Daily Game Plan

by Contributor
on December 2, 2024

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

TODAY’S ECONOMIC DATA:   9:45ET S&P Global US Manufacturing PMI; 10:00ET Construction Spending, ISM Manufacturing,
ISM Prices Paid, ISM New Orders, ISM Employment; 3:15ET Fed’s Waller speaks; 4:30ET Fed’s Williams speaks

Highlights and News:  

  • US Tightens Curbs on China’s Access to AI Memory and Chips Tools; Stop Short of Early Proposals
  • President Joe Biden signed a sweeping pardon for his son, Hunter Biden
  • China vowed strong measures to counter any US weapons sales to Taiwan
  • In Syria, there are reports of a large influx of Israeli fighter jets escorted by drones

 

World markets edge higher after the Biden administration unveiled new restrictions on China’s access to vital components for chips and AI that fell short of earlier
proposals. The US Department of Commerce slapped additional curbs on the sale of high-bandwidth memory and chipmaking gear, including that produced by US firms at foreign facilities. It also blacklisted 140 more Chinese entities that it accused of acting on
Beijing’s behalf, though it didn’t name. The new sanctions and Entity List additions will be fully detailed later today. Manufacturing activity in China expanded for a second straight month in November, according to a private survey out today. Meanwhile,  the
IDF spokesman to the Arab media said, “Iran is sending troops to Syria; we will act according to the situation that develops.”  

 

EQUITIES:  

US equity futures posted small moves, suggesting a pause in the rally that just produced the S&P 500’s strongest month of the year and another record close. Among events in focus this
week, Fed Chair Jerome Powell participates in a moderated discussion on Wednesday. Data due Friday will offer an assessment of the US jobs market.  Meanwhile, Canada will step up border enforcement in a “visible and muscular way,” a top official said, as it
tries to prevent US tariffs. Investors will watch for economic data today on manufacturing and construction spending.

Futures ahead of the bell: E-Mini S&P -0.02%, Nasdaq +0.1%, Russell 2000 +0.2%, DJI -0.05%. 

In pre-market trading, Cloudflare (NET) rises 4% after Morgan Stanley turns bullish on the stock. Core Scientific (CORZ) drops 4% following an announcement that the
Bitcoin miner intends to offer $500 million in convertible notes via a private offering. Gap (GAP) gains 4% after JPMorgan upgraded its rating on the apparel retailer. Toast (TOST) slips 2% as Goldman Sachs stepped away from its buy rating, citing an elevated
valuation following a recent rally. Upstart Holdings (UPST) drops 5% after JPMorgan downgraded the consumer finance firm. Stellantis (STLA) falls 9% after Chief Executive Officer Carlos Tavares’s surprise departure leaves the maker of Jeep SUVs and Peugeot
cars without clear leadership.

European gauges are higher after reversing early losses as European Central Bank speakers supported hopes for further rate cuts amid worries over the French budget. 
French stocks fell as the far-right National Rally indicated in the strongest language yet that it could topple the French government as soon as this week. France’s budget drama dragged down banking stocks, with Societe Generale SA, Credit Agricole SA and
BNP Paribas SA all lower. Stellantis NV shares plunged more than 8% after CEO Carlos Tavares stepped down from the automaker following a dispute with the board. Stoxx 600 +0.5%, DAX +1.1%, CAC +0.1%, FTSE 100 +0.3%. Retail +1.6%, Personal Goods +1.4%, Basic
Resources +1.3%. Autos -0.3%, Travel & Leisure -0.1%.

Shares in Asia rose on signs of economic stabilization in China, while a rally in tech stocks mirrored similar gains in the US.  The MSCI Asia Pacific Index rose 0.9%
to its highest level since Nov. 11, with benchmark heavyweights like TSMC, Hitachi and Toyota Motor leading the advance. Chinese shares in Hong Kong and the mainland rose as new data showed better-than-expected improvement in manufacturing activity. The Caixin
manufacturing purchasing managers index rose to 51.5 last month, the highest since June and above forecasts for 50.6. Equities in Japan gained, led by banks, after Bank of Japan Governor Kazuo Ueda said interest-rate hikes are “nearing” as inflation and economic
trends develop in line with the central bank’s forecasts. Taiwanese tech supply chain companies rose after local media reports that Nvidia is looking for local suppliers for humanoid robots. Taiwan +2.1%, Philippines +2%, Topix +1.3%, CSI 300 +0.8%, Hang Seng
Index +0.6%, Sensex +0.6%, Singapore +0.3%, ASX 200 +0.1%, Kospi -0.05%, Indonesia -0.9%.

