Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Fed’s Goolsbee on CNBC; 9:35ET Fed’s Musalem, Schmid speak; 10:00ET New Home Sales;
11:00ET KC Fed Services Activity; 12:00ET Fed’s Cook speaks

Highlights and News:  

• Trump: Major Prisoners Swap ‘Completed’ Between Russia, Ukraine
• 30-year Treasury note is at a “great entry point” with the yield above 5%; BofA’s Hartnett
• TRUMP THREATENS 25% TARIFFS ON APPLE IF IPHONES NOT MADE IN US
• US Pushes EU to Unilaterally Slash Levies: FT
• Trump to Sign Executive Orders Aimed at Jumpstarting the Nuclear Energy Industry – Reuters
• Trump: Recommending a 50% Tariff on the EU Starting June 1

Global stocks were stable until Trump posted on social media this morning. Trump threatened a 50% tariff on goods from the European Union starting on June 1, saying
“our discussions with them are going nowhere.” Emerging-market stocks rose as investors bet that a weaker dollar and an improved outlook for corporate earnings will widen the outperformance by developing nations over US assets. The MSCI Emerging Markets Index
is on course to beat the S&P 500 for the fifteenth time out of the 21 weeks this year. On today’s data front, the German economy grew significantly more in the first quarter than previously estimated due to export and industry frontloading ahead of US tariffs,
according to latest data. British retail sales volumes jumped in April by a much stronger than expected 1.2% month-on-month, the Office for National Statistics said. Japan’s core consumer price inflation climbed 3.5% in April,  marking the sharpest annual
increase in over two years, raising pressure on the Bank of Japan to keep hiking interest rates.

EQUITIES: 

US equity futures slide after Trump posted “I am recommending a straight 50% Tariff on the European Union, starting on June 1,”  saying negotiations are going nowhere. Another Trump post
on Truth Social said he expects iPhones that are sold in the US will be manufactured and built in the US, hitting Apple shares pre-market. Shares of nuclear power firms soared after a Reuters report said Trump would sign executive orders aimed at jumpstarting
the nuclear energy industry as soon as today. The S&P500 remains on course for its worst week since the selloff following President Trump’s tariff announcements at the beginning of April. Analysts are cautioning that an ongoing deterioration in the US government’s
fiscal position will continue to weigh on riskier assets. Investor confidence in the US has taken another knock this week on concern Trump’s tax bill will worsen the already swelling deficit.

Futures ahead of the bell: E-Mini S&P -1.3%, Nasdaq -1.7%, Russell 2000 -2%, DJI -1.2%.

In pre-market trading, Apple (AAPL) drops 3.7% after Trump threatened 25% tariffs on the company if iPhones aren’t made in the US. Tesla (TSLA) -2%, Alphabet (GOOGL)
-1.6%, Nvidia (NVDA) -3%, Amazon (AMZN) -2.7%, Meta Platforms (META) -2.2%, Microsoft (MSFT) -1.8%. Nuclear power stocks climb after Reuters reported that Trump will sign executive orders that aim to jumpstart the industry by easing the regulatory process
on approvals for new reactors and strengthening fuel supply chains. Constellation Energy (CEG) +1.9%, Oklo (OKLO) +8%, Nano Nuclear Energy (NNE) +8%. Booz Allen (BAH) slumps 14% after the defense contractor provided disappointing guidance. Deckers Outdoor
(DECK) falls 19% after the maker of Hoka running shoes and UGG boots provided a disappointing current-quarter forecast and declined to provide full-year guidance. Hallador Energy (HNRG) falls 20% after the power producer said an agreement with a “leading global
datacenter developer” is being terminated. Intuit (INTU) gains 7% after the owner of TurboTax posted strong revenue growth following the end of the US tax season. Ross Stores (ROST) sinks 13% after the off-price retailer gave a disappointing second-quarter
forecast and withdrew its full-year outlook. Xerox (XRX) declines 8% after the company cut its quarterly dividend to 2.5 cents per share ahead of the Lexmark deal closing.

European gauges plunge after President Trump recommended a 50% tariff on the European Union starting in June. The EU commission declined to comment on the tariff news
until a call between EU trade chief and US trade representative. Earlier the Financial Times reported the US is pushing the EU to unilaterally cut tariffs or face 20% “reciprocal” duties. The European Union has shared a revised trade proposal with the US,
as it aims to inject momentum in talks with Trump’s administration amid lingering skepticism that a transatlantic deal can be reached. UK retail sales gained 1.2% in April, continuing a surprisingly strong start to the year. The renewal of tariff threats is
set to weigh most on cyclically-leaning indexes such as Germany and France. Autos and consumer products like luxury are some of the sectors getting most hit. The Stoxx 600 slid ~2% with banks leading declines. Stoxx 600 -1.7%, DAX -2.2%, CAC -2.3%, FTSE 100
-1%. Luxury -3.8%, Autos -3.5%, Banks -3.3%. Real Estate +0.2%, Basic Resources +0.2%.

Shares in Asia were mostly higher, with the MSCI Asia Pacific index gaining 0.7% on the day. The Philippines’ stock benchmark outperformed; recouping Thursday’s loss
spurred by a call for the cabinet to quit.  China and the US continued high-level contact with a Thursday call between senior officials, a sign that the two sides are maintaining active communications. Japanese stocks rose after the government reported a core
inflation rate of 3.5% in April, the highest since early 2023. Hong Kong shares edged higher to close the week in green, buoyed by multiple strong market debuts. Goldman Sachs lowered its earnings estimates and price target for TSMC, citing the unfavorable
trend in the Taiwan dollar. Philippines +1.7%, Sensex +0.95%, Topix +0.7%, Indonesia +0.7%, Thailand +0.3%, Hang Seng Index +0.25%, ASX 200 +0.1%, Vietnam +0.05%. Kospi -0.5%, Taiwan -0.1%, CSI 300 -0.8%.

