Daily Game Plan

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

TODAY’S ECONOMIC DATA:   8:30ET Employment Cost Index, Personal Income, Personal Spending; PCE Price Index, Core
PCE, Fed’s Bowman speaks; 9:45ET MNI Chicago PMI

Highlights and News:  

• US Probing If DeepSeek Got Nvidia Chips From Firms in Singapore
• President Trump is poised to unleash his first wave of tariffs Saturday
• Walgreens Suspends Nearly Century-Old Dividend to Save Cash
• The black boxes of the American Airlines jet that collided with a military helicopter have been recovered
• Fed’s Favored Inflation Gauge Posted Muted Advance in December

Global markets remained vigilant after President Trump repeated on Thursday that the United States would impose a 25% tariff on imports from Mexico and Canada, as
early as Saturday.  A self-imposed Feb. 1 deadline by Trump for a first round of tariffs on Canada, Mexico, and China looms, but the scope of the duties remains unclear.  The European Central Bank cut interest rates on Thursday as expected, while the market
is betting the Bank of England will follow suit next week. French inflation unexpectedly held steady at the start of the year, while German regional data slowed sharply, prompting traders to boost bets on more ECB rate cuts. Meanwhile, US officials are probing
whether Chinese AI startup DeepSeek bought advanced Nvidia semiconductors through third parties in Singapore, circumventing US restrictions.

EQUITIES:  

US equity futures are higher as strong earnings from Apple and Intel supported sentiment, as investors turn their focus on key inflation data this morning and brace for President Trump’s
announcement on tariffs. Apple reported its fiscal first quarter earnings after the bell on Thursday, beating expectations on the top and bottom lines but falling short on iPhone revenue. The December personal consumption expenditures price index is due ahead
of the bell, with headline inflation expected to increase 0.3% month-on-month and 2.6% annually. The Federal Reserve’s preferred measure of underlying inflation remained muted in December, +0.2%, which should support further reductions in interest rates.

Futures ahead of the data: E-Mini S&P +0.45%, Nasdaq +0.8%, Russell 2000 +0.4%, DJI +0.3%.

In pre-market trading, Apple (AAPL) rises 4% after the iPhone maker gave a better-than-expected outlook, helping to offset disappointing iPhone and China revenue in
its first-quarter results. Intel (INTC) advanced 2% after the chipmaker posted December-quarter results that beat analysts’ low expectations, while its forecast for current-quarter revenue missed estimates. AST SpaceMobile (ASTS) rises 6% after the company
said that the Federal Communications Commission has granted it special temporary authority permitting testing service in the US with partners AT&T and Verizon. Walgreens Boots Alliance (WBA) lost 11% after the pharmacy chain operator suspended its quarterly
cash dividend amid restructuring efforts. Atlassian (TEAM) surges 20% after the software company reported second-quarter results that beat expectations and raised its full-year forecast. Baker Hughes (BKR) rises 1.5% after the oil field services firm’s earnings
beat estimates. Chevron (CVX) declines 1% as profit underperformed expectations amid shrinking crude prices and fuel-making margins. Boot Barn (BOOT) falls 7% after providing a fiscal 4Q profit forecast range with a midpoint that falls short of estimates.
Cipher Mining (CIFR) jumps 11% after the Bitcoin mining company announced a $50 million PIPE investment from SoftBank. Deckers Outdoor dropped 14% after the UGG bootmaker’s annual sales forecast raise fell short of investors’ lofty expectations. Vertex (VRTX)
climbs 4% after the biotech’s non-opioid analgesic Journavx received FDA approval for moderate-to-severe acute pain in adults. Viavi (VIAV) surges 19% after the company’s net revenue forecast for the third quarter beat analysts’ estimates.

European stocks and government bonds lift together as data points to a slowdown in euro-area inflation this month, leading traders to ramp up bets on further rate cuts.
Traders are now fully pricing in three more cuts by the ECB before the end of the year. The Stoxx 600 Index has rallied for six straight weeks and is set for a  gain of more than 6% this month, as a strong earnings season lifts sentiment.  Novartis AG shares
surged 4% after the company said profit will rise this year as new medicines help offset competition from copycats of its best-selling drug. Stoxx 600 +0.4%, DAX +0.25%, CAC +0.4%, FTSE 100 +0.3%. Technology +1.6%, Travel & Leisure +0.9%, Energy +0.9%. Telecom
-0.5%.

Shares in Asia were mixed, with the MSCI Asia Pacific Index down 0.1%. the regional benchmark posted a gain for the Lunar New Year week, and its first monthly advance
since September. Korean tech shares fell, catching up with concerns about the artificial intelligence market after extended holidays.  SK Hynix slid ~10%, and Samsung Electronics dropped over 2% after missing profit expectations. Singapore’s Straits Times
Index led gains in the region, while Philippines badly underperformed. Stocks in India rallied for a fourth consecutive day ahead of the federal budget on Saturday.  Markets remain closed in mainland China, Hong Kong, Taiwan and Vietnam. Singapore +1.4%, Sensex
+1%, Indonesia +0.5%, ASX 200 +0.4%, Topix +0.2%. Philippines -4%, Thailand -1.6%, Kospi -0.8%.

FIXED INCOME: 
 

Long-end Treasury yields are ~1bp cheaper on the day following President Trump’s late-Thursday repeated pledge of 25% tariffs on imports from Canada and Mexico on
Feb. 1, with short-end little changed. European rates outperform, led by Germany’s, where soft regional inflation gauges unleashed a curve-steepening rally. Focal points of US session include December personal income and spending data including PCE price indexes
and a speech by Fed Governor Bowman. US 10-year yield +1.5 bps to 4.525%; 2s10s steeper by 1bp.

