Daily Game Plan

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 IMF publishes World Economic
Outlook; 10:00ET Richmond Fed Manufact. Index, Fed’s Harker speaks

HIGHLIGHTS and News:  

• Global Bonds Fall as Traders Rethink Rate Cuts
  
• HSBC Unveils Biggest Restructuring in a Decade
• US preparing $800mm aid package to finance production of Ukrainian drones
• Hezbollah takes the “full and sole responsibility” for targeting Israeli PM Benjamin Netanyahu’s house
• Putin hosts BRICS summit in Russia
  

World stocks fell amid a global debt selloff as traders priced in a slower pace of monetary policy easing in major global economies. The rout in bonds spread to Asia,
where the yield on Australian benchmark debt surged as much as 16 basis points.  Traders are paring back bets on aggressive easing given the US economy remains robust and Fed officials this week sounded a cautious tone over the pace of future rate decreases.
Investors also took some cash off the table in Japan, which holds an election on Sunday. Antony Blinken is in Israel today to meet with Benjamin Netanyahu in another attempt to reach a cease-fire deal before the US elections. 

EQUITIES:  

US equity futures are lower again as investors rethink the outlook for interest-rate cuts and braced for the next wave of earnings reports, which picks up pace today. The prospect of
bigger fiscal deficits after the upcoming US presidential election are compounding the market’s concerns. Citi warned exposure to the S&P 500 has reached levels that were historically followed by a 10% slump.    

Futures ahead of the bell: E-Mini S&P -0.35%, Nasdaq -0.4%, Russell 2000 -0.5%, DJI -0.3%. 

In pre-market trading, IRhythm (IRTC) jumps 20% after the company said it received FDA 510(k) clearance for design updates to its Zio AT device. Medpace (MEDP) drops
12% after the health care services company cut its revenue forecast for the full year. Philip Morris (PM) rises 2% after lifting its profit outlook amid strong sales of tobacco alternatives such as Zyn and IQOS. Polaris (PII) drops 7% after the automaker lowered
its full-year earnings per share and sales guidance. Zions (ZION) rises 2% as 3Q earnings per share beat estimates. GE Aerospace (GE) fell 4% despite raising its profit forecast for 2024 with sales falling short of Wall Street’s expectations last quarter as
the jet engine maker grapples with supply-chain limitations that are weighing on deliveries.  3M (MMM) climbs 4% after increasing the low end of its 2024 profit forecast and reporting 3Q earnings that topped analyst estimates. Cheesecake Factory (CAKE) gains
3% following a report that activist investor JCP Investment Management has built a stake in the restaurant chain. General Motors (GM) ticks 1% higher after signaling solid US demand for its highest-margin vehicles. Danaher (DHR) rises 2% after the life-sciences
firm reported 3Q profit and sales that topped estimates.  Verizon Communications (VZ) falls 3% after reporting third-quarter
revenue that missed analysts’ expectations, weighed down by lackluster sales of hardware such as mobile phones.

European gauges dripped lower with Europe in the midst of a downbeat earnings season. So far about 47% of MSCI Europe companies reported results below expectations
while only 27% beat, according to Bloomberg. Real estate and utilities underperform while technology was boosted by SAP’s results.  Germany’s SAP surged as much as 5.9%, to an all-time high after it delivered a beat on several key metrics in the third quarter
and boosted its guidance for the full year.  Eurofins Scientific shares drop as much as 14% after the laboratory-testing company reported third-quarter revenue that missed estimates. Stoxx 600 -0.7%, DAX -0.3%, CAC -0.7%, FTSE 100 -0.6%. Utilities -2.1%, Real
Estate -1.8%, Telecom -1.5%. Technology +0.9%.

Shares in Asia dropped, dragged by weakness in the technology and financial sectors, amid lower expectations for Federal Reserve interest-rate cuts. The MSCI Asia Pacific
Index fell 0.9%, with TSMC and Commonwealth Bank of Australia among the biggest drags. Australian and Korean benchmarks were among the biggest decliners. Japanese stocks slid as uncertainty surrounding the Oct. 27 general election weighed on local markets.
Stocks in India were also lower, led by automakers amid lackluster trading debut for Hyundai Motor Co.’s local unit. ASX 200 -1.7%, Nikkei 225 -1.4%, Kospi -1.3%, Thailand -1.25%, Sensex -1.15%, Vietnam -0.8%, Singapore -0.75%, Taiwan was ~flat. Hang Seng
Index +0.1%, Indonesia +0.2%, CSI 300 +0.6%.

FIXED INCOME: 
 

Treasuries steadied after Monday’s sharp losses as investors mulled the prospect of slower US interest-rate cuts. Fed officials including Jeffrey Schmid said they
favor more modest reductions, though Mary Daly said she sees no reason to stop easing. Treasuries outperform European rates, with Italian long-end weaker after a debt sale. The US 10-year yield is at 4.195% after trading back above 4.20% for the first time
since July. 5s30s and 2s10s spread flatter by about 2bps.  

METALS: 

Gold rose, approaching Monday’s record high, with haven demand from traders paying attention to geopolitical risks, including conflict in the Middle East and the
US election.  Rising US bond yields and weak Chinese demand have done little to slow the gold price rally as gold and silver-backed ETFs continue to see inflows. Spot gold +0.4%, Silver +1.8%, Copper +0.9%.

