Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Durable Goods Orders, Cap Goods; 10:30ET Dallas Fed Manf. Activity; 2:00ET Fed’s
Mary Daly on BTV

US July Durable Goods Orders Rose 9.9%, Above All Estimates

HIGHLIGHTS and News:  

• Hezbollah chief says further strikes on Israel possible
• Families flee after new Israeli evacuation orders in Gaza as ceasefire hopes dim
• Canada will impose tariffs of as much as 100% on Chinese-made EVs and 25% on steel and aluminum
• SpaceX will rescue NASA astronauts after Boeing’s Starliner craft failures
  
• Babe Ruth’s jersey he wore when hitting the legendary “called shot” home run for the NY Yankees in 1932 sold Sunday for $24.12mm

Global shares steadied ahead of inflation data later in the week that could pave the way for rate cuts in the United States and Europe. Figures on US personal consumption
and core inflation are due on Friday, along with a flash reading on European Union inflation. Markets are fully priced for a quarter-point cut from the European Central Bank next month, and more than 160 basis points of easing by the end of 2025. Japan’s defense
ministry said it had scrambled jets against a Chinese reconnaissance aircraft that had briefly breached its airspace on Monday morning. The ministry said it was the first time a Chinese military aircraft had breached Japan’s airspace. Meanwhile, Hezbollah
launched hundreds of rockets and drones at Israel early on Sunday, as Israel’s military said it struck Lebanon with around 100 jets to thwart a larger attack, in one of the biggest clashes in more than 10 months.

EQUITIES:  

US equity futures edged higher, while investors braced for earnings from AI darling Nvidia midweek. Nvidia is up ~150% year-to-date, accounting for around a quarter of the S&P 500’s 17%
year-to-date gain. Fed Chair Powell’s Jackson Hole speech last week all but sealed the case for an interest-rate cut next month, but the debate has shifted to the size of the cut and what that would say about the state of the economy.

Futures ahead of the bell: E-Mini S&P +0.15%, Nasdaq -0.05%, Russell 2000 +0.7%, DJI +0.15%

In pre-market trading, PDD Holdings (PDD) falls 15% after reporting weaker-than-expected sales. Daqo New Energy (DQ) falls 4% after the polysilicon maker reported revenue for the second
quarter that missed estimates. sell as much as $400 million in shares. SolarEdge Technologies (SEDG) gains 4% after Zvi Lando stepped down as CEO. Xpeng ADRs (XPEV) gains 3% as the Chinese electric-car maker said its CEO had purchased 1m Class A shares of
the company.

The equal-weighted S&P 500 is nearly the cheapest it has been relative to its mainstream, capitalization-weighted counterpart since during the technology bubble of the late 1990s, according
to Bank of America data. 

Homebuilders outperformed the broader market last week.

European gauges are muted as investors await a raft of key economic data set to unfold through the week. Energy and real estate sectors outperform, while the technology sector kept gains
in check. The Euro Stoxx 600 is little changed, with trading volumes less than half of the average as UK markets are closed for a holiday.  German business morale fell for a third consecutive month in August, a survey showed today. Over the weekend, the European
Central Bank’s Chief Economist Philip Lane said the bank’s battle to return inflation to 2% isn’t won and interest rates must stay as high as necessary to achieve that goal. Stoxx 600  +0.05%, DAX -0.1%, CAC +0.25%. REITs +0.7%, Energy +0.7%, Autos +0.6%.
Technology -0.4%, Insurance -0.2%.

Asian stocks were mostly higher as risk sentiment got a boost from rising expectations of an imminent interest rate cut by the Federal Reserve. The MSCI Asia Pacific Index gained 0.5%,
with tech shares leading gains. Japan was a notable underperformer in the region as a stronger yen pressured exporter stocks. Stocks also declined in mainland China and South Korea. The People’s Bank of China left the rate on its one-year policy loans at 2.3%,
underscoring Beijing’s cautious approach in supporting the economy. Nomura strategists upgraded Indonesian and Malaysian stocks to overweight, saying “the time has come to add decisively to Asean markets” as the Fed rate cut cycle is expected to begin. Hang
Seng Index +1.05%, Indonesia +0.8%, ASX 2– +0.75%, Sensex +0.75%, Taiwan +0.4%, Singapore +0.25%, Shanghai Composite +0.05%. CSI 300 -0.1%, Kospi -0.15%, Vietnam -0.4%, Topix -0.9%.

