Daily Game Plan

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

DATA/HEADLINES:   8:30ET Employment Report*; 10:00ET Factory Orders, Durable Goods, ISM Services Index;  1:30ET
Fed’s Barkin speaks  

TODAY’S HIGHLIGHTS and News:  

• 13 year old boy is the first person in the 40 year history of Tetris to beat the game
• Massive Bearish Treasury Option Trade Bets on Rout Post-Payrolls, Targets 10 Yr. Yield at 4.15%
• Citi upgraded financial stocks to overweight
• The FDA has decided to allow Florida to import millions of dollars worth of medications from Canada at far lower prices

Global equities fell and on track to snap a nine-week winning streak, as investors remained cautious ahead of the US jobs report, with some rotation into cheaper
and more defensive shares. The rush to cash extended into 2024 as global stocks started reversing some of last quarter’s rally. Investors poured $123 billion into cash funds in the week through Jan. 3 — the largest ever for the first week, BofA said. US Secretary
of State Antony Blinken prepared to visit the Middle East to try and prevent the Israel-Gaza conflict from widening.  Biden administration officials are said to be drawing up plans for the US to respond to a potentially wider, protracted regional conflict,
potentially drawing the US into another Middle East war.

EQUITIES: 
 

US equity futures slipped overnight, set to extend their first weekly retreat since October amid elevated valuations, tensions in the Middle East and mounting concern that a resilient
labor market might delay the start of monetary easing.  Futures on the tech-heavy Nasdaq 100 Index has lost more than 3% so far this week as investors awaited a key jobs report that could test expectations for an early start to the Federal Reserve’s easing
cycle. The VIX volatility Index kept rising from pre-pandemic lows reached last month.

Futures ahead of the bell: E-Mini S&P %, Nasdaq %, Russell 2000 %, Dow %.

In pre-market trading, Peloton (PTON US) shares rise 4%. The stock surged 14% on Thursday amid residual optimism over the company’s partnership with TikTok for a new fitness hub. Apple
(AAPL) edges 0.7% lower, putting the stock on track for its fifth consecutive session of declines. Agilon Health (AGL) sinks 25% after cutting its adjusted Ebitda outlook for the year. Beyond Inc. (BYON) gains 3.7% after the company behind Bed Bath & Beyond
and Overstock is upgraded to buy from hold at Needham due to self-help initiatives. PayPal Holdings (PYPL) drops 1% after picking up a second downgrade this week.
Allogene Therapeutics (ALLO) shares fall 12% as analysts noted that the company’s plan to streamline its trial footprint could cause delays entering the market. Okta (OKTA) dips
1.8% after the stock’s rating was cut to hold from buy at Jefferies.

European stocks are broadly lower, deepening declines as traders pared bets on interest-rate cuts from the European Central Bank and Bank of England following key inflation data in the
region on Friday. Europe’s Stoxx 600 index fell more than 1%, on track to end a seven-week run of gains, dragged lower by the retail and consumer products and services sectors. LVMH and Remy Cointreau fell after China announced an anti-dumping probe on European
liquor products from Friday.  Euro-zone inflation picked up to 2.9% in December, in line with projections. The core measure fell for a fifth month, to 3.4%. German retail sales dropped -2.5% with -0.1 expected. Stoxx 600 -0.9%, DAX -0.8%, CAC -1.1%, FTSE 100
-0.9%. Retail -1.8%, Chemicals -1.6%, Construction -1.4%, Travel -1.3%. Banks -0.2%.

Asian equities erased gains and headed for their worst start to a year since 2016. The MSCI Asia Pacific Index dropped 0.2%. China’s stocks continued a weak run as Hong Kong and mainland
shares declined for the fourth successive session amid persistent doubts over economic recovery and corporate earnings. China is launching an anti-dumping investigation into liquor products like brandy from the European Union, in a relatively modest step after
the bloc opened a probe last fall into its electric vehicle subsidies. China’s shadow banking giant Zhongzhi Enterprise Group filed for bankruptcy. The downfall marks one of China’s biggest-ever corporate collapses, putting more stress on already fragile consumer
and investor sentiment. Shares in Japan closed higher, and were the best performers in the region, driven by gains in exporters after the yen continued to weaken. Southeast Asian markets saw Malaysian, Philippine and Vietnamese benchmarks rising. Topix +0.6%,
Philippines +0.4%, Vietnam +0.3%, Singapore +0.3%, Sensex +0.2%. ASX 200 -0.1%, Taiwan -0.2%, Kospi -0.3%, CSI 300 -0.5%, Hang Seng Index -0.7%, Shanghai Composite -0.8%.  

