Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Durable Goods Orders, Cap Goods; 10:00ET U. of Mich. Sentiment; 11:00ET Kansas City
Fed Services Activity, Fed’s Collins speaks

HIGHLIGHTS and News:  

• Russia Provided Targeting Data for Houthi Assault on Global Shipping –
  
  WSJ
• Zelenskyy says the first North Korean troops are expected to be deployed with the Russian army to “combat zones” as soon as Oct 27-28
• Israel says it killed Hamas commander who doubled as U.N. aid worker
• Massive caravan of migrants headed towards US border in attempt to gain entry before election
• ECB published a decline in inflation expectations which strengthens the case for further easing

World stocks steadied ahead of Japan’s weekend election, with polls suggest Japan’s ruling Liberal Democratic Party may lose its majority. Inflation expectations
of consumers in the euro zone continued declining in September, according to the ECB. Prices are seen rising 2.4% over the next 12 months, down from 2.7% in August and the least since September 2021. The expectations gauge of the German IFO survey rose to
the highest since June while the business climate readings topped even the highest estimates. China’s top legislative body will hold a highly anticipated session in Beijing from November 4 to 8, as investors watch for any approval of fiscal stimulus to revive
the economy. Meanwhile, Putin said that it is Russia’s business whether or not it decides to use North Korean troops and if Ukraine wants to join NATO then Moscow can do what it wants to ensure its own security.

EQUITIES:  

US equity futures edge higher, looking to trim its first weekly drop in seven, as investors looked past a jump in borrowing costs that cooled market sentiment earlier in the week. Tesla
is lower ahead of the bell after notching its best day in more than a decade as investors cheered the firm’s stronger-than-expected profit and CEO Elon Musk’s expectations for vehicle growth next year. Capri Holdings (CPRI), the parent company of Michael Kors
and Jimmy Choo, saw shares plunge around 45% post-market after a US judge blocked its pending $8.5 billion merger with Coach owner Tapestry (TPR).    

Futures ahead of the bell: E-Mini S&P +0.3%, Nasdaq +0.4%, Russell 2000 +0.4%, DJI -0.25%.

In pre-market trading, Deckers Outdoor (DECK) shares jumped about 15% after the shoemaker raised its annual sales forecast and beat second-quarter expectations. Deckers
reported a nearly 35% jump in Hoka sales in the second quarter. Skechers U.S.A. (SKX) climbs 7.5% after the footwear company reported third-quarter sales and profit that topped expectations and boosted its projections for the full year. Boston Beer (SAM) falls
4% on light trading after the company cut its profit forecast for the full year. Capri (CPRI) sinks 46% as a federal judge blocks a planned takeover by Tapestry due to handbag-market competition concerns. Centene (CNC) gains 11% after the health insurer boosted
its revenue guidance for the full year. Coursera (COUR) plummets 20% after the online-education company cut its year revenue guidance. Management plans to cut about 10% of the company’s global workforce. Denny’s (DENN) rises 5% as Citi turned bullish on the
company, citing greater cost discipline and accelerated store closures. Newell Brands (NWL) climbs 11% after management increased its year forecast. New York Community Bancorp (NYCB) falls 6% after reporting a provision for credit losses for the 3Q  that missed
the average analyst estimate. Olin Corp. (OLN) slips 8% after the company posted a 3Q loss as Hurricane Beryl hurt results worse than anticipated.  Western Digital (WDC) gains 11% after the computer hardware firm posted 1Q profit that beat.

Truly one of the best charts I have seen in a while. TSLA relative to the consumer discretionary ETF (XLY)

European gauges are little changed with gains in miners and energy shares offsetting losses in travel and personal care. The Stoxx 600 index briefly reversed early
losses after lackluster results from companies including French Cognac maker Remy Cointreau SA and Mercedes-Benz Group AG. Remy Cointreau slashed its annual sales guidance on weak demand in the US and China where consumers continue to cut spending. Mercedes-Benz
plans to step up cost improvement measures after weaker demand in China hit the luxury-car maker’s profits. Electrolux fell ~15% after it reported operating profit for the third quarter that missed. On the positive side, Sanofi SA shares gained after the pharmaceuticals
maker saw profit rise thanks to demand for seasonal vaccines. Stoxx 600 -0.1%, DAX ~flat, CAC -0.25%, FTSE 100 -0.2%. Basic Resources +0.7%, Energy +0.5%, Banks +0.25%. Travel & Leisure -1%, Food & Bev -0.5%.

Shares in Asia were mixed,  as selling in Japan was countered by gains in China and Taiwan. The MSCI Asia Pacific Index swung in a narrow range, ending the week with
a loss of 2.4%. Japanese stocks were the biggest drags on the gauge, slumping amid speculation the nation’s ruling coalition may lose its majority in the election this weekend. Stocks rose in mainland China and Hong Kong as traders look for further stimulus
to help restart a recently stalled market rally. Solar stocks in China rebounded amid optimism over news that the US is considering a request to cut tariffs. Shenzhen-based stocks and venture capital-related shares surge after the city unveiled plans to boost
the tech industry, including the establishment of more VC funds. Hang Seng Tech +1.2%, CSI 300 +0.7%, Taiwan +0.7%, Hang Seng Index +0.5%, Philippines +0.4%, Thailand +0.2%. Indonesia -0.3%, Singapore -0.3%, Vietnam -0.4%, Nikkei 225 -0.6%, Sensex -0.8%.

