Daily Game Plan

by Contributor
on December 12, 2024

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

TODAY’S ECONOMIC DATA:  8:30ET PPI Final Demand, Initial Jobless Claims, 8:45ET ECB’s Lagarde speaks; 12:00ET Household
Change in Net Worth; 1:00ET 30-Year Auction

ECB CUTS DEPOSIT FACILITY RATE BY 25BPS TO 3.00%; EST. 3.00%. ECB: MOST MEASURES SHOW INFLATION TO SETTLE AT 2% SUSTAINABLY

Highlights and News:  

  • CHINA VOWS TO STABILIZE PROPERTY SECTOR, STOCK MARKET
  • Biden Commutes Sentences of Nearly 1,500 People; largest in history
  • Israelis and Palestinians are signaling new efforts to forge a ceasefire deal
  • Trump Invites China’s Xi to January Inauguration
  • Bill Belichick named University of North Carolina’s head coach

 

Global stocks rose ahead of the European Central Bank policy decision, which is expected to lower rates by a quarter-point, following on from the Swiss National Bank’s
surprising 50 basis-point reduction earlier in the day. Prior to the Swiss rate cut, Canada lowered its policy rates by a half point, Australia hinted it’s moving toward cuts and China vowed to deliver rate cuts. China signaled further stimulus measures including
raising its budget deficit ratio in 2025 at a key economic meeting.  Top officials led by President Xi Jinping also vowed to deliver rate cuts and lower the reserve requirement for banks.

 

EQUITIES:  

US equity futures edge lower as Treasury yields rose ahead of the Federal Reserve’s policy meeting next week. Traders are now waiting for US producer inflation numbers due this morning
for further clues on prices and the health of the economy.  Among individual stock movers, software firm Adobe dropped more than 10% in US premarket trading after a weaker-than-expected full-year forecast, while Uber Technologies was lifted overnight by upbeat
management comments at an industry conference.

Futures ahead of the bell: E-Mini S&P -0.2%, Nasdaq -0.4%, Russell 2000 -0.4%, DJI -0.15%.

In pre-market trading, Adobe (ADBE) falls 11% after the Photoshop maker’s downbeat full-year revenue forecast led to concerns that returns from AI investments into
its software applications might take longer than expected.  Gambling.com Group (GAMB) climbs 5% as the company is in advanced negotiations to buy OddsJam, an online service that helps sports bettors find the best odds.  Keros Therapeutics (KROS) plunges 71%
after halting higher dosing in a part of the drug developer’s trial of an experimental therapy for patients with a lung disease, citing side effects. Kroger (KR), whose planned merger with fellow grocery giant Albertsons was scuttled this week, climbs 2% after
announcing a $7.5 billion share buyback program. Lovesac (LOVE) tumbles 19% after the furniture retailer cut its net sales guidance for the full year. Uber (UBER) climbs 3% as TD Cowen reacts positively toward the ride-hailing company’s direction following
a meeting with CFO Prashanth Mahendra-Rajah.

Shares of Tesla have risen for six consecutive sessions, gaining 21% over the period. They have gotten a boost — jumping 69% — since Donald Trump was elected.

European gauges are steady as traders looked ahead to the European Central Bank’s monetary policy announcement. Traders will focus on what central bank President Christine
Lagarde signals about the outlook for growth and inflation in the months to come, given the political instability in France and Germany right now. Autos and food stocks led the gains, with retail dropped the most as Inditex SA extended losses after a downgrade. 
Luxury goods firm Brunello Cucinelli SpA rallied after an increased revenue growth forecast. Stoxx 600 -0.1%, DAX ~flat, CAC ~flat, FTSE 100 +0.1%. Autos +0.6%, Food & Bev +0.5%, Banks +0.4%, Travel +0.4%. Retail -1.2%, Basic Resources -0.6%.

