Daily Game Plan

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

DATA/HEADLINES:   8:30ET Fed’s Goolsbee speaks on CNBC; 10:00ET U. of Mich. Sentiment, Existing Home Sales; 11:15ET
Fed’s Daly speaks on Fox Business; 1:00ET Fed’s Barr speaks; 4:00ET TIC Flows; 4:15ET Fed’s Daly speaks

TODAY’S HIGHLIGHTS and News:  

• New cancer diagnoses expected to hit record high this year
  driven by alarming increase among younger Americans
• Biden is forgiving ~$5 billion in additional student loans, cancelling debt of nearly 74,000 graduates

World stocks gained as chipmaker TSMC’s outlook for capital spending and revenue lifted hopes of a broad tech recovery in 2024. Global equity funds witnessed hefty
outflows in the week up to Jan. 17 as investors trimmed positions after central bankers in the US and Europe pushed back against market expectations of an early interest rate cut. Investors pulled a net $8.68 billion out of global equity funds during the week,
a third straight week of outflows, data from LSEG showed. Geopolitical tensions escalated as NATO is said to be mobilizing ~90K troops for its biggest drills since the Cold War.            

EQUITIES: 
 

US equity futures are higher with Nasdaq 100 futures leading gains after the index closed at a record high on Thursday. Tech, growth and AI stocks that led the 2023 rally are traders’
top picks again, BofA strategists said. Michael Hartnett said the new Treasury yield range implies investors will avoid banks, REITs, small-caps and leverage. Apple gets a first taste for demand for the Vision Pro when it goes on sale online this morning.
iRobot plunged premarket after people familiar said the EU will probably block Amazon’s plan to buy it. Congress passed a temporary spending bill to avert a partial government shutdown this weekend, sending the legislation to Joe Biden, who plans to sign it.
       

Futures ahead of the bell: E-Mini S&P +0.6%, Nasdaq +0.8%, Russell 2000 +0.6%, Dow +0.6%.

In pre-market trading, State Street (STT) gains 5% after reporting adjusted earnings per share for the fourth quarter that beat estimates. Kaman (KAMN) is halted after announcing that
it has entered into a definitive agreement to be acquired by Arcline Investment Management for $1.8B. Coherus BioSciences (CHRS) gains 7% after the company posted positive data from the lead-in portion of the Phase 2 clinical trial on a treatment for liver
cancer. Endeavor (EDR) climbs 5.9% after Bloomberg reported that Silver Lake plans to sell parts of the entertainment company after taking it private. IBM advances 2.3% after Evercore ISI raised its rating, calling the company an “overlooked beneficiary” of
the increasing adoption of artificial intelligence. iRobot (IRBT) slides 35% following reports that the European Union’s antitrust watchdog is planning to block Amazon’s planned acquisition of the Roomba vacuum maker. JB Hunt (JBHT) gains 3.5% after the company’s
fourth-quarter operating revenue beat estimates. Silk Road Medical (SILK) rises 5% after Stifel upgraded the medical device maker to buy. Spirit Airlines Inc. (SAVE) surges 26% after saying it still believes in its plan to merge with JetBlue Airways. Super
Micro Computer (SMCI) gains 11% after the computer hardware maker’s preliminary financial results beat expectations. Wayfair (W) gains 16% after cutting 1,650 employees. DraftKings gains1.3% after the online-sports betting company was upgraded to buy from
hold at Stifel.

European gauges opened higher before steadily paring gains with the Stoxx 600 poised for its worst weekly decline in three months as investors assessed the latest corporate earnings.
Technology, travel and leisure and insurance sectors led gains, while miners declined. UK retail sales fell 3.2% in December, its worst retail sales slump in three years, added to concern the economy tipped into a mild recession in 2023. Germany released softer
than expected PPI at -1.2%. Among individual names, French shipping firm CMA CGM is set to buy British logistics firm Wincanton (WIN.LN +47%) for about $700 million in a cash deal. 4imprint Group (FOUR LN) shares rise as much as 18% to reach an all-time high
after the promotional merchandise maker reported profits for 2023 that beat expectations. Swiss automation and electricity supplier ABB Ltd. dropped over 3% after saying the US Congress is reviewing its operations in China. European Central Bank President
Christine Lagarde will speak later at the World Economic Forum in Davos.

