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

TODAY’S ECONOMIC DATA:  10:00ET Existing Home Sales; 1:00ET US to sell $13 billion 20-year bond reopening

Highlights and News:  

  • Trump Strikes Trade Deal With Japan Setting Tariff Rate at 15%
  • EU representatives are coming for trade negotiations today
  • Trump will meet UK’s PM Starmer during weekend trip and will formalize trade deal in UK meeting
  • EU’S €100 BILLION NO-DEAL PLAN TO MATCH US 30% TARIFF
  • Bessent: EU retaliatory preparation is a negotiating tactic
  • CHINA, US TO HOLD TRADE TALKS JULY 27-30
  • US Nuclear Weapons Agency Breached in Microsoft SharePoint Hack

 

Global stocks continued to rise following a US-Japan trade agreement that reduces tariffs on auto imports and exempts Tokyo from harsh new levies on other goods,
in return for a $550 billion investment and loan package directed to the US. Trump said a trade deal with Tokyo will include Japan paying a lower-than-threatened 15% tariff on shipments to the US. Japan will also buy 100 Boeing aircraft, boost rice purchases,
and buy $8 billion in agricultural and other products, while hiking defense spending with American firms. The investment package will enable Japanese firms “to build resilient supply chains in key sectors like pharmaceuticals and semiconductors,” PM Ishiba
said. In another positive development, US and Chinese officials will meet in Stockholm next week to discuss an extension to the August 12 deadline for negotiating a trade deal. Trump also said EU representatives are coming for trade negotiations today. Signs
of global stock-market complacency are emerging as the equities rally coincides with an acceleration in earnings downgrades, according to JPMorgan quantitative strategists.

 

EQUITIES:   

US equity futures edge higher after the S&P 500 reached another record close. US automakers expressed dissatisfaction with the trade agreement, citing concerns over a system that lowers
tariffs on Japanese auto imports but maintains 25% tariffs on imports from their facilities and suppliers in Canada and Mexico. Goldman economists expect the US baseline reciprocal tariff rate will rise to 15% from 10%, with a 50% levy on copper and critical
minerals. The US Nuclear Security Administration was among the institutions breached by the cyberattack on Microsoft, which the company linked to China, according to a source. Texas Instruments’ stock fell in premarket trading after raising concerns that the
tariff-driven spike in demand would be temporary. Investors are awaiting results from Tesla and Alphabet after the close.

Futures ahead of the bell: E-Mini S&P +0.35%, Nasdaq +0.1%, Russell 2000 +0.9%, DJI +0.5%.

In pre-market trading, industrial chipmakers trade lower after an outlook and comments from industry bellwether Texas Instruments tempered investor optimism about a
cyclical recovery. Texas Instruments (TXN) -10%, ON Semiconductor (ON) -6%. Power producers rally as data indicates that businesses and households served by the largest US power grid will spend a record $16.1 billion to ensure electricity supplies. Vistra
(VST) +5%, Constellation Energy (CEG) +4%. Meme stocks including GoPro (GPRO) and Krispy Kreme (DNUT) are higher as retail traders look to buy into heavily-shorted companies with low share prices. GoPro +49%, Krispy Kreme +33%. AT&T (T) falls 3% after posting
second quarter results. Capital One (COF) gains 2% after the credit-card company reported adjusted earnings per share for the second quarter that beat. Enphase Energy (ENPH) falls 7% after the solar-equipment company forecast revenue for the third quarter
that missed analyst estimates. Fiserv (FI) slips 16% after the payments technology firm narrowed its adjusted earnings per share forecast for the full year. GE Vernova (GEV) climbs 4% after the energy spinoff from GE said it expects revenue to trend towards
the higher end of $36 billion to $37 billion. Liberty Energy (LBRT) climbs 4% and Oklo (OKLO) rises 3% after the pair announced a power deployment partnership. Texas Instruments Inc. (TXN) tumbles 10% after stoking fears that a tariff-fueled surge in demand
will be short-lived. Unity Software (U) falls 2% after BTIG gave the company a rare sell rating, downgrading from neutral following a strong run.

