Daily Game Plan

by Contributor
on September 20, 2024

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

TODAY’S ECONOMIC DATA:  2:00ET Fed’s Harker speaks

HIGHLIGHTS and News:  

  • The BOJ kept borrowing costs unchanged at 0.25% in a sign it’s not in a hurry to hike again
  • Hezbollah launched 140 rockets into northern Israel in 3 strikes
  • Shohei Ohtani became the first player in MLB history to reach the 50/50 club; HR/Stolen Bases
  • Goldman’s Tactical Specialist, Scott Rubner Is Bearish Near-Term But Sees Year-End Rally

World stocks eased, hovering near record highs, while the yen eased after Bank of Japan Governor Kazuo Ueda tempered expectations around imminent rate hikes. Japan’s
key inflation gauge accelerated to 2.8% in August in data published just hours before the BOJ wrapped up its meeting. MSCI index of world stocks edged lower after Thursday’s 1.6% jump took it to a record high. In China, the central bank kept its benchmark
lending rates on hold, countering expectations for a move lower. Data today showed British retail sales rose by a stronger-than-expected 1% in August and growth in July was revised up.        

 

EQUITIES:  

US equity futures slipped after the S&P500 hit its 39th record high of the year, as some bad news on earnings from FedEx tempered the euphoria around the trajectory for interest rates.
Traders are also braced for the quarterly “triple witching,” potentially amplifying market moves. About $5.1 trillion of derivatives contracts tied to stocks, index options and futures are set to expire today. The options expiry coincides with the rebalancing
of benchmark indexes. In corporate news, Constellation Energy will invest $1.6 billion to revive the shuttered Three Mile Island nuclear plant after agreeing to sell all the output to Microsoft to power its AI needs. OpenAI’s latest $6.5 billion funding round
is oversubscribed, and investors will find out today whether they’re part of the deal. J&J lifted its baby powder settlement offer to more than $8.2 billion from $6.5 billion.

Futures ahead of the bell: E-Mini S&P -0.15%, Nasdaq -0.2%, Russell 2000 -0.15%, DJI +0.05%  

In pre-market trading, FedEx (FDX) shares tumble 12% after the parcel carrier lowed its annual outlook while posting a worse-than-expected quarterly profit. Nike (NKE)
shares rise 6.8% Friday after the company announced Elliott Hill will return to the company as CEO. Apellis Pharmaceuticals (APLS) shares drop 7.5% after the drugmaker said a committee of the European Medicines Agency has upheld its negative opinion on the
marketing authorization for the company’s eye drug, Syfovre. Assembly Biosciences (ASMB) shares rise 5.4% after Jefferies upgraded the stock to buy from hold ahead of data for the firm’s Herpes simplex virus (HSV) anti-viral drug. Snap (SNAP) shares fall over
1% as B Riley Securities initiated coverage on the social media company with a neutral recommendation.

European gauges slipped from two-week highs, with automakers leading the slide after Mercedes-Benz cut its full-year profit margin target for the second time in less than two months,
on the back of weakness in China. UK retail sales beat expectations in August as shoppers took advantage of discounting. But consumer confidence crashed in September by the most since 2022 amid concern about future tax rises, according to GfK data. Luxury
shares were among the worst performers on the wider benchmark after Jefferies and Goldman slashed several targets and estimates. European delivery companies including Deutsche Post and IDS were also under pressure after US operator FedEx Corp. warned its business
would slow in the year ahead. Stoxx 600 -0.7%, DAX -0.7%, CAC -0.7%, FTSE 100 -0.8%. Autos -3%, Technology -1.7%, Basic Resources -1.4%. Banks +0.8%, Utilities +0.8%.

Shares in Asia rose to end their best week in a month as the Federal Reserve’s larger-than-expected rate cut and hopes of China’s eventual stimulus rekindled appetite for riskier assets.
The MSCI Asia Pacific Index rose 0.6% to a two-month high. Japanese shares held onto gains as the Bank of Japan kept its monetary policy steady, signaling it’s in no rush to raise interest rates. Blue chips in China edged up but remained close to a seven-month
low touched earlier in the week. Chinese property stocks rallied as Bloomberg reported that regulators are working on a proposal that would allow mega cities such as Shanghai and Beijing to relax restrictions for non-local buyers. Chinese electric vehicle
stocks rise after the European Union and China agreed to intensify discussions in a bid to avert looming tariffs ahead of a nearing deadline. Sensex +1.6%, Nikkei 225 +1.5%, Hang Seng Index +1.4%, Philippines +0.7%, Taiwan +0.5%, Kospi +0.5%, ASX 200 +0.2%,
CSI 300 +0.15%. Indonesia’s JCI Index -2%.