METALS: 

Gold edges higher, touching a new record high, driven by haven demand amid Trump’s tariff threats. It’s on track for the best month since March as Trump’s tariff
threats and the danger of a trade war spur haven demand for the precious metal. Investors are also awaiting the Federal Reserve’s key inflation gauge, the personal consumption expenditures index, which is set to be released this morning.  Spot gold +0.4%,
Silver +0.3%, Copper -0.3%.

ENERGY:   

Oil prices fluctuated and were on track for weekly losses as traders awaited a decision by President Trump on tariffs on imports from Canada and Mexico. Commodity
markets are pricing in elevated odds that crucial raw materials like oil will be included in sanctions against Canadian imports, Goldman Sachs said. Trump said a decision on whether to include oil imports would be made Thursday night, but no announcement has
so far been made. The US imported 4.42 million barrels of oil per day from Canada in 2023, representing 52% of total oil imports, according to the EIA. Mexico comes in at a distant second, representing 11% of U.S. oil imports.  WTI +0.2%, Brent +0.05%, US
Nat Gas -0.5%, RBOB +0.5%.

CURRENCIES: 

In currency markets, the Canadian dollar, which fell to a near five-year low against the dollar Thursday, steadied on Friday, ahead of data releases including US
PCE inflation and Canada GDP. Immediate tariffs could trigger a larger drop in the loonie, depending on whether oil is included. The peso is also recouping some of its sharp losses yesterday on Trump’s tariff statement. The US dollar rose and is set for its
best week in seven. The euro eased after weaker-than-expected inflation data from France and Germany. Traders are ramping up bets for a deeper divergence between European and US interest rates, setting the euro on a clear path for further weakness.  The ECB
may have to go deeper if US President Trump acts on a pledge to impose punitive trade tariffs. Political turmoil in France and risks associated with elections in Germany next month will also be a drag on the currency, according to global head of currencies
at Russell Investments.  US$ Index +0.4%, GBPUSD +0.02%, EURUSD -0.15%, USDJPY +0.4%, AUDUSD +0.2%, NZDUSD +0.3%, USDCHF +0.1%, USDCAD -0.15%, USDMXN -0.35%.  

Spot Bitcoin -0.1%, Spot Ethereum +3.5%.

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 Outperform at Bernstein; PT $375
• Avery Dennison (AVY) Raised to Overweight at JPMorgan; PT $205
• C.H. Robinson (CHRW) Raised to Buy at Stifel; PT $113
• Celestica (CLS CN) Raised to Outperform at CIBC; PT C$216.22
• Comcast (CMCSA) Raised to Neutral at BNPP Exane; PT $35
• Electronic Arts (EA) Raised to Buy at MoffettNathanson LLC; PT $145
• Enphase Energy (ENPH) Raised to Neutral at Guggenheim
• First Merchants (FRME) Raised to Outperform at Hovde Group; PT $50
• Flagstar Financial (FLG) Raised to Buy at DA Davidson; PT $14.50
• Paylocity (PCTY) Raised to Outperform at Mizuho Securities; PT $235
• Realbotix Corp (XBOT CN) Raised to Buy at HC Wainwright
• Ultrapar (UGPA3 BZ) ADRs Raised to Buy at Goldman; PT $3.20
• Downgrades
• Adagene (ADAG) ADRs Cut to Equal-Weight at Morgan Stanley
• Afya (AFYA) Cut to Sell at Citi; PT $15
• Comcast (CMCSA) Cut to Neutral at BofA; PT $38
• Cytek Biosciences (CTKB) Cut to Sell at Goldman; PT $4.50
• Excelerate Energy (EE) Cut to Underweight at Morgan Stanley; PT $29
• Hershey (HSY) Cut to Underweight at Piper Sandler; PT $120
• Intra-Cellular (ITCI) Cut to Hold at Canaccord; PT $132
• Magnolia Oil & Gas (MGY) Cut to Neutral at Goldman; PT $26
• Mondelez (MDLZ) Cut to Neutral at Piper Sandler; PT $63
• Murphy Oil (MUR) Cut to Hold at Truist Secs; PT $31
• Occidental (OXY) Cut to Sell at Goldman; PT $45
• UPS (UPS) Cut to Neutral at Baird; PT $130
• Initiations
• Acrivon Therapeutics (ACRV) Rated New Overweight at Cantor
• Alamos Gold (AGI CN) Rated New Buy at William O’Neil
• Astria Therapeutics Inc (ATXS) Rated New Market Outperform at JMP
• Core Natural Resources (CNR) Rated New Hold at Jefferies; PT $93
• Dave (DAVE) Rated New Buy at Canaccord; PT $120
• GE Vernova (GEV) Rated New Equal-Weight at Oxcap; PT $362
• Gulfport Energy (GPOR) Rated New Hold at TD Cowen; PT $185
• KalVista (KALV) Rated New Market Outperform at JMP; PT $19
• Leon’s Furniture (LNF CN) Rated New Outperform at National Bank; PT C$34
• News Corp (NWSA) Rated New Buy at Seaport Global Securities; PT $37
• NNN REIT Inc (NNN) Rated New Inline at Evercore ISI; PT $42
• Oddity Tech (ODD) Rated New Overweight at JPMorgan; PT $55
• PLBY Group (PLBY) Rated New Buy at Roth Capital Partners; PT $3
• Zillow (ZG) Rated New Neutral at Baird; PT $88

Data sources: Bloomberg, Reuters, CQG

David Wienke