Daily Game Plan

by Contributor
on August 16, 2024

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

TODAY’S ECONOMIC DATA:  ET 8:30 a.m: US July Housing Starts and Building Permits,10:00
a.m: US August University of Michigan Sentiment,1:00 p.m.: Baker Hughes US Rig Count,1:25 p.m.: Fed’s Austan Goolsbee speaks

HIGHLIGHTS and News:  

  • NYC Mayor Eric Adams was subpoenaed as part of a corruption probe by the DOJ, the NYT reported.
  • Ernesto strengthened into a Category 2 hurricane as it headed north toward Bermuda, threatening to drench the
    British territory
  • Florida man Vladimir Galkin has become JetBlue’s third biggest shareholder, amassing a stake worth $132 million. But he says his investments are just “a side hobby.”

 

World stocks were mostly higher Friday, buoyed by robust economic data that has reassured investors about the resilience of the American economy.
Recent readings on inflation, jobless claims, and retail sales have fostered optimism for a “Goldilocks” scenario of stable prices and solid growth. Both the S&P 500 and the Nasdaq are on course for their biggest weekly advance since November, while the yen
is set for its sharpest loss since May. Meanwhile in Asia, stocks experienced their best weekly performance in over a year, particularly driven by a weaker yen that benefits exporters.

 

EQUITIES:  

U.S. stock index futures pared early gains on Friday and are now inching lower. S&P 500 and the Nasdaq logged six-session winning streaks, as a spate of encouraging
economic data fueled a broad rebound led by heavyweight tech and growth stocks. Applied Materials saw a 2.5% decline after its fourth-quarter forecast met expectations but failed to impress investors hoping for stronger gains from AI spending, despite reporting
third-quarter results that exceeded analyst predictions. Conversely, H&R Block shares surged by 9.6% following a revenue forecast for 2025 that surpassed average analyst estimates. Lumen Technologies dropped 5.8% after Wells Fargo downgraded its rating, citing
concerns over revenue visibility, while Microchip’s shares increased by 2.5% after Piper Sandler upgraded the chipmaker’s rating, highlighting potential gross margin improvements. Other significant movers included Couchbase, which received an overweight recommendation
from Piper Sandler, and various stocks across different market capitalizations reflecting diverse investor sentiment.

Futures ahead of the bell: E-Mini S&P -0.2%, Nasdaq -0.2%, Russell 2000 -0.1%, DJI -0.08%

European stocks rose for a third consecutive session, driven by positive global economic data and expectations that the Federal Reserve will reduce interest rates next
month. The Stoxx Europe 600 Index edged higher, with insurance and technology shares outperforming, while travel and leisure, as well as retail sectors lagged. Notable movements included a surge in shares of Bavarian Nordic A/S following the World Health Organization’s
declaration of a global public health emergency regarding mpox, and a slump in Orsted A/S due to a significant impairment charge. The market’s recovery comes after a rough start to August, as resilient economic indicators, including easing US inflation and
encouraging data from Japan and China, have calmed recession fears. DAX +0.5%, FTSE -0.5%, Stoxx 600 +0.1%, CAC 40 +0.1%.

Asian stocks rebounded, ending a four-week losing streak, driven by a rally in the tech sector, with the MSCI Asia Pacific Index rising 2.3%, marking its largest weekly
gain in over a year. Major contributors included TSMC, Alibaba, and Samsung, while Japanese shares performed particularly well. Easing fears of a global economic slowdown and expectations of interest rate cuts bolstered market confidence, following a significant
selloff the previous week. Key markets in South Korea, Japan, and Taiwan reported earnings growth, and sectors like semiconductors and Chinese technology stocks saw notable gains. Noteworthy movers included Alibaba and JD.com, which both reported strong earnings,
while South Korean cosmetics stocks surged after Berkshire Hathaway disclosed a stake in Ulta Beauty. Overall, the positive momentum was reflected across various regional indices, with significant increases in Hong Kong, Taiwan, and Australia, while concerns
lingered over the Chinese market’s stability amid export controls on certain materials. Topix +2.9%, Nikkei +3.6%, China’s CSI 300 +0.11%; Hang Seng +1.88%; Kospi +1.9%; ASX 200 +1.3%

FIXED INCOME: 
 

Treasuries advanced in early U.S. trading, buoyed by gains in German bunds, with yields across the curve rising by 3 to 4 basis points, particularly
in the front and belly segments. The U.S. 10-year yield traded around 3.875%, reflecting a nearly 4 basis point increase. Market focus included consumer sentiment data set for release at 10 a.m. New York time, alongside remarks from Fed member Goolsbee. Additionally,
the day’s economic data included July housing starts and building permits, as well as the August New York Fed services business activity report.

