Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Retail Sales, New York Fed Services Business Activity; 9:15ET Industrial Production,
Capacity Utilization, Manufacturing (SIC) Production; 10:10ET Business Inventories, NAHB Housing Market Index; Fed begins two-day policy meeting

Fed rate decision, Wednesday / UK rate decision, Thursday / Japan rate decision, Friday

HIGHLIGHTS and News:  

• US AUG. RETAIL SALES RISE 0.1% M/M; EST. -0.2%
• Explosions Rock Russian Air Base Hosting Putin’s Nuclear Bombers
  
• Historically, the S&P has surged in the 12 months after the Fed started easing, with 2001 and 2007 the notable exceptions
  
• US has no imminent plans to present an updated proposal in the Israel-Hamas cease-fire talks; CNN

Global stocks rose while the US dollar was pinned lower, a day before the US Federal Reserve is expected to begin an easing cycle that could see policymakers deliver
an outsized rate cut. All eyes are on policy decisions and commentary this week by the Federal Reserve and Bank of Japan. Other central bank rate decisions this week include Indonesia and Brazil on Wednesday, Taiwan, UK, South Africa and Norway on Thursday.
BOJ on Friday. Meanwhile, the US and Japan are nearing a deal to curb chip technology exports to China, with the White House aiming to unveil new export controls before November’s election, the FT reported.     

EQUITIES:  

US equity futures are higher as traders looked forward to a final set of economic data before the Federal Reserve decides on the size of Wednesday’s interest-rate cut.  S&P 500 contracts
are set for a seventh consecutive day of gains, while the Nasdaq 100 was poised to rebound after Monday’s slump in tech megacaps. Microsoft rose in premarket trading after boosting its dividend 10% and unveiling a $60 billion stock-buyback program. Intel rallied
sharply post-market after the chipmaker won new business from Amazon.com. Optimism around Fed rate cuts has boosted investor sentiment for the first time since June, according to a global survey by Bank of America. Fund managers see a 79% chance of a soft
landing as rate cuts support the economy.

Futures ahead of the data: E-Mini S&P +0.35%, Nasdaq +0.5%, Russell 2000 +0.4%, DJI +0.3%

In pre-market trading, Intel (INTC) shares rise 7% after the company landed Amazon.com’s AWS as a customer for its manufacturing business. AppLovin (APP) climbs 2.4%
following an upgrade of the software maker to buy at UBS on improving revenue growth visibility. HP Enterprise (HPE) rises 3.5% as BofA upgrades to buy from neutral, citing numerous upcoming catalysts. SolarEdge Technologies (SEDG) shares fall 7.1% as Jefferies
cuts to underperform from hold, citing significant headwinds in Europe. Shopify (SHOP) advances 2% following an upgrade to buy at Redburn Atlantic. Torrid Holdings (CURV) shares gain 3.5% after William Blair raised the apparel retailer to outperform from market
perform. Viasat (VSAT) falls 3.7% as JPMorgan cut the recommendation on the communication company to neutral from overweight, after United Airlines chose to partner with Elon Musk’s Starlink instead of the broadband satellite provider to power its inflight
Wi-Fi. 

Financials outperformed yesterday as XLF vs SPY holds key short term technical support.

European gauges climb to their highest in two-weeks. Retail and technology stocks led the advance in Europe’s Stoxx 600 index while REITs and Healthcare underperform. Germany’s ZEW investor
expectations survey plummeted to its lowest level in almost a year in September, missing expectations. Among individual stocks, Flutter Entertainment edged higher after it agreed to buy Playtech’s Italian gambling business for an enterprise value of €2.3 billion.
Essentra Plc shares slumped as much as 25% after a profit warning. In other corporate news, UniCredit SpA may seek ECB authorization in the coming days to raise its stake in Commerzbank AG to 30%, while Deutsche Bank AG is exploring options to make it harder
for the Italian bank to buy Commerzbank. Stoxx 600 +0.6%, DAX +0.7%, CAC +0.6%, FTSE 100 +0.7%. Retail +2.3%, Construction +1.25%, Technology +1.2%. Real Estate -0.1%, Healthcare -0.2%.

Shares in Asia were mostly higher except for gauges in Japan as the market reopened following a holiday on Monday. The yen strengthened through the psychological level of 140 per dollar
Monday amid expectations the gap between US and Japanese interest rates will narrow further.  The MSCI Asia Pacific Index ended higher by 0.1%, recovering from early declines, as Tencent and Alibaba climbed in Hong Kong. Australian shares climbed for a fourth
day, while Hong Kong rose nearly the most in three weeks. Markets in mainland China, Taiwan and South Korea were closed for holidays. Vietnam +1.6%, Hang Seng Index +1.4%, Philippines +1%, Singapore +0.6%, ASX 200 +0.25%, Sensex +0.1%. Topix -0.6%, Nikkei
225 -1%.

FIXED INCOME: 
 

Treasuries steadied, with the curve flatter, as US retail data is in focus as the FOMC begins its two-day meeting today. Former Fed President Bill Dudley is among
those expecting a 50 basis-point move tomorrow. “Monetary policy is tight, when it should be neutral or even easy,” he wrote in a Bloomberg column. “And a bigger move now makes it easier for the Fed to align its projections with market expectations, rather
than delivering an unpleasant surprise not warranted by the economic outlook.” Futures markets are fully pricing in a quarter-point cut and now imply almost a 70% chance that the Fed could ease rates by half a percentage point, up from around a 15% chance
last week. Focal points of US include August retail sales data and 20-year bond auction. 10-year yield around 3.6%, 1bp lower. 

