Daily Game Plan

by Contributor
on November 4, 2024

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

TODAY’S ECONOMIC DATA:  10:00ET Factory Orders, Durable Goods Orders, Cap Goods Order; 1:00ET 3-Year note auction

Highlights and News:  

  • US Stocks now account for 49% of the World’s Market Cap
  • Total jobs in the US increased 1.4% over the last year, the slowest growth rate since March 2021
  • Kamala will still be in charge of certifying the 2024 Election Results

 

World stocks nudge higher with a widespread re-evaluation of so-called Trump trades after polling data cast doubt on that result. In addition to the US election,
trading across financial markets this week also will be shaped by central bank decisions for the US, UK and Australia, among others. Iran is planning a counterattack on Israel involving more powerful warheads and other weapons, the Wall Street Journal reported,
citing Iranian and Arab officials briefed on the plans. On Saturday, Iran’s supreme leader, Ayatollah Ali Khamenei, said Tehran and its regional allies would deliver a “crushing response” to Israel, as well as the US.   

 

EQUITIES:  

US equity futures are mixed to slightly higher as investors are gearing up for a week of potentially huge market-moving events — the presidential election and the Federal Reserve policy
decision. With just one session to go, weekend polls showed Harris with a shock lead in Iowa and gaining ground elsewhere. Meanwhile, earnings continue to roll in, with beleaguered AI server maker Super Micro Computer (SMCI), Arm (ARM), and Qualcomm (QCOM)
among those lined up to report this week. With 70% of the S&P 500 having reported quarterly results, the benchmark index is on pace for its fifth quarter of earnings growth in a row. Nvidia Corp. rose in early trading after an announcement that the chipmaker
will replace Intel Corp. in the Dow Jones Industrial Average.

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

In pre-market trading, Nvidia (NVDA) and Sherwin-Williams (SHW) advance after S&P Dow Jones Indices said the pair would be added to the Dow Jones Industrial Average. Nvidia +1%, Sherwin-Williams
+5%. Air Transport Services Group (ATSG) soars 22% after a Reuters report said that Stonepeak Partners is in advanced talks to acquire the provider of aircraft leasing and cargo transportation services. B. Riley Financial (RILY) drops 10% after the company
announced it will need to take an additional impairment of $120 million related to its equity investment in the parent unit of Franchise Group. BioNTech (BNTX) rises 2% after reporting better-than-expected quarterly results helped by solid sales of its variant-adapted
Covid-19 vaccines. DigitalOcean (DOCN) falls 6% after the software company reported its 3Q results. Talen Energy (TLN) slides 13% as management is evaluating options after the Federal Energy Regulatory Commission rejected a nuclear power pact on Friday. Constellation
Energy (CEG) -13%, Vistra (VST) -5%, PSEG (PEG) -3%. Yum China (YUMC) climbs 6% after the restaurant chain operator reported 3Q profit that topped expectations and announced plans to step up capital returns to shareholders.

European gauges are holding gains as strength across energy stocks and deal-making chatter lifted shares. Oil majors lead gains as the price of Brent crude rose sharply
after OPEC+ delayed its output hike. Autos, consumer stocks and banks were also all higher, while the technology sector lagged. Burberry Group Plc shares rose following a report on potential bid interest for the struggling British luxury goods maker, while
EssilorLuxottica SA popped higher on renewed chatter that Meta Platforms is weighing a stake in the eyewear manufacturer. Stoxx 600 +0.2%, DAX flat, CAC +0.2%, FTSE 100 +0.7%.Energy +1%, Banks +0.7%, Autos +0.5%, Technology -0.4%, Travel -0.2%.

Shares in Asia were mostly higher, led by a rise in South Korean shares and hopes for more economic stimulus from the Chinese government. The MSCI Asia Pacific Excluding
Japan Index rose 0.6%. The Kospi outperformed in the region after South Korea’s main opposition party said it supported the government’s decision to drop a plan that would have imposed a capital gains tax on retail investors. Stocks in mainland China and Hong
Kong also rose as traders awaited details of a fiscal package to emerge from a meeting of Chinese lawmakers that’s taking place this week. Kospi +1.8%, CSI 300 +1.4%, Taiwan +0.8%, ASX 200 +0.55%, Hang Seng Index +0.3%. Indonesia -0.3%, Vietnam -0.8%, Sensex
-1.2%. Japan was closed for a holiday.

FIXED INCOME: 
 

Treasury yields retreat as traders pare so called ‘Trump trades’ in response to the latest US election polls. The yield on 10-year Treasuries dropped 10 basis points
to 4.28%, after a new poll suggested traders may be underestimating the prospect of a win for Kamala Harris. Long-end-led gains flatten 2s10s by ~5bp, 5s30s by ~2bp. Fed-dated OIS little changed, pricing in around 23bp of rate cuts for Thursday’s Fed decision
and a combined 44bp of cuts over the two remaining meetings this year.

