Daily Game Plan

by Contributor
on September 24, 2024

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

TODAY’S ECONOMIC DATA:  8:30ET Philadelphia Fed Non-Manufacturing Activity; 9:00ET FHFA House Price Index, Fed’s
Bowman speaks; 10:00ET Consumer Confidence, Richmond Fed Mfg Index; 1:00ET 2-Yr Auction

HIGHLIGHTS and News:  

  • Biden to address UN General Assembly for the last time as president today
  • PBoC cut 7day rates by 20bps; will cut
    banks RRR rates by 50bps in the near future
  • Israel army chief plans to speed up offensive operations; launching new wave of attacks on Hezbollah
  • Boeing’s latest offer of a 30% pay bump to striking workers angered union leaders  
  • Trump will lay out his vision for tax breaks in a speech today

World stocks hit a record high after China unveiled multiple stimulus measures to support its economy and stock markets, triggering a bounce in commodity prices.
China’s central bank unveiled its biggest stimulus since the pandemic to pull the economy out of its deflationary funk and back towards the government’s growth target. But analysts warned more fiscal help was needed to hit these goals, given extremely weak
credit demand from businesses and consumers, and noted the absence of any policies aimed at supporting real economic activity. Elsewhere, Israel’s military said it launched airstrikes against Hezbollah sites in Lebanon on Monday, which Lebanese authorities
said killed 492 people and sent tens of thousands fleeing for safety. The strikes risk pulling OPEC producer Iran closer to the conflict and could ignite a broader war across the region.         

 

EQUITIES:  

US equity futures are holding small gains after the S&P 500 and Dow Jones Industrial Average posted new record closes. Traders will mull over fresh economic data today, with the Conference
Board’s consumer confidence reading for September due. Comments from several Federal Reserve officials on Monday appeared to leave the door open to additional large rate cuts in the US. Visa dipped premarket after sources said the DOJ plans to sue it for allegedly
monopolizing the US debit card market. Dell Technologies is relisted on the S&P 500 Index.

Futures ahead of the bell: E-Mini S&P +0.1%, Nasdaq +0.2%, Russell 2000 +0.2%, DJI +0.15% 

In pre-market trading, Liberty Broadband (LBRDA) soared 20% after proposing an all-stock merger with Charter Communications (CHTR), while Starbucks (SBUX) fell 0.5%
on a bearish rating by Jefferies. Hawaiian Electric Industries (HE) slides 11% after pricing an offering.  Miniso (MNSO) extends Monday’s decline by 1.8% after announcing a plan to buy a majority stake in Yonghui Superstores. Salesforce (CRM) gains 2% as Piper
Sandler raised its recommendation on the stock to overweight from neutral, seeing free cash flow per share doubling by 2029. US-listed Chinese stocks advance after China’s central bank announced a slew of measures aiming to boost the economy, housing sector
and the stock market. Alibaba (BABA) rises 5.7%, JD.com (JD) gains 8.2%, NetEase (NTES) advances 6.2%. Walmart (WMT) rises ~1% after Truist Securities upgraded the retailer to buy from hold. Costco (COST) eased 0.4% lower after Truist downgraded the stock.

European gauges are broadly higher, as China’s sweeping stimulus measures boosted stocks of luxury companies and miners. France, which is home to a host of luxury brands, was the standout
regional performer. LVMH (LVMH.PA), Hermes (HRMS.PA), Kering (PRTP.PA), Dior (DIOR.PA), and Burberry (BRBY.L), gained between 4% and 5%. Basic resources jumped 5% and is set for their best day in nearly two years, as copper prices hit a two-month high. Meanwhile,
data showed German business morale fell more than expected in September. While the news from Beijing helped offset the gloom of Monday’s weak European economic data, Goldman strategists warned that the region’s slowdown is a key risk for stocks. Stoxx 600
+0.6%, DAX +0.5%, CAC +1.2%, FTSE 100 +0.2%. Basic Resources +4.4%, Luxury +2.3%, Banks +0.9%. REITs -0.9%, Utilities -0.5%.

