Daily Game Plan

by Contributor
on September 25, 2024

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

TODAY’S ECONOMIC DATA:  10:00ET New Home Sales; 1:00ET 5-Year Note Auction; 4:00ET Fed’s Kugler speaks

HIGHLIGHTS and News:  

  • UN Security Council to meet regarding Lebanon this evening
  • Israel Intercepts First Hezbollah Missile Fired at Tel Aviv
  • Iran’s President said plans are underway to discuss a nuclear deal
  • Trump was briefed by the White House on “real and specific threats from Iran to assassinate him”
  • Biden may announce about $5.6B more in military equipment to Ukraine as soon as tomorrow

Global stocks are mixed to lower as the latest policy moves from China today aren’t rippling beyond Asian markets as investors question whether the steps will be
enough. China’s central bank lowered the interest rate charged on its one-year policy loans by the most on record, kicking off a sweeping program to revive confidence in the world’s second-largest economy. China cut the rate of the medium-term lending facility
to 2% from 2.3%. Central banks are in focus in Europe, with Sweden’s Riksbank cutting borrowing costs and raised the possibility of a bigger step in coming months.  A policy decision is also due in the Czech Republic. ECB’s Governing Council member Klaas Knot
said he expects gradual interest-rate cuts “in the near future” and in the first half of next year. Global growth is in the process of stabilizing as the drag from central bank rate hikes fades and falling inflation boosts households’ incomes, the OECD said.
        

 

EQUITIES:  

US equity futures fluctuated after the S&P 500 finished with its 41st record close this year. Investors questioned the effectiveness of the latest China stimulus and awaited clues on
the US economy. Nasdaq 100 futures retreated as US-listed Chinese tech stocks fell in premarket trading. Berkshire Hathaway sold another $863 million of BofA stock, trimming its stake closer to a 10% regulatory threshold. Apple shares are lower pre-market
as data shows sales in China fell in August. Google files a complaint with the European Commission over Microsoft’s licensing practices for cloud computing.

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

In pre-market trading, General Motors shares fall 3.6% after Morgan Stanley analysts cut the car maker to underweight from equal-weight. HP Enterprise (HPE) shares
rise 3% after the IT firm was upgraded to overweight from equal-weight at Barclays amid signs of a recovery in enterprise servers. KB Home (KBH) shares drop 6.4% after the homebuilder reported earnings that fell short. Stitch Fix (SFIX) fell as much as 25%
after the online retailer’s forecasts fell short of estimates. DoorDash (DASH +2%) was raised to overweight from sector weight at KeyBanc.

Vistra Corp. shares (VST) overtook Nvidia shares (NVDA) last week to become the top performer in the S&P 500 SPX on a year-to-date basis. That’s an impressive feat
for an electricity provider. Investors are upbeat about their nuclear-power businesses in the artificial-intelligence era.

Emerging Markets ETF (EEM) rallied sharply yesterday and is now at the key 200dma relative to the S&P 500

European gauges are mixed after a two-day win streak as losses in energy and auto names weigh on the broader market. The Stoxx 600 reversed early losses to trade slightly
higher after gaining nearly 1% on Wednesday. Oil and gas shares underperform on concerns China’s stimulus plans would not do enough to boost demand.  SAP SE slid as much as 4% on news the German software developer and other companies are being probed by US
officials for potentially conspiring to overcharge government agencies over the course of a decade.  Volkswagen and unions will start talks over cost cuts including plans to potentially shutter factories in Germany. Stoxx 600 +0.1%, DAX -0.2%, CAC -0.2%, FTSE
100 +0.3%. Real Estate +1.35%, Healthcare +0.6%, Luxury +0.5%. Autos -0.7%, Energy -0.6%, Utilities -0.4%.

Shares in Asia were broadly mixed after rising earlier in the day, as a policy-driven rally in China started to lose momentum after skepticism kicked in. The PBOC followed its announcement
of wide-ranging policy easing on Tuesday with a cut to medium-term lending rates to banks today. Mainland Chinese blue chips gained over 1%, adding to a 4.3% jump in the prior session. Hong Kong’s Hang Seng also climbed, adding to Tuesday’s 4.1% surge. Chinese
property stocks jumped more than 20%, as Beijing’s package of stimulus measures for the sector boosts investor sentiment. The MSCI Asia Pacific Index edged up 0.1% after gaining as much as 1%. CSI 300 +1.5%, Taiwan +1.5%, Vietnam +0.8%, Hang Seng Index +0.7%,
Sensex +0.3%, ASX 200 -0.2%, Topix -0.2%, Indonesia -0.5%, Philippines -0.9%, Singapore -1.1%, Kospi -1.3%.

FIXED INCOME: 
 

Treasuries edge lower, with US 10-year yields rising 3 bps to 3.76%. An auction of new 5-year notes during US afternoon follows good demand for Tuesday’s 2-year note
sale. Swaps traders raised their wagers to about 75 bps of Fed easing by year-end — implying a half-point move at one of the two remaining meetings.

 

 

 

METALS: 

Gold steadied after hitting a new all-time high, as weak US data bolstered the case for deeper interest rate cuts. Investors are waiting for more US data — including
the personal consumption expenditures gauge and jobless claims — due later in the week, for additional indications on the Fed’s likely easing path. Spot gold ~flat, silver -0.7%, copper -0.6%.

