TODAY’S GAME PLAN: from the trading
desk, this is not research
TODAY’S ECONOMIC DATA: 11:00ET NY Fed 1-Yr Inflation Expectations
Highlights and News:
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China’s retaliatory tariffs on US goods are scheduled to take effect today
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Trump to announce new steel, aluminum tariffs today, more tariffs coming this week
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The US has suspended its “de minimis” exemption, which allowed small packages from China and Hong Kong to enter the country without customs declarations and tariffs
Global stocks rose, as investors shrugged off trade war-related worries to focus on robust quarterly results. President Trump said he would announce 25% tariffs today
on all steel and aluminum imports into the US today and reveal other reciprocal tariffs on “everyone” this week. He didn’t specify when the duties would take effect. China’s retaliatory tariffs on some US exports also take effect today, with no sign of progress
between Beijing and Washington. Worries about Chinese deflation were soothed by data showing consumer inflation accelerated to its fastest in five months in January. A number of key events are on the radar this week, including Fed Chairman Powell’s semi-annual
testimony and US CPI data.
EQUITIES:
US equity futures recovered from earlier losses as investors looked ahead to another busy week of earnings. Federal Reserve Chairman Jerome Powell is scheduled to testify before the House
of Representatives on Tuesday and Wednesday, where the effects of tariffs on monetary policy will undoubtedly be a major topic of discussion. The latest tariff news boosted American metals stocks, with United States Steel Corp. surging as much as 15% premarket.
Futures ahead of the bell: E-Mini S&P +0.55%, Nasdaq +0.8%, Russell 2000 +0.6%, DJI +0.5%.
In pre-market trading, Aluminum and steel company shares rise as President Trump plans to impose 25% tariffs on all imports of the metals into the country.. Alcoa (AA)
climbs 5% and Century Aluminum (CENX) jumps 11%. Steel firms moving higher include Cleveland-Cliffs (CLF) +8%, US Steel (X) +4%. Aspen Technology (AZPN) falls 2% after Emerson said the $265 per share price offer for the company is Emerson’s best and final
price. Axsome Therapeutics (AXSM) rises 13% after announcing it has entered into a settlement agreement with Teva Pharmaceuticals resolving patent litigation. Charles Schwab Corp. (SCHW) falls 3% as Toronto-Dominion Bank plans to exit its equity investment
in the company. Hain Celestial (HAIN) declines 8% as the snacks and tea maker reported an earnings miss. Monday.com (MNDY) soars 25% after the software company reported fourth-quarter results that were much better than expected. On Semi (ON) slips 4% after
reporting quarterly revenue that missed the average analyst estimate. Playa Hotels & Resorts (PLYA) rises 2% after Hyatt Hotels agreed to buy the company for about $2.6 billion. Pliant Therapeutics (PLRX) slumps 64% after the company voluntarily paused enrollment
and dosing of a trial of bexotegrast in patients with idiopathic pulmonary fibrosis. Rockwell Automation (ROK) rises 7% after the company posted quarterly profit that beat the average analyst estimate. Semtech (SMTC) plunges 26% after the chipmaker said sales
of the company’s CopperEdge products are expected to be lower than management’s “floor case” estimate. Meta is leading gains for the Magnificent Seven group. Meanwhile, shares in Tesla are set to extend losses for a fourth session.
European gauges advanced as corporate earnings were set to increase more than analysts expected, while investors monitored the latest tariff moves from US President
Trump. Energy stocks lead gains, led by a 7% jump in BP after a report said activist investor Elliott Investment Management built a stake in the company. Nearly halfway into the reporting season, MSCI Europe firms have posted a 0.5% increase in fourth-quarter
earnings compared with analysts’ expectations of a 1.3% decline, according to Bloomberg. Mining stocks rose even as Trump shared plans to levy 25% tariffs on all imports of steel and aluminum into the US. Stoxx 600 +0.5%, DAX +0.4%, CAC +0.2%, FTSE 100 +0.6%.
Energy +1.3%, Real Estate +1.2%, Telecom +1.2%, Autos +1.1%. Construction -0.3%.
Shares in Asia were mostly lower on concern President Trump’s plans for tariffs on all imports of steel and aluminum will add to a growing trade war. The MSCI Asia
Pacific Index fell 0.3%, with the region’s material shares weighing. The Hang Seng Index jumped almost 2% as Chinese tech shares rallied for a third day as the nation’s growing artificial intelligence capability fueled optimism on the beaten-down sector. Sentiment
was also boosted by Trump’s decision to delay suspension of the “de minimis” exception, boosting e-commerce shares. Chinese stocks related to genetic sequencing gained as analysts trim their price targets for key US competitor Illumina after its inclusion
on China’s “unreliable entity” list. Philippines -1.9%, Indonesia -1.4%, Taiwan -1%, Vietnam -0.9%, Thailand -0.9%, Sensex -0.7%, ASX 200 -0.3%, Topix -0.1%, Kospi -0.05%. Hang Seng Index +1.85%, CSI 300 +0.2%, Nikkei 225 +0.05%.
