Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:15ET ADP Employment Change; 8:30ET US Treasury Quarterly Refunding Announcement ; 9:45ET
S&P Global US Services PMI ; 10:00ET ISM Services       (Delayed)

Highlights and News:  

• China will adjust some of its export control measures that target certain US entities on Nov. 10
• Handful of moderate Senate Democrats considering voting to end the longest ever government shutdown – WAPO
• White House is seeking to repeal sanctions on Syria
• Active Managers are leveraged long equities for the first time since July 2024
• ADP Employment Report Shows Labor Market Rebound In October
  

A slide in technology stocks dragged global markets lower for a second day as investors continued to retreat from the leading winners of the AI boom. The sell-off
comes after Wall Street executives warned of an overdue market correction, with dimming hopes for Federal Reserve rate cuts and the ongoing US government shutdown further fueling risk-off sentiment. Canadian Prime Minister Mark Carney said he would run wider
budget deficits to fund increased spending and stimulate an economy facing risks from US tariffs. To offset the spending boost, Carney said around 5% of federal public sector jobs would be eliminated.

EQUITIES: 

US equity futures are mixed, reversing earlier losses after a Washington Post report that a handful of moderate Senate Democrats are considering voting to end the longest ever US federal
funding lapse. Nasdaq 100 futures led overnight losses after the index logged its steepest drop in nearly a month amid concerns over lofty valuations. Super Micro Computer plunged on disappointing results, while Advanced Micro Devices slipped after its update
failed to impress. Outside the technology sector, the equity selloff showed signs of easing, with S&P 500 futures trimming losses and Russell 2000 slightly higher. ADP’s private-sector payrolls report may have a bigger impact than usual on sentiment, due to
limited visibility on the labor market amid the longest government shutdown on record. Meanwhile, the US Supreme Court will hear the first arguments of a case to determine the legality of President Trump’s tariffs today. Futures ahead of the bell: E-Mini S&P
-0.1%, Nasdaq -0.2%, Russell 2000 +0.3%, DJI is flat.

Futures ahead of the bell: E-Mini S&P -0.1%, Nasdaq -0.2%, Russell 2000 +0.3%, DJI is flat.

In pre-market trading, AMD (AMD) falls 4% after the chipmaker reported its third-quarter results and gave an outlook. While analysts are broadly positive, they note
some issues with margins and the outlook. Axon (AXON) drops 18% after the Taser maker reported disappointing third-quarter adjusted EPS and agreed to buy emergency-tech company Carbyne. Biohaven (BHVN) tumbles 44% as TD Cowen calls the FDA’s Vyglxia Complete
Response Letter as “highly disappointing.”  Clover Health (CLOV) sinks 20% after the health insurer cut its adjusted Ebitda guidance for the full year. Humana (HUM) falls 5% after the health insurer reaffirmed its forecast for medical costs for the full year,
with the outlook below the average analyst estimate. Kennedy-Wilson (KW) surges 26% after receiving a buyout proposal letter from CEO William McMorrow and Fairfax Financial Holdings. Kratos (KTOS) falls 8% after the defense contractor forecast revenue and
adjusted Ebitda for the fourth quarter that missed.  Mosaic (MOS) shares are up 5% after the agricultural chemicals company reported adjusted earnings per share for the third quarter that beat. Pinterest (PINS) is down 18% after the search platform gave a
revenue outlook that is weaker than expected. Super Micro Computer Inc. (SMCI) falls 7% after the server maker missed reduced estimates for first-quarter sales and profit and gave a disappointing earnings forecast. Trex (TREX) sinks 33% after the maker of
decking products forecasts net sales for the fourth quarter that fell short of estimates. Upstart (UPST) falls 13% after the AI lending marketplace reported third-quarter revenue that missed expectations and lowered its full-year revenue forecast.