METALS: 

Gold eased slightly from a record high as the market counted down to the Federal Reserve’s much-anticipated pivot to lower interest rates. Gold may face near-term
minor setback if the Fed opts for just a 25-bp cut tomorrow but will subsequently rally to a record aided by rising ETF inflows, Goldman analysts said. Spot gold -0.2%, silver -0.05%, copper +0.1%.

ENERGY:   

Oil prices are little changed after gaining three of the past four sessions, with traders looking for direction as they weighed concerns about the outlook for demand.
Crude rose Monday, with support tied to lingering effects on US production after Hurricane Francine last week forced the shut-in of offshore oil rigs in the Gulf of Mexico. The restart of a key Iraqi oil pipeline that’s been shut for over a year is being delayed
by cost disputes, PM Mohammed Shia Al-Sudani said. He also said a timetable for the withdrawal of US troops from Iraq will be announced soon. WTI +0.2%, Brent +0.2%, US Nat Gas +0.7%, RBOB +0.3%.

CURRENCIES:   

Currency markets trade in a narrow range across the board.  The US$ Index is lower for a fourth straight day, holding near the lows of the year as the Federal Reserve
kicks off its two-day policy meeting. USDCAD is little changed as traders await the release of Canadian CPI later today to assess the probability the Bank of Canada eases its policy at its next meeting by 50 basis points. USDJPY is little changed after rising
as much as 0.4% during the Tokyo session. The BOJ is expected to leave its benchmark rate at 0.25% when its two-day meeting ends Friday.  US$ Index -0.5%, GBPUSD -0.03%, EURUSD +0.02%, USDJPY +0.01%, AUDUSD +0.05%, USDNOK ~flat, USDCHF -0.05%.

Spot Bitcoin +2.5%, Spot Ethereum +1.6%.  Trump unveiled a crypto platform called World Liberty Financial.

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
• Alerus Financial (ALRS) Raised to Outperform at Raymond James
• AppLovin (APP) Raised to Buy at UBS
• Banc of California (BANC) Raised to Outperform at Raymond James
• BioNTech (BNTX) ADRs Raised to Buy at Jefferies; PT $150
• Dime Community (DCOM) Raised to Strong Buy at Raymond James
• Gannett Co (GCI) Raised to Neutral at Citi; PT $5.10
• GE Vernova (GEV) Raised to Buy at BofA
• HP Enterprise (HPE) Raised to Buy at BofA; PT $24
• Lattice Semi (LSCC) Raised to Buy at Stifel; PT $55
• LivaNova (LIVN) Raised to Outperform at Baird; PT $66
• New York Community Bancorp (NYCB) US Raised to Market Perform at Raymond James
• PrairieSky Royalty (PSK CN) Raised to Outperform at RBC; PT C$33
• Relmada Therapeutics (RLMD) Raised to Buy at Jefferies; PT $13
• Shopify (SHOP CN) Raised to Buy at Redburn; PT $99
• Synovus (SNV) Raised to Outperform at Raymond James
• Texas Capital (TCBI) Raised to Outperform at Raymond James
• Torrid (CURV) Raised to Outperform at William Blair
• Veritex Holdings (VBTX) Raised to Strong Buy at Raymond James
• Downgrades
• Acushnet (GOLF) Cut to Hold at Jefferies; PT $75
• Adecoagro (AGRO) Cut to Equal-Weight at Morgan Stanley; PT $12.50
• AeroVironment Inc (AVAV) Cut to Market Perform at Raymond James
• Bank OZK (OZK) Cut to Market Perform at Raymond James
• Frontier (FYBR) Cut to Neutral at JPMorgan; PT $38.50
• Old Second (OSBC) Cut to Outperform at Raymond James
• Prosperity Banc (PB) Cut to Outperform at Raymond James
• SolarEdge (SEDG) Cut to Underperform at Jefferies; PT $17
• Viasat (VSAT) Cut to Neutral at JPMorgan; PT $15
• Initiations
• Antero Resources (AR) Rated New Neutral at Citi; PT $29
• Carvana (CVNA) Reinstated Buy at BofA; PT $185
• Definitive Healthcare (DH) Rated New Buy at BTIG; PT $7
• Dell Technologies (DELL) Rated New Outperform at Mizuho Securities
• Ecarx Holdings (ECX) Rated New Buy at UOB Kay Hian; PT $3.40
• Fidelis Insurance (FIHL) Rated New Neutral at Goldman; PT $18.50
• Jakks Pacific (JAKK) Rated New Buy at B Riley; PT $37
• Lightspeed Commerce Inc (LSPD CN) Rated New Buy at Benchmark; PT $20
• Oruka Therapeutics Inc (ORKA) Rated New Outperform at Leerink; PT $44
• Rhythm Pharma (RYTM) Rated New Market Outperform at JMP; PT $64
• SAP (SAP GR) WalkMe Reinstated Underweight at Barclays; PT $8
• Super Micro Computer (SMCI) Rated New Neutral at Mizuho Securities

Data sources: Bloomberg, Reuters, CQG

David Wienke