FIXED INCOME: 
 

Treasuries dipped as traders looked ahead to US data that may help shape Federal Reserve policy and assessed hawkish comments from the Bank of Japan. Treasuries remain
weaker after gapping lower at the Asia open, erasing a portion of Friday’s late rally that was aided by month-end index rebalancing. Yields are 2bp-4bp higher across a flatter curve after ending November at monthly lows, with 5-, 10- and 30-year below 200-day
average levels for first time since late October. 10-year yield is around 4.2%.

 

 

METALS: 

Gold is slightly lower after a four-session rally, pressured by a firmer dollar while investors awaited key US economic data for cues on the Federal Reserve’s monetary
policy outlook. Gold prices slipped over 3% in November to register its worst monthly performance since September 2023 as the prospect of higher tariffs under the incoming Trump administration would keep interest rates higher for longer. Fears of escalation
in Russia’s war on Ukraine continue to support gold. Spot gold -0.1%, Silver -0.6%, Copper -0.4%.

 

 

 

ENERGY:   

 

Oil prices move higher, supported by upbeat factory activity in the world’s second largest oil consumer China and as Israel resumed attacks on Lebanon despite a ceasefire
agreement, stoking tensions in the Middle East. A truce between Israel and Lebanon came into effect on Wednesday but both sides have accused each other of breaching the ceasefire. Weakness on Friday came after OPEC+ delayed until Thursday a meeting that had
been set for Sunday. WTI +1.2%, Brent +1.2%, US Nat Gas -6.2%, RBOB +1.4%.

 

 

CURRENCIES: 

In currency markets, the dollar pushed higher as the crisis swirling around the French government deepened. The dollar was further supported by Donald Trump’s comments
that the BRICS nations shouldn’t create a currency to rival the greenback. The euro fell after France’s far-right party threatened to topple the government amid a stand-off over the nation’s budget. Sterling fell as UK house prices posted their strongest rise
since March 2022. The yen slipped but recoups half of earlier losses. Bank of Japan Governor Ueda said rate hikes are “nearing” as economic trends develop in line with the central bank’s forecasts.  US$ Index +0.6%, GBPUSD -0.5%, EURUSD -0.7%, USDJPY +0.25%,
AUDUSD -0.5%, NZDUSD -0.5%, USDCHF +0.6%, USDNOK +0.5%  

 

 

 

Spot Bitcoin -2.6%, Spot Ethereum -2.8%. US ETFs investing in Bitcoin and Ether saw record monthly net inflows — $6.5 billion and $1.1 billion respectively — in November.
US Bitcoin funds now hold over 1 million tokens, about 5% of supply.

 

 

