Daily Game Plan

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

TODAY’S ECONOMIC DATA:  9:00ET FHFA House Price Index; 10:00ET Conf. Board Consumer Confidence, Richmond Fed Manufacturing
Index; 10:30ET Dallas Fed Services Activity; 1:00ET 2-Year Auction

HIGHLIGHTS and News:  

• Russia launched a missile and drone attack across Ukraine striking targets in more than half of the country
• Zuckerberg says Biden administration pressured Meta to censor COVID-19 content
• Skydance is set to become the new owner of Paramount
• IAEA CHIEF GROSSI: THERE IS RISK OF NUCLEAR INCIDENT IN KURSK REGION – IFX

Global stock indices were little changed overall, as investors sought safety amid geopolitical risks and looked ahead to Nvidia earnings and US inflation data later
this week. Also keeping sentiment in check was the move by Canada on Monday, to impose a 100% tariff on imports of Chinese electric vehicles and a 25% tariff on imported steel and aluminum from China. Profits at China’s industrial companies rose at the fastest
pace in five months in July, data showed. Investment and consumer spending weighed on Germany’s economy in the second quarter. UK shop prices fell 0.3% year on year in early August, their first decline in almost three years.

EQUITIES:  

US equity futures fluctuated as traders await a key measure of US inflation due on Friday that could further influence market perceptions of how quickly the Fed will act to lower rates.
Investors were also on edge ahead of Nvidia’s earnings report on Wednesday, where anything short of a stellar forecast from the chipmaker could jolt investor confidence in the AI-fueled rally. Pricing in the options market shows that traders see the potential
for an almost 10% move in either direction after earnings.

Futures ahead of the bell: E-Mini S&P -0.1%, Nasdaq -0.05%, Russell 2000 -0.2%, DJI -0.1%

In pre-market trading, JD.com rose 3% after saying it plans to buy back as much as $5 billion of its shares in a move to appease investors worried about a potentially worsening Chinese
consumer downturn. Cava Group (CAVA) falls 8% after the Mediterranean restaurant chain’s largest individual shareholder and a group of executives filed to sell shares. Hershey (HSY) slips 1.7% after Citi downgraded the chocolate bar maker to sell, saying volume
weakness and cocoa inflation presents a looming downside risk.  Leslie’s (LESL) rises 2% after the outdoor supplies and sporting goods retailer named Jason McDonell as CEO and reaffirmed its fiscal 2024 outlook. Eli Lilly & Co. (LLY) ticks 0.6% lower as the
company is now selling Zepbound vials at 50% discount to popular shots. Paramount Global (PARA) drops 5% as Seagram Co. heir Edgar Bronfman Jr. dropped out of a bidding war for the media company. Trip.com (TCOM) jumps 8% after the Chinese online travel agency
reported second-quarter revenue and earnings that beat estimates.

CAVA has risen over 77% from the August 5 low, into extreme overbought condition.

SMH holding initial resistance at the
50dma for a fourth straight day.

The Dow Jones Industrials Average touched a new all-time intraday high yesterday, while the Nasdaq declined behind weakness in technology as the Semiconductor index (SMH) dropped over
2.3%. 

Nasdaq holds a short term negative tone relative to the S&P 500 below the
200dma in the pair.

European gauges remain in the green after giving up early gains after hitting their highest since mid-July amid low trading volumes. Autos, mining and travel shares are leading gains
while real estate and retail lags. Forecast-beating profit from the world’s biggest listed miner BHP helped to prop up sentiment in early trading. Associated British Foods declined as Deutsche Bank cut its rating on the stock to sell from hold. Ryanair led
gains in European airline and travel stocks after its CEO said a softening in fares experienced between April and June has levelled out. Bunzl shares soared after the distribution group raised its full-year profit guidance. Euro Stoxx 600 +0.15%, DAX +0.4%,
CAC +0.1%, FTSE 100 +0.3%. Autos +1.2%, Basic Resources +1.2%, Travel & Leisure +0.9%. REITs -0.7%, Retail -0.5%. 

Shares in Asia were mixed to lower, dragged down by major technology shares, with disappointing results from Chinese e-commerce firm PDD weighing on sentiment. The MSCI Asia Pacific Index
slipped 0.2%, with Alibaba and TSMC among the biggest drags. Chip stocks followed US peers lower on renewed concerns over the sustainability of artificial intelligence demand ahead of Nvidia’s results tomorrow. Japan outperformed in the region, following a
late rally. The recent strengthening of the yen has helped to shift investor focus to domestic firms such as retailers and information-system vendors.  Topix +0.7%, Hang Seng Index +0.4%, Philippines +0.15%, Singapore +0.05%. CSI 1000 -1.2%, CSI 300 -0.6%,
Kospi -0.3%, Taiwan -0.25%, ASX 200 -0.2%. 

