Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Housing Starts, Building Permits; 2:00ET FOMC Rate Decision; 2:30ET Fed Chair presser*.
4:00ET TIC Flows

HIGHLIGHTS and News:  

• Iran’s president says the US is culpable in Hezbollah pager blasts  
• The House votes today on a six-month interim spending bill to sidestep a government shutdown; attached to the bill is a provision to require proof of citizenship
  to vote
• US 30-year mortgage rate falls to two-year low of 6.15%
  
• Blinken says ‘tremendous’ progress on ceasefire over past month  

Global stocks steadied as a cautious tone spread across world markets before the Federal Reserve’s interest-rate decision. Traders are split over whether the US central
bank will announce a cut of 25 or 50 basis points later today, with market-implied odds currently signaling a ~60% chance of the bigger move. The MSCI’s index of world stocks was flat after touching a two-week high a day earlier and just below an all-time
high. Hezbollah promised to retaliate against Israel after accusing it of detonating pagers across Lebanon on Tuesday, killing nine people and wounding nearly 3,000 others who included fighters and Iran’s envoy to Beirut. Parts of Asia are celebrating Autumn
with Hong Kong and South Korean markets shut.         

EQUITIES:  

US equity futures were muted as investors braced for the Federal Reserve’s long-awaited policy decision, with the size of the expected rate cut still the focus of debate. Contracts on
the S&P 500 inched higher in a tight range overnight, with the benchmark about 0.5% below its July closing record. Investors are looking for the Fed to ease policy sufficiently to respond to recent signs of weakness in the economy, without stirring concerns
that conditions are worse than markets appreciate. In corporate news, Microsoft and BlackRock are teaming up on an effort to raise $30 billion to build out AI infrastructure, while Google parent Alphabet won its bid to overturn a $1.7 billion EU antitrust
fine related to digital ads.

Futures ahead of the bell: E-Mini S&P +0.03%, Nasdaq +0.1%, Russell 2000 -0.1%, DJI +0.1%

In pre-market trading, United States Steel (X) shares advance 4.0% after a US security panel granted Nippon Steel permission to refile its plans to purchase the American
steel company.  Applied Therapeutics (APLT) shares jump 40% after the company completed its late-cycle review meeting with the FDA on the ongoing New Drug Application review of govorestat. Intuitive Machines (LUNR) shares rise 54% after the company said it
got a contract from NASA with a maximum potential value of $4.82 billion. Super Micro Computer (SMCI) rose 0.8% as Needham & Co initiated with a recommendation of buy. VF Corporation (VFC) shares rise 3.3% after the North Face owner was upgraded to overweight
from equal-weight by analysts at Barclays. 23andMe (ME) co-founder and Chief Executive Officer Anne Wojcicki told employees that she remains committed to taking the genetic testing company private following the resignation of its independent board members.
Shares are down 9.7%.

Equal weight S&P 500 put in another all-time high.

REITs have had a nice run relative to the broader market the last two months, ahead of expected interest rate cuts.

European gauges slipped, with media and technology sectors the biggest laggards, while banks and autos outperformed. Novo Nordisk fell 2% as it said its blockbuster diabetes shot Ozempic
was “very likely” to be one of the next drugs targeted for a price cut in bargaining with the US government’s Medicare program. A recent survey from Bank of America showed investor confidence in European equities is ebbing on worries about a weaker economy.
The region’s cyclical stocks — which are more sensitive to economic growth — have underperformed defensive peers for most of this quarter. Barclays Plc strategists said cyclicals “should stabilize” and that the bulk of the rally in defensives may be over if
economic data hold up. Stoxx 600 -0.4%, DAX is flat, CAC -0.4%, FTSE 100 -0.6%. Banks +0.5%, Autos +0.4%. Media -0.9%, Technology -0.7%.

Shares in Asia were mixed as all eyes turn to the Fed’s policy decision today. The MSCI Asia Pacific Index held steady, with Toyota Motor among the biggest boosts while TSMC dragged on
the regional benchmark. Japan’s Nikkei 225 climbed as much as 1.3% early on in reaction to overnight weakness in the yen but pared those gains to 0.5% as the currency rebounded. Japan’s export growth unexpectedly cooled in August from a year earlier as shipments
to the US fell for the first time in almost three years. Imports rose just 2.3%, missing the lowest estimate. Chinese chip-related stocks jumped after the nation claimed a breakthrough in the development of homegrown semiconductor-making equipment, a step
in overcoming US sanctions. Meanwhile, China announced sanctions on American companies selling arms to Taiwan. Markets in Hong Kong and South Korea were closed for holidays. Shanghai Composite +0.5%, Vietnam +0.5%, Topix +0.4%, CSI 300 +0.4%, ASX 200 was flat.
Singapore -0.05%, Sensex -0.15%, Philippines -0.3%, Taiwan -0.8%.

FIXED INCOME: 
 

Treasury yields ticked higher, and the curve is a bit steeper ahead of the FOMC rate decision. Financial markets are fully pricing in a 25 bps rate cut, while the
odds of a 50 bps cut stood at 61%, according to LSEG data, up from as little as 14% a week ago.  Treasury yields are cheaper by 2bp-3.5bp across the curve with the 10-year at 3.68%, near the session high. Ahead of the Fed decision, swaps market prices in around
39bp of rate-cut premium and a combined 115bp over this year’s three remaining meetings.

