Daily Game Plan

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

TODAY’S ECONOMIC DATA:   8:30ET National Activity Index, Durable Goods Orders; 10:30ET Dallas Fed Manufacturing
Business Index; 1:00ET $69B 2-year note auction

Highlights and News:  

• US natural gas surges almost 20% amid freezing weather
• US Power Grids Under Strain From Brutal Cold
• Trump threatened Canada with 100% tariffs if it makes a trade deal with China
• Yen Extends Gain as Takaichi Warning Points to Intervention Risk
• Zelenskiy says security guarantees document from US is 100% ready
• CHINA SAYS ITS CITIZENS FACE ‘SEVERE’ SAFETY THREATS IN JAPAN
• NVIDIA INVESTS $2B IN COREWEAVE; PACT TO ACCELERATE BUILDOUT OF AI FACTORIES
• Democrats vowed to block a spending package, increasing risk for a partial US government shutdown

Global stocks ease in cautious trading as Trump dispatched naval assets to the Middle East, prompting speculation he may follow through on threats to attack Iran’s
regime. The biggest market action is in currencies and precious metals. Speculation is growing about possible joint US-Japan intervention in the currency markets, fueled by trader accounts of the New York Fed reaching out to banks to check on the yen’s rate,
alongside ongoing close communication between Finance Minister Katayama and Treasury Secretary Scott Bessent. In his latest tariff ‍threats, Trump said on Saturday that he would impose a 100% tariff on Canada if it follows through on a trade deal with China.
Elsewhere, sources indicate that India intends to cut tariffs on EU-imported cars to 40% from up to 110%, with the two sides approaching a free trade deal potentially announced by Tuesday. President Zelenskiy announced on Sunday that a US document outlining
security guarantees for Ukraine is completely ready and Kyiv is waiting for a time and place for it to be signed, indicating that weekend talks with Russia in Abu Dhabi yielded some positive developments. The Federal Reserve is broadly anticipated to pause
its cycle of interest rate reductions this week, with a more stable labor market helping to rebuild some unity among policymakers at the central bank.

EQUITIES: 

US equity futures are cautiously in the red as the busiest week of the earnings season is kicking off, with companies accounting for more than a third of the S&P 500’s total market value
due to report. It’s a big week of calendar events, including the Fed’s rate decision and four of the Mag 7 reporting results. Results from Meta, Apple, Tesla and Microsoft will be dissected to see how their substantial investments in artificial intelligence
are converting into actual profitability. The week starts with travel chaos and unprecedented pressure on power grids after the worst storm in years. Canada is the latest target of Trump’s tariff threats, while the risk of another government shutdown is rising.
Trump threatened Canada with 100% tariffs on exports to the US if it makes a trade deal with China. Canada said efforts to diversify trade away from the US won’t be derailed. The Federal Reserve is broadly anticipated to pause its cycle of interest rate reductions
this week, with a more stable labor market helping to rebuild some unity among policymakers at the central bank. Another near-record bout of call trading might have helped the S&P 500 erase a 2% drop last week to close almost flat. Collective net sales of
US single stocks by hedge funds hit the highest in four weeks, driven by short sales outpacing long buys by a ratio of 1.7 to 1, according to the Prime Trading desk at Goldman Sachs. The early stages of the US earnings season suggest growth broadening across
industries outside the tech sector this year, according to JPMorgan strategists.
In corporate news, SoftBank is said to have halted talks about an acquisition of US data center operator Switch, while the WSJ reported that Merck is no longer in talks to buy
biotech firm Revolution Medicines after the pair failed to agree on a price.

Futures ahead of the data/bell: E-Mini S&P -0.02%, Nasdaq -0.2%, Russell 2000 -0.1%, DJI +0.01%.

In pre-market trading, Allied Gold (AAUC) rises 4% after Zijin Gold International agreed to acquire the miner for C$44 per share. BlackRock TCP Capital Corp. (TCPC),
a publicly traded middle-market lending fund, falls 12% as it expects to mark down the net value of its assets 19% after a string of troubled loans weighed on results. MannKind (MNKD) rises 2% after the FDA approved an update to the company’s inhaled insulin,
revising recommendations for the starting mealtime dosage. Revolution Medicines (RVMD) slides 21% after the Wall Street Journal reported that Merck ended talks to acquire the biotech firm. Sarepta Therapeutics (SRPT) rises 6% after the firm said it will report
three-year topline data from its study of its gene therapy to treat patients with Duchenne muscular dystrophy on Monday. SkyWater Technology (SKYT) rises 7% after IonQ Inc. agreed to buy the company in a cash-and-stock deal that values the chipmaker at about
$1.8 billion. USA Rare Earth (USAR) jumps 21% after the Financial Times reported that the Trump administration is planning to invest $1.6 billion into the mining company.