 

METALS: 

Gold prices inched higher as investors awaited Tuesday’s US presidential election and the Federal Reserve’s interest rate decision on Thursday. UBS noted that the
election would be the key driver for gold, with a Trump win potentially accelerating prices toward $2,900 per ounce. Spot gold +0.25%, Silver +1%, Copper +0.8%.

 

 

ENERGY:   

 

Crude oil gained sharply as OPEC+ agreed to push back its December production increase by one month and Iran escalated its rhetoric against Israel. OPEC+ said they
would wait yet another month before beginning to unwind 2.2 million barrels a day in production cuts. Iran’s Islamic Revolutionary Guard Corps said Sunday the country will “certainly” launch a new attack against Israel. WTI +2.8%, Brent +2.6%, US Nat Gas -1.7%,
RBOB +3.0%.

 

 

CURRENCIES:   

In currency markets, the dollar lost ground as traders became more cautious ahead of the US presidential election and a likely Fed rate cut later in the week.  The
dollar fell versus all Group-of-10 peers after weekend US election polls indicated Vice President Harris gaining ground against former President Trump. The Mexican peso — which has suffered from Trump’s talk of tariffs — was one of the biggest gainers among
major currencies, up 1%. US$ Index -0.6%, GBPUSD +0.15%, EURUSD +0.6%, USDJPY -0.8%, AUDUSD +0.7%, NZDUSD +0.5%, USDCHF -0.8%.

 

 

Spot Bitcoin -0.3%, Spot Ethereum +0.1%.

 

 

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

  • Upgrades
    • Aecon Group (ARE CN) Raised to Buy at TD Cowen
    • Air Canada (AC CN) Raised to Buy at Stifel Canada; PT C$25.50
    • Bank of Nova Scotia (BNS CN) Raised to Buy at TD Cowen; PT C$80
    • Charter Communications (CHTR) Raised to Buy at BofA; PT $450
    • Cogeco Communications (CCA CN) Raised to Buy at Canaccord; PT C$77
    • Danaher (DHR) Raised to Outperform at Wolfe; PT $285
    • Entergy (ETR) Raised to Equal-Weight at Morgan Stanley; PT $150
    • Keysight (KEYS) Raised to Overweight at Barclays; PT $180
    • M/I Homes (MHO) Raised to Outperform at Wedbush; PT $185
    • MDA Space (MDA CN) Raised to Outperform at BMO; PT C$28
    • Peloton (PTON) Raised to Buy at BofA; PT $9
    • Roblox (RBLX) Raised to Overweight at Morgan Stanley; PT $65
    • StoneCo (STNE) Raised to Buy at XP Investimentos; PT $15
    • USCB Financial (USCB) Raised to Overweight at Piper Sandler; PT $20
    • Vertex Inc (VERX) Raised to Buy at Jefferies; PT $50
    • Watts Water (WTS) Raised to Buy at Northcoast; PT $225
  • Downgrades
    • Booz Allen (BAH) Cut to Hold at Jefferies; PT $190
    • Cactus (WHD) Cut to Equal-Weight at Barclays; PT $61
    • Customers Bancorp (CUBI) Cut to Market Perform at KBW; PT $52
    • Essa Pharma (EPIX) Cut to Neutral at Piper Sandler
      • Cut to Market Perform at Oppenheimer
      • Cut to Hold at Jefferies; PT $1.70
    • Fiverr (FVRR) Cut to Neutral at BTIG
    • Janus Intl (JBI) Cut to Hold at Jefferies; PT $7.50
    • Matinas BioPharma (MTNB) Cut to Neutral at Alliance Global Partners
    • NNN REIT Inc (NNN) Cut to Underperform at BNPP Exane; PT $44
  • Initiations
    • Ambipar Emergency Response (AMBI) Rated New Outperform at Bradesco BBI
    • Collective Mining (CNL CN) Rated New Sector Outperform at Scotiabank
    • Cummins (CMI) Rated New Outperform at Haitong Intl; PT $406.60
    • EQT Corp (EQT) Rated New Hold at Baptista Research; PT $40.10
    • Everus Construction Group (ECG) Rated New Neutral at DA Davidson
    • Instil Bio (TIL) Rated New Market Perform at JMP
    • Kaspi.kz (KSPI KZ) ADRs Rated New Buy at Citi; PT $140
    • KinderCare Learning (KLC) Rated New Overweight at Barclays; PT $38
      • Rated New Buy at Goldman; PT $41
      • Rated New Neutral at Baird; PT $30
      • Rated New Overweight at JPMorgan; PT $31
      • Rated New Equal-Weight at Morgan Stanley
      • Rated New Outperform at BMO; PT $34
    • Nektar (NKTR) Reinstated Overweight at Piper Sandler; PT $7
    • Rollins (ROL) Rated New Equal-Weight at Barclays; PT $50
    • Summit Therapeutics (SMMT) Rated New Market Outperform at JMP; PT $32
    • Tencent Music (TME) ADRs Rated New Outperform at Bernstein; PT $14
    • Trip.com (TCOM) ADRs Rated New Outperform at Bernstein; PT $85
    • Zura Bio (ZURA) Rated New Outperform at Leerink; PT $15

 

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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