Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET PPI: 9:45ET MNI Chicago PMI; 10:00ET Construction Spending; 11:00ET Kansas City Fed
Services Activity

US JAN. PRODUCER PRICES RISE 2.9% Y/Y; EST. +2.6%

Highlights and News:  

• Iran-US technical talks will begin in Vienna (home of International Atomic Energy Agency) on Monday
• US deploys squadron of one-way kamikaze (LUCAS) drones to Middle East amid Iran tensions
• Morgan Stanley warns AI spending to “surpass” dot-com bubble
• Pakistan bombs targets in Afghan cities, minister calls it ‘open war’
• Anthropic Rejects Latest Pentagon Offer, Escalating AI Feud
• Netflix Drops Out of Bid for Warner Bros.
• Bill Clinton to give private testimony to Congress about Epstein

Global stocks were mixed to lower, although the MSCI World Index is on track for a monthly gain despite underlying volatility from AI concerns, geopolitics, and sector
rotations. Equity funds attracted the bulk of weekly inflows driven by emerging markets, while large flows also returned to gold, Bank of America says. Strategists led by Michael Hartnett see international stocks outperform US for rest of this decade, noting
non-US stocks account for 38% share of the global stock market cap versus US at 62%. In a further sign of rising tensions, the US Department of State authorized the departure of non-emergency staff and their families from Mission Israel due to “safety risks”.
Pakistan carried out airstrikes on Taliban government targets in Afghanistan’s major cities—including the capital Kabul and Kandahar—overnight, marking the first direct strikes against its former allies. Islamabad declared the situation an “open war” amid
escalating border clashes in this volatile, nuclear-armed region.

EQUITIES: MSCI Rebalance;
The S&P 500 has closed within 2.5% of its 50-day moving average for 63 consecutive sessions

US equity futures are broadly lower, led by small cap Russell 2000 contracts, while investors look ahead to important inflation figures due this morning that could bolster the case for
further interest rate cuts. Increasing concerns about artificial intelligence are pressuring technology shares, as the Nasdaq faces what could be its sharpest monthly decline since March 2025.
Netflix surged more than 9% in premarket trading as investors welcomed its decision to step back from the bidding war for Warner Bros. Discovery, while Paramount jumped around 10% after emerging as the winner in the race for some of the most valuable
TV and film assets globally. Dell shares jumped premarket after projecting $50 billion in AI server sales, topping estimates. Anthropic rejected the Pentagon’s latest offer in a dispute over safeguards around the use of its artificial intelligence technology
by the US military. The company insists on two specific restrictions: it doesn’t want its technology used for surveillance of US citizens or for autonomous lethal strikes without a human in the loop. No major US companies are expected to report on Friday,
but Berkshire Hathaway’s annual report is due on Saturday. This earnings season, which wraps up next week, has seen the fewest S&P 500 companies beat estimates since 2022.

Futures ahead of the data/bell: E-Mini S&P -0.7%, Nasdaq -0.7%, Russell 2000 -1.3%, DJI -0.9%

In pre-market trading, Block (XYZ) rallies 19% after the financial technology company said it was reducing its workforce by nearly half in a bet on AI. Jack Dorsey’s
firm also raised its full-year outlook for gross profit. Caris Life Sciences (CAI) climbs 15% after the life sciences firm gave revenue forecast for the full year that surpassed Wall Street’s expectations. CoreWeave (CRWV) falls 11% after the AI infrastructure
software company reported a bigger-than-expected loss and boosted capital expenditures. Dell Technologies (DELL) rises 12% after the company gave an outlook for sales of its artificial intelligence servers that exceeded estimates. Flutter (FLUT) falls 11%
after the gambling company reported fourth-quarter results that fell short. Intuit (INTU) falls 2% after the tax-preparation software maker gave a third quarter earnings guidance that missed estimates. Kore Group (KORE) rises 78% after agreeing to be acquired
by Searchlight Capital Partners and Abry Partners for $9.25 per share in cash. NCR Atleos (NATL) jumps 15% as The Brink’s Company said it will acquire the company in a cash and stock deal valued at about $6.6 billion. Netflix (NFLX) climbs 7% after the streaming
giant dropped out of the fight to buy Warner Bros. Discovery. Rocket Cos. (RKT) rises 7% after the mortgage finance company posted revenue and adjusted profit for the fourth quarter that beat. Zscaler (ZS) falls 10% after the security software company’s second-quarter
results weren’t seen as strong enough to reverse recent negative sentiment toward software companies.

The Nasdaq 100 Index is holding a short term negative tone as it hovers below the cloud, while S&P 500 holds above its Imoku cloud.

