Daily Game Plan

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

DATA/HEADLINES   10:30ET Dallas Fed Manf. Activity

Bank of Japan rate decision, Tuesday; Federal Reserve rate decision, Wednesday; Bank of England rate decision, Thursday; US unemployment, Friday

TODAY’S HIGHLIGHTS:  

• Biden to sign sweeping executive order to steer development of AI safety, security standards
• Mike Pence dropped out of the 2024 presidential race
  
• UAW escalates strike against lone holdout GM after landing tentative pacts with Stellantis and Ford

World shares are higher as investors focused on the outlook for interest rates ahead of a busy week of central bank meetings and economic data. Stocks climbed as
appetite for riskier assets recovered after Israel’s military action in Gaza proceeded more cautiously than some had feared, and so far there are few signs that the conflict will spread across the wider Middle East region.  Instead of a massive ground invasion,
the Israeli military has started slowly, taking a day-by-day approach. Iran’s foreign ministry said Hamas has pledged to release non-Israeli hostages “in the shortest time possible.” Investors are waiting for the outcome of meetings at the Bank of Japan on
Tuesday, the US Federal Reserve on Wednesday and the Bank of England on Thursday, as well as Chinese manufacturing data tomorrow and key US jobs data on Friday.                         

EQUITIES:

US equity futures are higher, after last week’s sharp selloff, which sent the S&P 500 into a technical correction on Friday with the index closing 10% below a recent
peak. The UAW expanded its strike against GM, with workers walking out of plants in Tennessee. Stellantis reached a tentative accord with US laborers but Stellantis workers in Canada are going on strike after talks there fell apart. Ford’s agreement to end
the six-week strike includes $8.1 billion in new investments at both internal combustion and EV plants, as well as record raises. The earnings season continues with Apple, Airbnb, McDonald’s, Moderna and Eli Lilly & Co among the many reporting this week. Results
so far have been underwhelming. President Biden will unveil an executive order today with wide ranging action on artificial intelligence. Broadcom said its $61 billion agreement to buy software maker VMware, which it had expected to complete by today, will
instead close before the expiration of their merger agreement next month.                   

Futures ahead of the bell: E-Mini S&P +0.7%, Nasdaq +0.8%, Russell 2000 +0.9%, Dow +0.6%.

In pre-market trading, Coherus Biosciences (CHRS) shares surge 29% after the biotech company announced on Friday the US Food and Drug Administration had approved its cancer drug, Loqtorzi.
Cisco Systems (CSCO) is little changed after the digital communications company was downgraded to market perform from outperform at Raymond James. ReAlpha Tech (AIRE) shares jump 23% as the property technology startup began its second week of trading. Realty
Income Corp., an owner of convenience stores, warehouses and other commercial real estate, agreed to acquire Spirit Realty Capital (SRC +12.5%) for $5.3 billion in an all-stock transaction. XPO gains 7% after reporting 3Q revenue gained more than estimates.
SoFi Technologies (SOFI)  jumped 5% after the online lender increased its revenue forecast for 2023 and said deposits more than tripled from a year earlier. McDonald’s (MCD +2.8%) reported comparable sales for the third quarter that beat the average analyst
estimate.

European gauges are higher as Israel’s military action in Gaza proceeded more cautiously. The Stoxx 600 index was up 0.6% in a broad risk-on move. Germany slipped into contraction in
the third quarter, preliminary GDP data showed, but held up slightly better than expected amid recession jitters. Gross domestic product fell by 0.1% quarter on quarter, versus forecasts of a 0.3% decline. Among single stocks, Siemens Energy AG jumped ~7%
after the supervisory board chairman pushed back against suggestions the troubled turbine maker may need a taxpayer-funded bailout from the German government. Ascential PLC soared 30% after it proposed a sale of Digital Commerce to Omnicom Group, and also
WGSN to Apax Funds.  HSBC Holdings was steady after the bank’s share buyback of as much as $3 billion offset news of a pretax profit of $7.71 billion that fell short of analyst estimates. DAX +0.5%, CAC +0.6%, FTSE 100 +0.7%. Travel & Leisure +1.4%, Healthcare
+1.2%, Retail +0.9%.          

Asian stocks were mixed as weak corporate earnings took center stage amid continued concerns over geopolitical tensions and China’s economy. The MSCI Asia Pacific Index slipped 0.2% with
Toyota and Honda Motor among the biggest drags. Japan was among the hardest hit amid disappointing earnings from the likes of machinery maker Komatsu. Chinese stocks traded mixed as property developer Evergrande had its liquidation hearing delayed.  In China’s
EV sector, Great Wall Motor jumped 7% in Hong Kong after stronger-than-expected results.  Shares of Huawei’s suppliers jump following the phone maker’s more-than-doubled 3Q profit.  Vietnam -1.7%, Topix -1%, ASX 200 -0.8%, Hang Seng Index +0.05%, Taiwan +0.01%,
Kospi +0.3%, Sensex +0.5%, CSI 300 +0.6%, Hang Seng Tech +1.3%.           

