Daily Game Plan

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

DATA/HEADLINES   8:30ET Philadelphia Fed Non-Manufacturing Activity; 9:00ET FHFA House Price Index; 10:00ET New
Home Sales, Consumer Confidence, Richmond Fed; 10:30ET Dallas Fed Services Activity; 1:00ET 2 Year Auction; 1:30ET Fed’s Bowman speaks

TODAY’S HIGHLIGHTS:  

• Biden to join UAW workers Tuesday on picket line in Michigan
• Orange juice supplies in the US plunged to the lowest level since 1968
  

Global equities fell, putting the MSCI All Country World Index on track to match its longest losing streak in the past decade, as fears of interest rates staying
high for longer weighed on risk assets globally. Bond traders lifted expectations for inflation in Japan to the highest in almost nine years on higher oil prices and a weaker yen. Investors are now focused on developments surrounding a US government shutdown
for any implications for financial markets, and on China’s Golden Week starting Friday for signs of consumer revival in Asia’s largest economy.  EU’s trade chief warned Beijing’s failure to condemn Russia’s war in Ukraine was damaging China’s investment opportunities.
                                              

EQUITIES: 

US equity futures slipped, poised to reverse Monday’s modest gains, as traders continued to price in a more hawkish interest-rate path and Moody’s warned a government shutdown would reflect
poorly on America’s credit rating. Investors are souring on the technology-heavy Nasdaq 100 Index, building net short positions in the futures market of roughly $8 billion, according to Citigroup strategists. The bets against the tech sector reflect growing
investor concern that interest rates will stay higher for longer. Senate negotiators are nearing a deal on a short-term spending measure that would keep the government open for 4-6 weeks after the Oct. 1 deadline, according to sources. But if House Speaker
Kevin McCarthy puts the Senate bill up for a vote, GOP hardliners have threatened to try to oust him. Moody’s warned on Monday that a shutdown this time would have negative implications for the US government’s AAA credit rating, as it would highlight how political
polarization is worsening the country’s fiscal standing. Meanwhile, President Biden visits a UAW picket line in Michigan today, and performers in the video-game industry voted to authorize a strike.                                           

Futures ahead of the bell: E-Mini S&P -0.3%, Nasdaq -0.3%, Russell 2000 -0.3%, Dow -0.3%.

In pre-market trading, DraftKings (DKNG) rises 3.4% after JPMorgan upgrades the online sports-betting company to overweight from neutral. Fisker (FSR) gains 4.7% after saying it has built
5,000 Fisker Ocean SUVs and expects to ramp deliveries. Immunovant (IMVT) jumps 56% after the company announced top-line results from an early-stage trial of its drug for autoimmune diseases.  Omega Therapeutics (OMGA) shares slide 4% after it announced preliminary
clinical data from a trial of its drug candidate for liver cancer. Pliant Therapeutics (PLRX) is up 20% ahead of a call the company set for this morning to discuss interim mid-stage clinical trial data. Thor Industries (THO) drops 2.4% even after the recreation
vehicle firm reported net sales that beat estimates, with analysts citing potential slower production and revenue rebound pace. United Natural Foods (UNFI) falls 13% after issuing a profit outlook for the fiscal year that missed the average analyst estimate.
 

Shares in Europe retreated for a fourth day, dragged lower by renewed worries over China’s property sector and higher bond yields across the developed world.  The Stoxx 600 Index fell
0.4% as of 1:06 p.m. in London, with the consumer-products and real estate sectors among the biggest laggards. Luxury stocks including Richemont and LVMH dropped after Morgan Stanley cut earnings estimates for the industry, citing weakness in China. Semiconductor-equipment
maker ASM International NV fell after giving earnings guidance that underwhelmed investors. Value stocks have made a comeback, with the MSCI Europe Value Index now heading for its biggest monthly outperformance over its growth counterpart since January 2022. 
Stoxx 600 -0.4%, DAX -0.5%, CAC -0.6%, FTSE 100 +0.25%. REITs -1.4%, Technology -1.3%, Autos -0.9%. Healthcare +0.2%, Travel +0.15%.                    

In Asia, property concerns continued to weigh on Chinese markets as property developers slipped further after slumping by the most in nine months on Monday. China Evergrande Group missed
a debt payment and former executives were detained. Hong Kong’s Hang Seng Index fell to levels last seen in November and mainland benchmarks edged lower, reflecting a dismal mood across the region. The MSCI Asia Pacific Index declined 0.8%, with technology
firms among the biggest drag. Korea’s benchmark was among the worst performers in the region, closing at its lowest level since April, weighed down by Samsung, SK Hynix and Samsung Biologics. Meanwhile, stocks in Philippines extended their rebound to a fourth
day, boosted by a rally in banks. Hang Seng Index -1.5%, Vietnam -1.3%, Kospi -1.3%, Nikkei 225 -1.1%, Taiwan -1.1%, CSI 300 -0.6%, ASX 200 -0.5%, Sensex -0.1%. Philippines +1.5%.   