Quick look at a pairs trade. GOOGL/META: testing the key 200 week mvg avg; overbought

European gauges opened lower following the Asian sell-off but are well off the lows. Technology and defense shares are among the biggest laggards while autos outperformed,
boosted by BMW AG shares. BMW said demand for the new iX3 sport utility vehicle model is exceeding expectations. Novo Nordisk A/S trimmed its forecast for a fourth time this year on lagging sales of its blockbuster drugs Wegovy and Ozempic. Vestas gained as
much as 15% after the Danish wind-power manufacturer reported a strong set of earnings. Ambu slumps as much as 19% after the Danish health-care equipment company reported its latest earnings.  Siemens Healthineers falls as much as 13%, the most on record,
after the German health-care equipment group reported disappointing earnings. Evotec shares fall as much as 12% after the German company reported results RBC called “dismal.”  German factory orders rose for the first time in five months. Demand increased 1.1%
in September, led by automotive and electrical equipment manufacturers. Stoxx 600 -0.2%, DAX -0.2%, CAC -0.05%, FTSE 100 +0.15%. Technology -0.8%, Defense -0.7%, Healthcare -0.7%. Autos +1.3%. 

Shares in Asia were hit hard overnight, pushing Japan’s Nikkei down nearly 7% from Tuesday’s record highs at one point, while shares in South Korea plunged over 6%
before clawing back some losses. The MSCI Asia Pacific Index dropped as much as 2.3%, before trimming losses to 1%. Tech heavyweights TSMC, SoftBank and Samsung Electronics were among the biggest drags. Asian makers of personal computers slipped as Apple prepares
to enter the low-cost laptop market for the first time. Toyota Motor Corp dropped the most since April after the carmaker’s annual profit guidance disappointed investors. Chinese shares rose as the State Council’s tariff commission said it would suspend its
24% additional tariff on US goods for one year but retain a 10% levy. Markets in India were closed for a holiday. Kospi -2.85%, Nikkei 225 -2.5%, Taiwan -1.4%, Philippines -0.8%, Thailand -0.25%, ASX 200 -0.1%, Hang Seng Index -0.1%. Vietnam +0.2%, CSI 300
+0.2%, Indonesia +0.9%.

FIXED INCOME: 
 

Treasury yields remain within about a basis point of Tuesday’s closing levels with the curve slightly steeper.  Focal points of US session focus include October ADP
employment change and services PMIs, as well as Treasury quarterly refunding announcement. Dealers expect two- to 30-year auction sizes will be unchanged during the November-to-January period. US 10-year is higher by less than 1bp near 4.095%.

METALS: 

Gold rose for the first time in four sessions. China’s recent overhaul of its tax policy on gold is set to lift on-exchange trading, industry insiders said, as the
resulting higher cost of gold jewelry and certain investment-grade bullion is expected to drive investors to more cost-efficient gold exchange-traded funds. Spot gold +1%, Silver +1.3%, Copper futures -0.4%.

ENERGY:   

Oil extended a run of listless trading as traders awaited US inventory data due later and assessed a persistent outlook for oversupply. US crude inventories rose
6.5 million barrels last week, according to the American Petroleum Institute, which would be the biggest increase since July if confirmed by official data. WTI is slightly lower above $60, with prices fluctuating within a roughly $2 range since early last
week. China plans to double its battery storage capacity by next year, an ambitious goal that could have massive downstream impacts on the world’s renewable energy transition. Shale explorer Ovintiv will buy Canada’s NuVista Energy in a cash-and-stock deal
valued at about $2.7 billion. WTI -0.4%, Brent -0.35%, US Nat Gas -2.2%, RBOB -0.8%. 

CURRENCIES: 

In currency markets, the dollar is little changed ahead of a report from ADP Research on private employment. The euro is a bit firmer, having hit a three-month low
following five straight days of declines. Japan’s top currency official, Atsushi Mimura, said recent moves by the yen are deviating from what might be expected given interest rate differentials. Kiwi dollar turned positive even as New Zealand jobless rate
hits a nine-year high, as leveraged funds covered shorts after China halted tariffs on a range of US agricultural products. Korean won falls to lowest since April as risk liquidation fuels outflows. US$ Index -0.05%, GBPUSD +0.2%, EURUSD +0.1%, USDJPY +0.05%,
AUDUSD -0.15%, NZDUSD +0.1%, USDCHF -0.05%, USDCAD +0.2%, USDSEK +0.05%, USDNOK -0.05%.

