Daily Game Plan

by Contributor
on September 23, 2024

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

TODAY’S ECONOMIC DATA:  8:30ET Chicago Fed Nat Activity Index; 9:45ET S&P Global US Manufacturing PMI, Services
PMI, Composite PMI; 10:15ET Fed’s Goolsbee speaks;  1:00ET Fed’s Kashkari speaks

HIGHLIGHTS and News:  

  • Kamala Harris to release new economic proposals this week
  • Fed’s Kashkari says risks now tilted to weakening labor market
  • Fed’s Bostic: want a little time to pass as we remove restrictiveness
  • The PBOC announced a press briefing on financial support for tomorrow

World stocks hung around record highs as investors turned their attention to China and Switzerland as the next destinations for monetary easing. China’s central bank
lowered its 14-day repo rate by 10 basis points, days after disappointing markets by not cutting longer-term rates. In Europe, purchasing manager surveys showed France’s services sector contracted sharply in September and German business activity decreased
by its sharpest pace in seven months. A survey by S&P Global showed euro zone business activity contracted sharply and unexpectedly this month as the bloc’s dominant services industry flat-lined, while a downturn in manufacturing accelerated. UK businesses
also reported a slowdown in growth this month. Sweden’s central bank meets on Wednesday and the Swiss National Bank meets on Thursday, with markets fully pricing a quarter-point cut from both.         

 

EQUITIES:  

US equity futures nudge higher, as investors await US inflation data later this week, which traders expect to confirm forecasts for more easing. In weekend news, House Republicans unveiled
a three-month stopgap bill to avert a government shutdown. The US Commerce Department is expected today to propose a ban on Chinese software and hardware in connected and autonomous vehicles on American roads due to national security concerns. Apollo offered
to invest as much as $5 billion in Intel, sources said, just days after Qualcomm was said to have floated a friendly takeover. US stocks are on track to finish higher in September for the first time in five years, according to Dow Jones Market Data.

Futures ahead of the bell: E-Mini S&P +0.1%, Nasdaq +0.25%, Russell 2000 +0.35%, DJI +0.05% 

In pre-market trading, Intel (INTC) rises 3% after Apollo Global Management Inc. offered to make a multibillion-dollar investment. Ciena (CIEN) rises 3% as Citi upgraded
the communications equipment firm to buy. Constellation Energy (CEG) gains 3% as Morgan Stanley raised its price target for the stock, pointing to the company’s plan to invest $1.6 billion to revive its Three Mile Island plant. General Motors (GM) declines
2% as Bernstein cut the recommendation on the automaker’s stock to market perform. Moody’s (MCO) and S&P Global (SPGI) slip about 1% as Raymond James cut its recommendations on both, seeing risks to their estimates. Palantir (PLTR) slips 1% as Raymond James
downgraded its recommendation on the data-analysis software company. Pinterest (PINS) gains 2% on a buy-rating initiation from Deutsche Bank.

European gauges are mixed, as investors weighed signs of weaker regional growth against expectations of a resilient global economy. The Stoxx Europe 600 Index is holding in positive territory,
led by defensive stocks. The euro area’s private-sector economy shrank for the first time since March, according to data released this morning, with a deepening manufacturing downturn heightening concerns that the region’s recovery has run out of steam. France’s
CAC 40 fell as investors weighed continued political uncertainty. Macron appointed a new French government that needs tacit support from the far right to avoid collapse. Meanwhile, UniCredit SpA raised its stake in Commerzbank AG to 21%, just days after the
German government indicated it opposes a takeover of the lender.  Commerzbank shares reversed An early drop to trade slightly higher. Stoxx 600 +0.2%, DAX +0.5%, CAC -0.2%, FTSE 100 -0.2%, Autos +0.9%, Technology +0.9%, REITs +0.9%, Food & Bev +0.7%. Banks
-1.4%, Basic Resources -0.2%.

Shares in Asia ticked higher amid hopes for more economic stimulus from the Chinese government. Mainland China shares rose, helped by the central bank’s cut in a short-term policy rate.
Several regulators are also scheduled to hold a briefing Tuesday on financial support for economic development, fueling speculation officials are preparing to ramp up efforts to revive growth. Chinese stocks listed in Hong Kong capped their seventh day of
gains, the longest winning streak since January 2019. Singapore’s main share index rose to its highest since late 2007, while the benchmark in the Philippines closed in bull-market territory. Stock markets in Tokyo were closed for a holiday.  Philippines +2.3%,
Taiwan +0.6%, Sensex +0.45%, Indonesia +0.4%, Singapore +0.4%, CSI 300 +0.4%, Kospi +0.3%. Hang Seng Index -0.05%, Vietnam -0.3%, ASX 200 -0.7%.

FIXED INCOME: 
 

Treasuries extend yield-curve steepening trend led by German bond market, where 2s10s spread turned positive for the first time since November 2022 after a gauge
of private-sector activity shrank for the first time since March. US session includes S&P Global US PMIs and at least three Fed speakers to kick off a busy week for central-bank commentary. A Treasury auction cycle begins Tuesday, with 2-, 5- and 7-year note
sales Tuesday, Wednesday and Thursday.  The Fed’s Neel Kashkari said he backs another half-point rate reduction this year after supporting the outsized cut last week. US 2s10s spread steeper by 3bp; 10-year around 3.76%. 