FIXED INCOME: 
 

Treasuries extended declines, heading for the biggest weekly retreat since October, fueled by speculation that a resilient labor market may delay interest-rate cuts
by the Federal Reserve. Swaps traders now see around a 65% chance the Fed will cut rates by the Fed’s March meeting, down from almost fully pricing such a move a week ago. The yield on 10-year notes is back above 4% in a sharp reversal from last week, when
it slid to a five-month low. One large options trade yesterday targets a 10-year yield as high as 4.15% by the end of the day.  US yields were cheaper by 3bp to 4bp across the curve. 10 year yield at 4.035%, back at its 200 day moving average. 2 year yield
~4.41%. 

METALS: 
   

Gold edged lower, set for its first weekly drop in a month as a resilient US labor market fueled investor speculation that the Federal Reserve may delay interest-rate
cuts. Traders are waiting for the US nonfarm payroll report, which is expected to show that employers added 175,000 positions last month. While that’s a slower hiring pace than November, it would still reflect economic strength and add to evidence that wagers
on easier monetary policy have gone too far. Spot gold -0.2%, silver -0.1%.             

ENERGY:  

Crude oil moved higher, as rising tensions in the Middle East stoke fears of a wider war that could crimp crude supplies. Both benchmarks are on track to end the
first week of the year higher, having almost recouped their losses from Thursday after hefty US gasoline and distillate stock builds. The Biden administration is slowly putting oil back into the Strategic Petroleum Reserve, after selling a record amount from
the emergency stockpile in 2022. So far, changes in shipping routes in the Red Sea have led to increased demand for US crude, pushing up exports. WTI +1%, Brent +0.7%, US Nat Gas -1.5%, RBOB +0.3%.        

CURRENCIES:   

In currency markets, the dollar strengthened for a sixth day as traders focused on the release of a US jobs report. Nonfarm payrolls likely increased by 175k in December
(vs. 199k prior). The euro slipped as traders bet on fewer than six quarter-point cuts by the European Central Bank in 2024. Euro-zone inflation picked up in December; consumer prices rose 2.9% from a year ago, up from 2.4% in November. The yen reached a three-week
low versus the dollar.  More BOJ watchers joined those pushing back their predictions for the end of negative rates in the wake of the New Year’s Day earthquake and recent remarks by Governor Kazuo Ueda. US$ Index +0.25%, GBPUSD -0.2%, EURUSD -0.2%, USDJPY
+0.3%, AUDUSD -0.4%, USDNOK +0.6%.     

Bitcoin -1.2%, Ethereum -1.2%. 

TECHNICAL LEVELS: 