FIXED INCOME: 
 

Treasuries are cheaper across the curve, with losses led by front and belly, unwinding a portion of Friday’s sharp 5s30s steepening move. Safe-haven demand eases,
pushing yields higher after Israel’s military action in Gaza proceeded more cautiously than anticipated. US 10 year yield rose ~5bps to 4.885%; 2 year yield around 5.04%.  Wednesday’s Treasury Department bond sales announcement will be a focus for investors.
It’ll update quarterly borrowing estimates today ahead of issuance plans Wednesday. Friday brings a US payroll report that may show job and wage growth slowed last month.

METALS: 
   

Gold fell as demand for havens moderated after Israel’s widened ground offensive in Gaza proceeded more cautiously than anticipated.  Bullion slid after jumping 1.1% on Friday as Israel
stepped up ground operations. Israel sent troops and tanks into the northern Gaza Strip in what it called the second and longer phase of its war against Hamas and is taking a day-by-day approach. That eased fears that a massive invasion would lead to a regional
escalation. Spot gold -0.6%, silver +0.1%.

ENERGY:  

Oil fell by more than 1% as Middle East conflict remained contained as Israel’s heightened push into the Gaza Strip had yet to evoke significant, military retaliation
from Iran or its proxies. Crude had jumped 3% on Friday after Israel stepped up ground incursions into Gaza, stoking worries the conflict could expand in a region that accounts for a third of global oil output. However, that concern was fading today, analysts
said.  WTI -1.1%, Brent -1%, US Nat Gas -4%, RBOB -0.3%.

CURRENCIES:   

The dollar traded mixed versus its Group-of-10 peers amid thin flows as risk sentiment recovered following Israel’s military action in Gaza. USD/JPY falls as much
as 0.3%, a two-week low, before erasing losses, as traders position for the Bank of Japan policy decision Tuesday.  Australia’s dollar leads gains after retail-sales data beat estimates and on speculation rising iron-ore prices will bolster export earnings.
EUR/USD reverses losses to trade higher on the day after data showed that German output shrank in the third quarter less than economists expected.  US$ Index -0.05%, GBPUSD +0.1%, EURUSD +0.15%, USDJPY +0.05%, AUDUSD +0.6%, NZDUSD +0.4%, USDCAD -0.2%.           

Bitcoin -0.1%, Ethereum +0.9%.     

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
• AbbVie (ABBV) Raised to Overweight at Barclays; PT $170
• Acushnet (GOLF) Raised to Buy at Compass Point; PT $60
• Eastman Chemical (EMN) Raised to Overweight at JPMorgan; PT $90
• Femsa (FEMSAUBD MM) ADRs Raised to Overweight at Barclays; PT $130
• Invitation Homes (INVH) Raised to Outperform at Oppenheimer; PT $35
• L3Harris (LHX) Raised to Outperform at Raymond James
• Meta Platforms (META) Raised to Buy at Phillip Secs; PT $375
• Morningstar (MORN) Raised to Buy at Redburn; PT $320
• Northwestern (NWE) Raised to Overweight at Wells Fargo; PT $51
• PTC Inc. (PTC) Raised to Outperform at Oppenheimer; PT $165
• TDCX (TDCX) ADRs Raised to Overweight at JPMorgan; PT $7.40
• Vale (VALE3 BZ) ADRs Raised to Buy at Citi; PT $16
• Downgrades
• 2Seventy Bio (TSVT) Cut to Market Perform at Leerink; PT $6
• Aon PLC (AON) Cut to Underweight at Wells Fargo; PT $304
• Cisco (CSCO) Cut to Market Perform at Raymond James
• Corus Entertainment (CJR/B CN) Cut to Speculative Buy at TD; PT C$4.50
• Datadog (DDOG) Cut to Neutral at Baird; PT $84
• Krispy Kreme (DNUT) Cut to Hold at Truist Secs; PT $13
• Lundin Mining (LUN CN) Cut to Hold at Pareto Securities; PT C$9.55
• Newell Brands (NWL) Cut to Hold at Truist Secs; PT $8
• Cut to Neutral at JPMorgan; PT $7
• Olin (OLN) Cut to Neutral at JPMorgan; PT $48
• Rock Tech Lithium (RCK CN) Cut to Sell at Canaccord; PT C$1
• Valley National (VLY) Cut to Neutral at JPMorgan; PT $10
• Initiations
• Abrdn Global Infrastructure Income Fund (ASGI) Rated New Buy at Stifel
• Amazon (AMZN) Rated New Overweight at Guotai Junan Sec; PT $162.80
• Annexon (ANNX) Rated New Overweight at Wells Fargo; PT $11
• Arcellx (ACLX) Rated New Outperform at Cowen
• Decibel Cannabis Co Inc (DB CN) Rated New Outperform at ATB Capital
• Dianthus Therapeutics Inc (DNTH) Rated New Buy at Guggenheim; PT $45
• Foremost Lithium Resource & Technology (FAT CN) Rated New Buy at ThinkEquity; PT C$11.08
• Newamsterdam Pharma (NAMS) Rated New Outperform at RBC; PT $25
• Safehold Inc (SAFE) Resumed Overweight at Morgan Stanley; PT $33
• Thornburg Income Builder Opportunities Trust (TBLD) US Rated New Buy at Stifel
• Verisk (VRSK) Reinstated Equal-Weight at Wells Fargo; PT $230
• Vision Marine Technologies (VMAR) US Rated New Buy at Ascendiant Capital Markets; PT $4.50

Data sources: Bloomberg, Reuters, CQG