Daily Game Plan

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

TODAY’S ECONOMIC DATA:   8:15ET ADP Employment Change;
8:30ET Fed’s Bostic, Cook speak; 9:45ET S&P Global US Services PMI, S&P Global US Composite PMI, Bank of Canada Rate Decision; 10:00ET ISM Services; 2:00ET Fed’s Beige Book

ADP REPORT: PACE OF HIRING IN MAY REACHED LOWEST LEVEL SINCE MARCH 2023

Highlights and News:  

• Private sector hiring rose by just 37,000 jobs in May, the lowest in more than 2 years
• TRUMP, SENATE FINANCE PANEL MEETING TODAY
• Trump called Xi Jinping “VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH”
• Sefcovic Says EU-US Trade Talks Going in Right Direction, Ready to Defend Interests if Needed
• Global Stocks Hit Record on Resilient Economy
• A ship carrying about 3,000 cars to Mexico was abandoned in the middle of the Pacific Ocean

Global stocks hit a record high for the first time since February, as signs of a resilient US economy overshadowed uncertainty around trade negotiations. Higher US
duties on steel and aluminum took effect, while today is the deadline for US trading partners to submit their proposals for deals that might help them avoid Trump’s hefty tariffs from taking effect in five weeks. Market reaction was muted after Trump said
in a late-night social media post that Chinese leader Xi Jinping was very tough to make a deal with, raising questions about whether a fragile economic truce between the world’s two largest economies will hold. A key sticking point appears to be critical minerals.
US and European trade officials meet in Paris today, with EU Trade Commissioner Maros Sefcovic says trade talks with the United States are “advancing in the right direction at pace.”

EQUITIES: 

US equity futures extended gains as investors await further data on the labor market, which has so far held up better than expected amid the trade war. S&P 500 contracts are slightly
higher after posting consecutive gains for the first time since mid-May. Investors will follow services data and ADP’s report on private-sector employment today for updated information on the strength of the US economy. Senate Majority Leader John Thune believes
the House’s deal on the SALT cap will have to be changed in upper-chamber negotiations. Wells Fargo shares rose premarket after the Fed lifted an asset cap that has restricted its size for more than seven years. Dollar Tree reported better-than-expected results
but warned investors that its second quarter profit could be down significantly from a year ago. CrowdStrike shares dropped after its second-quarter sales forecast missed. Futures slip after ADP.

Futures ahead of the data/bell: E-Mini S&P +0.2%, Nasdaq +0.2%, Russell 2000 +0.25%, DJI +0.2%.

In pre-market trading, CrowdStrike shares (CRWD) fall 6.8% after the cybersecurity company posted disappointing first-quarter subscription revenue due to an impact
from programs related to its post-outage Customer Commitment Package (CCP). Dollar General shares (DG) rise 0.6% as Oppenheimer & Co raised to outperform from market perform. Guidewire (GWRE) advances 14% after the software company boosted its revenue guidance
for the full year. Snowflake (SNOW) rises 2.4% as UBS raised to buy from neutral saying the company is early in a multi-year data investment cycle.

European gauges are higher as the European Central Bank kicks off its two-day policy meeting where it is expected to cut rates on Thursday. Germany’s DAX hit an all-time
high, boosted by the new government’s plans for big corporate tax breaks. Germany’s cabinet approved a €46 billion tax break package for companies to revive the economy. The euro area’s private sector grew slightly in May, with the Composite Purchasing Managers’
Index dropping to 50.2 from 50.4 in April. UK business optimism rebounded in May with overall PMI rising to 50.3, its highest level since the aftermath of Labour’s first budget, according to a closely watched survey.  Airbus SE gained as much as 3.4% following
a report that China is considering placing an order for hundreds of aircraft. French real estate group Carmila fell as much as 8.7% after supermarket operator Carrefour sold a 7% stake. Stoxx 600 +0.5%, DAX +0.6%, CAC +0.7%, FTSE 100 +0.2%. Technology +1.4%,
Basic Resources +1.3%, Food & Bev +1.1%, Chemicals +1%. Banks -0.7%, Autos -0.4%.

Shares in Asia rose, led by South Korean stocks as new President Lee vows reforms to shore up growth. The MSCI Asia Pacific Index rose 0.8%, with TSMC and SK Hynix
among the biggest boosts. Equities in Taiwan and Japan advanced on the back of a tech rally on Wall Street overnight. Hong Kong shares trimmed gains after President Trump called Xi Jinping very tough to make a deal with, underscoring mounting uncertainty over
the progress of US-China trade talks. Shares of Chinese electric vehicle makers, including BYD and Xpeng, rose after their car models were selected in China’s campaign to boost EV sales in rural areas. Kospi +2.7%, Taiwan +2.3%, ASX 200 +0.9%, Nikkei 225 +0.8%,
Hang Seng Index +0.6%, CSI 300 +0.4%, Indonesia +0.3%, Sensex +0.3%, Singapore +0.2%, Vietnam -0.1%, Philippines -0.5%, Thailand -1.5%.

