Daily Game Plan

by Contributor
on October 9, 2024

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

TODAY’S ECONOMIC DATA:  8:00ET Fed’s Bostic speaks; 9:15ET Fed’s Logan speaks; 10:00ET Wholesale Inventories; 10:30ET
Fed’s Goolsbee speaks; 12:30ET Fed’s Jefferson speaks; 1:00ET 10-Year Note Auction; 2:00ET FOMC Meeting Minutes; 5:30ET Fed’s Collins speaks; 6:00ET Fed’s Daly speaks

HIGHLIGHTS and News:  

  • US Weighs Google Breakup as Remedy in Historic Antitrust Case
  • Netanyahu and Biden to Speak Today as Israel’s Iran Response Nears
  • Fed’s Jefferson Says Risks to Inflation, Employment Now Balanced
  • US 30-Year Mortgage Rates Climb by Most in More Than a Year
  • Iranian Lawmakers Asks Security Council To Authorize Creation Of Nuclear Weapons – TASS

 

Global stocks struggled overnight as investors tempered their expectations for a robust Chinese economic recovery. China Ministry of Finance announced it will hold
a briefing on Saturday, supposedly to intensify its fiscal policy adjustment to shore up growth. Meanwhile, the ECB’s Villeroy said a rate cut next week is very probable and it won’t be the last. Governing Council member Stournaras said he is backing two more
quarter-point rate cuts from the ECB this year. New Zealand’s central bank cut interest rates by half a percentage point, as policymakers become more concerned about the economic slowdown. India’s central bank opened the door for its first cut in four years. President
Biden and Israeli Prime Minister Netanyahu are set to speak today amid frantic efforts by Washington to temper Israel’s response to Iran’s missile attack last week. Biden and Netanyahu haven’t spoken since August.

 

EQUITIES:  

US equity futures are just slightly lower, recovering from earlier pressure on news Tuesday that US authorities are weighing an antitrust crackdown on Google-owner Alphabet. The Justice
Department “is considering behavioral and structural remedies that would prevent Google from using products such as Chrome, Play, and Android to advantage Google search and Google search-related products, including features such as artificial intelligence.
Google said a split would “break them.”  The crisis engulfing Boeing Co. took a dramatic turn after negotiations to resolve an almost monthlong strike collapsed and S&P Global Ratings warned it may cut the plane maker’s credit grade to junk.

Futures ahead of the bell: E-Mini S&P -0.03%, Nasdaq -0.1%, Russell 2000 +0.05%, DJI -0.02%. 

In pre-market trading, Alphabet (GOOGL) slips about 1% after the US Justice Department told a federal judge it’s considering recommending that Google be forced to sell
off parts of its operations. Astera Labs (ALAB) jumps 12% after the company introduced a new portfolio of switches for AI workloads. Boeing (BA) falls about 1% after negotiations to end an almost monthlong strike collapsed. Crinetics Pharmaceuticals (CRNX)
declines 2% as the drug developer offers $400 million in shares. Helen of Troy (HELE) rises 14% after the consumer products company behind Hydro Flask water bottles reported second-quarter net sales and adjusted earnings per share that exceeded expectations.
Zeta Global (ZETA) gains about 4% on an agreement to buy email marketing platform LiveIntent.

Russell 2000 Growth vs Value climbing back above the 200 week moving average for the first time since breaking below it in November 2021.

European gauges recover from early losses as investors assessed prospects for an interest-rate cut by the European Central Bank next week and the prospect for more
China stimulus.  Among individual movers, Continental AG rallied 6.7% after the tiremaker reassured analysts about its earnings outlook. Luxury goods firm Kering SA gained nearly 2% after it named former LVMH executive Stefano Cantino as CEO of Gucci. Renewable
energy companies were lifted by an International Energy Agency report predicting massive growth in renewable power capacity. Stoxx 600 +0.25%, DAX +0.3%, CAC +0.3%, FTSE 100 +0.3%. Autos +1%, REITs +0.7%, Construction +0.6%. Banks -0.7%.

Shares in Asia were mixed, with Japan’s Nikkei 225 leading gains while Chinese stocks tumbled. Onshore Chinese stocks suffered their biggest drop in more than four
years as traders grew impatient over the pace of Beijing’s stimulus measures and weak holiday-spending data hurt sentiment.  The CSI 300 Index plunged over 7%, its first loss in 11 days and erasing Tuesday’s advance.  The MSCI Asia Pacific Index fell 0.2%,
led by Chinese tech names. Indian shares advanced after the Reserve Bank of India set the stage for its first interest rate cut in four years, growing more confident that inflation will ease in coming months. Stocks in New Zealand rallied after the central
bank cut interest rates by half a percentage point. Nikkei 225 +0.9%+, Vietnam +0.8%, Singapore +0.55%, Topix +0.3%, Taiwan +0.2%, ASX 200 +0.1%. Sensex -0.2%, Indonesia -0.75%, Hang Seng Index -1.4%, Philippines -1.5%, CSI 300 -7.1%.