European gauges rallied on hopes the trade deal with Japan could pave the way for more deals, including with Europe. The exuberance in financial markets spread to shares
of European carmakers, as the Japan deal stoked optimism that the EU could strike a similar deal. Europe’s Stoxx 600 jumped over 1% led by automakers, while telecom, tech and utilities lagged. European semiconductor stocks retreated after Texas Instruments
stoked fears that a tariff-fueled surge in demand will be short lived. Italy’s UniCredit SpA gained as much as 4.9% after the lender raised its outlook for full-year profit. SAP SE dropped as much as 4.4% after the software firm said on a post-earnings conference
call that sales cycles in sectors like industrial manufacturing are getting longer due to uncertainties around tariffs. The European Union said it plans to impose 30% tariffs on some €100 billion worth of US goods if there is no deal and the US implements
its levies after the August deadline. Stoxx 600 +0.9%, DAX +0.4%, CAC +0.9%, FTSE 100 +0.4%. Autos +3.3%, Healthcare +1.9%, Luxury +1.7%. Telecom -1%, Utilities -0.8%, Technology -0.8%.

Shares in Asia were broadly higher as a trade deal between the US and Japan raised optimism for more agreements. Shares in Japanese carmakers jumped on reports the
auto sector rate would be lowered to 15% from 25% for Japan. Japan’s auto sector accounts for more than a quarter of its US exports. Japan’s Topix soared 3.2%, with Toyota (+14.3%) posting its biggest daily gain since 1987. South Korean automakers also rose
on optimism over potential progress in tariff negotiations between South Korea and the United States. The MSCI AC Asia Pacific Index climbed 1.9%, reaching a four-year high. Philippine equities rallied after an agreement was reached with the US that includes
a slightly lower tariff of 19%. Thailand’s benchmark jumped as much as 2.6% after the nation’s finance minister said it’s close to a deal to lower a threatened 36% levy. Nikkei 225 +3.5%, Thailand +2.3%, Indonesia +1.7%, Philippines +1.7%, Hang Seng Index
+1.6%, Taiwan +1.4%, ASX 200 +0.7%, Sensex +0.7%, Kospi +0.4%, Vietnam +0.2%, China was little changed.

FIXED INCOME: 
 

Treasuries are off session lows but remain under slight pressure as US trading day begins, after Tuesday’s rally sent yields to lowest levels in more than a week.
Sentiment continues to be driven by progress toward trade agreements. Japanese 10-year bond yields hit the highest since 2008 after a weak 40-year note auction and fresh political jitters around Prime Minister Ishiba, who later denied reports about his resignation. 
US yields are higher by less than 2bp across tenors, with 10-year near 4.36% and the curve flat. Treasury sells $13 billion 20-year bond reopening today; $21 billion 10-year TIPS new issue is ahead Thursday.

 

METALS: 

Gold eased after a three-day rally as Trump’s deal with Japan allayed trade war concerns that have stoked demand for haven assets. Spot gold is little changed at
around $3,425 an ounce after the trade deal terms were better than most investors expected, following fraught negotiations. With several countries still racing to secure agreements ahead of an Aug. 1 deadline, investors continue to seek clarity on progress
with China in particular.  Spot gold -0.2%, Silver +0.2%, Copper futures +1.6%.

 

 

ENERGY:   

 

Oil prices slipped as investors monitored progress on tariff talks between the US and key trade partners. Brent crude traded near $68 a barrel, extending a three-day
decline. US Treasury Secretary Scott Bessent said he’ll discuss a potential extension of the trade truce with China during talks in Stockholm next week. The discussions can now take on a broader array of topics, potentially including Beijing’s continued purchases
of “sanctioned” oil from Russia and Iran, he said. The American Petroleum Institute said nationwide crude inventories fell slightly last week, while distillate stockpiles rose. Official data is due later today. Trump said the US and Japan are close to a deal
to jointly export LNG from Alaska. WTI -0.8%, Brent -0.8%, US Nat Gas -0.9%, RBOB -0.2%. 

 

CURRENCIES

In currency markets, Antipodean currencies lead G-10 gains as risk-on mood takes over in global stock markets. The yen strengthened against the dollar initially after
the trade deal, before weakening on speculative reports of Prime Minister Ishiba’s intention to resign. Ishiba said the reports were “completely unfounded”, and the yen recovered. Improved sentiment towards the global economy from the trade deal boosted the
Australian dollar, although sentiment remained cautious. The euro eased before Thursday’s EU-China summit. US$ Index +0.05%, GBPUSD +0.05%, EURUSD -0.2%, USDJPY -0.25%, AUDUSD +0.55%, NZDUSD +0.7%, USDCHF +0.1%, USDCAD -0.15%, USDSEK -0.1%, USDNOK +0.05%.