FIXED INCOME: 
 

Treasuries are little changed in early US session with long-end yields about 2bp richer on the day while front-end is about 0.5bp cheaper, flattening the yield curve
slightly. 10-year yield is steady near 4.45%. Focal points of US session include ADP employment and ISM services gauge and Bank of Canada rate decision. IG dollar new-issue slate includes two offerings so far. Five were priced Tuesday totaling nearly $7 billion.
Yields slipped after data showed private sector hiring rose by just 37,000 jobs in May, the lowest in more than 2 years.

METALS: 

Gold reversed earlier gains to trade slightly lower ahead of ADP employment data. Global central banks are accumulating around 80 tons of gold per month, Goldman
said. The purchases, which have been led by China, will probably continue — driving prices even higher.  Spot gold -0.2%, Silver -0.4%, Copper +0.5%. 

ENERGY:   

Oil prices steadied as rains slowed the growth of some blazes that had disrupted Canadian crude production. US gasoline supplies jumped by 4.7 million barrels last
week just as the summer driving season got underway. That would be the biggest increase since January if confirmed by the EIA today. Iran’s Supreme Leader Ayatollah Ali Khamenei criticized a US proposal for a nuclear deal, calling American officials “arrogant”
for expecting Iran to cease uranium enrichment. Iran’s oil exports to China were just over 1.1 million barrels a day in May, about a fifth lower than a year earlier, according to estimates by Vortexa. WTI -0.1%, Brent -0.05%, US Nat Gas +0.1%, RBOB -0.4%.

CURRENCIES: 

In currency markets, the dollar is steady as traders turned their attention to a private US jobs report this morning. The loonie edges higher ahead of the policy
decision. Canada’s central bank is likely to hold interest rates steady today as officials wait for clearer signals on how the US trade war will affect the economy.  Aussie dollar reverses losses following a GDP miss. US$ Index -0.03%, GBPUSD ~flat, EURUSD
+0.1%, USDJPY +0.2%, AUDUSD +0.3%, NZDUSD +0.3%, USDCHF -0.1%, USDCAD -0.1%, USDSEK -0.2%, USDNOK -0.4%.

Bitcoin -0.5%, Ethereum +0.5%. 

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
• Agenus (AGEN) Raised to Buy at HC Wainwright; PT $25
• AnaptysBio (ANAB) Raised to Buy at HC Wainwright; PT $38
• Blueprint Medicines (BPMC) Raised to Neutral at Citi; PT $129
• Cactus (WHD) Raised to Overweight at Barclays; PT $54
• Dollar General (DG) Raised to Outperform at Oppenheimer; PT $130
• Raised to Hold at CFRA; PT $118
• Embraer (EMBR3 BZ) ADRs Raised to Buy at HSBC; PT $57
• Lockheed (LMT) Raised to Buy at President Capital Management
• Novagold Resources (NG CN) Raised to Outperform at RBC; PT C$9.60
• RTX Corp (RTX) Raised to Buy at President Capital Management
• Snowflake (SNOW) Raised to Buy at UBS; PT $265
• XP Inc. (XP) Raised to Buy at Goldman; PT $23
• Yext Inc. (YEXT) Raised to Buy at B Riley; PT $10
• Yum (YUM) Raised to Buy at Goldman; PT $167
• Downgrades
• Algonquin Power (AQN CN) Cut to Sector Perform at National Bank
• Apple (AAPL) Cut to Hold at Needham
• Aptiv (APTV) Cut to Neutral at Guggenheim
• Constellation Energy (CEG) Cut to Neutral at Citi; PT $318
• CrowdStrike (CRWD) Cut to Neutral at BofA
• Cut to Inline at Evercore ISI; PT $440
• Cut to Hold at Canaccord; PT $475
• Initiations
• BWX Technologies (BWXT) Rated New Buy at William O’Neil
• DraftKings (DKNG) Rated New Outperform at Bernstein; PT $46
• Flutter (FLUT) Rated New Market Perform at Bernstein; PT $275
• Inmune Bio (INMB) Rated New Buy at Lucid Capital Markets; PT $25
• Liberty Formula One (FWONA) Rated New Market Perform at Bernstein
• Lionsgate Studios (LION) Rated New Hold at Loop Capital; PT $8
• Live Nation (LYV) Rated New Outperform at Bernstein; PT $185
• Meta (META) Reinstated Buy at William O’Neil
• Newamsterdam Pharma (NAMS) Rated New Overweight at Cantor; PT $42
• Primo Brands (PRMB) Rated New Overweight at Barclays; PT $40
• Spotify (SPOT) Rated New Outperform at Bernstein; PT $825
• TAT Technologies (TATT) Rated New Buy at Truist Secs; PT $35
• TKO (TKO) Rated New Outperform at Bernstein; PT $190
• Unicycive Therapeutics (UNCY) Rated New Buy at Lucid Capital Markets
• Vistra Corp (VST) Rated New Buy at William O’Neil
• Warner Music (WMG) Rated New Outperform at Bernstein; PT $32

Data sources: Bloomberg, Reuters, CQG

David Wienke