FIXED INCOME: 
 

Treasuries are under pressure as US trading day begins, trailing bigger declines in most European bond markets, as focus shifts to supply. August’s last three Treasury
coupon auctions begin with $69b 2-year note sale. Auction cycle begins also includes $70b 5-year and $44b 7-year over the following two days. US 10-year yields rise ~3bps to 3.845%.  Yields are higher by 1bp-3bp with the 2s10s curve steeper by ~2bp.

METALS: 

Gold edged lower, snapping two days of gains, with traders looking ahead to US inflation data that will offer clues on the Federal Reserve’s rate-cutting path. US
inflation figures due on Friday, which are expected to show the three-month annualized rate of core inflation down to 2.1%, just above the central bank’s 2% goal. BHP cut its outlook for Chinese copper demand this year and warned of a modest global surplus
through the end of 2025. Spot gold -0.2%, silver +0.3%, copper +0.2%.

ENERGY:   

Oil prices decline, paring some of Monday’s rally. Middle East tensions – along with concerns about a potential shutdown of Libyan oil fields – had led to a surge
in oil prices of more than 7% over the previous three sessions. A spread that shows the difference in oil prices in Europe and Asia surged to the widest in 10 months on concern that swaths of supply from Libya are about to get halted. Goldman lowered its 2025
Brent forecast to $77 from $82 on an expected production boost by OPEC+.  WTI -0.5%, Brent -0.45%, US Nat Gas -1.1%, RBOB ~flat.

CURRENCIES:   

In currency markets, the pound is one of the best performers among the G-10 currencies, extending gains by as much as 0.4% against the greenback to its highest since
March 2022 as options show traders see upside risks for sterling into the September central bank meetings. The US dollar index hovered just off a one-year low, reflecting bets on faster rate cuts, while the euro nudged towards multi-month highs versus the
greenback. The dollar is near its fair value and is unlikely to weaken further as China’s sluggish economy and smaller-than-expected Federal Reserve interest-rate cuts will support demand for the greenback, according to Bank of America.  US$ Index -0.05%,
GBPUSD +0.3%, EURUSD +0.05%, USDJPY +0.05%, AUDUSD +0.2%, USDNOK -0.25%, USDCHF -0.2%, NZDUSD +0.45%. 

Spot Bitcoin -1.3%, Spot Ethereum -2%. 

• Upgrades
• Cleveland-Cliffs (CLF) Raised to Buy at Seaport Global Securities
• Coterra Energy Inc (CTRA) Raised to Buy at Roth Capital Partners
• Energizer Holdings (ENR) Raised to Buy at Truist Secs; PT $40
• Thomson Reuters (TRI CN) Raised to Sector Outperform at Scotiabank
• XPeng (XPEV) ADRs Raised to Buy at BOCOM Intl; PT $10.05
• Downgrades
• Aadi Bioscience Inc (AADI) Cut to Neutral at Piper Sandler; PT $1.75
• Cinemark (CNK) Cut to Neutral at B Riley; PT $31
• Hershey (HSY) Cut to Sell at Citi; PT $182
• Marathon Oil (MRO) Cut to Equal-Weight at Wells Fargo; PT $29
• PagSeguro (PAGS) Cut to Neutral at Bradesco BBI; PT $13
• PDD (PDD) ADRs Cut to Neutral at Macquarie; PT $126
• ADRs Cut to Neutral at Citi; PT $120
• SiTime (SITM) Cut to Underweight at Barclays; PT $90
• Vasta Platform (VSTA) Cut to Underweight at JPMorgan
• Initiations
• AllianceBernstein (AB) Rated New Equal-Weight at Barclays; PT $35
• Antero Resources (AR) Rated New Buy at Roth Capital Partners; PT $32
• Apollo Global (APO) Rated New Buy at Redburn; PT $153
• Ares Management (ARES) Rated New Neutral at Redburn; PT $140
• Blackstone (BX) Rated New Neutral at Redburn; PT $134
• Carlyle Group (CG) Rated New Buy at Redburn; PT $55
• Corbus Pharmaceuticals (CRBP) Rated New Outperform at Mizuho Securities
• EnerSys (ENS) Rated New Buy at Roth Capital Partners; PT $120
• First Horizon (FHN) Reinstated Neutral at Baird; PT $16
• First Watch Restaurant (FWRG) Rated New Buy at Benchmark; PT $23
• Gitlab (GTLB) Rated New Outperform at Baird; PT $59
• Immunic Inc (IMUX) Rated New Buy at B Riley; PT $6
• Invesco (IVZ) Rated New Equal-Weight at Barclays; PT $18
• JFrog (FROG) Rated New Outperform at Baird; PT $32
• KKR & Co. (KKR) Rated New Buy at Redburn; PT $153
• Krispy Kreme (DNUT) Reinstated Inline at Evercore ISI; PT $13
• Rezolute (RZLT) Rated New Buy at Guggenheim; PT $11

Data sources: Bloomberg, Reuters, CQG