Asian stocks were mostly higher, as tech bellwether TSMC’s positive guidance sparked a broad surge in semiconductor-related shares. The MSCI Asia Pacific Index rose 1%, its biggest gain
in a week, paring this week’s loss to 2.3%. A sub-gauge of tech shares jumped more than 3%, its biggest advance in more than a year. Taiwan’s benchmark led gains around the region as TSMC climbed 6% after saying it expects a return to solid growth this quarter.
Chinese stocks fell as Citic, the nation’s largest brokerage, suspended short-selling for some clients amid the prolonged rout which made the nation’s equities the world’s worst performers. Taiwan +2.6%, Nikkei 225 +1.4%, Kospi +1.3%, Vietnam +1%, ASX 200
+1%, Sensex +0.7%, Singapore +0.4%. CSI 300 -0.15%, Shanghai Composite -0.5%, Hang Seng Index -0.5%.

FIXED INCOME: 
 

Treasuries are slightly richer on the day from the belly out to long-end of the curve, flattening spreads and unwinding a portion of Thursday’s steepening move. The
move has support from bigger rally in gilts after UK retail sales fell at their fastest pace since Covid-19 lockdowns. The US session includes University of Michigan sentiment survey and three scheduled Fed speakers. US 10-year yield ~4.13%, 2-year yield at
4.355%.  

METALS: 
   

Gold advanced but is still set for a weekly loss as robust US economic data and hawkish comments from policymakers prompted traders to rethink bets about the prospect
for interest rate cuts. Swaps traders trimmed bets on a Fed pivot, pricing in about a 52% chance of a rate cut in March, down from almost 80% at the end of last week. Spot gold +0.6%, silver +0.3%.  

ENERGY:  

Oil prices fluctuated before trading slightly lower as Middle East tensions and oil output disruptions caused by cold weather in the US somewhat balanced concerns
about the health of the Chinese and global economy.  For the week, WTI is on track to rise about 2% while Brent is set to gain 1%. While the Middle East tensions have not shut down any oil production, supply outages continue in Libya and about 40% of oil output
in North Dakota. China’s gasoline production jumped more than 11% in December from the previous year. European natural gas futures rose for a second day following its recent slump, while trading activity in January has jumped to a multi-month high. WTI -0.5%,
Brent -0.4%, US Nat Gas -3%, RBOB -0.6%.

CURRENCIES:   

In currency markets, the pound fell after UK retail sales came in well below estimates. The yen rebounded from its lowest level since late November after weak inflation
data reinforced bets for the Bank of Japan to maintain its ultra-loose policy at its meeting next week.  Japan Dec Core CPI eased to 2.3%.  Analysts noted inflation data provided further comfort to the BOJ that the inflation peak had passed. New Zealand’s
dollar is sold against the greenback and Aussie ahead of a speech Tuesday by RBNZ Chief Economist Paul Conway. The Loonie is trimming a weekly loss amid firmer metal prices and position squaring as next week’s Bank of Canada policy meeting approaches. US$
Index -0.2%, GBPUSD -0.2%, USDJPY -0.1%, EURUSD +0.1%, AUDUSD +0.4%, USDNOK -0.5%, NZDUSD is flat.

Bitcoin +0.5%, Ethereum +1.3%. 