FIXED INCOME: 
 

Yields on US Treasuries and European government debt fell after hitting decade highs as investors price in a protracted period of high interest rates. European Central
Bank Governing Council member Madis Muller said he’s not currently expecting further increases in interest rates. Minneapolis Fed chief Neel Kashkari said he expects one more hike this year and rates may need to stay higher for longer. US yields richer by
1bp to 3bp across the curve with gains led by 10-year sector, which trades around 4.5%, 2s10s spread is slightly flatter on the day. Data on US consumer confidence and manufacturing activity expected later today could provide more clues on the outlook for
the economy and monetary policy. Treasury auctions resume with $48b 2-year note sale at 1pm, with $49b 5-year and $37b 7-year notes scheduled later this week.                            

METALS: 
           

Gold held losses after the dollar rallied to its highest level this year. The metal edged slightly lower on Tuesday as traders looked ahead to a key US inflation
report due this week that’s expected to show a deceleration in consumer-price growth. Gold has largely range-traded since July despite hawkish signaling from the Federal Reserve and continued outflows from exchange-traded funds. Copper is trading at the widest
contango since at least 1994 as inventories expand and demand concerns persist. Spot gold -0.2%, silver -0.4%, copper -0.3%.        

ENERGY:  

Oil retreated as the impact of a rising dollar compounded concerns that demand for fuel will be held back by major central banks holding interest rates higher for
longer. The US economy should be able to shrug off the recent rise in oil prices, Goldman Sachs analysts say. American oil production will likely reach a remarkable milestone in the fourth quarter, with Rystad Energy expecting a record of more than 13 million
barrels a day. That would be the highest of any country in the world and more than double the level of a decade ago.  A federal court in New Orleans left in place an order forcing the Biden administration to expand an upcoming sale of offshore drilling rights
in the Gulf of Mexico. Achieving net zero by 2050 is still possible but requires tripling renewable energy capacity by the end of the decade and increasing green investments to $4.5 trillion a year globally by the early 2030s, the IEA said. WTI -1%, Brent
-0.8%, US Nat Gas -3.25%, RBOB -1.4%.                                     

CURRENCIES:   

The dollar is little changed, erasing a gain of 0.3% overnight, as momentum in US yields and stocks set the tone. Swiss franc is headed for its 11th daily drop versus
the dollar, the longest run of losses in almost half a century. The latest selling has highlighted the difference in borrowing costs between Switzerland, where they are at 1.75%, and the US, where rates have climbed to 5.5%. USDJPY is little changed after
erasing early gains and fell sharply by 30 pips after Japanese Finance Minister Shunichi Suzuki said he’s watching foreign exchange moves with a high sense of urgency. The Pound is headed for its fifth day of losses versus the dollar. US$ Index -0.1%, GBPUSD
-0.2%, USDJPY -0.02%, EURUSD +0.1%, AUDUSD -0.2%, USDCAD +0.3%, USDCHF +0.05%.

Bitcoin -0.2%, Ethereum +0.3%. 

TECHNICAL LEVELS: 

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
• (DKNG) DraftKings Raised to Overweight at JPMorgan; PT $37
• (EW) Edwards Life Raised to Outperform at Oppenheimer; PT $90
• (FLS) Flowserve Raised to Buy at Jefferies; PT $50
• (HPP) Hudson Pacific Raised to Buy at BTIG; PT $11
• (OPEN) Opendoor Technologies Raised to Hold at Gordon Haskett
• (PNM) PNM Resources Raised to Buy at Mizuho Securities; PT $50.30
• (RDFN) Redfin Raised to Hold at Gordon Haskett
• (WING) Wingstop Raised to Buy at Stifel; PT $200
• Downgrades
• (AOI CN) Africa Oil Cut to Neutral at SpareBank; PT C$3.65
• (CSL) Carlisle Cut to Hold at Jefferies; PT $290
• (FREQ) Frequency Therapeutics Cut to Neutral at Baird; PT 7 cents
• (NDSN) Nordson Cut to Hold at Jefferies; PT $240
• (OLN) Olin Cut to Equal-Weight at Wells Fargo; PT $50
• (WPC) WP Carey Cut to Market Perform at BMO
• (WTE CN) Westshore Terminals Cut to Sector Perform at RBC; PT C$29
• Initiations
• (BMBL) Bumble Rated New Buy at HSBC; PT $20.30
• (EXEL) Exelixis Rated New Buy at HC Wainwright; PT $28
• (FL) Foot Locker Reinstated Neutral at Piper Sandler; PT $19
• (MTCH) Match Group Rated New Hold at HSBC; PT $47.10
• (NDAQ) Nasdaq Inc. Rated New Hold at Citic Securities; PT $54
• (PINS) Pinterest Rated New Buy at HSBC; PT $32.10
• (SNAP) Snap Rated New Reduce at HSBC; PT $7.50
• (STVN) Stevanato Group Rated New Overweight at Stephens; PT $33
• (UTZ) Utz Brands Rated New Outperform at RBC; PT $17

Data sources: Bloomberg, Reuters, CQG