Daily Game Plan

by Contributor
on August 14, 2024

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

TODAY’S ECONOMIC DATA:  ET: 7:00 a.m: US MBA Mortgage Applications, 8:30 a.m.:
US July CPI, 10:30 a.m: US DOE Oil and Gasoline Inventories

HIGHLIGHTS and News:  

  • The Russian border region of Belgorod declared an emergency today after new attacks by Ukrainian forces.
  • Tropical Storm Ernesto nears hurricane strength as it skirts Puerto Rico, bringing power outages and potential flooding.
  • Las Vegas police threaten to protest working Raiders games over NFL’s new protocols.

Global stocks were broadly higher, U.S futures fluctuated in tight ranges ahead of US inflation data, while European stocks tracked an advance
in Asia. The US CPI is expected to show another modest increase in July, 0.2% for both the core and headline figure, reinforcing bets for a Fed rate cut next month. Meanwhile, Alphabet shares fell premarket; a bid to break up Google is one of the options being
considered by the Justice Department after a landmark court ruling found that the company monopolized the online search market, according to people with knowledge of the deliberations.

 

EQUITIES:  

US equity futures kept to tight ranges before an American consumer price report that could determine whether the Federal Reserve will start cutting interest rates next
month. Alphabet Inc. shares dropped 1% in US premarket trading after Bloomberg News reported that the Justice Department is considering a push to break up Google. Kellanova (K) saw a significant rise of 7.5% after the Wall Street Journal indicated that Mars
Inc. is expected to announce a nearly $30 billion acquisition deal for the snack maker. Ouster shares plummeted 17% after the lidar technology company provided a weaker-than-expected revenue outlook. Flutter Entertainment surged more than 8% after exceeding
Q2 expectations and raising its outlook, driven by a surge in new customers and revenue, particularly in the US. Other notable movers included Nu Holdings which rose over 4% after reporting strong Q2 results, and Roblox which gained 1.5%.

Futures ahead of the bell: E-Mini S&P +0.02%, Nasdaq +0.02%, Russell 2000 +0.6%, DJI +0.02%

European stocks advanced for a second day as investors awaited key US inflation data for insights into the economy, following UK inflation rising less than expected.
The Stoxx Europe 600 Index edged higher with the travel and leisure sector surging, particularly boosted by Flutter Entertainment Plc after the operator of the FanDuel online sportsbook exceeded estimates. Miners lagged behind due to concerns over an industry-wide
crisis in China flagged by the world’s largest steel company. The UK’s FTSE 100 rose 0.5% following data indicating that inflation picked up for the first time this year, albeit below expectations, which supports the case for further rate cuts. Additionally,
data revealed that firms across the eurozone slowed hiring in the second quarter amid signs of economic weakness. Individual movers included UBS, which rose after reporting higher-than-expected profit, supporting CEO Sergio Ermotti’s efforts to return capital
to shareholders and finalize the integration of Credit Suisse, while Flutter’s results positively impacted other gambling companies like Entain Plc, and travel company TUI AG rose after issuing a better-than-expected earnings report. DAX +0.4%, FTSE +0.3%,
Stoxx 600 +0.2%, CAC 40 +0.3%.

Asian stocks climbed for a fourth straight day, on track for its longest string of gains in over a month, ahead of a key US consumer price report. The MSCI Asia Pacific
Index rose 0.7%, with Japanese stocks reaching the highest levels since early August after Prime Minister Fumio Kishida said he won’t run for a second term. Investors are focusing on the upcoming US inflation data for cues on whether the Federal Reserve will
cut rates next month, as another below-estimate CPI print will cement bets on the Fed easing monetary policy. Equities in Hong Kong and China traded lower, while those in Australia, Korea and Taiwan advanced. A survey showed 80% of fund managers expect Japanese
equities to rise in the next 12 months, with a bias toward banks and semiconductors sectors. Shares of Indian miners declined after a report that the country’s top court is allowing states to collect past-due royalties on mineral-bearing land. Topix +1.1%,
Nikkei +0.6%, China’s CSI 300 -0.7%; Hang Seng -0.3%; Kospi +0.8%; ASX 200 +0.3%

.

FIXED INCOME: 
 

Treasuries were supported by gains in gilts, as the UK curve bull steepened following lower-than-expected headline, core, and service CPI data
for July, which led to increased pricing of rate cuts by the Bank of England. Treasury yields were slightly lower across the curve, including 10-year yields around 3.83%, while UK 2-year yields outperformed Treasuries by nearly 6 basis points. Market participants
anticipate soft CPI data driven by housing rents, used car prices, and discounts in discretionary services, with Fed-dated OIS pricing in approximately 107 basis points of rate cuts for the year.