FIXED INCOME: 
 

Treasury yields declined for a second day, leaving the rate on the 10-year note up about one tenth of a percentage point on the week. Curve spreads are a tad steeper
following Thursday’s sharp flattening move. 10-year is 1.4bp lower on the day near 4.20%; 2-year yield down 2.5bp at 4.055%.  US session includes durable goods orders and sentiment data and unscripted comments by Boston Fed’s Collins.

METALS: 

Gold is slightly lower, holding just below this week’s record high, as ongoing tensions in the Middle East helped limit the decline. Next week, investors in gold
will be focused on the US inflation and economic growth data for clues about the health of the economy. The recent rally has dented demand in the price-sensitive Asian physical markets with discounts rising in China and consumers in India buying less in volume
terms. Spot gold -0.4%, Silver -1.2%, Copper -0.2%.

ENERGY:   

Oil prices are slightly higher, and are on track for weekly gains, with lingering worries over the potential for a wider Middle East conflict. Crude saw some pressure
Thursday on prospects for a cease-fire between Israel and Hamas in Gaza, though a breakthrough remains elusive. Meanwhile, investors await further details on Chinese stimulus packages. China’s latest stimulus measures may lift oil demand by 100,000 b/d, boosting
prices by up to $2 a barrel by late 2025, Goldman said. India’s crude imports jumped 6% in September, the most since May. WTI +0.8%, Brent +0.7%, US Nat Gas +0.3%, RBOB +0.6%.

CURRENCIES:   

In currency markets, the dollar fluctuated after profit taking weighed on the $Index yesterday.  The yen is flat ahead of Japan’s weekend election. Japan’s ruling
coalition risks losing its majority in the lower house of parliament for the first time since 2009, which may trigger more losses in the yen. Governor Kazuo Ueda said the Bank of Japan has time to consider its next policy steps, signaling officials won’t hike
interest rates next week. USDJPY is holding above its 200dma for the last three days. The euro is little changed after Ifo data showed Germany’s business outlook improved in October. Sterling is slightly higher, with focus on next week’s budget and updated
bond sales plan. US$ Index +0.01%, GBPUSD +0.1%, EURUSD -0.02%, USDJPY -0.01%, AUDUSD +0.03%, NZDUSD -0.1%, USDCHF +0.1%.

Spot Bitcoin ~flat, Spot Ethereum +0.4%.

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
• Air Products (APD) Raised to Neutral at Redburn; PT $330
• Denny’s (DENN) Raised to Buy at Citi; PT $7.50
• Element Solutions (ESI) Raised to Outperform at Wolfe; PT $31
• Taylor Morrison (TMHC) Raised to Outperform at Wedbush; PT $85
• TC Energy (TRP CN) Raised to Overweight at Morgan Stanley; PT C$78
• Tesla (TSLA) Raised to Reduce at Phillip Secs; PT $230
• Toll Brothers (TOL) Raised to Outperform at Wedbush; PT $175
• Downgrades
• Alexandria Real Estate (ARE) Cut to Sector Perform at RBC; PT $125
• Apple (AAPL) Cut to Underweight at KeyBanc; PT $200
• Beyond Inc (BYON) Cut to Underperform at BofA; PT $6
• Boston Beer (SAM) Cut to Hold at Jefferies; PT $325
• Converge Technology (CTS CN) Cut to Sector Perform at Scotiabank; PT C$5
• Cut to Sector Perform at National Bank
• Honeywell (HON) Cut to Neutral at Baird; PT $217
• iA Financial (IAG CN) Cut to Sector Perform at National Bank; PT C$118
• J M Smucker (SJM) Cut to Hold at Stifel; PT $125
• Kraft Heinz (KHC) Cut to Hold at Stifel; PT $38
• Marinus Pharma (MRNS) Cut to Neutral at HC Wainwright; PT $2
• Cut to Hold at TD Cowen
• Newmont Corp (NEM) Cut to Sector Perform at Scotiabank; PT $55
• Cut to Neutral at CIBC; PT $55
• Plains All American (PAA) Cut to Equal-Weight at Morgan Stanley
• Plains GP (PAGP) Cut to Equal-Weight at Morgan Stanley; PT $19
• Rexford Industrial (REXR) Cut to Sector Perform at Scotiabank; PT $48
• StorageVault Canada (SVI CN) Cut to Hold at Desjardins; PT C$5.25
• T-Mobile (TMUS) Cut to Market Perform at Raymond James
• Teck Resources (TECK/B CN) Cut to Hold at Deutsche Bank; PT $50
• Western Midstream Partners (WES) Cut to Underweight at Morgan Stanley
• World Kinect Corp (WKC) Cut to Hold at Stifel; PT $32
• Initiations
• Apellis Pharma (APLS) Rated New Sector Perform at RBC; PT $25
• AtkinsRealis (ATRL CN) Reinstated Sector Outperform at Scotiabank; PT C$73
• BKV (BKV) Rated New Buy at Truist Secs; PT $24
• Geely Auto (175 HK) ZK US Rated New Outperform at CICC; PT $31.74
• Glass House Brands (BRND/U CN) Rated New Buy at PI Financial; PT $12
• Lyft (LYFT) Rated New Hold at Benchmark
• National Energy Services (NESR) Reinstated Buy at BTIG; PT $15
• PPL (PPL) Rated New Overweight at JPMorgan; PT $37
• Regency Centers (REG) Rated New Overweight at KeyBanc; PT $80
• Stantec (STN CN) Reinstated Sector Outperform at Scotiabank; PT C$129
• Uber (UBER) Rated New Hold at Benchmark
• Waldencast (WALD) Rated New Buy at Canaccord; PT $5
• WSP Global (WSP CN) Reinstated Sector Outperform at Scotiabank; PT C$279

Data sources: Bloomberg, Reuters, CQG

David Wienke