European gauges reverse earlier losses and trade mixed. The Stoxx Europe 600 Index is little changed, with a drop in airlines weighing on the travel and leisure sector
after a massive winter storm disrupted travel across the US. Several European airlines have also suspended flights to and over countries in the Middle East over the weekend as tensions between the US and Iran raise concerns of wider disruption across the Persian
Gulf. In individual stocks, Neste Oyj gained 6% as Morgan Stanley upgraded the Finnish energy group to overweight. Teleperformance shares fell over 7% after CIC Market Solutions downgraded the French operator of call centers and cut its price target. Morgan
Stanley strategists raise their year-end target for the MSCI Europe index to 2,600 from 2,430 as they see potential for higher valuations and increasing AI adoption returns across Europe.  Autotrader shares fell as much as 3.3% after the online car marketplace’s
CEO disclosed on a podcast on Friday that dealers face a 5.5% rise in package prices this year. Stoxx 600 +0.05%, DAX -0.05%, CAC -0.2%, FTSE 100 +0.2%. Basic Resources +1.7%, Banks +1.1%, Energy +1%, Utilities +0.9%. Travel & Leisure -1.2%, Technology -1.1%,
Defense -1%.

Shares in Asia were mixed amid choppy trading as gains in technology and material shares offset a slump in Japanese equities. The MSCI Asia Pacific Index rose as much
as 1.1% before halving its advance to +0.5%. Japanese stocks fell sharply as exporters tumbled amid a yen rally sparked by increased speculation that authorities may intervene to support the currency’s slide. Shares of Japanese automakers dropped while domestic
retailers rose after the yen gained to its strongest level in over a month, weighing on exporters but boosting importers. A softer dollar is seen as positive for Asia’s emerging economies as many of them rely on imports priced in the currency, and it also
gives their central banks more scope to cut interest rates to support growth. Asian mining stocks climbed with metals prices as investors rotated into hard assets, driven by a weakening dollar and growing unease over currencies. Taiwan +0.3%, Indonesia +0.3%,
CSI 300 +0.1%, Hang Seng Index +0.1%. Topix -2.1%, Vietnam -1.5%, Hang Seng Tech -1.2%, Philippines -0.9%, Kospi -0.8%, Singapore -0.6%. India and Australia were closed.

FIXED INCOME: 
 

Treasuries hold small gains led by long-end tenors, with 20- and 30-year yields down 1bp-2bp from Friday’s closing levels. European bonds outperform led by France
following continued progress on budget plans. US 10-year yield slips about 1.5 basis points to 4.215%, with the curve slightly flatter. This week’s Treasury coupon auctions begin a day early with 2-year notes. Treasury coupon auctions this week include 2-,
5- and 7-year notes on Monday, Tuesday and Thursday respectively, with FOMC rate decision Wednesday. IG credit issuance slate includes a couple of items so far. Dealers are projecting about $35 billion of supply for this week.

METALS: 

The weaker dollar fuels a broad-based metals rally, with silver soaring about 7% to a fresh record high and gold tops $5,000 for the first time. Analysts expect spot
gold prices to climb further toward $6,000 this year on mounting global tensions as well as strong central-bank and retail demand. Goldman Sachs forecasts purchases to average 60 metric tons a month as emerging-market central banks continue diversifying reserves
into gold. Spot gold is up about 18% so far this year due largely to the so-called debasement trade, whereby investors retreat from currencies and Treasuries. A massive selloff in the Japanese bond market last week is the latest example of investors rejecting
heavy fiscal spending. Spot gold +1.6%, Silver +6.3%, Copper futures +0.7%.

ENERGY:   

Oil prices fluctuated amid a powerful winter storm blanketing much of the United States, which boosted heating fuel demand and caused disruptions at refineries. Exxon
Mobil shut some units at a refining complex in Texas due to the cold snap. OPEC+ delegates said they’re currently expecting to stick with plans to keep oil production steady next month when the group meets on Sunday. Brent traded little changed near $66 a
barrel, after climbing 2.8% on Friday, the biggest gain in two weeks. Hedge funds raised their bullish bets on crude to the highest since August in the week through Jan. 20. US natural gas jumped by almost 20% as freezing weather swept across much of the country,
boosting heating demand and disrupting supplies. The winter storm is estimated to have knocked offline almost 10% of US natural gas production. Ukraine said it hit a small oil refinery in southern Russia, the third attack this month on its foe’s fuel-producing
industry. The US is in talks with crude producers and oilfield service providers about a plan to quickly revive output in Venezuela at a fraction of the estimated $100 billion cost for a complete rebuild. WTI -0.25%, Brent -0.15%, US Nat Gas +5%, RBOB -1.2%. 

