Daily Game Plan

by Contributor
on September 10, 2024

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

TODAY’S ECONOMIC DATA:  10:00ET Fed’s Michael Barr speaks on Basel III Endgame; 12:15ET Fed’s Michelle Bowman speaks
on stress testing; 1:00ET 3-Year Note Auction

HIGHLIGHTS and News:  

  • Apple and Google lost landmark EU decisions in a win for the bloc’s crackdown on tech companies
  • US regulators scaled back a proposed capital requirement hike for the biggest banks, to 9% from 19%
  • Blinken: Russia to Use Iranian Missiles in Ukraine Within Weeks

Global stocks shares steadied, struggling to draw momentum from a rally on Wall Street as concerns about faltering economic growth dampened investor sentiment. Data
from China showed exports grew at 8.7% for their fastest since March 2023 in August, suggesting manufacturers were rushing out orders ahead of tariffs expected from a number of trade partners, while imports (-0.5%) missed forecasts amid weak domestic demand.
 Sentiment is likely to be impacted by the upcoming US presidential debate later today, the US consumer price report Wednesday and the ECB’s meeting Thursday, where the central bank is expected to cut interest rates for a second time this year.   

 

EQUITIES:  

US equity futures wavered as markets head into a crunch period, with key inflation data on Wednesday followed by interest-rate decisions on both sides of the Atlantic. S&P 500 contracts
traded in a narrow range overnight after rising more than 1% on Monday, rebounding from its worst start to the month since 1953. Investors now turn their attention to tomorrow’s US inflation report, which could provide more clarity on whether the Federal Reserve
would deliver an outsized 50-basis-point cut when it meets next week. Expectations are for headline inflation in the United States to have slowed to an annual rate of 2.6% in August, compared with July’s 2.9%.   

Futures ahead of the bell: E-Mini S&P +0.2%, Nasdaq +0.3%, Russell 2000 +0.2%, DJI +0.1%

In pre-market trading, Oracle (ORCL) climbs 8% after reporting quarterly profit and bookings that topped estimates. Alibaba ADRs (BABA) rise 2% after its stock was made directly accessible
to investors in mainland China for the first time. Apple (AAPL) slips 1% after the iPhone maker lost its court fight over a $14.4 billion Irish tax bill. Mission Produce (AVO) jumps 22% after the avocado supplier reported fiscal third-quarter revenue that
topped estimates. Rubrik (RBRK) drops 6% after the cybersecurity company reported earnings. Viridian Therapeutics (VRDN) gains 8% ahead of a conference call this morning when the company will report topline data for the Thrive phase 3 clinical trial.

European gauges were muted ahead of key US inflation figures and the European Central Bank’s policy meeting later in the week. The Euro Stoxx 600 is slightly lower after reversing early
gains. Real estate and food stocks outperformed, while health care and auto sectors were the biggest laggards. Among individual stocks, Capgemini shares jumped as much as 7.4% after Bank of America upgraded the IT firm to buy from neutral, saying the risk
of a guidance reset had played out following a profit warning in July.  Stoxx 600 -0.1%, DAX -0.4%, CAC +0.2%, FTSE 100 -0.5%. REITs +1%, Food & Bev +0.7%, Tech +0.6%. Autos -3.5%, Healthcare -0.7%.  

Asian stocks were mixed as a late recovery in Chinese markets offset declines in Japan and Korea. The MSCI Asia Pacific Index traded within a narrow range, with health-care firms being
significant detractors. Japan’s Topix fell for the fifth consecutive day as yen volatility affected investor sentiment. Chinese stocks rose slightly in late trading, although the CSI 300 Index remains near its lowest close since January 2019, amid concerns
about deflation and potential US legislation blacklisting some Chinese biotech firms. Hong Kong’s benchmark ended a five-day losing streak, aided by gains in Alibaba after its inclusion in the Stock Connect program, which could attract $20 billion in inflows.
Meanwhile, Indian contract-drug manufacturers rallied following US legislation targeting Chinese biotech firms, while some Chinese EV stocks rose on strong sales data. Indonesia +0.75%, Sensex +0.45%, ASX 200 +0.3%, Hang Seng Index +0.2%, CSI 300 +0.1%. Topix
-0.1%, Taiwan -0.4%, Kospi -0.5%, Vietnam -1%.

FIXED INCOME: 
 

Treasuries are slightly cheaper across the curve amid comparable losses for bunds and gilts following several European bond sales skewed toward longer-dated maturities.
Calendar events are limited ahead of the presidential debate slated to start at 9pm EST.  Yields are higher by 1bp-2bp across the curve, the 10-year around 3.715%. Coupon auction cycle begins today with $58b 3-year new issue, followed by $39b 10-year and $22b
30-year reopenings Wednesday and Thursday.

 

 

METALS: 

Gold held steady just above $2,500 an ounce, as traders await crucial US inflation data tomorrow. Spot gold +0.02%, silver +0.3%.

