Daily Game Plan

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

DATA/HEADLINES:   10:00ET Wholesale Inventories, Wholesale Trade Sales; 3:15ET Fed’s Williams speaks on economic
outlook  

TODAY’S HIGHLIGHTS and News:  

• In 2023, outstanding credit card balances in the US surpassed $1 trillion for the first time – FRED
• US and Chinese defense officials held in-person talks at the Pentagon
  
• World Economic Forum says fake news poses the biggest danger to the world

Global equities, the dollar and bonds held steady with many investors on the sidelines ahead of a key US inflation report on Thursday. China’s inflation, trade and
credit reports are also due in the coming days. Geopolitical tensions were also on the radar with more disruptions in the Red Sea, and an election is days away in Taiwan. China’s US envoy said the country had no room to compromise with those advocating for
Taiwan independence. Meanwhile, Investors placed record orders for Spanish bonds on Wednesday, continuing a run of blockbuster debt sales seen in the European market this year. The US, Japan, UK and the eurozone will start flooding the market with debt at
a near unprecedented clip in coming weeks. Global chip sales rose for the first time in more than a year as demand started to rebound on the back of AI.    

EQUITIES: 
 

US equity futures traded in a narrow range as investors waited for the tomorrow’s inflation figures and for the start of company earnings season. The tech-heavy Nasdaq 100 posted modest
gains overnight while those on the S&P 500 index were little changed.  Headwinds could come with the earnings season picking up in the next few weeks, with analysts slashing estimates in the runup to the announcements. Today is the long-awaited deadline for
the US Securities & Exchange Commission to vote on spot-Bitcoin ETF applications.     

Futures ahead of the bell: E-Mini S&P +0.01%, Nasdaq +0.1%, Russell 2000 is flat, Dow -0.1%.

In pre-market trading, Aehr Test Systems (AEHR) shares slide 17% after the semiconductor manufacturing company reported its second-quarter results. Etsy (ETSY) shares fall 1.7% after
Goldman Sachs cut its rating to neutral.  Intuitive Surgical (ISRG) shares rise 5% after reporting preliminary revenue for the fourth quarter that beat the average analyst estimate. Lennar (LEN) rises 1.8% after the company increased its quarterly cash dividend.
Smart Global (SGH) rises 9.5% after the semiconductor device company posted record gross margins. Virgin Galactic (SPCE) climbs 3% after Truist upgraded the space travel company to hold.

European gauges are slightly lower after erasing early gains, with Construction and Travel shares leading losses while REITs outperform. Among individual movers, UK bakery chain Greggs
Plc rose after annual revenue beat. UK grocer J Sainsbury Plc dropped on weak sales of clothing and general merchandise. BE Semiconductor Industries NV fell after being downgraded at Deutsche Bank. Hundreds of thousands of people faced train cancellations
across Germany as a three-day nationwide rail strike added to travel chaos. ECB Vice President Guindos said on Wednesday that the euro zone may have been in recession last quarter and prospects remain weak. French industrial production expanded 0.5% in November
versus expectations for no change.  Stoxx 600 -0.3%, DAX -0.1%, CAC -0.2%, FTSE 100 -0.4%. Construction -1.1%, Travel -0.8%, Insurance -0.7%. REITs +0.6%, Media +0.2%.

Asia stocks were mixed, as a rally in Japanese shares was offset by declines across much of the region. Japan’s Nikkei 225 climbed 2% to break above 34,000 for the first time since 1990.
Exporters led the advance, helped by a softening yen after data showed Japanese real wages shrank for a 20th month in November. The MSCI Asia Pacific Index gained 0.1% after erasing early gains. China’s Shanghai Composite closed at its lowest level since 2020
as investors await key China policy meetings for signs of possible further stimulus and growth plans. Topix +1.3%, Sensex +0.4%, Vietnam +0.25%. Taiwan -0.4%, CSI 300 -0.5%, Singapore -0.55%, Hang Seng Index -0.6%, ASX 200 -0.7%, Kospi -0.7%, Philippines -1.1%.
 