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
• Acadia Health (ACHC) Raised to Overweight at Stephens; PT $92
• Bank OZK (OZK) Raised to Outperform at Raymond James; PT $58
• Beyond Inc (BYON) Raised to Buy at Needham; PT $40
• CACI (CACI) Raised to Buy at Stifel; PT $380
• CNX Resources (CNX) Raised to Neutral at BofA
• Coterra Energy Inc (CTRA) Raised to Buy at BofA
• CrossFirst Bankshares (CFB) Raised to Outperform at Raymond James
• Dun & Bradstreet (DNB) Raised to Strong Buy at Raymond James
• Dynatrace (DT) Raised to Buy at Jefferies; PT $70
• Elanco Animal Health (ELAN) Raised to Buy at Stifel; PT $20
• Farmers National Banc (FMNB) Raised to Outperform at Raymond James
• Freshworks (FRSH) Raised to Buy at Jefferies; PT $30
• German American (GABC) Raised to Outperform at Raymond James; PT $38
• Hilltop Holdings (HTH) Raised to Market Perform at Raymond James
• Independent Bank Group (IBTX) Raised to Outperform at Raymond James
• Instructure (INST) Raised to Buy at Jefferies; PT $30
• Kymera (KYMR) Raised to Overweight at JPMorgan; PT $34
• Leidos (LDOS) Raised to Overweight at Barclays
• Monday.com (MNDY) Raised to Buy at Jefferies; PT $230
• National Storage (NSA) Raised to Overweight at KeyBanc; PT $45
• OceanFirst (OCFC) Raised to Outperform at Raymond James; PT $21
• Pennant Group (PNTG) Raised to Overweight at Stephens; PT $18
• Retail Opportunity (ROIC) Raised to Overweight at KeyBanc; PT $16
• Vtex (VTEX) Raised to Overweight at Morgan Stanley; PT $8
• WesBanco (WSBC) Raised to Outperform at Raymond James; PT $34
• Downgrades
• Allogene (ALLO) Cut to Neutral at Guggenheim
• Cut to Market Perform at JMP
• Ally Financial (ALLY) Cut to Underperform at Raymond James
• AvalonBay (AVB) Cut to Sector Weight at KeyBanc
• Bank OZK (OZK) Cut to Underweight at Wells Fargo; PT $41
• Booz Allen (BAH) Cut to Underweight at Barclays; PT $125
• Buenaventura (BUENAVC1 PE) ADRs Cut to Hold at Kallpa Securities; PT $14.30
• Business First Bancshares (BFST) Cut to Market Perform at Raymond James
• California Resources (CRC) Cut to Neutral at BofA
• Chord Energy (CHRD) Cut to Underperform at BofA
• CI&T Inc (CINT) Cut to Equal-Weight at Morgan Stanley; PT $5.50
• Cognizant (CTSH) Cut to Sell at SocGen; PT $67
• Cytokinetics (CYTK) Cut to Equal-Weight at Morgan Stanley; PT $90
• Definitive Healthcare (DH) Cut to Hold at Canaccord; PT $10
• Diodes (DIOD) Cut to Hold at Truist Secs; PT $78
• DT Midstream (DTM) Cut to Neutral at Mizuho Securities; PT $57
• Eagle Bulk (EGLE) Cut to Neutral at BTIG
• EOG Resources (EOG) Cut to Neutral at BofA
• First Hawaiian (FHB) Cut to Underweight at Wells Fargo; PT $18
• Genco Shipping (GNK) Cut to Neutral at BTIG
• Gulfport Energy (GPOR) Cut to Neutral at BofA
• Hancock Whitney (HWC) Cut to Hold at Truist Secs; PT $50
• IBM (IBM) Cut to Sell at SocGen; PT $143
• ManpowerGroup (MAN) Cut to Underperform at BNPP Exane; PT $70
• Medical Properties (MPW) Cut to Sector Weight at KeyBanc
• MSCI (MSCI) Cut to Market Perform at Raymond James
• Northern Oil and Gas (NOG) Cut to Underperform at BofA
• Okta (OKTA) Cut to Hold at Jefferies; PT $95
• Palantir (PLTR) Cut to Underperform at Jefferies; PT $13
• Paycom Software (PAYC) Cut to Hold at Jefferies; PT $195
• Paycor HCM (PYCR) Cut to Hold at Jefferies; PT $22
• Paylocity (PCTY) Cut to Hold at Jefferies; PT $180
• Physicians Realty (DOC) Cut to Sector Weight at KeyBanc
• Rexford Industrial (REXR) Cut to Neutral at Baird; PT $61
• Seacoast Banking (SBCF) Cut to Hold at Truist Secs; PT $29
• SITE Centers (SITC) Cut to Peerperform at Wolfe
• SouthState Corp (SSB) Cut to Market Perform at Raymond James
• Stag Industrial (STAG) Cut to Neutral at Baird; PT $41
• Televisa (TLEVICPO MM) ADRs Cut to Equal-Weight at Morgan Stanley; PT $4
• United Rentals (URI) Cut to Underperform at BNPP Exane; PT $485
• V2X Inc (VVX) Cut to Hold at Stifel; PT $52
• Vimeo (VMEO) Cut to Hold at Jefferies; PT $4
• Vivo (VIVT3 BZ) ADRs Cut to Equal-Weight at Morgan Stanley; PT $11
• Zions (ZION) Cut to Hold at Truist Secs; PT $46
• Initiations
• Amphenol (APH) Rated New Buy at Citi; PT $117
• Beachbody (BODY) Rated New Buy at Roth MKM; PT $15
• BioNTech (BNTX) ADRs Rated New Market Perform at Oppenheimer
• Capricor Therapeutics (CAPR) Rated New Overweight at Cantor; PT $8
• Enbridge (ENB CN) Rated New Outperform at ATB Capital; PT C$56
• Entrada Therapeutics (TRDA) Rated New Outperform at Oppenheimer; PT $22
• Harpoon Therapeutics (HARP) Rated New Outperform at Oppenheimer; PT $23
• IBM (IBM) Reinstated Hold at Jefferies; PT $180
• LeddarTech (LDTC) Rated New Market Perform at Cowen
• Mondee Holdings (MOND) Rated New Equal-Weight at Morgan Stanley; PT $3
• Neurogene Inc (NGNE) Rated New Buy at Stifel; PT $31
• Northern Oil and Gas (NOG) Rated New Equal-Weight at Morgan Stanley
• Permian Resources (PR) Rated New Neutral at BofA
• Roivant Sciences (ROIV) Rated New Overweight at Piper Sandler; PT $20
• Snowflake (SNOW) Rated New Outperform at RBC; PT $230
• TC Energy (TRP CN) Rated New Sector Perform at ATB Capital; PT C$54
• TE Connectivity (TEL) Rated New Neutral at Citi; PT $146

Data sources: Bloomberg, Reuters, CQG