Shares in rose amid a broad risk-on rally as a slew of measures from China to support its struggling economy boosted sentiment on the region’s equities. The MSCI Asia Pacific Index rose
1%, with Tencent, TSMC and Alibaba among the biggest boosts. Chinese stocks and bonds rallied as the government announced plans to lower borrowing costs and inject more funds into the economy, as well as to ease households’ mortgage repayment burden.  Governor
Pan said the central bank will soon cut the amount of cash that banks must hold as reserves (RRR), by 50 basis points, freeing up about 1 trillion yuan ($142 billion) for new lending. The PBOC will also cut the seven-day reverse repo rate to 1.5%, as well
as other interest rates to help support the property market. The CSI 300 index closed up 4.3% in its best day in more than four years. Hang Seng Tech +5.9%, Shanghai Composite +4.15%, Hang Seng Index +4.1%, Kospi +1.1%, Thailand +1%, Vietnam +0.7%, Taiwan
+0.7%, Topix +0.5%, Philippines +0.2%. Sensex -0.02%, ASX 200 -0.1%, Singapore -0.4%.

FIXED INCOME: 
 

Treasuries bear-steepen as global stocks advance. US front-end yields are 2bps higher with long-end cheaper by about 5.5bps; 2s10s spread is wider by more than 3bps
after exceeding 19bp for first time since June 2022; 10-year is 5.5bp higher on the day at 3.799%. Treasury coupon auction cycle begins today with $69b 2-year note sale; 5- and 7-year auctions follow on Wednesday and Thursday.

 

 

METALS: 

Gold erased early overnight gains after reaching a fresh all-time high as traders parse the latest remarks from Federal Reserve officials and prepare for key US economic
data.  UBS Group AG suggests the rally could continue due to expected further Fed easing, geopolitical tensions, and robust demand from investors and central banks. Focus will be on Fed Chair Powell’s remarks on Thursday and US PCE data on Friday. Copper rallied
strongly after China unveiled a series of measures to boost growth. Spot gold -0.1%, silver +0.6%, copper +2.6%.

 

 

ENERGY:   

 

Oil prices rose on news of monetary stimulus from top importer China and concerns that conflict in the Middle East could hit regional supply while another hurricane
threatened supply in the United States. But for oil to continue to rally, China’s accommodative monetary policies need to be matched by expansionary fiscal policies to boost internal demand, said a senior analyst at OANDA. US oil producers in the Gulf of Mexico
paused some of their production as the second hurricane in two weeks was predicted to tear through offshore oilfields. OPEC releases its annual World Oil Outlook today. WTI +2.3%, Brent +2.1%, US Nat Gas -0.1%, RBOB +2%.

 

 

CURRENCIES:   

In currency markets, the Chinese yuan jumped to a 16-month high against the dollar as China unveiled more measures to boost its stuttering economy. The dollar rose
to a three-week high versus the yen as Governor Kazuo Ueda reiterated that the Bank of Japan has time to assess market moves and overseas economies before making a policy decision. Sterling heads for a fifth daily advance. The Aussie$ pared early gains after
the RBA kept its cash rate target unchanged at 4.35%, as expected. Aussie lost traction as RBA Governor Michele Bullock said the central bank didn’t explicitly consider a rate hike at its meeting. US$ Index +0.02%, GBPUSD +0.15%, EURUSD +0.15%, USDJPY +0.25%,
AUDUSD +0.1%, USDNOK -0.5%, USDSEK -0.45%.

 

 

 

Spot Bitcoin +0.2%, Spot Ethereum -1%. 

 