FIXED INCOME: 
 

Treasuries are slightly cheaper across the curve in a mild bear-flattening move that partially unwinds the steepening trend advanced by Wednesday’s half-point Fed
rate cut. Front-end yields are cheaper by more than 2bp, narrowing 2s10s and 5s30s curve spreads; 10-year around 3.73%. Treasury coupon auctions ahead next week include 2-, 5- and 7-year note sales Tuesday, Wednesday and Thursday.

 

 

 

METALS: 

Gold hit a fresh record above $2,600 an ounce as the Fed’s aggressive start to policy easing continued to ripple through markets. Bank of America’s Michael Hartnett
said the optimism in equity markets following the Fed’s move is stoking the risk of a bubble, making bonds and gold an attractive hedge against any recession or renewed inflation. China’s economic downturn and gold’s record prices are damping the nation’s
consumer appetite for the metal in what should be a busy time for jewelry sales. Spot gold +1.1%, silver +1.8%, copper +0.2%.

 

 

 

ENERGY:   

 

Oil prices edge lower but are still on track for the biggest weekly advance since February. Brent and WTI were both on track for gains of 4% or more for the week.
Crude jumped in Thursday’s session, alongside global equities, as worries over an economic hard landing abated. Fears of a broader Middle East conflict that could threaten oil flows from the region also contributed to gains. Hezbollah leader Hassan Nasrallah
said on Thursday that the back-to-back blasts of electronic devices across Lebanon amount to “a declaration of war.” WTI -0.5%, Brent -0.5%, US Nat Gas +0.9%, RBOB -0.4%.

 

 

CURRENCIES:   

In currency markets, the dollar inched higher and the yen fell sharply on the back of Ueda’s remarks after the BOJ kept interest rates steady and said that upside
risks to inflation are easing. BOJ’s Ueda gave few hints on when the central bank could raise rates again and said uncertainty around the US economy and market volatility could impact its policy moves. Traders had anticipated a hawkish stance. The onshore
yuan strengthened to the highest in nearly 16 months after the People’s Bank of China’s surprise move to keep lending rates on hold and setting a stronger daily reference rate, leading to intervention by state banks to prevent it from appreciating too fast.
Sterling reached new cycle highs after UK retail sales exceeded expectations. US$ Index +0.15%, GBPUSD +0.2%, EURUSD +0.1%, USDJPY +1%, AUDUSD +0.05%, USDNOK +0.2%, USDCHF +0.2%.

 

 

 

Spot Bitcoin +0.6%, Spot Ethereum +3.6%. 

 