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
• AT&T (T) Raised to Outperform at Oppenheimer; PT $21
• Crown Castle (CCI) Raised to Market Perform at BMO; PT $110
• DraftKings (DKNG) Raised to Buy at Stifel; PT $45
• Fiverr (FVRR) Raised to Buy at Goldman; PT $43
• IBM (IBM) Raised to Outperform at Evercore ISI; PT $200
• Itron (ITRI) Raised to Outperform at Oppenheimer; PT $81
• Roku (ROKU) Raised to Neutral at Seaport Global Securities
• Silk Road Medical (SILK) Raised to Buy at Stifel
• Downgrades
• Asur (ASURB MM) ADRs Cut to Neutral at Bradesco BBI; PT $300
• Blackstone (BX) Cut to Neutral at Citi; PT $124
• Chegg (CHGG) Cut to Sell at Goldman; PT $8
• Coursera (COUR) Cut to Sell at Goldman; PT $14
• Discover Financial (DFS) Cut to Hold at HSBC; PT $107
• DraftKings (DKNG) Cut to Underperform at BNPP Exane; PT $28
• Duolingo (DUOL) Cut to Sell at Goldman; PT $160
• GAP Airports (GAPB MM) ADRs Cut to Neutral at Bradesco BBI; PT $160
• Hertz (HTZ) Cut to Hold at Jefferies; PT $8
• LCI Industries (LCII) Cut to Hold at Truist Secs; PT $110
• OMA (OMAB MM) ADRs Cut to Underperform at Bradesco BBI; PT $70
• Richelieu Hardware (RCH CN) Cut to Sector Perform at National Bank
• Trillion Energy International (TCF CN) Cut to Neutral at Eight Capital
• Universal Display (OLED) Cut to Neutral at Citi; PT $180
• ZipRecruiter (ZIP) Cut to Neutral at Goldman; PT $15
• Initiations
• ADT Inc (ADT) Rated New Buy at Baptista Research; PT $8.40
• Advance Auto (AAP) Rated New Sell at Veritas Investment Research Co
• Alight (ALIT) Resumed Buy at Citi; PT $12
• Appfolio (APPF) Rated New Buy at BTIG; PT $215
• Arrow Electronics (ARW) Rated New Hold at Baptista Research
• BHP (BHP AU) ADRs Rated New Hold at Berenberg; PT $56
• Builders FirstSource (BLDR) Rated New Outperform at Oppenheimer
• Coherent Corp (COHR) Rated New Underperform at Baptista Research
• CoStar (CSGP) Rated New Neutral at BTIG
• CRH (CRH) Rated New Buy at DA Davidson; PT $82
• DoubleVerify (DV) Rated New Hold at Baptista Research; PT $39.60
• Floor & Decor (FND) Rated New Underperform at Baptista Research
• Fortune Brands (FBIN) Rated New Perform at Oppenheimer
• Frontier (FYBR) Rated New Buy at Baptista Research; PT $34.70
• HealthEquity (HQY) Rated New Outperform at Baptista Research
• Insight Enterprises (NSIT) Rated New Underperform at Baptista Research
• Inspire Medical (INSP) Rated New Buy at Jefferies; PT $245
• Jeld-Wen (JELD) Rated New Market Perform at Oppenheimer
• Littelfuse (LFUS) Rated New Hold at Baptista Research; PT $267.30
• Macom (MTSI) Rated New Underperform at Baptista Research; PT $89.10
• Masco (MAS) Rated New Perform at Oppenheimer
• Masonite (DOOR) Rated New Outperform at Oppenheimer
• Matterport (MTTR) Rated New Neutral at BTIG
• Motorola Solutions (MSI) Reinstated Buy at Deutsche Bank; PT $350
• Novanta (NOVT) Rated New Hold at Baptista Research; PT $162.90
• Orchestra BioMed (OBIO) Rated New Buy at Jefferies; PT $14
• Pactiv Evergreen (PTVE) Rated New Buy at Jefferies; PT $18
• Performance Food (PFGC) Rated New Hold at Baptista Research; PT $77.20
• Shoals Technologies (SHLS) Rated New Buy at Janney Montgomery; PT $20
• SmartRent (SMRT) Rated New Buy at BTIG; PT $4.50

Data sources: Bloomberg, Reuters, CQG