 

METALS: 

Gold prices climbed and approaching record highs as investors eagerly await key U.S. inflation data that could influence the Federal Reserve’s
decision on interest rate cuts next month. Elsewhere, the weakness in iron ore deepened after the world’s biggest steel producer warned that China’s steel industry is facing a crisis more serious than the downturns of 2008 and 2015, likening conditions to
a “severe winter.” Gold +0.3%, Silver +0.02%, Iron Ore -2.6%

 

 

 

ENERGY:   

 

Oil prices stabilized on Wednesday, rebounding from previous losses, as industry data indicated a significant decrease in U.S. crude inventories
and geopolitical tensions persisted in the Middle East. Brent crude climbed to around $81 per barrel, while West Texas Intermediate traded near $79. The American Petroleum Institute reported a 5.2-million-barrel drop in U.S. crude stockpiles last week, potentially
marking the seventh consecutive weekly decline if confirmed by official figures This reduction, coupled with ongoing concerns about potential Iranian retaliation against Israel, has bolstered oil prices despite recent forecasts of a global surplus and downward
revisions in demand projections .WTI -0.1%, Brent +0.04%, Nat Gas +0.6%.

 

CURRENCIES:   

In currency markets, the dollar index fell to its lowest in four months. Economists expect core CPI to increase by just 0.2% in July, which could
further weaken the dollar and support the view that easing inflation may prompt the Fed to cut rates by as much as 100 basis points by year-end. The dollar fell to its weakest level in over seven months against the euro ahead of the US consumer price index
data, which could bolster expectations for aggressive interest rate cuts by the Federal Reserve in the coming months. The New Zealand dollar also declined by following a surprise interest rate cut from the Reserve Bank of New Zealand. British pound slipped
0.3% after UK inflation data showed slower-than-expected growth. Meanwhile, USDJPY stabilized after initially dropping due to Japan’s Prime Minister Fumio Kishida announcing he would not seek a second term.US$ Index -0.1%, GBPUSD -0.1%, EURUSD +0.2%, USDJPY
-0.1%, AUDUSD -0.1%, NZDUSD -0.9%, USDCHF +0.2%.

 

 

Spot Bitcoin +1.4%, Spot Ethereum +2%.

 

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
    • Ball (BALL) Raised to Outperform at
      Baird; PT $70
    • Chipotle (CMG) Raised to Outperform
      at Wedbush; PT $58
    • Cidara (CDTX) Raised to Buy at HC
      Wainwright; PT $24
    • EQT Corp (EQT) Raised to Overweight
      at Wells Fargo; PT $42
    • Hudbay Minerals (HBM CN) Raised to
      Buy at Jefferies; PT C$14
    • Hut 8 Corp (HUT CN) Raised to Buy
      at HC Wainwright; PT C$18.50
    • Illumina (ILMN) Raised to Buy at TD
      Cowen; PT $144
      • Raised to Equal-Weight at Barclays;
        PT $125
    • Johnson Controls (JCI) Raised to Sector
      Perform at RBC; PT $69
    • Meritage Homes (MTH) Raised to Outperform
      at Wolfe; PT $230
    • nCino (NCNO) Raised to Buy at Goldman;
      PT $42
    • Nkarta (NKTX) Raised to Strong Buy
      at Raymond James
    • Qualcomm (QCOM) Raised to Buy at President
      Capital Management; PT $208
    • Sportradar (SRAD) Raised to Buy at
      Jefferies; PT $16
    • Starbucks (SBUX) Raised to Outperform
      at Evercore ISI; PT $120
    • Tencent Music (TME) ADRs Raised to
      Hold at 86Research; PT $12
  • Downgrades
    • Acelyrin (SLRN) Cut to Neutral at
      HC Wainwright; PT $6
    • Emerson Electric (EMR) Cut to Neutral
      at JPMorgan; PT $115
    • Hexcel (HXL) Cut to Sector Perform
      at RBC; PT $68
    • Hudson Pacific (HPP) Cut to Peerperform
      at Wolfe
    • Intuit (INTU) Cut to Equal-Weight
      at Morgan Stanley; PT $685
    • L3Harris (LHX) Cut to Sector Perform
      at RBC; PT $240
    • Marinus Pharma (MRNS) Cut to Neutral
      at Ladenburg Thalmann
    • Medtronic (MDT) Cut to Hold at Stifel;
      PT $85
    • Playa Hotels (PLYA) Cut to Neutral
      at Citi; PT $8
    • PulteGroup (PHM) Cut to Peerperform
      at Wolfe
    • Ranpak (PACK) Cut to Neutral at Baird;
      PT $10
  • Initiations

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

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