Daily Game Plan

by Contributor
on October 15, 2024

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

TODAY’S ECONOMIC DATA: 

HIGHLIGHTS and News:  

  • Walgreens Plans to Shutter 14% of US Stores Over Three Years
  • Yankees win 5-2 over the Guardians. Guardians and Yankees are meeting in MLB playoffs for 7th time, more than any 2 teams in AL history

 

 

Global stocks were mixed, with U.S. equity futures little changed ahead of the market opening. Bank of America reported stronger-than-expected earnings, driven by
a 12% increase in trading revenue to $4.93 billion for the third quarter. Meanwhile, U.S. crude oil prices fell nearly $4 to below $70 per barrel due to a weaker demand outlook from China and reports suggesting Israel may avoid targeting Iranian oil facilities.
The Biden administration is contemplating capping sales of advanced AI chips from Nvidia and other U.S. firms to certain countries, particularly in the Persian Gulf, although these discussions are still in early stages. Additionally, Boeing plans to raise
up to $25 billion to bolster its balance sheet amid ongoing production challenges from a prolonged strike.

 

 

EQUITIES:  

 

U.S. equity futures remained steady after the S&P 500 reached its 46th record high of 2024, with investors gearing up for major bank earnings. The S&P 500 and Nasdaq
100 futures showed little change, while Bank of America shares edged up in premarket trading after announcing increased net interest income and better-than-expected trading revenue. Energy shares fell as oil prices dropped below $75 a barrel following reports
that Israel would refrain from attacking Iranian oil facilities. Nvidia and Advanced Micro Devices were also in focus after discussions emerged about capping sales of advanced AI chips to certain countries. Goldman Sachs shares were +2% premarket after 3q
revenue tops estimate. Among the notable movers, Etsy shares fell 5% following a downgrade by Goldman Sachs to sell, while Trump Media & Technology surged 12%, extending its rally for a fourth consecutive session. Vistra Corp rose 2.4%, MicroStrategy gained
2%, and Philips climbed 1.4% after receiving a positive rating upgrade. Diamondback Energy and Halliburton saw declines of 3.1% and 3.3%, respectively, amid broader market concerns regarding U.S.-listed Chinese stocks, which continued to slide due to worries
about insufficient fiscal stimulus from China. SCHW +8% as Schwab 3Q Adjusted EPS Beats Estimates.

 

Futures ahead of the bell: E-Mini S&P +0.02%, Nasdaq -0.05%, Russell 2000 -0.1%, DJI +0.01%.

 

European stocks were mostly higher, nearing record levels as they followed a tech-driven rally on Wall Street, with the Stoxx Europe 600 Index rising just shy of its
September peak. Technology shares gained momentum, particularly Ericsson AB, which surged 9.8% after exceeding earnings expectations in the third quarter, benefiting from a lucrative deal with AT&T. However, energy stocks faced declines as oil prices fell
amid easing concerns about potential Israeli attacks on Iranian facilities. Market sentiment appeared optimistic, with investors focusing on China’s stimulus plans and macroeconomic growth prospects for 2025, despite warnings of complacency given existing
geopolitical risks. As major European companies prepare to report earnings this week, analysts noted a cooling euro-area economy and anticipated interest rate cuts from the European Central Bank due to Germany’s mild recession and overall economic stagnation.
DAX +0.3%, FTSE -0.4%, Stoxx 600 -0.04%, CAC 40 -0.7%.

Asian stocks experienced a reversal in gains, with the MSCI Asia Pacific Index declining by 0.4%, primarily due to significant losses in Chinese and Hong Kong shares.
Key technology stocks such as Meituan, Tencent, and Alibaba led the downturn, raising concerns about the sustainability of a market that had seen a vigorous rally in late September. The energy sector also struggled as oil prices fell following reports that
Israel might avoid targeting Iran’s crude infrastructure, easing fears of supply disruptions. Investor sentiment was further dampened by a slowdown in China’s export growth, which has been one of the few bright spots in its economy, leading to speculation
about the effectiveness of government stimulus measures. Despite these challenges, Japanese stocks surged after a public holiday, and markets in South Korea, Taiwan, and Australia ended higher. Notable movements included declines for shares linked to China’s
e-commerce firms and Australian digital payment companies amid regulatory changes. Overall, while some markets showed resilience, the broader outlook remains uncertain as investors weigh economic conditions and potential government interventions in China.
Topix +0.6%, Nikkei +0.7%, China’s CSI 300 -2.6%; Hang Seng -3.6%; Kospi +0.3%; ASX 200 -0.3%.

FIXED INCOME: 
 

Treasury yields rose by 1 to 4 basis points across maturities, supported by a drop in oil prices due to reports that Israel may avoid targeting Iranian crude infrastructure,
easing supply disruption concerns. The 10-year yield is around 4.07%, with a flatter yield curve as spreads tighten. Additionally, bank bond issuance is expected to ramp up, with JPMorgan and Wells Fargo among potential issuers in a market anticipated to see
about $30 billion in high-grade bond sales this week.

