Daily Game Plan

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

TODAY’S ECONOMIC DATA:  9:45ET S&P Global US Manufacturing PMI; 10:00ET Construction Spending, ISM Manufacturing

HIGHLIGHTS and News:  

• September is historically the worst month for US stocks
• The Philadelphia Eagles are working to remove what they say are “counterfeit political ads”
• Tesla Plans to Produce Six-Seat Model Y in China Late ‘25: Rtrs
• Former NY governor Cuomo to testify before Congress next week on COVID nursing home policy

Global stocks fall back as investors turned cautious awaiting a raft of economic data that will offer insight about the health of the US economy and the Federal Reserve’s
interest-rate path. In the runup to the start of the Fed’s rate-cutting cycle, investors are wary of risks stemming from US election campaigning and rising geopolitical tensions. Benjamin Netanyahu said Israel won’t cede control of the border area between
Gaza and Egypt even after nationwide protests called for a cease-fire.  

EQUITIES:  

US equity futures are lower, with small cap Russell 2000 contracts leading losses as markets enter into what has been a historically weak month for the main indexes on average. Rate-sensitive
chip stocks led premarket declines, with Nvidia down over 2%. Focus today will be on ISM manufacturing activity survey, setting the scene ahead of jobs data due on Friday that will be crucial for whether the Federal Reserve cuts by 25 or 50 basis points on
Sept. 18 and how much it delivers for the rest of the year. Traders now price in around 100 basis points of Fed cuts this year across three meetings. Analysts forecast the manufacturing index to rise to 47.5 but remain in contractionary territory.

Futures ahead of the bell: E-Mini S&P -0.5%, Nasdaq -0.7%, Russell 2000 -0.9%, DJI -0.5%

In pre-market trading, United States Steel (X) dropped ~6% after Kamala Harris joined President Biden in declaring the company should remain domestically owned and operated. Boeing (BA)
drops 3% after Wells Fargo downgraded the stock to underweight, giving the plane maker a rare negative analyst rating. Dyne Therapeutics (DYN) tumbles 32% after saying its Chief Medical Officer is stepping down. Polestar (PSNY) rises 4% after appointing Jean-Francois
Mady as CFO. Unity Software (U) climbs 5% as Morgan Stanley turned bullish on the stock. Vaxcyte (PCVX) soars 30% after posting positive topline data from a Phase 1/2 study of VAX-31.
Shoals Technologies Group (SHLS) shares rise 16% after securing a favorable initial ruling in the ITC case against Voltage.

European gauges eased off Friday’s record high levels as investors awaited US data to gauge the threat of a possible recession and for clues about the Federal Reserve’s next moves on
interest rates. The Euro Stoxx 600 slipped after hitting a fresh intraday record at the open as mining stocks lead losses on the back of softer commodity prices. Among individual stocks, Rightmove shares traded about 4.5% lower after the UK property portal
announced late on Monday that it has not been approached about a possible takeover by REA Group. Shares of Partners Group fell as much as 8% after the private equity group’s first-half results disappointed investors. Stoxx 600 -0.3%, DAX -0.3%, CAC -0.2%,
FTSE 100 -0.4%. Basic Resources -2%, REITs -1.6%, Energy -1.3%, Banks -1.2%. Retail +0.2%, Media +0.1%.

Shares in Asia were mixed following their biggest drop in nearly a month on Monday. Consumer and financial shares rose while the region’s major semiconductor-related stocks fell. The
MSCI Asia Pacific Index was little changed, while Japan’s Topix rose for a sixth straight session, boosted by banks. Tesla supplier stocks gained in China after vehicle shipments from the EV maker’s Shanghai factory rose for a second-straight month on a trade-in
subsidy boost. Thailand +0.8%, Topix +0.6%, Singapore +0.5%, CSI 300 +0.25%, Sensex was flat. ASX 200 -0.1%, Hang Seng Index -0.2%, Kospi -0.6%, Taiwan -0.6%, Indonesia -1%.   

FIXED INCOME: 
 

Treasuries are little changed versus Friday’s closing levels as US markets reopen after Labor Day holiday. Front-end lags slightly, flattening 2s10s curve by 1bp. 
US session includes S&P Global and ISM manufacturing PMIs, and the investment-grade corporate bond issuance slate is expected to be heavy. 10-year yield trades around 3.915%; 2-year yield ~3.93%.

METALS: 

Gold eased slightly ahead of US employment data due later this week that may influence the Federal Reserve’s rate-cutting path. Nonfarm payrolls data due Friday may
provide insights into the Fed’s path forward for widely expected rate cuts. Copper dipped as Goldman slashed its price forecast for next year citing China’s poor economic recovery. Spot gold -0.15%, silver -0.7%, copper -3%.

ENERGY:   

Oil prices fell as Chinese demand concerns outweighed supply disruptions in Libya. Oil has wiped out almost all of this year’s gains during the past couple of months
as economic concerns in key consumers — including China and the US — and ample supplies weigh on sentiment. The market is also bracing for the potential release of additional barrels from OPEC+. The US, meanwhile, is laying the groundwork for new sanctions
on Venezuelan government officials in response to Nicolás Maduro’s disputed reelection. WTI -1.5%, Brent -2.1%, US Nat Gas +2%, RBOB -2.4%.