 

METALS: 

 

Gold prices edged higher on Friday and are set for a weekly gain of over 1%. The potential for gold remains strong due to anticipated rate cuts,
rising geopolitical tensions, and heightened risks in the Middle East. The most significant risk for gold prices being the upcoming U.S. nonfarm payroll data due in early September, which could reignite recession fears if job growth declines and unemployment
remains stubbornly high. Gold +0.4%, Silver +1.9%

 

 

 

ENERGY:   

 

Oil prices dipped at the end of a volatile week, with Brent crude trading below $81 a barrel, despite a 2% weekly gain, while West Texas Intermediate
fell below $78. The market grappled with strong U.S. economic data, including robust retail sales and job figures, which countered concerns over weak demand from China. Brent is on track for its second consecutive weekly gain, rebounding from a seven-month
low, as geopolitical tensions in the Middle East, particularly regarding Iran’s potential actions against Israel, kept traders on edge. Analysts noted that crude oil remains choppy, with Brent settling into a tight range around $80, as fears of an Iranian
attack may support prices ahead of the weekend, despite the need for a significant increase in global demand to sustain a rally. WTI -2.9%, Brent -2.5%, Nat Gas -0.9%.

 

CURRENCIES:   

In currency markets, the dollar weakened, heading for its third consecutive week of losses, as a decline in U.S. Treasury yields prompted investors to unwind previous
gains. Traders are now anticipating approximately 92 basis points of easing by the Federal Reserve by year-end, a slight increase from the 90 basis points projected after strong retail sales data. USDJPY fell, influenced by shifts in interest rate differentials,
while GBPUSD rose buoyed by a rebound in UK retail sales.US$ Index -0.2%, GBPUSD +0.3%, EURUSD +0.2%, USDJPY +0.8%, AUDUSD +0.2%, NZDUSD +0.6%, USDCHF +0.5%

 

 

Spot Bitcoin +2.8%, Spot Ethereum +2.1%.

 

 

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
    • AFC
      Gamma       (AFCG) Raised to Neutral at Compass Point; PT $9
    • CF
      Industries       (CF) Raised to Overweight at Barclays; PT $90
    • Cisco (CSCO)
      Raised to Buy at HSBC; PT $58
      • Raised
        to         Buy at New Street Research; PT $57
    • Fox
      Corp       (FOXA) Raised to Overweight at Wells Fargo; PT $46
    • Illumina (ILMN)
      Raised to Buy at Daiwa; PT $154
    • Kimco
      Realty       (KIM) Raised to Strong Buy at Raymond James; PT $25
    • Kite
      Realty       (KRG) Raised to Strong Buy at Raymond James; PT $28
    • Microchip (MCHP)
      Raised to Overweight at Piper Sandler; PT $100
    • Newmark (NMRK)
      Raised to Outperform at Wolfe; PT $15
    • Nike (NKE)
      Raised to Buy at Williams Trading; PT $93
    • Sphere
      Entertainment       (SPHR) Raised to Overweight at JPMorgan; PT $57
    • Teradyne (TER)
      Raised to Overweight at Cantor; PT $160
  • Downgrades
  • Initiations
    • Couchbase (BASE)
      Rated New Overweight at Piper Sandler; PT $22
    • Credit
      Agricole       (ACA FP) ADRs Rated New Sell at Berenberg; PT $6.10
    • Liquidia (LQDA)
      Rated New Outperform at Raymond James; PT $27
    • Y-mAbs (YMAB)
      Rated New Overweight at Cantor; PT $20

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

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