Shares in Asia rose, driven by gains in tech shares after benign US inflation backed the case for a Federal Reserve rate cut next week. The MSCI Asia Pacific Index
gained 0.8%, the most in a week. Benchmarks in Hong Kong rose more than 1% on bets for stronger stimulus from China. Japanese equities closed higher for a fourth consecutive day, supported by the yen’s recent weakness. Shares in South Korea jumped on expectations
that President Yoon Suk Yeol may get impeached in a parliament vote this weekend. Kospi +1.6%, Hang Seng Tech +1.5%, Nikkei 225 +1.2%, Hang Seng Index +1.2%, CSI 300 +1%, Taiwan +0.6%, Singapore +0.4%, Vietnam -0.1%, ASX 200 -0.3%, Sensex -0.3%, Indonesia
-0.9%.

FIXED INCOME: 
 

Treasury yields are near session highs in early US dealing as concession continues to build for $22 billion 30-year bond auction. ECB rate decision at 8:15ET is expected
to be a quarter-point rate cut, following a surprise 50bp cut by the SNB. US yields are 2.5bp to 3.5bp higher across maturities, with the 10-year around 4.3%. The curve is slightly steeper. This week’s Treasury auction cycle concludes with the 30-year bond
reopening; demand was strong for Wednesday’s 10-year note sale , which stopped through by 1.7bp.

 

 

METALS: 

Gold reversed early gains, snapping a four-day advance as investors looked beyond the prospect of a US interest-rate cut next week to a more uncertain outlook for
the coming year. Gold is on track for its biggest annual gain since 1979, with support from Fed easing, haven demand, and sustained buying by the world’s central banks. Traders were also monitoring a dislocation between the New York and London markets for
gold and silver, with premiums for futures contracts jumping on Wednesday. The possibility of precious metals being subject to US import tariffs under the Trump administration has triggered the divergence, analysts said. Spot gold -0.4%, Silver -0.5%, Copper
+0.25%.

 

 

 

ENERGY:   

 

Oil inched higher, extending a three-day gain fueled by the possibility of tighter curbs on Russian and Iranian flows. Global oil markets face a glut next year despite
last week’s decision by OPEC+ to delay supply increases, the International Energy Agency said. Even if OPEC+ cancels next year’s hikes entirely, there’ll still be an overhang of 950,000 barrels a day, IEA said.  The prediction runs counter to the outlook from
the US Energy Information Administration, which this week said it broadly sees markets in balance next year.  WTI +0.3%, Brent +0.15%, US Nat Gas -2%, RBOB +0.25%.

 

 

CURRENCIES: 

In currency markets, the euro adds a few pips ahead of the European Central Bank decision where a 25-bp interest rate cut is widely expected. The Swiss National Bank
opted for a 50-bp cut, its largest reduction in nearly 10 years, sending the franc lower. President Martin Schlegel said he’d use negative rates again if needed to stem currency speculation. The dollar paired early losses against the Japanese yen after Reuters
reported that BOJ policy makers were inclined to forgo a hike on Dec. 19 and wait for more data on wages at the start of next year. The Australian dollar surged on unexpectedly strong employment data, prompting traders to pare pricing of a February rate cut
by the Reserve Bank. US$ Index -0.05%, GBPUSD -0.15%, EURUSD +0.05%, USDJPY -0.2%, AUDUSD +0.45%, NZDUSD +0.2%, USDCHF +0.4%, USDBRL -1% 

 

 

 

Spot Bitcoin -0.7%, Spot Ethereum +3.3%.

 

 

 