FIXED INCOME: 
 

Treasuries are richer by 1bp to 2bp across the curve, with curve spreads within 1bp of Tuesday’s close; 10-year yields around 3.99%. $37b 10-year reopening today
follows 3-year note sale that stopped 1.1bp through the WI level. Appetite for newly-issued bonds is off the charts as investors look to lock in yields before central banks cut interest rates. Tuesday was record day for issuance in the primary market across
Europe and bumper demand for deals from governments in Belgium, the UK and Italy. Some bond analysts argue that it’s only a matter of time before markets become nervous about the current supply dynamics.         

METALS: 
   

Gold steadied before Thursday’s US inflation report, which could provide further clues on the speed and timing of the Federal Reserve’s much anticipated monetary
policy easing. The CPI data is likely to show core inflation proving sticky above the Fed’s 2% average inflation target through 2024. Gold has lost steam at the start of this year as resilient economic fundamentals fuel speculation the Fed’s pivot may be delayed.
Spot gold +0.1%, silver +0.1%.            

ENERGY:  

Oil rose with traders awaiting an official update on US petroleum inventories after an industry group reported a large drop in crude stocks but increases in gasoline
and distillate supplies. US crude inventories fell by 5.2 million barrels last week, API data showed. That would bring down total holdings to the lowest in 10 weeks if confirmed by the EIA today.  Houthi rebels carried out one of their largest Red Sea missile
and drone attacks to date yesterday, igniting a response from five US and UK warships. While OPEC+ is cutting production to bolster the market, US crude production will hit a record high in 2024, the EIA said yesterday.  WTI +1.1%, Brent +1%, US Nat Gas -2%,
RBOB +2.2%.

CURRENCIES:   

 In currency markets, the yen extended its weakness against the dollar as a sharp slowdown in Japanese worker wage growth was seen limiting the Bank of Japan’s ability
to exit its ultra-loose policy stance.  Japan’s wage growth slowed sharply in November to 0.2% year on year, as the decline in real wages worsened to 3%.  The dollar weakened a tad amid a market consolidation ahead of Thursday’s US CPI data. The euro rose
despite concerns about the euro-area economy. US$ Index -0.1, GBPUSD +0.15%, EURUSD +0.1%, USDJPY +0.4%, AUDUSD +0.3%, USDNOK -0.5%.          

Bitcoin -0.6%, Ethereum +2%.  Bitcoin stabilized after spiking when an unauthorized post from the US Securities and Exchange Commission’s X account said it had approved
bitcoin exchange-traded funds. The SEC’s account seemingly does not have two stage authorization.  

