Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Philadelphia Fed Business Outlook, Initial Jobless Claims: 10:00ET Existing Home
Sales, Leading Index; 1:00ET $17 billion 10-Year TIPS Auction

Japan rate decision, Friday

HIGHLIGHTS and News:  

• Bank of England maintains key interest rate at 5%; restrictive policy needed for ‘sufficiently long”
• BOE’s Baily: important not to cut ‘too fast or by too much’
  
• A Japanese firm whose brand appeared on walkie-talkies that exploded in Lebanon said it halted production a decade ago of the model allegedly used in the attacks
• The US accused Iranian hackers of emailing stolen information from Trump’s presidential campaign to Biden’s campaign, as well as to journalists
  
• Exploding Gadgets Death toll Rises as Israel Steps up Talk of War

Stocks rallied across the globe as the Federal Reserve’s half-percentage-point interest-rate cut reignited investor sentiment. Another big reduction hinges on the
US labor market getting weaker, according to JPMorgan analysts, who correctly called the size of this week’s cut.  Meanwhile, the Bank of England refrained from cutting rates for a second consecutive meeting today, maintaining a patient approach. BOE’s Bailey
said the central bank should be able to cut rates ‘gradually over time.’ Bank of Japan Governor Kazuo Ueda faces the delicate task on Friday of making sure investors are firmly aware of rate hikes to come, without ruffling markets. Israeli Defense Minister Yoav
Gallant declared what he called a “new phase” in the war with regional Islamist groups and said troops would be diverted to the Lebanese border, an indication that long-held fears of a wider conflict may soon be realized.         

EQUITIES:  

US equity futures soared, with small cap Russell 2000 futures leading the way as a rally in global stocks gathered pace after the Fed’s outsized cut.  A solid gain in S&P 500 contracts
puts the underlying benchmark on course for a new record high. Nasdaq 100 contracts jumped over 2%, fueled by bets of resilient American growth and lower borrowing costs. A survey of Bloomberg Terminal subscribers shows 75% expect the US to avoid a technical
recession by the end of next year. In corporate news, Apple has been warned by the European Union to open up its highly guarded iPhone and iPad operating systems to rival technologies, or eventually risk significant fines.

Futures ahead of the bell: E-Mini S&P +1.6%, Nasdaq +2.2%, Russell 2000 +2.7%, DJI +1.2%

In pre-market trading, US bank stocks rose, a day after the Federal Reserve cut interest rates by 50 basis points, which is expected to reduce deposit costs and alleviate
pressure on borrowers. Elevated interest rates have weighed on loan growth and consumer spending this year. Shares of major US homebuilders surged, buoyed by expectations of higher demand due to reduced borrowing costs. D.R. Horton Lennar, PulteGroup and Toll
Brothers rose roughly 3% before the bell. Lennar is set to report its quarterly earnings later today.  DoorDash (DASH) gains 3.9% after BTIG upgraded the food-delivery company to buy from neutral, saying its checks signal continued strength. Mobileye (MBLY)
shares rise 7.6% after Intel said it does not currently have any plans to divest a majority interest in the company. Steelcase (SCS) falls over 8% after the maker of office furniture gave a third-quarter revenue forecast that fell short of analyst estimates.

European gauges rose to within striking distance of their record highs, tracking a global rally across financial markets. Britain’s FTSE 100 pared some gains after the Bank of England
held interest rates steady and said it would not rush to ease policy. Sectors tied to economic momentum, such as miners, oil majors and autos outperformed, while typically defensive stocks, like utilities and telecoms, fell. Among individual stocks, shares
in Davide Campari-Milano NV posted their biggest jump since 2020 after its controlling shareholder Lagfin said it would buy up to €100 million of shares in a boost for the Italian spirits maker. Stoxx 600 +1.4%, DAX +1.6%, CAC +1.9%, FTSE 100 +1%. Basic Resources
+3.7%, Technology +3%, Autos +2.4%. Utilities -0.85%, Telecom -0.8%. 

Shares in Asia were broadly higher, as the Federal Reserve’s shift to interest-rate cuts bolstered expectations that other central banks will follow suit, supporting growth. The MSCI
Asia Pacific Index gained 1.3%, with Japanese exporters including Toyota and Hitachi among top gainers as the yen weakened. Hong Kong’s benchmark climbed to the highest level in two months, helped by gains in technology firms. Property-developers in both China
and Hong Kong gained, as the latter cut its base interest rate following the Fed’s eased policy. The optimism pushed Australian shares to a fresh record, which those in Singapore climbed to a 17-year high. Hang Seng Tech +3.25%, Nikkei 225 +2.1%, Hang Seng
Index +2%, Taiwan +1.7%, Singapore +1.1%, CSI 300 +0.8%, ASX 200 +0.6%, Sensex +0.3%, Kospi +0.2%.

FIXED INCOME: 
 

Treasuries are mixed as traders returned their focus to the state of the labor market and US jobless claims data. The yield curve continues to steepen overnight as
traders anticipate more Fed rate cuts coming in November and December. 2s10s spread +5 bps: above 13bp to widest level since June 2022. The market is now pricing in another 70 bps of rate reductions this year. Shorter tenors are outperforming, sending the
two-year yield 4.5 basis points lower to 3.575%.  10-year yield is +1bp at 3.71%.

METALS: 

Gold rose toward yesterday’s brief record high, silver rallied sharply, and copper climbed to its highest level since mid-July. While the Fed’s first cut marked an
aggressive start to the pivot, Powell said on Wednesday that no one should see that as a “new pace.” Still, lower borrowing costs benefit gold. Spot gold +1.2%, silver +3.7%, copper +1.3%.

