Daily Game Plan

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

TODAY’S ECONOMIC DATA:  2:20ET Fed’s Williams Speaks; 9:00 p.m.: Trump to address joint session of Congress

Highlights and News:  

• Trump will discuss tax cuts and economic agenda in speech today
• Putin Agrees to Help Trump Broker Iran Talks  
• Ukraine Continues to Receive US Aid According to Plan – Sources
• China Says It Strictly Controls Fentanyl Production, Exports
• Bessent: Highly Confident that Chinese Manufacturers Will Eat the Tariffs
  

World stocks fell as tariff actions, which could upend nearly $2.2 trillion in two-way annual US trade went live. President Trump’s new 25% tariffs on imports from
Mexico and Canada took effect today, along with a doubling of duties on Chinese goods to 20%, launching new trade conflicts with the top three US trading partners. For the second time in a month, China retaliated against US tariffs with measured actions that
appeared calibrated to avoid escalation and bring the US to the negotiating table. China’s new tariffs of as much as 15% targeted a wide range of US agricultural products including certain meats, grains, cotton, fruit, vegetables and dairy products. Beijing
also placed 25 US firms under export and investment restrictions on national security grounds. The Canadian government announced a sweeping package of counter-tariffs against US-made products.    

EQUITIES:  

US equity futures fell as tit-for-tat tariff action weighs on sentiment. The new levies mark Trump’s biggest push to remake global trade, and investors will be watching his address to
Congress later today for hints on future steps. US Treasury Secretary Bessent said this morning that “we are set on bringing interest rates down”, in a Fox New interview. He added the US is to become a major exporter of energy and “we will do bank deregulation.’ 
There’s a “very small” chance that the US economy tips into a recession, despite uncertainty surrounding global trade, Goldman CEO David Solomon said. Congressional Republicans will increase scrutiny of the Fed, with a new task force kicking off its first
meeting today. Target Corp. is projecting little to no sales growth this year, a concerning sign for a big-box retailer that’s struggling to shake
off a lengthy slump. Tesla (TSLA) declined the most premarket among the Magnificent Seven stocks. Meanwhile, shares in Nvidia (NVDA) whipsaw a day after a selloff in the chipmaker wiped out almost $265 billion in market value.

Futures ahead of the bell: E-Mini S&P -0.7%, Nasdaq -0.9%, Russell 2000 -1.1%, DJI -0.3%

In pre-market trading, JetBlue Airways (JBLU) shares are down 1.7%, after Deutsche Bank downgraded the airline to hold from buy. Okta (OKTA) shares jump 14% after the
infrastructure software company reported fourth-quarter results that beat expectations, and its outlook impressed. Walgreens Boots Alliance (WBA) shares rise 4.6% after Bloomberg reported that Sycamore Partners is nearing an acquisition of the drugstore operator.
On Holding (ONON) shares climb 6.6% after the Swiss sneaker maker reported fourth-quarter sales and gross margin that topped Wall Street expectations. Illumina (ILMN) shares slid 4.3% after China banned the firm from selling genetic sequencing products in
the country as part of a wave of retaliatory measures against fresh US tariffs on all Chinese goods. Viant Technology (DSP) shares slide 15% after the digital advertising company reported fourth-quarter earnings that missed estimates. 

Nasdaq 100 Index held above its key 200dma yesterday, while Russell 2000 broke its 200 day over a week ago.

European gauges are lower as concerns grow the region could be next to face US tariffs. The Stoxx Europe 600 Index fell over 1%, after closing at a fresh record. Autos
and banks are leading declines while food & beverage sector outperforms. Aerospace and defense stocks (SXPARO) hit a record high as Thales SA jumped 8% after its results beat expectations, while Hensoldt AG rallied as much as 18%. So far, a strong earnings
season and gains for defense stocks have offset concerns about the possibility of a trade war with the US. France’s CAC 40, Germany’s DAX, London’s FTSE 100 and the Swiss Market Index have all surpassed record levels this year, as Europe is outperforming the
US market. Stoxx 600 -1.5%, DAX -2.5%, CAC -1.5%, FTSE 100 -0.6%.  Autos -4.8%, Banks -4%, Energy -3.8%, Technology -2.7%. Food & Bev +1.1%, Aero & Defense +0.3%.

Shares in Asia fell after US President Trump signed an order doubling tariffs on Chinese imports. The MSCI Asia Pacific Index ended lower by 0.4%, with auto and chip
stocks weighing. Chinese stocks were modestly lower, on speculation the country is taking a measured approach to US levies with its retaliatory tariffs. The prospects of a trade war are rattling markets, amid concerns the negative impact could outweigh any
positives coming out of the upcoming Two Sessions, which begins tomorrow. India’s NSE Nifty 50 Index was marginally lower, extending its drop to a record 10th day. Overseas investors continue to flee the market on concerns about slowing economic growth and
relatively high valuations. Other focal points this week include GDP data from Australia and South Korea plus Malaysia’s interest rate decision. Indonesia -2.1%, Nikkei 225 -1.2%, Thailand -0.9%, Taiwan -0.7%, ASX 200 -0.6%, Hang Seng Index -0.3%, Kospi -0.15%,
Sensex -0.1%, CSI 300 -0.1%. Shanghai Composite +0.3%, Philippines +0.4%.

FIXED INCOME: 
 

Treasuries are mixed with shorter-dated maturities outperforming and the curve steeper. US 10-year yield recouped early losses after touching its lowest level since
October amid mounting trade war concerns. Bonds are getting a tailwind from haven demand amid trade frictions and the potential for further Fed easing. Traders fully priced in three 25bp Fed rate cuts this year. US front-end yields are richer by nearly 5bp
near session lows with long-end yields slightly higher on the day.