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
    • AGNC Investment (AGNC) Raised to Overweight at Wells Fargo; PT $12
    • Annaly (NLY) Raised to Overweight at Wells Fargo; PT $23
    • Aptiv (APTV) Raised to Overweight at Wells Fargo; PT $87
    • Assembly Bio (ASMB) Raised to Buy at Jefferies; PT $35
    • BOK Financial (BOKF) Raised to Buy at Truist Secs; PT $123
    • Centessa Pharmaceuticals (CNTA) US Raised to Overweight at Morgan Stanley; PT $26
    • Cogeco Communications (CCA CN) Raised to Outperform at National Bank
    • Millicom (TIGO) Raised to Sector Outperform at Scotiabank; PT $37.30
    • Tim Brasil (TIMS3 BZ) ADRs Raised to Sector Outperform at Scotiabank
    • Visteon (VC) Raised to Overweight at Wells Fargo; PT $122
  • Downgrades
    • Ares Commercial (ACRE) Cut to Underweight at Wells Fargo; PT $7
    • Claros Mortgage Trust (CMTG) Cut to Underweight at Wells Fargo; PT $8
    • Dana (DAN) Cut to Underweight at Wells Fargo; PT $9
    • DHT Holdings (DHT) Cut to Sell at SEB Equities; PT $9.50
    • FedEx (FDX) Cut to Neutral at Fubon; PT $300
      • Cut to Underweight at Morgan Stanley; PT $200
      • Cut to Hold at Punto Casa de Bolsa; PT $291.69
    • Frontline PLC (FRO) Cut to Sell at SEB Equities; PT $19.05
    • Intl Seaways (INSW) Cut to Hold at SEB Equities; PT $55
    • Notable Labs Ltd (NTBL) Cut to Market Perform at JMP
    • Par Pacific (PARR) Cut to Neutral at Piper Sandler; PT $23
    • PBF Energy (PBF) Cut to Underweight at Piper Sandler; PT $25
    • PepsiCo (PEP) Cut to Equal-Weight at Morgan Stanley; PT $185
    • Prosperity Banc (PB) Cut to Hold at Truist Secs; PT $79
    • Rapid7 (RPD) Cut to Sector Perform at RBC; PT $40
    • Scorpio Tankers (STNG) Cut to Hold at SEB Equities; PT $73
    • Telecom Argentina (TECO2 AR) ADRs Cut to Sector Underperform at Scotiabank
    • Valero Energy (VLO) Cut to Neutral at Piper Sandler; PT $123
    • Velocity Financial (VEL) Cut to Underweight at Wells Fargo; PT $20
  • Initiations
    • Advanced Energy (AEIS) Rated New Outperform at Baird; PT $128
    • Affirm Holdings (AFRM) Rated New Positive at Susquehanna; PT $52
    • Alliant Energy (LNT) Rated New Hold at Jefferies; PT $67
    • Ameren (AEE) Rated New Buy at Jefferies; PT $97
    • American Electric Power (AEP) Rated New Hold at Jefferies; PT $107
    • Amkor Technology (AMKR) Rated New Overweight at KeyBanc; PT $38
    • BWX Technologies (BWXT) Rated New Hold at Baptista Research; PT $111.90
    • Clearway Energy (CWEN/A) Rated New Buy at Jefferies; PT $35
    • Curtiss-Wright (CW) Rated New Underperform at Baptista Research
    • CyberArk (CYBR) Rated New Outperform at RBC; PT $328
    • Dominion Energy (D) Rated New Hold at Jefferies; PT $58
    • Duke Energy (DUK) Rated New Buy at Jefferies; PT $138
    • Evergy (EVRG) Rated New Buy at Jefferies; PT $70
    • Exelon (EXC) Rated New Buy at Jefferies; PT $46
    • Globant (GLOB) Rated New Outperform at Bradesco BBI; PT $240
    • Idacorp (IDA) Rated New Hold at Jefferies; PT $110
    • Knight-Swift (KNX) Rated New Hold at Baptista Research; PT $59.50
    • Landstar (LSTR) Rated New Underperform at Baptista Research; PT $173.90
    • Middleby (MIDD) Rated New Outperform at Baptista Research; PT $162.40
    • OGE Energy (OGE) Rated New Buy at Jefferies; PT $46
    • Pinnacle West Capital (PNW) Rated New Buy at Jefferies; PT $104
    • Portland General (POR) Rated New Hold at Jefferies; PT $48
    • PPL (PPL) Rated New Buy at Jefferies; PT $38
    • Reddit (RDDT) Rated New Buy at B Riley; PT $75
    • Snap (SNAP) Rated New Neutral at B Riley; PT $11
    • Southern Co (SO) Rated New Hold at Jefferies; PT $94
    • Stantec (STN CN) Rated New Hold at Baptista Research
    • Tetra Tech (TTEK) Rated New Hold at Baptista Research; PT $49.90
    • WEC Energy (WEC) Rated New Hold at Jefferies; PT $102
    • Wesco (WCC) Rated New Hold at Baptista Research; PT $189.10
    • WEX (WEX) Rated New Outperform at Baptista Research; PT $235.90
    • WillScot Holdings Corp (WSC) Rated New Hold at Baptista Research
    • Woodward (WWD) Rated New Hold at Baptista Research; PT $184.60
    • Xcel Energy (XEL) Rated New Hold at Jefferies; PT $70

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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