FIXED INCOME: 
 

Treasury yields ticked up with belly to long-end yields slightly cheaper on the day after plying narrow ranges during Asia session and European morning. 10-year yield
hovered above the key 4% level after diminished expectations for interest-rate cuts triggered a run of selling in previous days. The latest speeches from Fed Vice Chair Philip Jefferson and Atlanta Fed chief Raphael Bostic pointed to a measured approach. 
Jefferson said “the balance of risks to our two mandates has changed — as risks to inflation have diminished and risks to employment have risen, these risks have been brought roughly into balance.” More Treasury auctions on deck with a $39b 10-year reopening.
Six Fed officials have scheduled appearances. 10-year around 4.04%; curve is slightly steeper.

 

 

 

METALS: 

Gold is flat, trying to end a six day of losses, as comments from Federal Reserve policymakers added to signs that US rate cuts won’t be as aggressive as previously
thought. Fed Bank of Boston President Susan Collins emphasized on Tuesday that monetary easing should be careful and data-based. Her Atlanta counterpart Raphael Bostic said threats to the labor market have increased, although inflation risks have fallen and
the economy is still strong. Traders will be watching minutes of the Fed’s latest meeting and US inflation data due later this week for further clues on the rate path. Spot gold flat, Silver +0.03%, Copper -1%.

 

 

ENERGY:   

 

Oil prices are slightly lower ahead of official data on US inventories, extending a sharp pullback seen the previous session on prospects for a cease-fire between
Israel and Hezbollah that served to ease fears of a wider Mid-East conflict. Oil futures fell 4% Tuesday after Hezbollah reportedly endorsed efforts by Lebanon to broker a cease-fire between the Iran-backed militant group and Israel. The downside for crude
was limited today by expectations Hurricane Milton will disrupt drilling activity in the Gulf of Mexico Hurricane Milton returned to CAT 5 strength and is set to hit Sarasota and Tampa tonight, the latter having not seen a big hurricane for about a decade. 
The damage estimates are huge and significantly higher than Helene. US crude inventories increased by about 11 million barrels last week, the API reported. That would be the biggest increase in eight months if confirmed by the EIA today. Goldman sees upside
of up to $20 to Brent in the case of disruptions in Iranian production. WTI -0.15%, Brent -0.15%, US Nat Gas -1.6%, RBOB -0.2%.

 

 

 

CURRENCIES:   

In currency markets, the kiwi is the weakest of the G-10 currencies, falling more than 1% against the greenback after the RBNZ stepped up their easing pace with a
50 bps interest rate cut. The dollar traded higher versus all Group-of-10 peers as traders awaited minutes from last month’s Fed meeting later today, while US inflation data is due Thursday. The euro slipped as comments from ECB council member Villeroy weighed.
He said the ECB will very probably lower interest rates next week and will loosen monetary policy again at future meetings. US$ Index +0.1%, GBPUSD -0.15%, EURUSD -0.25%, USDJPY +0.35%, AUDUSD -0.3%, NZDUSD -1.1%, USDCHF +0.05%, USDNOK +0.6%.

 

 

 

 

Spot Bitcoin -0.4%, Spot Ethereum ~flat   

 

 