European gauges have moderated from morning highs to trade mixed, positioning the pan-European benchmark for its eighth straight month of advances—the
longest streak in over a decade—as solid corporate updates continued to support risk appetite against a backdrop of tariff and AI-disruption headwinds. French and Spanish inflation rises, backing stable ECB rates. The Stoxx 600 is holding in the green with
telecommunications and mining stocks leading gains, while travel shares underperform. Deutsche Telekom shares rally while Vodafone dips following an El Español report that Telefonica is in talks over a potential acquisition of 1&1 in Germany. Melrose Industries
plunges as much as 16%, the biggest drop in almost a year, after earnings guidance from the aerospace business fell short of expectations. BASF shares fall as much as 5.4%, after the German chemicals company’s full-year results disappointed analysts. Grifols
declined as much as 8.3% after the Spanish company’s adjusted Ebitda for the fourth quarter missed estimates. Wizz Air shares slid as much as 10% after shareholder Indigo Partners offered 10 million shares priced at a discount. Prime Minister Keir Starmer
is under pressure to reinvent his ailing Labour government with a leftwards pivot after the Green Party captured one of its House of Commons seats via a special election. Stoxx 600 +0.15%, DAX +0.1%, CAC -0.15%, FTSE 100 +0.55%. Telecom +1.8%, Real Estate
+1.1, Energy +1.1%. Travel & Leisure -1.9%, Luxury -1.4%.

Shares in Asia traded mixed, with the MSCI Asia Pacific Index up 0.1%, closing its best February on record as investors snapped up shares of the region’s AI infrastructure
companies. Key gauges rose in Japan and Hong Kong, while Taiwan’s market was closed for a holiday. Meanwhile, global investors offloaded nearly $5 billion of South Korean equities today, in a sign of profit taking after the equity benchmark rallied nearly
50% this year. Hang Seng rises about 1% as Chinese tech shares look to end a difficult month with modest gains. Handset supply-chain stocks slip in Asia after researcher IDC said the global smartphone market will contract 12.9% in 2026 because of the unprecedented
memory chip shortage, marking “a crisis like no other.” Next week’s key events include China’s annual “Two Sessions,” with the Chinese People’s Political Consultative Conference and the National People’s Congress. Topix +1.5%, Hang Seng Index +0.95%, Singapore
+0.6%, Hang Seng Tech +0.55%, ASX 200 +0.25%, Vietnam +0.05%. Philippines -0.2%, CSI 300 -0.3%, Kospi -1%, Sensex -1.2%.

FIXED INCOME: 
 

US yields are continuing their declines, with the 10-year extending below the 4% level to 3.98%, below the key 200 week moving average for the first time since early
2022. Treasuries hold gains amassed mainly during London morning, leaving yields 1bp-3bp richer led by front-end and belly, steepening the curve slightly. Focus will be on the producer prices data this morning.

METALS: 

Gold moves higher with spot near $5,220 an ounce, after the US and Iran agreed on further nuclear talks, while the American military build-up in the Middle East kept
markets on edge about the potential for conflict. Washington and Tehran will continue negotiations next week after making “significant progress” on Thursday, according to mediator Oman. However, a person familiar with the US position said officials left the
talks disappointed with progress. Copper is higher after the Chinese Politburo urged a demand boost. Spot gold +0.6%, Silver +2.7%, Copper futures +1.9%. 

ENERGY:   

Oil prices are higher as the US deploys American forces in the Middle East even after agreeing to more nuclear talks with Iran next week. Traders will be closely
watching a scheduled OPEC+ supply meeting on Sunday, as conflict risks cloud the outlook. US and Iranian officials ended the latest round of nuclear talks in Geneva on Thursday by agreeing to reconvene as soon as next week. In futures, Brent rose to near $73
a barrel after closing little changed on Thursday. The UK Treasury is considering scrapping a controversial windfall tax on North Sea oil and gas following persistent pushback from producers. WTI +3%, Brent +3%, US Nat Gas +1.8%, RBOB +1.8%.

CURRENCIES: 

In currency markets, the dollar is little changed ahead of US PPI figures which may help guide estimates for consumer inflation. The pound slumped to its weakest
level against the euro in over two months following the Green Party’s by-election victory in Manchester, where Reform UK secured the second-highest vote share—a result that highlighted mounting pressures on Prime Minister Keir Starmer. Inflation quickened
more than anticipated in France and unexpectedly accelerated in Spain, supporting the ECB’s stance further rate cuts aren’t needed. China’s yuan slipped after rising in the last 10 sessions, its longest run of gains since September 2010, as the People’s Bank
of China moved to rein in the currency’s rise. China’s central bank intervened today to curb the rapidly appreciating yuan, eliminating the 20% risk reserve requirement on forex forward contracts—a step that lowers the cost of dollar purchases and helps ease
pressure on exporters hit by the stronger currency. The yen eases from earlier gains to trade slightly higher versus the dollar. Tokyo’s CPI fell below the BOJ’s 2% target in February to the slowest pace since October 2024 as Prime Minister Takaichi’s utility
subsidies curbed household energy costs. US$ Index -0.05%, GBPUSD -0.1%, EURUSD +0.05%, USDJPY -0.1%, AUDUSD is flat, NZDUSD is flat, USDCHF -0.4%, USDCAD -0.1%, USDSEK -0.2%, USDNOK -0.7%.