METALS: 

Gold is higher, rallying on market volatility as worsening trade war boosts demand for havens. Gold has gained as soft manufacturing data adds fuel to growth concerns,
with President Trump’s tariff policies set to accentuate any slowdown. Speculation is rising that China will let the yuan depreciate to soften tariff effects and support exporters, and any further weakness against the dollar will push Chinese buyers further
into gold as a safe-haven, analysts say. Spot gold +1.1%, Silver +0.7%, Copper -0.6%.

ENERGY:   

CURRENCIES: 

In currency markets, the dollar eased as tariffs on goods from Canada and Mexico came into force.  Haven assets outperform with the yen and Swiss franc at the top
of the G-10 FX leaderboard. The yen strengthens against the dollar following President Trump’s remark that Japan and China currency policies put the US at a disadvantage. The euro climbs to session highs after the EU Commission proposed extending €150 billion
in loans to boost defense spending. The euro has surged about 4% from a two-year low just one month ago and is now at its strongest this year versus the dollar. Sterling extends Mondays 1% gain versus the dollar as European leaders drew up a Ukraine peace
plan to present to Washington. Elsewhere, the Mexican peso weakened as much as 1.2% against the greenback, before paring losses. The Canadian dollar strengthened after retreating for seven straight sessions. The RBA said last month’s rate reduction doesn’t
commit the board to further easing, according to minutes of the meeting. Aussie$ firmed. US$ Index -0.8%, GBPUSD +0.35%, EURUSD +0.6%, USDJPY -0.9%, AUDUSD +0.25%, NZDUSD +0.4%, USDCHF -0.4%, USDCAD -0.4%, USDMEX +0.4%.

Bitcoin -2.5%, Ethereum -0.5%. Bitcoin declined for a second day after sinking more than 9% on Monday.

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
• Agree Realty (ADC) Raised to Equal-Weight at Barclays; PT $75
• Charles River (CRL) Raised to Neutral at Citi; PT $175
• Labcorp (LH) Raised to Buy at Citi; PT $300
• Medtronic (MDT) Raised to Buy at Citi; PT $107
• MYR Group (MYRG) Raised to Outperform at Kansas City Capital; PT $143
• Nordson (NDSN) Raised to Overweight at KeyBanc; PT $260
• Okta (OKTA) Raised to Outperform at Mizuho Securities; PT $127
• Raised to Buy at DA Davidson; PT $125
• Roku (ROKU) Raised to Neutral at MoffettNathanson LLC
• Scotts Miracle-Gro (SMG) Raised to Buy at Stifel
• Vistra Corp (VST) Raised to Buy at BofA; PT $152
• Downgrades
• Adient (ADNT) Cut to Underperform at BofA
• AvidXchange (AVDX) Cut to Equal-Weight at Barclays
• Calumet (CLMT) Cut to Hold at TD Cowen
• DoubleVerify (DV) Cut to Hold at Loop Capital; PT $16
• Ess Tech (GWH) Cut to Neutral at Roth Capital Partners; PT $3
• Frontier Airlines (ULCC) Cut to Hold at Deutsche Bank; PT $8
• GigaCloud Technology (GCT) Cut to Neutral at Roth Capital Partners
• Global Partners (GLP) Cut to Hold at Stifel; PT $56
• Green Plains (GPRE) Cut to Neutral at UBS; PT $7
• JetBlue (JBLU) Cut to Hold at Deutsche Bank; PT $7
• Kosmos Energy (KOS) Cut to Hold at Benchmark
• Pliant Therapeutics (PLRX) Cut to Hold at Needham
• Cut to Neutral at Cantor
• Cut to Hold at Stifel; PT $3
• Quest Diagnostics (DGX) Cut to Neutral at Citi; PT $185
• Ready Capital (RC) Cut to Market Perform at Citizens
• Sunnova Energy (NOVA) Cut to Underweight at Wells Fargo; PT 50 cents
• Cut to Neutral at Goldman; PT $1
• Tandem Diabetes (TNDM) Cut to Neutral at Citi; PT $24
• Initiations
• Ardelyx (ARDX) Rated New Buy at BTIG; PT $14
• Centrus Energy (LEU) Rated New Neutral at Citi; PT $104
• Rated New Outperform at Haitong Intl; PT $110.20
• Colliers International (CIGI CN) Rated New Outperform at CIBC; PT C$230.61
• Eagle Materials (EXP) Reinstated Hold at Stifel; PT $242
• Knight-Swift (KNX) Rated New Buy at Benchmark; PT $63
• Martin Marietta (MLM) Reinstated Buy at Stifel; PT $559
• NTG Clarity Networks (NCI CN) Rated New Buy at Canaccord; PT C$3.25
• Sionna Therapeutics (SION) Rated New Buy at TD Cowen
• Rated New Buy at Stifel; PT $32
• Rated New Buy at Guggenheim; PT $45
• Skyward Specialty (SKWD) Rated New Buy at William O’Neil
• Titan America (TTAM) Rated New Neutral at BNPP Exane; PT $16.50
• Rated New Market Perform at Bernstein; PT $17
• Rated New Buy at Citi; PT $19
• Rated New Neutral at Goldman; PT $19
• Rated New Buy at Stifel; PT $19
• Vulcan Materials (VMC) Reinstated Buy at Stifel; PT $287

Data sources: Bloomberg, Reuters, CQG

David Wienke