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
    • Affirm Holdings (AFRM) Raised to Equal-Weight at Morgan Stanley; PT $37
    • Home Depot (HD) Raised to Buy at Loop Capital; PT $460
    • Honeywell (HON) Raised to Buy at CFRA
    • Inter&Co (INTR) Raised to Overweight at JPMorgan; PT $8.50
    • Lowe’s (LOW) Raised to Buy at Loop Capital; PT $300
    • LPL Financial (LPLA) Raised to Overweight at Wells Fargo; PT $285
    • MSCI (MSCI) Raised to Buy at Redburn; PT $685
    • Norwegian Cruise (NCLH) Raised to Buy at Citi; PT $30
    • Saia (SAIA) Raised to Outperform at Wolfe; PT $511
    • Southwest Air (LUV) Raised to Hold at Jefferies
    • Valero Energy (VLO) Raised to Overweight at Wells Fargo; PT $165
    • Vnet Group (VNET) ADRs Raised to Buy at HSBC; PT $5.20
  • Downgrades
    • ArcBest (ARCB) Cut to Peerperform at Wolfe
    • Blackstone (BX) Cut to Neutral at Piper Sandler
    • Ciena (CIEN) Cut to Neutral at BNPP Exane; PT $67
    • Daqo New Energy (DQ) ADRs Cut to Hold at Daiwa; PT $25
    • Expeditors (EXPD) Cut to Underperform at Wolfe; PT $111
    • Exxon (XOM) Cut to Underperform at BNPP Exane; PT $105
    • FactSet (FDS) Cut to Sell at Redburn; PT $380
    • Morningstar (MORN) Cut to Neutral at Redburn; PT $340
    • Vale (VALE3 BZ) ADRs Cut to Underperform at Wolfe
  • Initiations
    • AFC Gamma (AFCG) Rated New Buy at Seaport Global Securities; PT $13
    • Aflac (AFL) Rated New Hold at TD Cowen; PT $102
    • ArcBest (ARCB) Rated New Neutral at Citi; PT $111
    • Blue Bird (BLBD) Rated New Buy at BTIG; PT $55
    • C.H. Robinson (CHRW) Rated New Neutral at Citi; PT $115
    • Canadian National (CNR CN) Rated New Neutral at Citi; PT $125
    • Canadian Pacific Kansas (CP CN) Rated New Buy at Citi; PT $97
    • Chewy (CHWY) Rated New Buy at TD Cowen; PT $38
    • Corebridge Financial (CRBG) Rated New Buy at TD Cowen; PT $35
    • Crocs (CROX) Rated New Buy at Guggenheim; PT $182
    • CSX (CSX) Rated New Buy at Citi; PT $42
    • Deckers Outdoor (DECK) Rated New Neutral at Guggenheim
    • ERO Copper (ERO CN) Rated New Buy at Clarksons; PT C$40.28
    • FedEx (FDX) Rated New Buy at Citi; PT $301
    • G-III Apparel (GIII) Rated New Buy at Guggenheim; PT $36
    • GFL Environmental (GFL CN) Rated New Buy at Eight Capital; PT C$70
    • Gitlab (GTLB) Rated New Overweight at Morgan Stanley; PT $70
    • Globe Life (GL) Rated New Buy at TD Cowen; PT $150
    • GXO Logistics (GXO) Rated New Buy at Citi; PT $60
    • HP Enterprise (HPE) Rated New Hold at Deutsche Bank; PT $22
    • JB Hunt (JBHT) Rated New Buy at Citi; PT $201
    • Knight-Swift (KNX) Rated New Neutral at Citi; PT $55
    • Kyverna Therapeutics (KYTX) Rated New Buy at Rodman & Renshaw; PT $16
    • Lincoln National (LNC) Rated New Hold at TD Cowen; PT $34
    • MetLife (MET) Rated New Buy at TD Cowen; PT $97
    • Nkarta (NKTX) Rated New Buy at Rodman & Renshaw; PT $14
    • Norfolk Southern (NSC) Rated New Buy at Citi; PT $294
    • Old Dominion (ODFL) Rated New Neutral at Citi; PT $206
    • Primerica (PRI) Rated New Buy at TD Cowen; PT $314
    • Propel Holdings (PRL CN) Rated New Buy at PI Financial; PT C$38
    • Prudential Financial (PRU) Rated New Hold at TD Cowen; PT $130
    • Reddit (RDDT) Rated New Buy at Jefferies; PT $90
    • Reinsurance Group (RGA) Rated New Hold at TD Cowen; PT $235
    • RLI (RLI) Rated New Outperform at Wolfe; PT $182
    • RXO (RXO) Rated New Buy at Citi; PT $33
    • Saia (SAIA) Rated New Buy at Citi; PT $518
    • Schneider National (SNDR) Rated New Neutral at Citi; PT $29
    • Secure Energy Services (SES CN) Rated New Buy at Eight Capital; PT C$20
    • Shift4 Payments (FOUR) Rated New Overweight at Barclays; PT $120
    • TFI International (TFII CN) Rated New Buy at Citi; PT C$217.26
    • Union Pacific (UNP) Rated New Neutral at Citi; PT $264
    • UPS (UPS) Rated New Buy at Citi; PT $162
    • Waste Connections (WCN CN) Rated New Neutral at Eight Capital; PT C$270
    • Werner Enterprises (WERN) Rated New Sell at Citi; PT $34
    • XPO Inc (XPO) Rated New Buy at Citi; PT $127

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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