FIXED INCOME: 
 

Treasuries are narrowly mixed with the curve slightly steeper, extending the move after Fed Chair Powell’s comments Friday in Jackson Hole. Yields on two-year Treasuries
fell an additional 3.5 bps to 3.875% before recouping losses, while 10-year yield steadied around 3.8%. Fed fund futures are fully priced for a quarter-point cut at the September 18 meeting and imply a 38% chance of an outsized move of 50 basis points. Treasury
auctions ahead this week include $69b 2-year Tuesday, $70b 5-year Wednesday (a possible unscheduled reopening) and $44b 7-year Thursday.

METALS: 

Gold moved higher, nearing a record high as Federal Reserve Chair Jerome Powell signaled impending interest rate cuts, boosting the metal’s appeal. Bullion traded
above $2,523 an ounce, driven by Powell’s remarks that the “time has come” for monetary easing to prevent further cooling in the U.S. labor market. Spot gold +0.5%, silver +1.1%, copper +0.7%.

ENERGY:   

Oil prices climbed after Israel and Hezbollah traded air strikes on Sunday, stirring worries about possible supply disruptions if the conflict escalated. Israel sent
more than 100 warplanes to take out thousands of Hezbollah missile launchers on Sunday, after which the militant group responded by firing more than 200 projectiles that did limited damage, according to Israeli officials. Cease-fire negotiations were held
in Cairo and are set to continue, AP said. Separately, Libya’s eastern-based government said it will stop all oil production and exports. WTI +2.8%, Brent +2.5%, US Nat Gas -1.6%, RBOB +1.9%.

CURRENCIES:   

In currency markets, the dollar traded mixed versus its Group-of-10 peers amid rising tensions in the Middle East and thin volumes due to a UK holiday. The US$ Index
inched higher after it slumped the most in nine months on Friday. The yen gained for a second day to its strongest level since January. The euro slipped after data showed Germany’s business outlook held at its lowest level since February. Risk-sensitive Australian
and New Zealand dollars underperformed G-10 currencies. US$ Index +0.1%, GBPUSD -0.2%, EURUSD -0.3%, USDJPY -0.1%, AUDUSD -0.4%, USDNOK +0.8%, NZDUSD -0.6%.

Spot Bitcoin -0.5%, Spot Ethereum -1.2%.  Bitcoin touched $65,000 for the first time in about three weeks.

• Upgrades
• American Homes (AMH) Raised to Overweight at Wells Fargo; PT $42
• BJ’s Wholesale (BJ) Raised to Neutral at JPMorgan; PT $78
• Camden Property (CPT) Raised to Equal-Weight at Wells Fargo; PT $127
• Kymera (KYMR) Raised to Outperform at Wolfe; PT $65
• Mid-America (MAA) Raised to Overweight at Wells Fargo; PT $174
• Petrobras (PETR4 BZ) ADRs Raised to Overweight at Morgan Stanley; PT $20
• Target (TGT) Raised to Outperform at Daiwa; PT $170
• Downgrades
• CCU (CCU CI) ADRs Cut to Sell at Goldman; PT $10.50
• Enova International (ENVA) Cut to Neutral at Janney Montgomery; PT $81
• Equity Residential (EQR) Cut to Equal-Weight at Wells Fargo; PT $77
• Invitation Homes (INVH) Cut to Equal-Weight at Wells Fargo; PT $38
• Kellanova (K) Cut to Neutral at DA Davidson; PT $83.50
• MoonLake Immunotherapeutics (MLTX) Cut to Peerperform at Wolfe
• Oaktree Specialty (OCSL) Cut to Equal-Weight at Wells Fargo; PT $17
• Premier (PINC) Cut to Hold at Benchmark
• Initiations
• CorMedix (CRMD) Rated New Buy at Rodman & Renshaw; PT $13
• Summit Materials (SUM) Rated New Overweight at Morgan Stanley; PT $51
• ZKH Group (ZKH) ADRs Rated New Add at Sealand Securities

Data sources: Bloomberg, Reuters, CQG