METALS: 

Gold remained steady after slipping from a record high earlier on Monday, ahead of the Federal Reserve’s long-awaited pivot to lower borrowing costs. Goldman Sachs
noted that a minor setback could occur if the Fed only cuts rates by 25 basis points, but they still expect gold to rise to $2,700 per ounce by early next year. Silver is lower but has been outperforming of late, gaining over 10% in a little over a week. Spot
gold +0.3%, silver -0.3%, copper +0.6%.

ENERGY:   

Oil prices fell after two sessions of gains after an industry report showed increasing US crude and fuel inventories, offsetting rising tension in the Middle East
and the potentially bullish impact of a US interest rate cut. US crude inventories rose by almost 2 million barrels last week, the API reported. That would be the biggest surge in almost three months if confirmed by the EIA today. Still, supplies at Cushing
fell closer to the level that’s seen as its operational minimum. The US may today announce a plan to buy up to 6 million barrels of oil for its strategic reserve, Reuters reported. WTI -0.9%, Brent -0.8%, US Nat Gas +1.2%, RBOB -0.8%.

CURRENCIES:   

In currency markets, the dollar dipped, before paring losses. Tuesday’s robust US retail sales data was taken as weakening the case for aggressive Fed easing. Vanguard
said it’s buying the dollar this week on the view that Fed rate-cut bets are overdone. The Japanese yen climbed as much as 0.8%, signaling expectations of a narrowing divergence in policy between the Fed and the Bank of Japan, which decides on rates on Friday.
Sterling strengthened as money markets see the Bank of England delivering modestly less easing after data today showed UK inflation rose 2.2% in August, slightly above the BOE’s target. Services inflation rose more than expected. US$ Index -0.1%, GBPUSD +0.4%,
EURUSD +0.1%, USDJPY -0.4%, AUDUSD +0.5%, USDNOK -0.3%, NZDUSD +0.6%, USDCHF -0.4%.

The US$ Index has held above the key 200 week moving average for five straight weeks.

Spot Bitcoin -0.4%, Spot Ethereum -1.9%. Anthony Scaramucci projected record highs for Bitcoin fueled by a combination of interest-rate cuts and US crypto regulatory
clarity in the wake of November’s presidential election.   

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
• Ambac Financial (AMBC) Raised to Buy at Roth Capital Partners; PT $15
• Braskem (BRKM5 BZ) ADRs Raised to Buy at UBS
• Extra Space (EXR) Raised to Buy at Jefferies; PT $204
• GE Healthcare (GEHC) Raised to Buy at BTIG; PT $100
• NMI Holdings (NMIH) Raised to Outperform at RBC; PT $48
• Sirius XM (SIRI) Raised to Buy at Guggenheim; PT $30
• SL Green (SLG) Raised to Neutral at Compass Point; PT $60
• VF Corp (VFC) Raised to Overweight at Barclays; PT $22
• Victoria’s Secret (VSCO) Raised to Equal-Weight at Barclays; PT $25
• Downgrades
• Edwards Life (EW) Cut to Hold at Jefferies; PT $70
• Incyte (INCY) Cut to Hold at Truist Secs; PT $74
• ResMed (RMD) Cut to Underperform at Wolfe; PT $180
• Initiations
• ARM Holdings (ARM) ADRs Rated New Outperform at William Blair
• Atha Energy (SASK CN) Rated New Speculative Buy at Canaccord; PT C$1.20
• Beam Therapeutics (BEAM) Rated New Hold at JonesTrading
• BeiGene (BGNE) ADRs Rated New Market Outperform at JMP; PT $288
• Broadcom (AVGO) Rated New Outperform at William Blair
• Canaan (CAN) ADRs Rated New Buy at B Riley; PT $2
• CervoMed Inc (CRVO) Rated New Buy at Chardan Capital Markets; PT $55
• Civitas Resources Inc (CIVI) Rated New Overweight at JPMorgan; PT $67
• Crescent Energy Co (CRGY) Rated New Neutral at JPMorgan; PT $12
• Editas (EDIT) Rated New Buy at JonesTrading; PT $13
• Halliburton (HAL) Rated New Buy at DBS Bank; PT $45
• Hilton Grand Vacations (HGV) Rated New Sell at Goldman; PT $31
• Hilton Worldwide (HLT) Rated New Buy at Goldman; PT $245
• Hyatt (H) Rated New Neutral at Goldman; PT $151
• Icon (ICLR) Rated New Outperform at Leerink; PT $379
• Inari Medical (NARI) Rated New Hold at Stifel; PT $50
• Intellia Therapeutics (NTLA) Rated New Buy at JonesTrading; PT $41
• KKR & Co. (KKR) Rated New Buy at HSBC; PT $148
• Marriott Intl (MAR) Rated New Buy at Goldman; PT $267
• Marriott Vacations (VAC) Rated New Sell at Goldman; PT $62
• Nvidia (NVDA) Rated New Outperform at William Blair
• OSI Systems (OSIS) Rated New Overweight at Wells Fargo; PT $170
• Penumbra (PEN) Rated New Buy at Stifel; PT $238
• Reddit (RDDT) Rated New Outperform at Baptista Research; PT $69.30
• Rhythm Pharma (RYTM) Rated New Buy at HC Wainwright; PT $64
• Robinhood (HOOD) Reinstated Buy at William O’Neil
• SLB (SLB) Rated New Buy at DBS Bank; PT $64.50
• Super Micro Computer (SMCI) Rated New Buy at Needham; PT $600
• Talen Energy Corp (TLN) Rated New Buy at UBS
• Travel + Leisure Co (TNL) Travel + Leisure Co Rated New Neutral at Goldman; PT $44
• Wyndham Hotels (WH) Rated New Buy at Goldman; PT $96

Data sources: Bloomberg, Reuters, CQG

David Wienke