CURRENCIES: 

In currency markets, the yen surges as much as 1.5% against the dollar, taking the yen to a four-month high on Prime Minister Takaichi’s intervention warning and
speculation that US may assist Japan to halt the currency’s slide. Japan will closely coordinate with the US and act in accordance with their joint finance ministers’ agreement last September, according to Chief Cabinet Secretary Minoru Kihara. “We will take
all necessary measures to address speculative and highly abnormal movements,” Takaichi said on Sunday. Such a move would likely be interpreted as a sign that Trump wants a weaker dollar generally. The dollar weakens against all FX majors, with the US$ Index
hitting a four month low. Investors also reduced their dollar positions ahead of a Federal Reserve meeting and a possible announcement by the Trump administration of a new Fed chair. Korean won leads Asian EM currencies higher, and Singapore dollar rises to
strongest since 2014.  US$ Index -0.3%, GBPUSD is flat, EURUSD +0.1%, USDJPY -0.9%, AUDUSD +0.2%, NZDUSD +0.1%, USDCHF -0.1%, USDCAD +0.1%, USDSEK +0.3%, USDNOK +0.4%.

Spot Bitcoin +1.4%, Spot Ethereum +3.1%.

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
• AppLovin (APP) Raised to Buy at Needham; PT $700
• Canfor (CFP CN) Raised to Sector Perform at Scotiabank; PT C$16
• Cisco (CSCO) Raised to Outperform at Evercore ISI; PT $100
• Cognizant (CTSH) Raised to Buy at Deutsche Bank; PT $100
• Corpay (CPAY) Raised to Overweight at Morgan Stanley; PT $379
• Eldorado Gold (ELD CN) Raised to Sector Outperform at Scotiabank
• Interfor (IFP CN) Raised to Sector Outperform at Scotiabank; PT C$14
• Meta (META) Raised to Buy at Rothschild & Co Redburn; PT $900
• Netflix (NFLX) Raised to Accumulate at Phillip Secs; PT $100
• Relay Therapeutics (RLAY) Raised to Outperform at Oppenheimer; PT $14
• Solventum (SOLV) Raised to Overweight at KeyBanc; PT $97
• Stewart Information (STC) Raised to Outperform at KBW; PT $81
• Downgrades
• Amazon (AMZN) Cut to Accumulate at Phillip Secs; PT $290
• BOK Financial (BOKF) Cut to Neutral at DA Davidson; PT $135
• Bombardier (BBD/B CN) Cut to Sell at Goldman; PT C$191
• CES Energy (CEU CN) Cut to Hold at TD Cowen; PT C$16
• Clearwater Analytics (CWAN) Cut to Neutral at UBS; PT $24.55
• IO Biotech (IOBT) Cut to Neutral at Piper Sandler; PT 50 cents
• Lifetime Brands (LCUT) Cut to Hold at Canaccord; PT $3.50
• Royal Gold (RGLD) Cut to Sector Perform at Scotiabank; PT $335
• Vale (VALE3 BZ) ADRs Cut to Neutral at Genial Investimentos; PT $17
• Varonis Systems (VRNS) Cut to Equal-Weight at Morgan Stanley; PT $41
• Initiations
• AAR (AIR) Rated New Neutral at Goldman; PT $121
• AMD (AMD) Reinstated Buy at William O’Neil
• Belite Bio (BLTE) ADRs Rated New Buy at BofA; PT $195
• BKV (BKV) Rated New Buy at William O’Neil
• Chime Financial (CHYM) Rated New Neutral at Rothschild & Co Redburn
• Compass (COMP) Rated New Overweight at JPMorgan; PT $15
• Dutch Bros (BROS) Rated New Buy at Citi; PT $82
• Evercore (EVR) Rated New Buy at BofA; PT $435
• Exponent (EXPO) Rated New Overweight at JPMorgan; PT $100
• Fannie Mae (FNMA) Rated New Buy at BTIG; PT $20
• Freddie Mac (FMCC) Rated New Buy at BTIG; PT $20
• Lazard (LAZ) Rated New Buy at BofA; PT $65
• Moelis & Co (MC) Rated New Neutral at BofA; PT $81
• Piper Sandler (PIPR) Rated New Underperform at BofA; PT $385
• Verra Mobility (VRRM) Rated New Neutral at JPMorgan; PT $25
• Xylem (XYL) Rated New Outperform at William Blair

Data sources: Bloomberg, Reuters, CQG

David Wienke