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
• AB InBev (ABI BB) ADRs Raised to Buy at Jefferies; PT $76
• Berkshire Hills (BHLB) Raised to Neutral at Piper Sandler; PT $24
• Bloom Energy (BE) Raised to Outperform at Baird; PT $22
• Chesapeake Utilities (CPK) Raised to Outperform at RBC; PT $123
• Descartes Systems (DSG CN) Raised to Outperform at Wolfe; PT C$127.08
• Duke Energy (DUK) Raised to Outperform at RBC; PT $113
• Exelon (EXC) Raised to Buy at Mizuho Securities; PT $39
• Fiserv (FI) Raised to Outperform at BNPP Exane; PT $156
• Hexcel (HXL) Raised to Buy at Truist Secs
• Raised to Neutral at Goldman; PT $70
• Home Depot (HD) Raised to Outperform at Wedbush; PT $380
• Howmet Aerospace (HWM) Raised to Buy at Truist Secs
• Landstar (LSTR) Raised to Outperform at Wolfe; PT $205
• Newmont Corp (NEM) Raised to Buy at Veritas Investment Research Co
• Oneok (OKE) Raised to Peerperform at Wolfe
• Raymond James (RJF) Raised to Overweight at JPMorgan; PT $135
• Toast (TOST) Raised to Buy at Goldman; PT $24
• United Airlines (UAL) Raised to Positive at Susquehanna; PT $60
• Universal Logistics (ULH) Raised to Buy at Stifel; PT $36
• Valmont (VMI) Raised to Buy at DA Davidson; PT $290
• Virgin Galactic (SPCE) Raised to Hold at Truist Secs
• Woodward (WWD) Raised to Buy at Goldman; PT $153
• Downgrades
• Alaska Air (ALK) Cut to Neutral at Susquehanna; PT $40
• Ally Financial (ALLY) Cut to Market Perform at BMO; PT $36
• Ambrx Biopharma (AMAM) Cut to Market Perform at JMP
• American Express (AXP) Cut to Underperform at BMO; PT $157
• Apple (AAPL) Cut to Neutral at Redburn; PT $200
• Axonics Inc (AXNX) Cut to Equal-Weight at Wells Fargo
• Birchcliff Energy (BIR CN) Cut to Sector Perform at National Bank
• Bunge Global (BG) Cut to Peerperform at Wolfe
• Canadian National (CNR CN) Cut to Neutral at CIBC; PT C$176
• Capital One (COF) Cut to Market Perform at BMO; PT $124
• Citigroup (C) Cut to Market Perform at BMO; PT $57
• Dow (DOW) Cut to Hold at Deutsche Bank; PT $58
• DT Midstream (DTM) Cut to Underperform at Wolfe; PT $53
• Etsy (ETSY) Cut to Neutral at Goldman; PT $80
• Forward Air (FWRD) Cut to Underperform at Wolfe; PT $50
• Goldman Sachs (GS) Cut to Market Perform at BMO; PT $357
• Helmerich & Payne (HP) Cut to Equal-Weight at Barclays; PT $40
• Juniper (JNPR) Cut to Hold at Needham
• Cut to Inline at Evercore ISI; PT $40
• LyondellBasell (LYB) Cut to Hold at Deutsche Bank; PT $105
• Mercury Systems (MRCY) Cut to Sell at Goldman; PT $24
• Navient (NAVI) Cut to Underweight at Barclays; PT $14
• NuStar Energy (NS) Cut to Underweight at JPMorgan; PT $19
• PennyMac (PFSI) Cut to Market Perform at KBW; PT $95
• Piper Sandler (PIPR) Cut to Market Perform at JMP
• Quanta Services (PWR) Cut to Sector Weight at KeyBanc
• Schwab (SCHW) Cut to Neutral at Citi
• Solo Brands (DTC) Cut to Neutral at Citi; PT $4
• Cut to Hold at Jefferies; PT $4
• Sun Country Airlines (SNCY) Cut to Neutral at Susquehanna; PT $15
• Synchrony Financial (SYF) Cut to Market Perform at BMO; PT $40
• UWM Holdings (UWMC) Cut to Underperform at KBW; PT $6
• Workday (WDAY) Cut to Neutral at DA Davidson; PT $300
• Zillow (ZG) Cut to Neutral at BofA; PT $60
• Initiations
• Aecom (ACM) Resumed Overweight at KeyBanc; PT $104
• AerCap Holdings (AER) Rated New Outperform at BMO; PT $103
• Affirm Holdings (AFRM) Rated New Market Perform at BMO; PT $44
• AIG (AIG) Rated New Market Perform at Cowen; PT $78
• Air Lease (AL) Rated New Outperform at BMO; PT $54
• Allstate (ALL) Rated New Outperform at Cowen; PT $193