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
    • AMD (AMD) Raised to Buy at Punto Casa de Bolsa; PT $170.22
    • Ares Management (ARES) Raised to Overweight at Wells Fargo; PT $212
    • Boeing (BA) Raised to Neutral at Northcoast
    • Brinker (EAT) Raised to Equal-Weight at Wells Fargo; PT $130
    • Brookfield Renewable Partners (BEP-U CN) Raised to Overweight at JPMorgan
    • Brookfield Renewable (BEPC CN) Raised to Overweight at JPMorgan
    • Celanese (CE) Raised to Buy at Fermium Research; PT $80
    • CenterPoint Energy (CNP) Raised to Sector Outperform at Scotiabank
    • Charter Communications (CHTR) Raised to Overweight at KeyBanc; PT $500
    • Coca-Cola (KO) Raised to Buy at Deutsche Bank; PT $70
    • Comcast (CMCSA) Raised to Buy at Seaport Global Securities
    • Con Edison (ED) Raised to Sector Perform at Scotiabank; PT $100
    • Constellation Energy (CEG) Raised to Buy at BofA; PT $269
    • Emera (EMA CN) Raised to Neutral at JPMorgan; PT C$56
    • Equifax (EFX) Raised to Overweight at Morgan Stanley; PT $320
    • FirstEnergy (FE) Raised to Sector Outperform at Scotiabank; PT $50
    • Flowserve (FLS) Raised to Neutral at Goldman; PT $69
    • Hercules Capital (HTGC) Raised to Outperform at KBW; PT $21.50
    • Keurig Dr Pepper (KDP) Raised to Buy at Deutsche Bank; PT $39
    • Marsh McLennan (MMC) Raised to Outperform at RBC; PT $250
    • MSCI (MSCI) Raised to Outperform at Wolfe; PT $700
    • New Jersey Resources (NJR) Raised to Overweight at JPMorgan; PT $54
    • Nexa (NEXA) Raised to Equal-Weight at Morgan Stanley
    • Parker-Hannifin (PH) Raised to Outperform at Wolfe; PT $786
    • Parsons (PSN) Raised to Buy at Goldman; PT $111
    • Paycor HCM (PYCR) Raised to Outperform at BMO; PT $24
    • PepsiCo (PEP) Raised to Buy at Deutsche Bank; PT $184
    • Rockwell Automation (ROK) Raised to Buy at Jefferies; PT $350
    • Southern Copper (SCCO) Raised to Equal-Weight at Morgan Stanley
    • Supervielle (SUPV AR) ADRs Raised to Neutral at JPMorgan; PT $15
    • TD Bank (TD CN) Raised to Buy at Jefferies; PT C$90
    • Vontier Corp (VNT) Raised to Outperform at Wolfe; PT $48
    • Xcel Energy (XEL) Raised to Overweight at JPMorgan; PT $80
  • Downgrades
    • Adobe (ADBE) Cut to Hold at TD Cowen; PT $550
    • Alliant Energy (LNT) Cut to Sector Perform at Scotiabank; PT $67
    • Altus Power (AMPS) Cut to Underweight at JPMorgan
    • American Electric Power (AEP) Cut to Sector Perform at Scotiabank
      • Cut to Neutral at JPMorgan; PT $102
    • Blackstone (BX) Cut to Equal-Weight at Wells Fargo; PT $195
    • Blue Owl Capital Corp (OBDC) Cut to Underperform at KBW; PT $14
    • CACI (CACI) Cut to Sell at Goldman; PT $373
    • Carisma Therapeutics Inc (CARM) Cut to Neutral at Baird; PT $1
    • Commercial Metals (CMC) Cut to Sell at UBS; PT $56
    • DHT Holdings (DHT) Cut to Hold at Kepler Cheuvreux; PT $9.70
    • Equifax (EFX) Cut to Peerperform at Wolfe
    • Eversource (ES) Cut to Sector Underperform at Scotiabank; PT $56
    • Frontline PLC (FRO) Cut to Hold at Kepler Cheuvreux; PT $15.83
    • General Dynamics (GD) Cut to Hold at Jefferies; PT $300
      • Cut to Sell at Goldman; PT $245
    • Hershey (HSY) Cut to Underweight at Wells Fargo; PT $160
    • Kenvue (KVUE) Cut to Hold at Deutsche Bank; PT $24
    • Lava Therapeutics (LVTX) Cut to Market Perform at Leerink; PT $2
    • Leidos (LDOS) Cut to Neutral at Goldman; PT $153
    • Middleby (MIDD) Cut to Hold at Jefferies; PT $160
    • Mondelez (MDLZ) Cut to Hold at Deutsche Bank; PT $67