FIXED INCOME: 
 

Treasuries yields are lower at the start of a shortened US session ahead of Monday’s Memorial Day holiday. US session features four Fed speakers, scant economic data
and expectations for a moribund corporate new-issue calendar. 2 and 5-year yields slip the most with the curve steeper. 2s10s +1.5bps; 5s30s +4.5bps. Investors should buy the selloff in long-dated Treasuries as the government is likely to heed warnings from
bond vigilantes to bring its debt under control, according to Bank of America’s Michael Hartnett.

METALS: 

Gold climbed after Trump threatened the EU with fresh tariffs, fueling market uncertainty and increasing demand for safe-haven assets. Spot gold is headed for the
biggest weekly gain in more than a month. Platinum rose to the highest in two years and is on track for a weekly gain of over 10%, as the World Platinum Investment Council estimated a shortage of almost 1 million ounces this year. Gold had 3rd-biggest weekly
outflow ever and largest since April 2013, according to a BofA note citing EPFR Global data. Spot gold +1.8%, Silver +0.3%, Copper -0.3%.

ENERGY:   

Oil prices continue to decline as concerns over global trade tensions and excess crude supply weigh on sentiment. Oil is lower for a fourth consecutive session and
are set for their first weekly decline in three, weighed down by renewed supply pressure from another possible OPEC+ output hike in July. Iran’s lead negotiator said Tehran would agree to no nuclear weapons but not to zero enrichment, ahead of today’s US nuclear
talks in Rome. WTI -1.2%, Brent -1.1%, US Nat Gas +0.1%, RBOB -0.9%. 

CURRENCIES: 

In currency markets, the dollar resumed its slide and is headed for its first weekly fall in five weeks, as investor attention switches from tariff anxiety to US
fiscal concerns. The Trump “tweets” reversed some moves as the US dollar index came off its lows.  The yen led gains in G-10 while Trump called Japanese PM Shigeru Ishiba ahead of another round of trade talks. The BOJ’s Kazuo Ueda refrained from indicating
he’s prepared to take action in the bond market after yields on super-long dated securities hit a record. Brazil scrapped plans to tax transfers to offshore funds just hours after the announcement. The move initially sent the real lower. US$ Index -0.4%, GBPUSD
+0.5%, EURUSD +0.4%, USDJPY -0.95%, AUDUSD +0.5%, NZDUSD +0.9%, USDCHF -0.7%, USDCAD -0.3%, USDSEK -0.6%, USDNOK -0.2%.

Bitcoin -2.6%, Ethereum -4%. 

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
• Charles River (CRL) Raised to Buy at Redburn; PT $182
• Fulcrum Therapeutics (FULC) Raised to Outperform at Leerink; PT $12
• Macerich (MAC) Raised to Neutral at Piper Sandler
• Morgan Stanley (MS) Raised to Buy at Erste Group
• Newmark (NMRK) Raised to Outperform at Wolfe; PT $14
• SolarEdge (SEDG) Raised to Market Perform at Northland
• Sonoco (SON) Raised to Overweight at Wells Fargo; PT $55
• Wix.com (WIX) Raised to Outperform at Baird; PT $190
• WM (WM) Raised to Overweight at JPMorgan; PT $277
• Downgrades
• Cloudflare (NET) Cut to Hold at CFRA
• CME Group (CME) Cut to Hold at Erste Group
• Computer Modelling Group (CMG CN) Cut to Hold at Ventum Financial; PT C$9
• Deckers Outdoor (DECK) Cut to Market Perform at Telsey; PT $120
• Cut to Sector Weight at KeyBanc
• Cut to Inline at Evercore ISI; PT $110
• Five Below (FIVE) Cut to Hold at CFRA; PT $108
• GFL Environmental (GFL CN) Cut to Neutral at JPMorgan; PT C$74.66
• McDonald’s (MCD) Cut to Hold at Erste Group
• Radian (RDN) Cut to Neutral at Compass Point; PT $37
• Reinsurance Group (RGA) Cut to Market Perform at Raymond James
• Snowflake (SNOW) Cut to Buy at CFRA
• UMC (2303 TT) ADRs Cut to Sell at Goldman; PT $6.80
• Vertex Pharmaceuticals (VRTX) Cut to Hold at Erste Group
• Vigil Neuroscience (VIGL) Cut to Neutral at Mizuho Securities; PT $8
• Initiations
• American Public (APEI) Rated New Buy at Texas Capital; PT $35
• Analog Devices (ADI) Rated New Buy at KGI Securities; PT $220
• Edesa Biotech Inc (EDSA) Rated New Buy at Lucid Capital Markets; PT $9
• High Liner Foods (HLF CN) Reinstated Sector Perform at RBC; PT C$20
• Lincoln Educational (LINC) Rated New Buy at Texas Capital; PT $26
• Lindblad Expeditions (LIND) Rated New Buy at Texas Capital; PT $16
• ON Semi (ON) Rated New Neutral at KGI Securities; PT $45
• Performance Food (PFGC) Rated New Buy at Citi; PT $121
• Radiopharm (RAD AU) ADRs Rated New Buy at Jones; PT $30
• Snowflake (SNOW) Reinstated Buy at William O’Neil
• Sysco (SYY) Rated New Neutral at Citi; PT $78
• Trip.com (TCOM) ADRs Rated New Buy at SPDB Intl HK; PT $78
• Universal Technical Institute (UTI) Rated New Buy at Texas Capital
• US Foods Holding (USFD) Rated New Buy at Citi; PT $95

Data sources: Bloomberg, Reuters, CQG

David Wienke