 

 

Bitcoin -1.2%, Ethereum -1.4% at 7:15ET.  Ether ETFs have 4th largest inflows on record on Tuesday at $534 million on surge in Blackrock purchases to $426 million;
extends record 13-day inflow streak to $4 billion. GOLDMAN SACHS AND BNY ARE SET TO ANNOUNCE THAT THEY’VE CREATED THE ABILITY FOR INSTITUTIONAL INVESTORS TO PURCHASE TOKENIZED MONEY MARKET FUNDS – CNBC

 

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
    • Atlassian (TEAM) Raised to Buy at CFRA
    • Circle Internet (CRCL) Raised to Buy at President Capital Management
    • Crescent Capital BDC (CCAP) Raised to Outperform at KBW; PT $17
    • Dynatrace (DT) Raised to Buy at Guggenheim; PT $66
    • Equity LifeStyle (ELS) Raised to Buy at Compass Point; PT $72
    • Mosaic (MOS) Raised to Buy at UBS; PT $45
    • NXP Semi (NXPI) Raised to Outperform at KGI Securities; PT $250
    • Paccar (PCAR) Raised to Buy at Vertical Research; PT $120
    • Taylor Morrison (TMHC) Raised to Buy at Seaport Global Securities
    • Toll Brothers (TOL) Raised to Buy at Seaport Global Securities
    • Wesdome Gold Mines (WDO CN) Raised to Buy at Canaccord; PT C$21.50
  • Downgrades
    • Boot Barn (BOOT) Cut to Hold at Jefferies; PT $175
    • Canadian National (CNR CN) Cut to Inline at Evercore ISI
      • Cut to Neutral at JPMorgan; PT C$154
      • Cut to Sector Perform at National Bank
    • Centene (CNC) Cut to Equal-Weight at Wells Fargo; PT $30
    • Fluence Energy (FLNC) Cut to Neutral at Seaport Global Securities
    • Freeport (FCX) Cut to Hold at HSBC; PT $46
    • Imperial Oil (IMO CN) Cut to Peerperform at Wolfe
    • Lockheed (LMT) Cut to Hold at Truist Secs; PT $440
    • LSB Industries (LXU) Cut to Neutral at UBS
    • MidCap Financial (MFIC) Cut to Market Perform at KBW; PT $14
    • Pentair (PNR) Cut to Hold at TD Cowen; PT $110
    • Replimune (REPL) Cut to Neutral at HC Wainwright
      • Cut to Underperform at BMO; PT $2
      • Cut to Equal-Weight at Barclays; PT $3
    • Sarepta (SRPT) Cut to Underperform at BofA; PT $10
    • Shopify (SHOP CN) Cut to Neutral at Arete; PT C$169.93
    • Tyson (TSN) Cut to Market Perform at Bernstein; PT $59
    • Unity Software (U) Cut to Sell at BTIG; PT $25
  • Initiations
    • Aeluma (ALMU) Rated New Buy at Benchmark; PT $25
    • Cango (CANG) ADRs Rated New Buy at HC Wainwright; PT $8
    • CCU (CCU CI) ADRs Reinstated Market Perform at Itau BBA; PT $13.40
    • Celsius Holdings (CELH) Rated New Buy at Citi; PT $55
    • Coincheck Group (THCP) Rated New Sector Weight at KeyBanc
    • D-Wave Quantum (QBTS) Rated New Buy at Canaccord; PT $20
    • Galaxy Digital (GLXY) Rated New Buy at Jefferies; PT $35
    • Kalaris Therapeutics Inc (KLRS) Rated New Neutral at Piper Sandler
    • Maze Therapeutics (MAZE) Rated New Buy at HC Wainwright; PT $34
    • Metallus (MTUS) Rated New Buy at Northcoast; PT $24
    • nVent Electric (NVT) Rated New Buy at Roth Capital Partners; PT $89
    • Okeanis Eco Tankers (ECO) Rated New Buy at Jefferies; PT $29
    • Soluna Holdings (SLNH) Rated New Neutral at HC Wainwright

 

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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