    • Nucor (NUE) Cut to Neutral at UBS; PT $156
    • Otis Worldwide (OTIS) Cut to Underperform at Wolfe
    • Raymond James (RJF) Cut to Equal-Weight at Wells Fargo; PT $169
    • Steel Dynamics (STLD) Cut to Neutral at UBS; PT $149
    • T-Mobile (TMUS) Cut to Sector Weight at KeyBanc
    • TPI Composites (TPIC) Cut to Neutral at JPMorgan
    • Vale (VALE3 BZ) ADRs Cut to Equal-Weight at Morgan Stanley
    • Xylem (XYL) Cut to Peerperform at Wolfe
  • Initiations
    • 5N Plus (VNP CN) Rated New Buy at PI Financial; PT C$10
    • Agree Realty (ADC) Rated New Outperform at Evercore ISI; PT $82
    • Autodesk (ADSK) Rated New Outperform at Macquarie; PT $380
    • Cargo Therapeutics (CRGX) Rated New Buy at Clear Street; PT $28
    • Celsius Holdings (CELH) Rated New Hold at Deutsche Bank; PT $32
      • Rated New Overweight at JPMorgan; PT $37
    • CenterPoint Energy (CNP) Rated New Buy at Ladenburg Thalmann
    • Century Therapeutics (IPSC) Rated New Buy at Clear Street; PT $9
    • Couchbase (BASE) Rated New Buy at Truist Secs; PT $21
    • Cullinan Therapeutics (CGEM) Rated New Buy at Clear Street; PT $30
    • Defi Technologies Inc (DEFI CN) Rated New Buy at HC Wainwright; PT C$6.37
    • Delcath (DCTH) Rated New Buy at Clear Street; PT $22
    • Elf Beauty (ELF) Rated New Hold at Deutsche Bank; PT $133
    • Emerson Electric (EMR) Rated New Buy at Jefferies; PT $160
    • Enliven Therapeutics (ELVN) Rated New Buy at Clear Street; PT $36
    • Erasca (ERAS) Rated New Buy at Clear Street; PT $5
    • Esab (ESAB) Rated New Buy at Jefferies; PT $160
    • Fibrobiologics (FBLG) Rated New Buy at Rodman & Renshaw; PT $12
    • Franklin BSP Realty (FBRT) Rated New Buy at Janney Montgomery; PT $16
    • Immatics (IMTX) Rated New Buy at Clear Street; PT $18
    • Informatica (INFA) Rated New Buy at Truist Secs; PT $34
    • Inozyme (INZY) Rated New Outperform at Raymond James; PT $26
    • Janux Therapeutics (JANX) Rated New Buy at Clear Street; PT $80
    • JBT (JBT) Rated New Hold at Jefferies
    • Kenvue (KVUE) Rated New Equal-Weight at Barclays; PT $23
    • Keyera (KEY CN) Reinstated Equal-Weight at Barclays; PT C$46
    • Lamb Weston (LW) Rated New Hold at Deutsche Bank; PT $81
    • Luckin Coffee (LKNCY) ADRs Rated New Buy at CMB International; PT $33.80
    • Mako Mining Corp (MKO CN) Rated New Buy at Eight Capital; PT C$5
    • MoonLake Immunotherapeutics (MLTX) Rated New Buy at Clear Street
    • Mosaic (MOS) Rated New Market Perform at Oppenheimer
    • MSA Safety (MSA) Rated New Hold at Jefferies
    • NBT Bancorp (NBTB) Rated New Buy at DA Davidson; PT $60
    • Nutrien (NTR CN) Rated New Outperform at Oppenheimer; PT C$84.96
    • Nuvation Bio (NUVB) Rated New Buy at Clear Street; PT $5
    • Palantir (PLTR) Rated New Neutral at Baird
    • Pembina Pipeline (PPL CN) Reinstated Overweight at Barclays; PT C$63
    • Penske Automotive (PAG) Rated New Buy at Benchmark; PT $185
    • Protagonist Therapeutics (PTGX) Rated New Buy at Clear Street; PT $63
    • Regal Rexnord (RRX) Rated New Buy at Jefferies; PT $215
    • Roblox (RBLX) Rated New Buy at HSBC; PT $63
    • V2X Inc (VVX) Rated New Sell at Goldman; PT $54
    • Veralto (VLTO) Rated New Buy at Jefferies; PT $125
    • Vertiv Holdings (VRT) Rated New Equal-Weight at Barclays; PT $142
    • Xencor (XNCR) Rated New Overweight at Wells Fargo; PT $37
    • Y-mAbs (YMAB) Rated New Buy at Clear Street; PT $21
    • Zedcor Inc (ZDC CN) Rated New Buy at Canaccord; PT C$4.25

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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