Bitcoin +2.2%, Ethereum +3.8%. Long-time Bitcoin holders have offloaded around 400,000 Bitcoin over the past month, an exodus of about $45 billion. Ether bounces
after testing the 200dma.

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 Water (AWK) Raised to Hold at Jefferies; PT $124
• Boise Cascade (BCC) Raised to Outperform at BMO; PT $100
• CervoMed Inc (CRVO) Raised to Buy at HC Wainwright; PT $25
• Cloudflare (NET) Raised to Hold at DZ Bank; PT $237
• Farmer Mac (AGM) Raised to Outperform at KBW; PT $219
• Ferragamo (SFER IM) ADRs Raised to Outperform at BNPP Exane; PT $5.70
• Huya (HUYA) ADRs Raised to Buy at HSBC; PT $3.50
• IPG Photonics (IPGP) Raised to Buy at Citi; PT $105
• Jushi Holdings (JUSH CN) Raised to Outperform at ATB Capital; PT C$1.50
• Kirby (KEX) Raised to Buy at Citi; PT $128
• Madrigal Pharma (MDGL) Raised to Overweight at Cantor
• Mosaic (MOS) Raised to Outperform at RBC; PT $30
• O’Reilly Automotive (ORLY) Raised to Outperform at Raymond James
• Qualys (QLYS) Raised to Neutral at Piper Sandler; PT $135
• RealReal (REAL) Raised to Overweight at KeyBanc; PT $16
• Sarepta (SRPT) Raised to Outperform at Mizuho Securities; PT $26
• Super Micro Computer (SMCI) Raised to Outperform at KGI Securities
• Thomson Reuters (TRI CN) Raised to Buy at Canaccord; PT C$245.22
• Tim Brasil (TIMS3 BZ) ADRs Raised to Buy at HSBC; PT $27
• Ventyx Bio (VTYX) Raised to Buy at HC Wainwright; PT $18
• Welltower (WELL) Raised to Outperform at Evercore ISI; PT $208
• Wingstop (WING) Raised to Buy at Northcoast; PT $300
• Yum (YUM) Raised to Outperform at Evercore ISI; PT $180
• Downgrades
• Archer-Daniels-Midland (ADM) Cut to Underweight at JPMorgan; PT $59
• Aurinia Pharmaceuticals (AUPH) Cut to Sector Perform at RBC; PT $15
• Denny’s (DENN) Cut to Hold at Benchmark
• Energy Fuels (EFR CN) Cut to Sell at Roth Capital Partners; PT $11.50
• Fiserv (FI) Cut to Neutral at BNPP Exane; PT $62
• Grocery Outlet (GO) Cut to Market Perform at Telsey; PT $17
• NuVista Energy (NVA CN) Cut to Tender at ATB Capital; PT C$17.50
• Rapid7 (RPD) Cut to Hold at Jefferies; PT $19
• Rhythm Pharma (RYTM) Cut to Market Perform at Oppenheimer
• Southern Co (SO) Cut to Hold at Jefferies; PT $103
• Trex (TREX) Cut to Hold at Vertical Research; PT $32
• Cut to Hold at Deutsche Bank; PT $40
• Cut to Market Perform at William Blair
• UL Solutions (ULS) Cut to Neutral at JPMorgan; PT $84
• Initiations
• Ascentage Pharma (6855 HK) ADRs Rated New Overweight at Piper Sandler
• Docebo (DCBO CN) Rated New Outperform at Oppenheimer; PT C$49.38
• Vanda Pharma (VNDA) Rated New Buy at B Riley; PT $11
• Verrica Pharma (VRCA) Rated New Buy at Lucid Capital Markets; PT $19

Data sources: Bloomberg, Reuters, CQG

David Wienke