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
    • Banc of California (BANC) Raised to Outperform at Wedbush
    • BioNTech (BNTX) ADRs Raised to Overweight at Morgan Stanley; PT $145
    • CNH Industrial (CNH) Raised to Outperform at Raymond James; PT $14
    • Columbia Banking (COLB) Raised to Outperform at Wedbush
    • Comerica (CMA) Raised to Outperform at Wedbush
    • Lowe’s (LOW) Raised to Outperform at Oppenheimer; PT $305
    • Prosperity Banc (PB) Raised to Outperform at Wedbush
    • Regions Financial (RF) Raised to Outperform at Wedbush
    • Ryan Specialty (RYAN) Raised to Outperform at BMO; PT $75
    • Salesforce Inc (CRM) Raised to Overweight at Piper Sandler; PT $325
    • Walmart (WMT) Raised to Buy at Truist Secs; PT $89
  • Downgrades
    • Baidu (BIDU) ADRs Cut to Hold at HSBC; PT $100
    • Catalent (CTLT) Cut to Neutral at Baird
    • Costco (COST) Cut to Hold at Truist Secs; PT $873
    • Customers Bancorp (CUBI) Cut to Neutral at Wedbush
    • DouYu (DOYU) ADRs Cut to Reduce at HSBC; PT $6.60
    • Equity Residential (EQR) Cut to Neutral at BofA
    • Essex Property (ESS) Cut to Neutral at BofA; PT $321
    • Exxon (XOM) Cut to Neutral at Redburn; PT $120
    • First Citizens (FCNCA) Cut to Neutral at Wedbush
    • First Horizon (FHN) Cut to Neutral at Wedbush
    • Insperity (NSP) Cut to Market Perform at William Blair
    • Invitation Homes (INVH) Cut to Neutral at BofA; PT $37
    • Juniper (JNPR) Cut to Neutral at Citi; PT $40
    • Kenvue (KVUE) Cut to Sector Perform at RBC; PT $24
    • Leonardo DRS (DRS) Cut to Neutral at BofA; PT $30
    • McKesson (MCK) Cut to Neutral at Baird
    • MINISO (MNSO) ADRs Cut to Hold at Jefferies; PT $14.91
    • Nutrien (NTR CN) Cut to Equal-Weight at Wells Fargo; PT C$67.56
    • Regeneron (REGN) Cut to Market Perform at Leerink; PT $1,077
    • Starbucks (SBUX) Cut to Underperform at Jefferies; PT $76
    • Triumph Group (TGI) Cut to Underperform at BofA; PT $12
  • Initiations
    • Aaon (AAON) Rated New Underperform at Baptista Research; PT $101
    • APi Group (APG) Rated New Buy at Baptista Research; PT $42.60
    • Applied Industrial Tech (AIT) US Rated New Underperform at Baptista Research; PT $222.80
    • Assai (ASAI3 BZ) ADRs Rated New Buy at HSBC; PT $9.71
    • Avidity Biosciences (RNA) Rated New Buy at Goldman; PT $59
    • Avis Budget (CAR) Rated New Buy at Baptista Research; PT $136.60
    • Church & Dwight (CHD) Rated New Overweight at Piper Sandler; PT $120
    • Colgate-Palmolive (CL) Rated New Overweight at Piper Sandler; PT $121
    • Dayforce (DAY) Rated New Overweight at KeyBanc; PT $70
    • Didi Global (DIDIY) ADRs Rated New Outperform at Macquarie; PT $5.50
    • DoorDash (DASH) Reinstated Outperform at Raymond James; PT $155
    • EHang Holdings (EH) ADRs Rated New Buy at China Renaissance
    • GE Vernova (GEV) Rated New Buy at Guggenheim; PT $300
    • Genpact (G) Rated New Underperform at Baptista Research; PT $39.60
    • HP Enterprise (HPE) Resumed Neutral at Citi
    • Instacart (CART) Rated New Market Perform at Raymond James
    • Kenvue (KVUE) Rated New Buy at Jefferies; PT $27
    • Lyft (LYFT) Reinstated Market Perform at Raymond James
    • P&G (PG) Rated New Neutral at Piper Sandler; PT $174
    • Pinterest (PINS) Rated New Outperform at Oppenheimer; PT $45
    • Procore Technologies (PCOR) Rated New Outperform at Baird
    • Protagonist Therapeutics (PTGX) Rated New Buy at TD Cowen
    • ResMed (RMD) Rated New Outperform at Baird; PT $280
    • Sirius XM (SIRI) Resumed Underweight at Morgan Stanley; PT $23
    • TransMedics (TMDX) Rated New Outperform at Baird; PT $200
    • Uber (UBER) Rated New Strong Buy at Raymond James; PT $90
    • Valaris (VAL) Rated New Neutral at Susquehanna; PT $62
    • Watts Water (WTS) Rated New Underperform at Baptista Research; PT $190
    • Zevra Therapeutics Inc (ZVRA) Rated New Market Outperform at JMP

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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