUDUSD -0.1%, NZDUSD -0.2%, USDCHF +0.2%, USDSEK +0.3.   

Spot Bitcoin +1.2%, Spot Ethereum +2.5%. COINBASE ADDS FORMER SEN. KYRSTEN SINEMA, TRUMP AIDE CHRIS LACIVITA, EX-NY FED PRESIDENT BILL DUDLEY, AND FINANCE EXPERT
LUIS ALBERTO MORENO TO GLOBAL ADVISORY COUNCIL TO STRENGTHEN POLITICAL AND REGULATORY STRATEGY

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
• Akero Therapeutics (AKRO) Raised to Buy at BofA; PT $63
• Brinker (EAT) Raised to Buy at Northcoast; PT $215
• Coca-Cola (KO) Raised to Buy at Jefferies; PT $75
• Commvault Systems Inc (CVLT) Raised to Outperform at William Blair
• Corning (GLW) Raised to Buy at HSBC; PT $60
• CVS (CVS) Raised to Buy at Edward Jones
• Ecopetrol (ECOPETL CB) ADRs Raised to Outperform at Bradesco BBI; PT $12
• Edwards Life (EW) Raised to Buy at Stifel
• Entergy (ETR) Raised to Buy at Ladenburg Thalmann; PT $86.50
• Lam Research (LRCX) Raised to Outperform at Bernstein; PT $91
• Meta (META) Raised to Buy at Benchmark; PT $820
• Pacira BioSciences (PCRX) Raised to Hold at Truist Secs; PT $25
• RH (RH) Raised to Neutral at Goldman; PT $374
• Sage Therapeutics (SAGE) Raised to Outperform at Mizuho Securities
• SEI (SEIC) Raised to Outperform at Raymond James; PT $99
• Starbucks (SBUX) Raised to Buy at Punto Casa de Bolsa; PT $115
• Veritex Holdings (VBTX) Raised to Outperform at Hovde Group; PT $31.50
• Downgrades
• Cargo Therapeutics (CRGX) Cut to Neutral at HC Wainwright
• Cut to Hold at Truist Secs; PT $7
• Cut to Underweight at JPMorgan
• Cut to Market Perform at William Blair
• Cut to Hold at Jefferies; PT $3
• Cut to Neutral at Chardan Capital Markets
• Cut to Neutral at Piper Sandler; PT $4
• Everest Group Ltd (EG) Cut to Market Perform at BMO; PT $375
• Floor & Decor (FND) Cut to Sell at Goldman; PT $79
• Geopark (GPRK) Cut to Neutral at Bradesco BBI; PT $10
• KKR & Co. (KKR) Cut to Hold at HSBC; PT $173
• Lennox (LII) Cut to Neutral at Mizuho Securities; PT $625
• Meridianlink Inc (MLNK) Cut to Underperform at BofA; PT $18
• Nvidia (NVDA) Cut to Sell at Punto Casa de Bolsa; PT $112
• PagerDuty Inc (PD) Cut to Underperform at BofA; PT $18
• Paragon 28 (FNA) Cut to Equal-Weight at Stephens; PT $13
• Vertex Pharmaceuticals (VRTX) Cut to Equal-Weight at Wells Fargo
• Initiations
• Alumis (ALMS) Rated New Outperform at Oppenheimer; PT $32
• Foghorn Therapeutics (FHTX) Rated New Buy at B Riley; PT $10
• Founders Metals (FDR CN) Rated New Outperform at BMO; PT C$7.50
• Green Impact Partners In (GIP CN) Rated New Buy at Desjardins; PT C$9
• Knightscope (KSCP) Rated New Buy at HC Wainwright; PT $16
• Quinsam Opportunities I (VHI CN) Rated New Sector Outperform at Scotiabank; PT C$14
• Surrozen (SRZN) Rated New Buy at HC Wainwright; PT $32
• Vizsla Royalties (VROY CN) Rated New Speculative Buy at Canaccord; PT C$3
• Worthington Enterprises (WOR) US Reinstated Buy at Seaport Global Securities; PT $55

Data sources: Bloomberg, Reuters, CQG

David Wienke