ENERGY:   

Oil gained — after advancing by almost 2% on Monday — as traders continued to track tensions in the Middle East.  Lingering tension in the Middle East continues to
provide support as the market awaits Israel’s response to Iran’s Oct. 1 missile attack.  China appears to be importing oil faster than required and may add surplus to strategic reserves owing to global political tensions, Reuters said. WTI +1%, Brent +0.9%,
US Nat Gas +1.3%, RBOB +1%.

CURRENCIES:   

Foreign exchange markets steadied after a session of selling almost everything against the dollar. The dollar traded near multi-month highs as investors reined in
expectations for more big US interest rate cuts ahead of the US election. Sterling traded in a narrow range: BOE Governor Andrew Bailey is due to speak alongside fellow rate-setters Megan Greene and Sarah Breeden. USDCAD is flat; money markets almost fully
price in a half-point interest rate cut by the BOC on Wednesday. The Aussie$ firmed as Australian bond yields rose across the curve. Deputy Governor Andrew Hauser remarked that the Reserve Bank of Australia’s benchmark rate won’t fall as much or as early as
those of its peers. US$ Index -0.1%, GBPUSD -0.05%, EURUSD +0.1%, USDJPY +0.05%, AUDUSD +0.4%, NZDUSD +0.3%, USDCHF -0.05%.

Spot Bitcoin -0.5%, Spot Ethereum -1.4%.

• Upgrades
• AMC Networks (AMCX) Raised to Buy at Seaport Global Securities; PT $11
• Corvus Pharmaceuticals (CRVS) Raised to Outperform at Mizuho Securities
• First Solar (FSLR) Raised to Buy at Citi; PT $254
• Fluor (FLR) Raised to Buy at Citi; PT $65
• Iamgold (IMG CN) Raised to Buy at Canaccord
• Paylocity (PCTY) Raised to Buy at Jefferies; PT $200
• Downgrades
• Canadian Solar (CSIQ) Cut to Sell at Citi; PT $11
• Coherent Corp (COHR) Cut to Neutral at Rosenblatt Securities Inc
• Deckers Outdoor (DECK) Cut to Neutral at BTIG
• Duke Energy (DUK) Cut to Sector Weight at KeyBanc
• Gatos Silver (GATO) Cut to Hold at Canaccord
• Global Payments (GPN) Cut to Market Perform at Bernstein(Earlier)
• Goeasy (GSY CN) Cut to Market Perform at BMO; PT C$202
• Lundin Gold (LUG CN) Cut to Hold at Canaccord; PT C$35
• Tecnoglass (TGLS) Cut to Market Perform at Raymond James
• Toromont Industries (TIH CN) Cut to Sector Perform at National Bank
• Initiations
• Airbnb (ABNB) Rated New Neutral at Fubon; PT $120
• Applied Industrial Tech (AIT) US Rated New Outperform at Mizuho Securities; PT $285
• AppLovin (APP) Rated New Buy at Loop Capital; PT $181
• BKV (BKV) Rated New Positive at Susquehanna; PT $24
• Braze (BRZE) Rated New Buy at Stifel; PT $37
• Cadence Design (CDNS) Rated New Outperform at Mizuho Securities
• California Resources (CRC) Rated New Overweight at Stephens; PT $73
• Contineum Therapeutics (CTNM) Rated New Outperform at Baird; PT $32
• Costco (COST) Rated New Outperform at Bernstein; PT $1,016
• Dollar General (DG) Rated New Outperform at Bernstein; PT $98
• Elemental Altus Royaltie (ELE CN) Rated New Sector Perform at National Bank; PT C$1.55
• Eli Lilly (LLY) Rated New Buy at Mirae Asset Securities; PT $1,170
• Eurasian Minerals (EMX CN) Rated New Outperform at National Bank
• Flex (FLEX) Rated New Overweight at KeyBanc; PT $41
• G. Mining Ventures (GMIN CN) Rated New Buy at Canaccord; PT C$16.50
• Hershey (HSY) Rated New Sell at Redburn; PT $165
• Home Depot (HD) Rated New Market Perform at Bernstein; PT $451
• Horizon Copper Corp (HCU CN) Rated New Sector Perform at National Bank
• Insperity (NSP) Rated New Underweight at JPMorgan; PT $90
• Klaviyo (KVYO) Rated New Buy at Stifel; PT $45
• Kura Oncology (KURA) Rated New Outperform at LifeSci Capital; PT $30
• Legacy Education (LGCY) Rated New Buy at Ladenburg Thalmann; PT $8.20
• Lowe’s (LOW) Rated New Outperform at Bernstein; PT $323
• Metalla Royalty & Streaming (MTA CN) Rated New Outperform at National Bank; PT C$6.50
• Mondelez (MDLZ) Rated New Buy at Redburn; PT $82
• Plexus (PLXS) Rated New Sector Weight at KeyBanc
• Smurfit WestRock (SW) Reinstated Neutral at Seaport Global Securities
• Synopsys (SNPS) Rated New Outperform at Mizuho Securities; PT $650
• Target (TGT) Rated New Market Perform at Bernstein; PT $168
• Vertiv Holdings (VRT) Rated New Buy at TF Securities
• Walmart (WMT) Rated New Outperform at Bernstein; PT $95
• Zeta (ZETA) Rated New Overweight at KeyBanc; PT $40

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

David Wienke