CURRENCIES:   

In currency markets, the yen was among top gainers in G-10 currencies after Bank of Japan Governor Kazuo Ueda reiterated that the central bank will continue to raise
interest rates if the economy and prices perform as expected. The US Dollar Index extended gains after testing its key 200-week moving average last week. Morgan Stanley is skeptical the US Dollar Index will dip below the key level of 100, despite risks being
skewed toward further weakness following Federal Reserve Chair Jerome Powell’s nod toward future policy easing at Jackson Hole. The Aussie$ slid after data showed Australia’s current account deficit unexpectedly widened in 2Q. Swiss inflation slowed more than
expected in August, supporting the case for another interest-rate cut, weighing slightly on the franc. US$ Index +0.2%, GBPUSD -0.25%, EURUSD -0.3%, USDJPY -0.7%, AUDUSD -0.8%, USDNOK +0.9%, NZDUSD -0.8%.

Spot Bitcoin +0.05%, Spot Ethereum -1.8%. 

• Upgrades
• Applied Opto (AAOI) Raised to Outperform at Raymond James
• Autodesk (ADSK) Raised to Neutral at Goldman; PT $295
• Raised to Buy at HSBC; PT $299
• Bank of America (BAC) Raised to Buy at Deutsche Bank; PT $45
• Braskem (BRKM5 BZ) ADRs Raised to Outperform at Bradesco BBI; PT $8.50
• BSR Real Estate (HOM/U CN) Raised to Sector Outperform at Scotiabank
• Coca-Cola Femsa (KOFUBL MM) ADRs Raised to Buy at Goldman; PT $113.70
• Corpay (CPAY) Raised to Peerperform at Wolfe
• ERO Copper (ERO CN) Raised to Outperform at Raymond James; PT C$36
• International Flavors (IFF) Raised to Outperform at Mizuho Securities
• Lockheed (LMT) Raised to Buy at Melius; PT $704
• M&T Bank (MTB) Raised to Overweight at JPMorgan; PT $215
• nCino (NCNO) Raised to Outperform at Raymond James
• NetApp Inc (NTAP) Raised to Buy at Loop Capital; PT $150
• Redfin (RDFN) Raised to Buy at B Riley; PT $13
• Southwest Air (LUV) Raised to Outperform at Evercore ISI; PT $35
• Transocean (RIG) Raised to Buy at DNB Markets; PT $5.50
• Unity Software (U) Raised to Overweight at Morgan Stanley; PT $22
• Visa (V) Raised to Outperform at BNPP Exane; PT $325
• Wells Fargo (WFC) Raised to Buy at Deutsche Bank; PT $65
• XPeng (XPEV) ADRs Raised to Outperform at Macquarie; PT $10
• Downgrades
• Boeing (BA) Cut to Underweight at Wells Fargo; PT $119
• Caleres (CAL) Cut to Hold at Loop Capital; PT $45
• CME Group (CME) Cut to Underperform at BofA
• JPMorgan (JPM) Cut to Hold at Deutsche Bank; PT $235
• Mastercard (MA) Cut to Neutral at BNPP Exane; PT $470
• Montauk Renewables (MNTK) Cut to Sector Perform at Scotiabank; PT $6
• Novartis (NOVN SW) ADRs Cut to Hold at Jefferies; PT $123.50
• Opal Fuels (OPAL) Cut to Sector Perform at Scotiabank; PT $5
• Simon Property (SPG) Cut to Neutral at Piper Sandler; PT $175
• Sphere Entertainment (SPHR) Cut to Sell at Benchmark
• Xylem (XYL) Cut to Hold at TD Cowen
• Initiations
• 10X Genomics (TXG) Rated New Outperform at Leerink; PT $35
• Alto Neuroscience (ANRO) Rated New Outperform at Wedbush; PT $29
• Arcellx (ACLX) Rated New Overweight at Cantor
• Archer Aviation (ACHR) Rated New Buy at HC Wainwright; PT $12.50
• Autonomix Medical (AMIX) Rated New Buy at Ladenburg Thalmann; PT $1.40
• Axsome Therapeutics (AXSM) Rated New Overweight at Wells Fargo; PT $140
• Commercial Metals (CMC) Reinstated Buy at Jefferies; PT $65
• Eagle Point Income (EIC) Rated New Buy at B Riley; PT $17.50
• Eve Holding (EVEX) Rated New Buy at HC Wainwright; PT $6
• Fair Isaac (FICO) Rated New Outperform at Oppenheimer; PT $1,967
• FitLife Brands (FTLF) Rated New Buy at Roth Capital Partners; PT $40
• Foghorn Therapeutics (FHTX) Rated New Buy at Jefferies; PT $18
• HA Sustainable Infrastructure (HASI) Rated New Outperform at RBC
• HashiCorp (HCP) Resumed Neutral at Citi; PT $35
• HCA Healthcare (HCA) Rated New Equal-Weight at Morgan Stanley; PT $427
• Inari Medical (NARI) Rated New Market Perform at Leerink; PT $47
• Jamf Holding (JAMF) Reinstated Neutral at Goldman; PT $21
• Joby Aviation (JOBY) Rated New Buy at HC Wainwright; PT $9
• Lantheus (LNTH) Rated New Buy at Redburn; PT $175
• Meta Platforms (META) Rated New Buy at Huatai Research; PT $594.83
• MKS Instruments (MKSI) Reinstated Neutral at Goldman; PT $129
• Olin (OLN) Rated New Market Perform at BMO; PT $50
• Penumbra (PEN) Rated New Outperform at Leerink; PT $263
• Silence Therapeutics (SLN) ADRs Rated New Buy at Jefferies; PT $40
• Soho House (SHCO) Resumed Equal-Weight at Morgan Stanley; PT $5.50
• Soleno (SLNO) Rated New Buy at HC Wainwright; PT $70

Data sources: Bloomberg, Reuters, CQG

David Wienke