Daily Game Plan

by Contributor
on October 23, 2024

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

TODAY’S ECONOMIC DATA:  ET 7:00 a.m: US MBA Mortgage Applications,9:00 a.m: Fed’s Bowman speaks,9:45 a.m: Bank of
Canada Rate Decision, 10:00 a.m: US September Existing Home Sales, ECB’s Lagarde speaks,10:30 a.m.: US EIA Crude Oil Inventories, 12:00 p.m.: Fed’s Barkin speaks, 1:00 p.m: US to sell $13 billion 20-year bonds, 2:00 p.m.: Fed releases Beige Book

HIGHLIGHTS and News:  

  • Boeing CEO Says Woes Will Take Time to Fix as Losses Pile Up
  • American Airlines. agreed to a $50 million civil penalty to resolve claims by the Biden administration that
    the carrier violated US rules protecting airline passengers with disabilities.

 

 

Global stocks dipped on a busy earnings day, with major companies like Tesla, Boeing, and Coca-Cola preparing to report. Bonds also fell as expectations for less
aggressive Federal Reserve interest-rate cuts continued to impact the markets. Bank of America CEO Brian Moynihan advised Fed officials to proceed cautiously with rate reductions, predicting “no landing” for the US economy. Blackstone CEO Steve Schwarzman
expressed that he does not foresee a recession, regardless of the election outcome. In premarket trading, McDonald’s shares dropped after an E. coli outbreak linked to its Quarter Pounders resulted in one death and several illnesses, primarily in Colorado
and Nebraska, with the company indicating that slivered onions might be the cause. Attention is also on chipmakers, particularly after Taiwan Semiconductor alerted the US to a potential rule violation and Qualcomm faced the threat of losing its chip design
license from Arm Holdings.

 

 

EQUITIES:  

US stock futures were lower, indicating that the S&P 500 may retreat for a third consecutive day as investors prepare for a wave of corporate earnings reports, including those from Tesla
and Boeing. Alto Neuroscience plummeted 62% after its ALTO-100 treatment failed to meet primary endpoints in a Phase 2b study, while Chinese solar shares surged on news of potential tariff reductions from the US Commerce Department. Enphase Energy’s shares
fell 15% due to a disappointing revenue forecast, and McDonald’s dropped 7.1% following an E. coli outbreak linked to its Quarter Pounders. Qualcomm shares declined 4.7% after Arm Holdings canceled a licensing agreement, while Snap rose 2.6% after JMP Securities
upgraded its rating. Starbucks saw a 5% drop after withdrawing its 2025 guidance amid ongoing sales declines, whereas Texas Instruments gained 3.4% despite a weak forecast. Boeing early losses to trade flat early Wednesday, after the troubled aerospace giant’s
third-quarter earnings showed better-than-expected revenue despite the impact of a strike by machinists. The company had a net loss of $6.17 billion, for the quarter, or $9.97 a share, wider than the loss of $1.64 billion, or $2.70 a share, posted in the year-earlier
period.

Futures ahead of the bell: E-Mini S&P -0.24%, Nasdaq -0.34%, Russell 2000 -0.42%, DJI -0.46%.

European stocks experienced a decline for the third consecutive session as investors focused on a busy week of corporate earnings and the implications for Federal Reserve
interest-rate cuts. The Stoxx Europe 600 Index fell with L’Oreal SA suffering a drop due to disappointing sales driven by weakening consumer demand in China. While the auto and utility sectors showed resilience, mining stocks lagged behind. Deutsche Bank AG’s
shares also fell following higher-than-expected provisions, whereas Heineken NV saw gains after reaffirming its guidance despite disappointing beer volumes. The benchmark index has struggled to gain momentum after rebounding from a summer selloff, amid concerns
that the Fed may reduce rates more slowly than anticipated, leading traders to lower expectations for rate cuts through May. As the third-quarter earnings season unfolds, results have been mixed, with about 36% of MSCI Europe companies surpassing estimates
while 40% missed them, reflecting the uncertain economic landscape.DAX -0.08%, FTSE -0.43%, Stoxx 600 -0.17%, CAC 40 -0.56%.