FIXED INCOME:
Treasuries are narrowly mixed, holding most of Friday’s yield increases sparked by the January jobs data. With no major US economic data slated before the CPI report
Wednesday, Treasury and corporate bond supply may be the main driver of flows. Treasury auctions begin Tuesday with 3-year notes and include 10- and 30-year new issues Wednesday and Thursday. Yields remain within 2bp of closing levels from Friday with the
curve steeper; 2s10s and 5s30s spreads are wider for first day in five. 10-year yield is flat around 4.49%.
METALS:
Gold hit a record high as President Trump pledged to impose tariffs on imports of steel and aluminum, as the president’s latest trade threats helped boost demand
for haven assets. Spot gold rose above $2,900 an ounce after advancing 2.2% last week. Aluminum futures in London were steady as traders waited for more details on when and how the latest tariffs would operate. Spot gold +1.5%, Silver +1.3%, Copper +1.4%.
ENERGY:
Oil prices ticked up after three weeks of losses that have been partly driven by trade concerns, with traders appearing to shake off worries surrounding another round
of tariffs set to be imposed by President Trump. Trump said on Friday that reciprocal tariffs were forthcoming – potentially against imports from China, Japan, Taiwan and the European Union, as well as other countries that already impose tariffs against American
goods. European natural gas prices rose over 4% to a two-year high as colder temperatures accelerate the depletion of the region’s storage facilities. WTI +1.5%, Brent +1.4%, US Nat Gas +3.7%, RBOB +0.9%.
CURRENCIES:
In currency markets, the dollar strengthened with investors concerned rising tariffs may boost inflation and limit the Federal Reserve’s ability to cut interest rates.
Wall Street banks argue that the dollar’s strength has room to run even as traders mull the outcome of Trump’s on-again, off-again tariff threats. Goldman Sachs is expecting the greenback to break parity against the euro, while JPMorgan predicts the greenback
may buy around 1.50 Canadian dollars for the first time in a generation. US CPI data along with commentary from Federal Reserve Chairman Jerome Powell due later this week are in focus for further clues on the central bank’s policy path. US$ Index +0.2%, GBPUSD
-0.05%, EURUSD -0.05%, USDJPY +0.4%, AUDUSD +0.1%, NZDUSD -0.1%, USDCAD +0.3%, USDMXN +0.15%.
Spot Bitcoin +2.4%, 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
- AspenTech (AZPN) Raised to Buy at Loop Capital; PT $315
- Cloudflare (NET) Raised to Buy at President Capital Management
- Mobileye (MBLY) Raised to Neutral at BofA; PT $19
- Nevro (NVRO) Raised to Hold at Jefferies; PT $5.85
- Oneok (OKE) Raised to Outperform at Wolfe; PT $110
- Robert Half Inc (RHI) Raised to Outperform at BNPP Exane; PT $71.50
- Shopify (SHOP CN) Raised to Buy at Benchmark; PT $150
- VerticalScope (FORA CN) Raised to Outperform at CIBC; PT C$17
- WesBanco (WSBC) Raised to Outperform at KBW; PT $44
- Downgrades
- Atkore (ATKR) Cut to Hold at Loop Capital; PT $65
- Illumina (ILMN) Cut to Underweight at Barclays; PT $100
- Kraft Heinz (KHC) Cut to Neutral at Mizuho Securities; PT $31
- Melco Resorts (MLCO) ADRs Cut to Neutral at Citi; PT $6
- Merck & Co (MRK) Cut to Hold at TD Cowen; PT $100
- NetApp Inc (NTAP) Cut to Neutral at Susquehanna
- Pliant Therapeutics (PLRX) Cut to Perform at Oppenheimer
- Cut to Neutral at HC Wainwright
- Cut to Sector Perform at RBC; PT $4
- Cut to Neutral at Citi; PT $4
- Cut to Equal-Weight at Wells Fargo; PT $4
- Roblox (RBLX) Cut to Hold at Accountability Research; PT $75
- Triumph Group (TGI) Cut to Peerperform at Wolfe
- Initiations
- Armour Residential (ARR) Rated New Neutral at BTIG
- ARS Pharmaceuticals Inc (SPRY) Rated New Outperform at Oppenheimer
- Flowco Holdings (FLOC) Rated New Overweight at JPMorgan; PT $32
- Rated New Overweight at Piper Sandler; PT $34
- Rated New Buy at Jefferies; PT $35
- Rated New Outperform at BMO; PT $33
- Lifeward Ltd (LFWD) Rated New Buy at Laidlaw; PT $10
- MannKind (MNKD) Rated New Outperform at Wedbush; PT $11
- Repligen (RGEN) Rated New Buy at TD Cowen; PT $200
Data sources: Bloomberg, Reuters, CQG
David Wienke
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