ENERGY:   

Oil prices advanced as the risk-on tone swept across wider markets, with traders monitoring escalating tensions in the Middle East. The Fed’s moves are seen soothing
worries over an economic downturn, blunting concerns about a hit to energy demand.
Shrinking US inventories could underpin further price gains. Investors are closely watching developments in the Middle East after Israel’s Defense Minister Yoav Gallant declared
what he called a “new phase” in the war with regional Islamist groups. That’s raised fears about a wider conflict that could involve Iran. WTI +1%, Brent +0.9%, US Nat Gas -0.6%, RBOB +1%.

CURRENCIES:   

In currency markets, the dollar rose to its highest in a week during the Asia session only to reverse course. Norway’s krone led gains against the dollar after the
central bank kept borrowing costs unchanged and signaled no intention to cut them before next year as it contends with inflation risks. An index of Asian currencies rose to the strongest level in more than a year. The yen swung between gains and losses in
volatile trading, as the Bank of Japan started its two-day meeting, with economists unanimous there won’t be a policy change. USDJPY pared in half a jump of as much as 1.2%. The euro reversed yesterday’s move to trade higher. Governing Council member Klaas
Knot said he’s comfortable with investor bets on further interest-rate cuts. The Aussie$ is sharply higher, erasing an earlier decline as employment data was enough for markets to dial back RBA December pricing.  US$ Index ~flat, GBPUSD +0.6%, EURUSD +0.3%,
USDJPY +0.6%, EURJPY +1%, AUDUSD +0.9%, USDNOK -1.2%, NZDUSD +0.7%.

Spot Bitcoin +3.9%, Spot Ethereum +4.6%. Bitcoin hit a three-week high. 

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
• DoorDash (DASH) Raised to Buy at BTIG; PT $155
• Equifax (EFX) Raised to Neutral at BNPP Exane; PT $310
• Equity LifeStyle (ELS) Raised to Overweight at Wells Fargo; PT $82
• Ivanhoe Mines (IVN CN) Raised to Overweight at Morgan Stanley; PT C$22
• Pampa Energia (PAMP AR) ADRs Raised to Buy at Banco BTG Pactual; PT $80
• Prelude Therapeutics (PRLD) Raised to Buy at HC Wainwright; PT $5
• Safehold Inc (SAFE) Raised to Outperform at Raymond James; PT $34
• Downgrades
• Athira Pharma (ATHA) Cut to Neutral at Mizuho Securities; PT 50 cents
• Blackstone (BX) Cut to Sell at CFRA; PT $140
• Casey’s (CASY) Cut to Underweight at JPMorgan; PT $337
• Elanco Animal Health (ELAN) Cut to Equal-Weight at Morgan Stanley
• Five Below (FIVE) Cut to Underweight at JPMorgan; PT $95
• Halozyme (HALO) Cut to Neutral at JPMorgan; PT $57
• Lument Finance Trust Inc (LFT) Cut to Market Perform at Raymond James
• Murphy USA (MUSA) Cut to Underweight at JPMorgan; PT $435
• Nexpoint Real Estate Finance (NREF) US Cut to Market Perform at Raymond James
• Progyny (PGNY) Cut to Market Perform at JMP
• Vista Outdoor (VSTO) Cut to Neutral at Roth Capital Partners; PT $42
• WillScot Holdings Corp (WSC) Cut to Equal-Weight at Barclays; PT $44
• Initiations
• Abbott (ABT) Rated New Overweight at Piper Sandler; PT $131
• Avis Budget (CAR) Rated New Equal-Weight at Barclays; PT $105
• Centessa Pharmaceuticals (CNTA) ADRs Rated New Buy at B Riley; PT $33
• Charter Communications (CHTR) Rated New Sector Perform at RBC; PT $345
• Emerson Electric (EMR) Rated New Buy at President Capital Management
• Helix Energy (HLX) Rated New Strong Buy at Raymond James; PT $14
• Hertz (HTZ) Rated New Underweight at Barclays; PT $3
• Kodiak Gas Services (KGS) Rated New Buy at Redburn; PT $35.20
• Kosmos Energy (KOS) Rated New Neutral at Mizuho Securities; PT $5
• Lamar (LAMR) Reinstated Equal-Weight at Wells Fargo; PT $132
• Myriad Genetics (MYGN) Rated New Equal-Weight at Morgan Stanley; PT $32
• NextEra Energy Partners (NEP) Rated New Buy at Jefferies; PT $28
• NextEra Energy (NEE) Rated New Hold at Jefferies; PT $87
• Northern Oil & Gas Inc (NOG) Rated New Outperform at Mizuho Securities
• Oklo (OKLO) Rated New Buy at B Riley; PT $10
• Outfront Media (OUT) Reinstated Overweight at Wells Fargo; PT $22
• Parex Resources (PXT CN) Reinstated Market Perform at BMO; PT C$13
• Quanta Services (PWR) Rated New Outperform at Wolfe; PT $313
• Talos Energy (TALO) Rated New Outperform at Mizuho Securities; PT $16
• Trisura (TSU CN) Rated New Buy at TD Cowen; PT C$52
• Turning Point Brands (TPB) Rated New Buy at Roth Capital Partners
• Wave Life Sciences (WVE) Rated New Buy at B Riley; PT $11

Data sources: Bloomberg, Reuters, CQG

David Wienke