• Ally Financial (ALLY) Reinstated Buy at Deutsche Bank; PT $47
• American Express (AXP) Reinstated Buy at Deutsche Bank; PT $235
• Aon PLC (AON) Rated New Outperform at Cowen; PT $390
• Arch Capital (ACGL) Rated New Outperform at Cowen; PT $96
• Arthur J Gallagher (AJG) Rated New Market Perform at Cowen; PT $249
• Bread Financial Holdings (BFH) Rated New Market Perform at BMO; PT $33
• Capital One (COF) Reinstated Hold at Deutsche Bank; PT $153
• Caret Holdings Inc (ROOT) Rated New Market Perform at Cowen; PT $11
• Ceridian HCM (CDAY) Rated New Buy at Stifel; PT $75
• Chubb (CB) Rated New Market Perform at Cowen; PT $254
• Comfort Systems USA (FIX) Resumed Sector Weight at KeyBanc
• DiamondRock Hospitality (DRH) Rated New Outperform at Wolfe; PT $11
• Discover Financial (DFS) Reinstated Hold at Deutsche Bank; PT $140
• Dycom Industries (DY) Resumed Overweight at KeyBanc; PT $136
• EchoStar (SATS) Rated New Buy at Deutsche Bank; PT $10
• Emcor (EME) Resumed Sector Weight at KeyBanc
• Enova International (ENVA) Rated New Market Perform at BMO; PT $57
• Equinor (EQNR NO) ADRs Rated New Market Perform at Cowen; PT $28
• Everest Group Ltd (EG) Rated New Market Perform at Cowen; PT $421
• First American (FAF) Rated New Buy at Deutsche Bank; PT $80
• Fluor (FLR) Resumed Sector Weight at KeyBanc
• FNF (FNF) Rated New Hold at Deutsche Bank; PT $64
• Goosehead Insurance (GSHD) Rated New Outperform at Cowen; PT $105
• Hartford Financial (HIG) Rated New Outperform at Cowen; PT $132
• Jacobs (J) Resumed Sector Weight at KeyBanc
• KBR (KBR) Resumed Overweight at KeyBanc; PT $63
• Kemper (KMPR) Rated New Outperform at Cowen; PT $70
• Lemonade (LMND) Rated New Market Perform at Cowen; PT $17
• Marsh & McLennan (MMC) Rated New Market Perform at Cowen; PT $189
• MasTec (MTZ) Resumed Overweight at KeyBanc; PT $92
• MediaAlpha (MAX) Rated New Outperform at Cowen; PT $15
• Mister Car Wash (MCW) Rated New Overweight at Wells Fargo; PT $11
• Mr Cooper (COOP) Rated New Buy at Deutsche Bank; PT $88
• MYR Group (MYRG) Resumed Sector Weight at KeyBanc
• Navient (NAVI) Rated New Hold at Deutsche Bank; PT $19
• OneMain (OMF) Reinstated Buy at Deutsche Bank; PT $68
• Parsons (PSN) Rated New Overweight at KeyBanc; PT $74
• PennyMac Mortgage (PMT) Reinstated Hold at Deutsche Bank; PT $16
• PennyMac (PFSI) Rated New Buy at Deutsche Bank; PT $115
• Progressive (PGR) Rated New Market Perform at Cowen; PT $174
• RenaissanceRe (RNR) Rated New Market Perform at Cowen; PT $224
• Revolve Group (RVLV) Rated New Sell at Goldman; PT $12
• RLJ Lodging (RLJ) Rated New Outperform at Wolfe; PT $15
• Rocket Cos. (RKT) Rated New Hold at Deutsche Bank; PT $10
• SLM (SLM) Rated New Buy at Deutsche Bank; PT $25
• SoFi Technologies (SOFI) Rated New Hold at Deutsche Bank; PT $11
• Rated New Market Perform at BMO; PT $9
• Stereotaxis (STXS) Rated New Buy at Roth MKM; PT $5
• Summit Hotel (INN) Rated New Peerperform at Wolfe
• Synchrony Financial (SYF) Reinstated Buy at Deutsche Bank; PT $56
• Teck Resources (TECK/B CN) Rated New Sell at Veritas Investment Research Co
• Tetra Tech (TTEK) Resumed Overweight at KeyBanc; PT $191
• Travelers (TRV) Rated New Outperform at Cowen; PT $247
• UWM Holdings (UWMC) Reinstated Hold at Deutsche Bank; PT $6
• Veralto (VLTO) Rated New Hold at Deutsche Bank; PT $79
• Wheels Up (UP) Reinstated Rating Suspended at Goldman
• Willis Towers (WTW) Rated New Outperform at Cowen; PT $316
• Xenia Hotels (XHR) Rated New Peerperform at Wolfe

Data sources: Bloomberg, Reuters, CQG