Asian stocks were lower and are poised to reach their lowest levels in a month, primarily influenced by weakness in technology giant TSMC and a strengthening dollar,
despite a rally in Hong Kong shares. The MSCI Asia Pacific Index fell by 0.4%, with TSMC’s decline overshadowing gains from companies like Meituan and Toyota. Investor sentiment remains cautious due to disappointing news from key US companies and concerns
over the Federal Reserve’s slower rate-cutting pace. While stocks in mainland China rose, Taiwan’s Taiex declined alongside TSMC, and Japanese equities fluctuated amid election uncertainties. Key sectors to watch include Chinese solar stocks, which surged
on tariff reduction rumors, and South Korean chip stocks benefiting from legislative discussions aimed at supporting the industry. Topix -0.55%, Nikkei -0.8%, China’s CSI 300 +0.4%; Hang Seng +1.27%; Kospi +1.13%; ASX 200 +0.13%.

FIXED INCOME: 
 

Treasuries are slightly lower across the curve, underperforming German bunds, where 2-year yields have risen by 7 basis points. The Euro-zone’s front-end yields are
declining as swaps indicate a 45% chance of a 50 basis point rate cut at the European Central Bank’s final meeting of the year on December 12. The Bank of Canada is expected to announce a 50 basis point rate cut to 3.75% at 9:45 AM ET, with swaps pricing in
approximately 44 basis points of cuts, suggesting an 88% likelihood of this move. US yields have decreased by 1 to 2 basis points across maturities, with the 10-year yield around 4.22%, trailing bunds by about 2.5 basis points. Treasury auctions will resume
with a $13 billion sale of 20-year bonds later today, while the economic calendar includes September existing home sales and the Fed’s Beige Book release

 

METALS: 

Gold reached a new record high due to heightened demand for safe-haven assets amid geopolitical tensions related to the upcoming US election and ongoing conflicts
in the Middle East. On Wednesday, gold prices climbed to $2,758.49, exceeding Tuesday’s peak by over $9 before settling slightly lower. The escalating risks associated with the tight US presidential race and potential broader conflicts involving Israel and
Iran have intensified bullish sentiment, also boosting silver, which is nearing $35 an ounce for the first time since 2012.Gold +0.1%, Silver -0.8%

 

 

ENERGY:   

 

Oil prices declined as traders reacted to a modest increase in US crude inventories and ongoing geopolitical tensions in the Middle East. Brent crude fell towards
$75 a barrel after a two-day gain of over 4%, while West Texas Intermediate hovered around $71. The American Petroleum Institute reported a rise of 1.6 million barrels in stockpiles last week, with official data expected later. In the Middle East, US Secretary
of State Antony Blinken and Israeli Prime Minister Benjamin Netanyahu discussed potential pathways to cease-fire following the killing of Hamas leader Yahya Sinwar, but uncertainty remains regarding Israel’s response to Iran after a recent missile strike.
Analysts at Goldman Sachs noted that while concerns about Iranian oil supply have eased, the market is now shifting focus to potential oversupply risks in 2025, suggesting that downside price pressures may outweigh geopolitical risks .WTI -1.9%, Brent -1.8%,
Nat Gas -2.0%.

 

 

 

CURRENCIES:   

In currency markets, the US dollar strengthened to its highest level since July, buoyed by expectations of less aggressive Federal Reserve interest-rate cuts and
positioning ahead of the upcoming US elections The USDJPY pair increased by up to 1%, driven by concerns over potential instability in Japan’s ruling coalition ahead of this weekend’s parliamentary elections. Meanwhile, USDCAD slightly rose , as the Canadian
dollar faces its worst month in over a year amid speculation regarding the Bank of Canada’s policy decisions. The euro fell for the third consecutive day with market expectations pricing in a 40% chance of a 50 basis point rate cut by the European Central
Bank in December. US$ Index +0.33%, GBPUSD -0.1%, EURUSD -0.2%, USDJPY +1.24%, AUDUSD -0.6%, NZDUSD -0.46%, USDCHF +0.2%.

 

 

 

Spot Bitcoin -1.7%, Spot Ethereum -2.1%.

 

 

 

 

 

 

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

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

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