 

 

ENERGY:   

 

Oil , which has lost nearly 20% in the last two months on concerns about global energy demand, was down another 1+%. Tropical Storm Francine began to rapidly intensify
and was expected to produce a dangerous category 2 hurricane, prompting Louisiana residents to flee inland and oil and gas producers to shut-in Gulf of Mexico production. The storm could wallop the Louisiana coast tomorrow with life-threatening 100 mile per
hour winds, drenching rains and an up to 10-foot storm surge. Energy companies began evacuating offshore workers and shut-in output at several production platforms ahead of the storm. The storm is poised to become a major test for new LNG export plants in
Louisiana.  WTI -1.4%, Brent -1.25%, US Nat Gas +2.5%, RBOB -0.6%.

 

 

 

CURRENCIES:   

In currency markets, the dollar showed mixed performance against its Group-of-10 peers as investors awaited the US presidential debate for insights into candidates’
policy priorities. Sterling edged higher after UK pay growth slowed to a two-year low, keeping the case for another Bank of England rate cut. The yen weakened briefly after people familiar said BOJ officials see little need to hike rates next week. The euro
may slide about 7% toward parity with the dollar by year-end as the ECB dials up rate cuts, according to Morgan Stanley.  US$ Index +0.1%, GBPUSD +0.1%, EURUSD -0.02%, USDJPY -0.05%, AUDUSD +0.03%, USDNOK -0.5%, USDCHF -0.2%.

 

 

Spot Bitcoin +0.4%, Spot Ethereum +0.4%.   

 

 

 

  • Upgrades
    • CrossFirst Bankshares (CFB) Raised to Buy at Janney Montgomery; PT $21
    • Delek US Holdings (DK) Raised to Neutral at JPMorgan; PT $26
    • DraftKings (DKNG) Raised to Neutral at BNPP Exane; PT $35
    • Equity Residential (EQR) Raised to Buy at Deutsche Bank
    • G. Mining Ventures (GMIN CN) Raised to Buy at Jefferies; PT C$13
    • Johnson Controls (JCI) Raised to Buy at BofA
    • Oracle (ORCL) Raised to Market Outperform at JMP; PT $175
    • Relay Therapeutics (RLAY) Raised to Buy at Jefferies; PT $16
  • Downgrades
    • Baidu (BIDU) ADRs Cut to Hold at UOB Kay Hian; PT $95
    • Bionano Genomics Inc (BNGO) Cut to Neutral at BTIG
    • Coca-Cola Europacific (CCEP) Cut to Neutral at BNPP Exane; PT $81
    • Costco (COST) Cut to Neutral at Redburn; PT $890
    • Methanex (MX CN) Cut to Equal-Weight at Barclays; PT C$59.62
    • Nutrien (NTR CN) Cut to Neutral at Goldman; PT C$72
    • Relay Therapeutics (RLAY) Cut to Market Perform at Oppenheimer
  • Initiations
    • Aura Biosciences (AURA) Rated New Outperform at LifeSci Capital; PT $23
    • CubeSmart (CUBE) Rated New Outperform at RBC; PT $56
    • CVRx (CVRX) Rated New Overweight at Cantor; PT $14
    • Dell Technologies (DELL) Rated New Neutral at Susquehanna; PT $120
    • Elf Beauty (ELF) Rated New Buy at B Riley; PT $175
    • Estee Lauder (EL) Rated New Neutral at B Riley; PT $95
    • Extra Space (EXR) Rated New Sector Perform at RBC; PT $180
    • GE Aerospace (GE) Rated New Outperform at Bernstein; PT $201
    • Haemonetics (HAE) Rated New Buy at BTIG; PT $112
    • Harmony Biosciences (HRMY) Rated New Buy at UBS; PT $56
    • Honest Co. (HNST) Rated New Buy at B Riley; PT $6.50
    • Longboard Pharmaceuticals (LBPH) Rated New Buy at Truist Secs; PT $60
    • MKS Instruments (MKSI) Rated New Overweight at Cantor; PT $140
    • Mobileye (MBLY) Rated New Buy at SPDB Intl HK; PT $16.20
    • Phibro Animal (PAHC) Rated New Neutral at JPMorgan; PT $22
    • ProKidney (PROK) Rated New Buy at Guggenheim; PT $6
    • Public Storage (PSA) Reinstated Sector Perform at RBC; PT $358
    • Skye Bioscience (SKYE) Rated New Market Outperform at JMP; PT $15
    • SKYX Platforms Corp (SKYX) Rated New Buy at Roth Capital Partners
    • Spire Global (SPIR) Resumed Buy at Canaccord; PT $12
    • Stryker (SYK) Rated New Outperform at Wolfe; PT $405
    • Ulta Beauty (ULTA) Rated New Sell at B Riley; PT $300
    • ZIM Integrated Shipping (ZIM) Resumed Underweight at JPMorgan
    • Zimmer Biomet (ZBH) Reinstated Peerperform at Wolfe

 

 

 

 

 

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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