 

 

METALS: 

Gold held steady after climbing to a fresh all-time high ahead of US economic data that may offer clues on the path forward for further rate cuts by the Federal Reserve. 
Hedge funds are holding their largest bet on gold since 2020. Gold has advanced since the Fed lowered its benchmark interest rate by half a percentage point last week, building on what was already a record-setting year for the precious metal. Traders will
scrutinize comments from Fed speakers including Raphael Bostic and Austan Goolsbee today. Spot gold ~flat, silver -1.5%, copper -0.5%.

 

 

ENERGY:   

 

Oil prices edged higher, attempting to build on last week’s strong gains as investors monitored a rise in Middle East tensions. Hezbollah over the weekend launched
rocket attacks from Lebanon into northern Israel, a response to Israeli attacks that killed a top commander. Sentiment was helped by the People’s Bank of China decision to cut its 14-day reverse repo rate by 10bp and inject liquidity into the financial system. 
WTI +0.5%, Brent is flat, US Nat Gas +2.5%, RBOB -0.2%.

 

 

CURRENCIES:   

In currency markets, the euro fell sharply against the dollar before paring some of its loss, as business activity readings painted a grim picture of the euro zone
economy and fueled bets of more policy easing by the ECB this year. Sterling fell but came off its session low after a survey showed British businesses reported a slowdown in growth this month, though it was less severe than the euro zone numbers. The dollar
is mixed against G-10 currencies but slipped against the yen in thin trading due to a holiday in Japan. US$ Index +0.2%, GBPUSD -0.05%, EURUSD -0.35%, USDJPY -0.2%, AUDUSD +0.4%, NZDUSD +0.3%, EURJPY -0.6%.

 

 

 

Spot Bitcoin +0.8%, Spot Ethereum +2.8%. 

 

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
    • BNY Mellon (BK) Raised to Buy at Deutsche Bank; PT $80
    • Capital Power (CPX CN) Raised to Sector Outperform at Peters & Co
    • Ciena (CIEN) Raised to Buy at Citi; PT $68
    • Keurig Dr Pepper (KDP) Raised to Buy at Citi; PT $43
    • Marinus Pharma (MRNS) Raised to Outperform at Oppenheimer; PT $6
    • On Holding (ONON) Raised to Neutral at BofA
    • TransAlta (TA CN) Raised to Sector Perform at Peters & Co; PT C$15
  • Downgrades
    • 4D Molecular (FDMT) Cut to Neutral at Cantor
    • Analog Devices (ADI) Cut to Hold at Truist Secs; PT $233
    • Azul (AZUL4 BZ) ADRs Cut to Neutral at Goldman; PT $4
    • Femsa (FEMSAUBD MM) ADRs Cut to Neutral at JPMorgan; PT $109
    • General Motors (GM) Cut to Market Perform at Bernstein; PT $53
    • Microchip (MCHP) Cut to Hold at Truist Secs; PT $80
    • Microsoft (MSFT) Cut to Neutral at DA Davidson; PT $475
    • Moody’s (MCO) Cut to Underperform at Raymond James
    • Palantir (PLTR) Cut to Market Perform at Raymond James
    • S&P Global (SPGI) Cut to Market Perform at Raymond James
    • So-Young (SY) ADRs Cut to Neutral at Citi; PT 80 cents
    • Tecnoglass (TGLS) Cut to Neutral at B Riley; PT $69
    • Ulta Beauty (ULTA) Cut to Hold at TD Cowen; PT $395
    • Zegna Group (ZGN) Cut to Neutral at BofA
  • Initiations
    • ATI Inc (ATI) Rated New Outperform at Baptista Research; PT $73.30
    • Atkore (ATKR) Rated New Buy at Baptista Research; PT $128.70
    • CG oncology (CGON) Rated New Outperform at RBC; PT $66
    • Clarivate (CLVT) Rated New Hold at Baptista Research; PT $7.30
    • Core & Main (CNM) Rated New Overweight at Wells Fargo; PT $52
    • Core Scientific (CORZ) Rated New Buy at Canaccord; PT $16
    • Fluor (FLR) Rated New Hold at Baptista Research; PT $51.50
    • Flutter (FLUT) Rated New Buy at Needham; PT $270
    • GXO Logistics (GXO) Rated New Buy at Baptista Research; PT $65.30
    • Hexcel (HXL) Rated New Outperform at Baptista Research; PT $70.30
    • Installed Building (IBP) Rated New Hold at Baptista Research; PT $271
    • Keros Therapeutics (KROS) Rated New Buy at Guggenheim; PT $96
    • MasTec (MTZ) Rated New Underperform at Baptista Research; PT $120.80
    • MKS Instruments (MKSI) Rated New Buy at Baptista Research; PT $137.10
    • MSC Industrial (MSM) Rated New Hold at Baptista Research; PT $91
    • Onestream (OS) Rated New Outperform at BMO; PT $38
    • Parsons (PSN) Rated New Hold at Baptista Research; PT $103
    • Pinterest (PINS) Rated New Buy at Deutsche Bank; PT $43
    • Satellos Bioscience Inc (MSCL CN) Rated New Speculative Buy at Canaccord
    • Saturn Minerals (SOIL CN) Rated New Outperform at ATB Capital; PT C$3.80
    • Structure Therapeutics (GPCR) US Rated New Overweight at Morgan Stanley; PT $118
    • Timken (TKR) Rated New Hold at Baptista Research; PT $89.60
    • Trade Desk (TTD) Rated New Neutral at MoffettNathanson LLC; PT $100
    • TriNet Group (TNET) Rated New Buy at Baptista Research; PT $120.80

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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