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
    • Ares Capital (ARCC) Raised to Overweight at Wells Fargo; PT $23
    • Cloudflare (NET) Raised to Overweight at Morgan Stanley; PT $130
    • Dana (DAN) Raised to Overweight at Barclays; PT $18
    • Embecta (EMBC) Raised to Equal-Weight at Morgan Stanley; PT $20
    • Emera (EMA CN) Raised to Outperform at CIBC; PT C$58
    • Gap (GAP) Raised to Overweight at JPMorgan; PT $30
    • Iamgold (IMG CN) Raised to Outperform at CIBC; PT C$10.64
    • Icon (ICLR) Raised to Buy at Nephron Research; PT $280
    • Intuitive Surgical (ISRG) Raised to Overweight at Morgan Stanley
    • Iqvia (IQV) Raised to Buy at Nephron Research; PT $250
    • Kymera (KYMR) Raised to Overweight at Wells Fargo; PT $57
    • MINISO (MNSO) ADRs Raised to Buy at DBS Bank; PT $26.20
    • NextEra Energy Partners (NEP) Raised to Overweight at Morgan Stanley
    • Novocure (NVCR) Raised to Outperform at Evercore ISI
    • Okta (OKTA) Raised to Overweight at Morgan Stanley; PT $97
    • Paycor HCM (PYCR) Raised to Buy at TD Cowen
    • Philips (PHIA NA) ADRs Raised to Hold at Jefferies; PT $26.40
    • Runway Growth Finance (RWAY) Raised to Overweight at Wells Fargo
    • Southern Copper (SCCO) Raised to Neutral at JPMorgan; PT $92.50
    • Stryker (SYK) Raised to Overweight at Morgan Stanley; PT $445
    • Tandem Diabetes (TNDM) Raised to Overweight at Morgan Stanley
    • Vnet Group (VNET) ADRs Raised to Buy at Goldman; PT $5
    • Xencor (XNCR) Raised to Overweight at Piper Sandler; PT $30
    • Zebra Tech (ZBRA) Raised to Equal-Weight at Morgan Stanley; PT $400
    • Zegna Group (ZGN) Raised to Neutral at BNPP Exane; PT $7.90
  • Downgrades
    • Alnylam (ALNY) Cut to Hold at Mirae Asset Securities; PT $236
    • Ambarella (AMBA) Cut to Sell at CFRA
    • AnaptysBio (ANAB) Cut to Neutral at BTIG
    • Applied Therapeutics (APLT) Cut to Sector Perform at RBC; PT $4
    • Autodesk (ADSK) Cut to Hold at HSBC; PT $290
    • Bausch + Lomb (BLCO CN) Bausch + Lomb Cut to Equal-Weight at Morgan Stanley
    • Blackstone Sec Lending (BXSL) Cut to Equal-Weight at Wells Fargo
    • Contango Ore (CTGO) Cut to Speculative Buy at Cantor; PT $25
    • DocuSign (DOCU) Cut to Sell at CFRA; PT $65
    • FS KKR Capital (FSK) Cut to Equal-Weight at Wells Fargo; PT $21
    • Glaukos (GKOS) Cut to Underweight at Morgan Stanley
    • HP Inc (HPQ) Cut to Hold at HSBC; PT $38
    • I-80 Gold (IAU CN) Cut to Neutral at CIBC; PT C$1.30
    • Kohl’s (KSS) Cut to Neutral at Guggenheim
    • LendingClub (LC) Cut to Neutral at JPMorgan; PT $17
    • Markel Group Inc (MKL) Cut to Hold at TD Cowen; PT $1,836
    • Noah Holdings (NOAH) ADRs Cut to Equal-Weight at Morgan Stanley; PT $13
    • Outlook Therapeutics Inc (OTLK) US Cut to Neutral at Chardan Capital Markets
    • Poseida (PSTX) Cut to Neutral at Piper Sandler; PT $10
    • Progyny (PGNY) Cut to Neutral at JPMorgan; PT $17
    • RumbleON (RMBL) Cut to Neutral at B Riley; PT $7
    • SentinelOne (S) Cut to Equal-Weight at Morgan Stanley
    • Symbotic (SYM) Cut to Hold at Craig-Hallum; PT $25
    • Tenable (TENB) Cut to Equal-Weight at Morgan Stanley; PT $47
    • Toast (TOST) Cut to Neutral at Goldman; PT $45
    • Trinity Capital (TRIN) Cut to Underweight at Wells Fargo; PT $13
    • Upstart (UPST) Cut to Underweight at JPMorgan; PT $57
  • Initiations
    • Arista Networks (ANET) Rated New Outperform at CICC; PT $450
      • Rated New Buy at Huatai Research; PT $472.35
    • Atha Energy (SASK CN) Rated New Buy at Paradigm Capital; PT C$1.75
    • BrightView (BV) Rated New Buy at BTIG; PT $22
    • Cemex (CEMEXCPO MM) ADRs Reinstated Market Perform at BBVA; PT $6.80
    • Cleveland-Cliffs (CLF) Reinstated Buy at Goldman; PT $16
    • Commercial Metals (CMC) Reinstated Buy at Goldman; PT $75
    • Corbus Pharmaceuticals (CRBP) Rated New Overweight at Piper Sandler
    • Elanco Animal Health (ELAN) Rated New Market Perform at Leerink; PT $14
    • ERO Copper (ERO CN) Rated New Buy at Goldman
    • GT Biopharma (GTBP) Rated New Buy at Roth Capital Partners; PT $11
    • Idexx Labs (IDXX) Rated New Outperform at Leerink; PT $500
    • Lavras Gold (LGC CN) Rated New Speculative Buy at Paradigm Capital
    • NGEx Minerals (NGEX CN) Rated New Outperform at CIBC; PT C$16
    • Nucor (NUE) Reinstated Buy at Goldman; PT $190
    • Primaris REIT (PMZ-U CN) Rated New Outperform at RBC; PT C$19
    • PROCEPT BioRobotics (PRCT) Rated New Overweight at Morgan Stanley
    • Progressive (PGR) Reinstated Buy at William O’Neil
    • Radius Recycling Inc (RDUS) Reinstated Neutral at Goldman; PT $22
    • Reliance (RS) Reinstated Neutral at Goldman; PT $341
    • Steel Dynamics (STLD) Reinstated Neutral at Goldman; PT $155
    • Tidewater (TDW) Rated New Buy at DNB Markets; PT $70
    • Valens Semiconductor (VLN) Rated New Buy at ThinkEquity; PT $5
    • Viking Therapeutics (VKTX) Rated New Overweight at Piper Sandler
    • Viper Energy Inc (VNOM) Reinstated Buy at Goldman; PT $70
    • Voyager Therapeutics (VYGR) Reinstated Buy at Citi; PT $12
    • Zoetis (ZTS) Rated New Outperform at Leerink; PT $215

 

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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