Spot Bitcoin -2.2%, Spot Ethereum -305%. 

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
• American Electric Power (AEP) Raised to Neutral at UBS; PT $132
• Aon PLC (AON) Raised to Outperform at Mizuho Securities; PT $397
• Applied Opto (AAOI) Raised to Neutral at B Riley; PT $54
• Arthur J Gallagher (AJG) Raised to Outperform at Mizuho Securities
• Biodesix (BDSX) Raised to Outperform at William Blair
• Block (XYZ) Raised to Overweight at Morgan Stanley; PT $93
• Brown & Brown (BRO) Raised to Outperform at Mizuho Securities; PT $85
• Celsius Holdings (CELH) Raised to Buy at BofA; PT $65
• Raised to Buy at CFRA
• Honeywell (HON) Raised to Outperform at Wolfe; PT $293
• Installed Building (IBP) Raised to Hold at Vertical Research; PT $326
• Liberty Formula One (FWONA) Raised to Equal-Weight at Wells Fargo
• Live Nation (LYV) Raised to Buy at Rothschild & Co Redburn; PT $193
• Netflix (NFLX) Raised to Buy at Arete
• Newmont Corp (NEM) Raised to Outperform at Bernstein; PT $157
• Palantir (PLTR) Raised to Buy at UBS; PT $180
• Penn Entertainment (PENN) Raised to Equal-Weight at Wells Fargo; PT $16
• PubMatic (PUBM) Raised to Buy at B Riley; PT $10.50
• Quebecor (QBR/B CN) Raised to Buy at Canaccord; PT C$60
• Southwest Air (LUV) Raised to Buy at TD Cowen; PT $66
• Stewart Information (STC) Raised to Overweight at Stephens; PT $82
• Sun Communities (SUI) Raised to Overweight at Wells Fargo; PT $150
• Downgrades
• American Homes (AMH) Cut to Market Perform at Raymond James
• Cars.com (CARS) Cut to Neutral at JPMorgan; PT $10
• Chemed (CHE) Cut to Sector Perform at RBC; PT $422
• DMG Blockchain Solutions Inc (DMGI CN) Cut to Neutral at HC Wainwright
• Dollar Tree (DLTR) Cut to Neutral at Citi; PT $132
• Duolingo (DUOL) Cut to Sector Perform at Scotiabank; PT $100
• Cut to Neutral at China Merchants; PT $111
• Cut to Neutral at JPMorgan; PT $95
• Cut to Equal-Weight at Morgan Stanley; PT $100
• Cut to Inline at Evercore ISI; PT $114
• Eagle Point Income (EIC) Cut to Neutral at Ladenburg Thalmann
• Eos Energy (EOSE) Cut to Neutral at Guggenheim
• Equity LifeStyle (ELS) Cut to Equal-Weight at Wells Fargo; PT $70
• Essex Property (ESS) Cut to Market Perform at Raymond James
• Gerdau (GGBR4 BZ) ADRs Cut to Market Perform at Itau BBA; PT $4.70
• GoodRx Holdings (GDRX) Cut to Neutral at JPMorgan
• Invitation Homes (INVH) Cut to Market Perform at Raymond James
• Lantheus (LNTH) Cut to Hold at Jones
• MannKind (MNKD) Cut to Sector Perform at RBC
• Marsh McLennan (MRSH) Cut to Neutral at Mizuho Securities; PT $199
• NCR Atleos (NATL) Cut to Neutral at DA Davidson; PT $50
• NexPoint Residential (NXRT) Cut to Underperform at Raymond James
• OneStream (OS) Cut to Neutral at BTIG
• Pembina Pipeline (PPL CN) Cut to Market Perform at BMO; PT C$60
• Phinia (PHIN) Cut to Hold at Freedom Capital; PT $88
• Quebecor (QBR/B CN) Cut to Hold at TD Cowen; PT C$60
• Sprout Social (SPT) Cut to Hold at Canaccord; PT $9
• Synopsys (SNPS) Cut to Equal-Weight at Morgan Stanley; PT $480
• Tennant (TNC) Cut to Hold at Freedom Capital; PT $67
• TKO (TKO) Cut to Neutral at Seaport Global Securities
• Vital Farms (VITL) Cut to Equal-Weight at Morgan Stanley; PT $24
• Warner Bros Discovery (WBD) Cut to Hold at Benchmark
• Cut to Underperform at Raymond James
• Initiations
• Brookfield Business (BBU-U CN) Reinstated Outperform at CIBC; PT C$60.28
• Dynatrace (DT) Rated New Neutral at Macquarie
• Palantir (PLTR) Rated New Buy at Rosenblatt Securities Inc
• Pelthos Therapeutics (PTHS) Rated New Overweight at Piper Sandler
• Trisura (TSU CN) Reinstated Outperform at CIBC; PT C$59

Data sources: Bloomberg, Reuters, CQG

David Wienke