 

METALS: 

Gold prices were little changed as traders considered comments from Federal Reserve officials regarding interest rate cuts. Fed Governor Christopher Waller indicated that recent economic
data allows for a less urgent approach to future rate reductions, contributing to a decline in Treasury yields. Gold +0.07%, Silver -0.2%

 

ENERGY:   

 

Oil prices tumbled after reports indicated that Israel may refrain from targeting Iran’s crude infrastructure, alleviating fears of significant supply disruptions
and shifting traders’ focus to the International Energy Agency’s forecast of an oil glut early next year. West Texas Intermediate fell close to $70 a barrel, while Brent futures dropped below $74. Israeli Prime Minister Benjamin Netanyahu reportedly told the
Biden administration that any strikes would focus on military targets rather than oil or nuclear facilities, following U.S. warnings. The IEA also warned of a substantial surplus in the oil market by early 2025, citing reduced demand growth forecasts and record
spare capacity within OPEC+. WTI -4.3%, Brent -4.1%, Nat Gas -1.2%.

 

CURRENCIES:   

In currency markets, the U.S. dollar pared earlier gains, after reaching its highest level in over two months against major currencies, driven by expectations that
the Federal Reserve will implement modest rate cuts soon. Meanwhile, the euro hit its lowest level since August ahead of the European Central Bank’s upcoming policy meeting, and the British pound weakened after labor market data indicated slow wage growth.
The Japanese yen hovered near 150 per dollar amid a dovish shift from the Bank of Japan, while oil-exporting currencies declined following a drop in crude prices due to eased supply disruption fears related to Israel and Iran.US$ Index -0.17%, GBPUSD +0.2%,
EURUSD -0.05%, USDJPY -0.3%, AUDUSD -0.2%, NZDUSD -0.05%, USDCHF -0.05%.

 

 

 

Spot Bitcoin -0.8%, Spot Ethereum -1.4%   

 

 

 

 

  • Upgrades
    • Advance
      Auto       (AAP) Raised to Outperform at Wedbush; PT $55
    • Ardagh
      Metal Packaging       (AMBP) Raised to Overweight at Wells Fargo
    • Bausch
      + Lomb       (BLCO CN) Bausch + Lomb Raised to Outperform at Evercore ISI; PT $25
    • BOK
      Financial       (BOKF) Raised to Buy at DA Davidson; PT $124
    • CGI
      Inc       (GIB/A CN) Raised to Outperform at CIBC; PT C$178
    • Con
      Edison       (ED) Raised to Buy at Citi; PT $116
    • D.R.
      Horton       (DHI) Raised to Neutral at Wedbush; PT $165
    • Doximity (DOCS)
      Raised to Overweight at Barclays; PT $52
    • Duke
      Energy       (DUK) Raised to Outperform at Mizuho Securities; PT $121
    • Ferguson (FERG)
      Raised to Neutral at On Field; PT $227
    • Meritage
      Homes       (MTH) Raised to Neutral at Wedbush; PT $195
    • Petrobras (PETR4
      BZ) ADRs Raised to Outperform at Itau BBA; PT $17.50
    • Revvity
      Inc       (RVTY) Raised to Overweight at Barclays; PT $140
    • SM
      Energy       (SM) Raised to Buy at TD Cowen
    • Wells
      Fargo       (WFC) Raised to Accumulate at Phillip Secs; PT $65
  • Downgrades
    • AIG (AIG)
      Cut to Market Perform at BMO; PT $84
    • Airbnb (ABNB)
      Cut to Underperform at Evercore ISI; PT $125.34
    • American
      Water       (AWK) Cut to Neutral at Mizuho Securities; PT $140
    • Appfolio (APPF)
      Cut to Underperform at KBW; PT $193
    • Arcadium
      Lithium       (ALTM) Cut to Neutral at Macquarie; PT $5.85
    • Boeing (BA)
      Cut to Hold at DZ Bank; PT $152
    • Ciena (CIEN)
      Cut to Inline at Evercore ISI
    • CMS
      Energy       (CMS) Cut to Neutral at Mizuho Securities; PT $72
    • CommVault (CVLT)
      Cut to Neutral at Guggenheim
    • Comstock
      Resources       (CRK) Cut to Sell at SWS; PT $9
    • Enphase
      Energy       (ENPH) Cut to Sector Perform at RBC; PT $100
    • Etsy (ETSY)
      Cut to Sell at Goldman; PT $45
    • ITT
      Inc       (ITT) Cut to Hold at CFRA; PT $150
    • Lennox (LII)
      Cut to Sector Weight at KeyBanc
    • Longboard
      Pharmaceuticals       (LBPH) Cut to Hold at Truist Secs; PT $60
      • Cut
        to         Neutral at Baird; PT $60
    • Magnolia
      Oil & Gas       (MGY) Cut to Hold at SWS; PT $30
    • Mobileye (MBLY)
      Cut to Sector Perform at RBC; PT $11
    • Noble
      Corp.       (NE) Cut to Hold at Benchmark
    • Prosperity
      Banc       (PB) Cut to Neutral at DA Davidson; PT $78
    • Saputo (SAP
      CN) Cut to Market Perform at BMO; PT C$30
    • Transocean (RIG)
      Cut to Hold at Benchmark
    • Valaris (VAL)
      Cut to Hold at Benchmark
    • VerticalScope (FORA
      CN) Cut to Neutral at CIBC; PT C$9
  • Initiations

 

 

 

Colors within the report:
Green is always the 200 period (day, week).
Red is always 21,
Blue = 50,
Brown =
100 *Stars have added importance 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

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