 

 

 

ENERGY:   

 

Oil prices pull back as optimism over China stimulus plan fades. Oil made strong gains Tuesday after the People’s Bank of China announced its most aggressive stimulus
program since the COVID-19 pandemic, but analysts said doubts over whether the measures will be enough to turn the tide against an economic slump for the world’s largest crude importer continue to linger. Middle East tensions may also help limit downside for
crude, with traders on alert for any escalation between Israel and Iran-backed Hezbollah. Meanwhile, Tropical Storm Helene strengthens as hurricane warnings cover parts of Florida and Mexico. US crude inventories fell by 4.34 million barrels last week, the
API reported. That would take total holdings to the lowest since 2022 if confirmed by the EIA today. WTI -1.2%, Brent -1%, US Nat Gas +1.5%, RBOB -1.1%.

 

 

 

CURRENCIES:   

In currency markets, the yen and Swiss franc are the worst-performing major currencies. Sterling dipped after touching its highest level in two and a half years against
the dollar. The Swedish krona fell after the Riksbank cut borrowing costs by a quarter point and raised the possibility of a bigger move. In the wake of China’s stimulus, the yuan strengthened to a fresh 16-month high before retreating.  Australia’s dollar
slipped after inflation figures slowed to a three-year low last month, potentially setting up an earlier rate cut by the central bank. .US$ Index +0.03%, GBPUSD -0.35%, EURUSD +0.05%, USDJPY +0.8%, AUDUSD -0.25%, USDNOK +0.3%, USDCHF +0.75%, NZDUSD -0.4%.

 

 

 

Spot Bitcoin -1%, Spot Ethereum -1.3%. Wiz is said to be in talks to sell existing shares that would value the cybersecurity startup as high as $20 billion. FTX witness
Caroline Ellison is sentenced to two years in prison.

 

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
    • Asbury Auto (ABG) Raised to Equal-Weight at Morgan Stanley; PT $240
    • AutoNation (AN) Raised to Overweight at Morgan Stanley; PT $200
    • Baker Hughes (BKR) Raised to Overweight at Wells Fargo; PT $42
    • Denison Mines (DML CN) Raised to Outperform at BMO; PT C$3
    • DoorDash (DASH) Raised to Overweight at KeyBanc; PT $177
    • Group 1 Automotive (GPI) Raised to Overweight at Morgan Stanley
    • HP Enterprise (HPE) Raised to Overweight at Barclays; PT $24
    • Light & Wonder (LNW) Raised to Buy at UBS
    • Lithia & Driveway (LAD) Raised to Equal-Weight at Morgan Stanley
    • MEG Energy (MEG CN) Raised to Sector Outperform at Scotiabank; PT C$35
    • Penske Automotive (PAG) Raised to Overweight at Morgan Stanley
    • Petrobras (PETR4 BZ) ADRs Raised to Overweight at JPMorgan; PT $19
    • Sonic Automotive (SAH) Raised to Equal-Weight at Morgan Stanley
    • Tenaris (TEN IM) ADRs Raised to Neutral at Grupo Santander; PT $35
  • Downgrades
    • Ecopetrol (ECOPETL CB) ADRs Cut to Underweight at JPMorgan; PT $8.50
    • Expedia (EXPE) Cut to Hold at TD Cowen
    • Ford (F) Cut to Equal-Weight at Morgan Stanley; PT $12
    • Fortrea (FTRE) Cut to Hold at Jefferies; PT $21
    • General Motors (GM) Cut to Underweight at Morgan Stanley
    • Global Payments (GPN) Cut to Neutral at BTIG
      • Cut to Neutral at Seaport Global Securities
    • HBT Financial (HBT) Cut to Neutral at DA Davidson; PT $24
    • Imperial Oil (IMO CN) Cut to Sector Perform at Scotiabank; PT C$110
    • Magna Intl (MG CN) Cut to Equal-Weight at Morgan Stanley; PT $43
    • Medpace Holdings (MEDP) Cut to Hold at Jefferies; PT $345
    • MINISO (MNSO) ADRs Cut to Hold at DBS Bank; PT $13.30
      • ADRs Cut to Neutral at JPMorgan; PT $15
    • NOV Inc (NOV) Cut to Underweight at Wells Fargo; PT $16
    • Old Second (OSBC) Cut to Neutral at DA Davidson; PT $17
    • Phinia (PHIN) Cut to Equal-Weight at Morgan Stanley; PT $50
    • Rivian (RIVN) Cut to Equal-Weight at Morgan Stanley
    • Smartsheet (SMAR) Cut to Market Perform at BMO; PT $56.50
      • Cut to Hold at Canaccord; PT $56.50
      • Cut to Market Perform at William Blair
      • Cut to Neutral at DA Davidson; PT $56.50
      • Cut to Equal-Weight at Wells Fargo; PT $57
      • Cut to Hold at Jefferies; PT $56.50
      • Cut to Hold at Needham
    • Textron (TXT) Cut to Hold at TD Cowen
    • Tyson (TSN) Cut to Underweight at Piper Sandler; PT $50
    • Union Pacific (UNP) Cut to Inline at Evercore ISI; PT $247
  • Initiations
    • Apollo Global (APO) Rated New Outperform at Wolfe; PT $139
    • Archrock (AROC) Rated New Outperform at Evercore ISI; PT $24
    • Cadence Design (CDNS) Rated New Underperform at Oppenheimer; PT $225
    • Cipher Mining (CIFR) Rated New Outperform at Macquarie; PT $6
    • CleanSpark (CLSK) Rated New Outperform at Macquarie; PT $20
    • Core Scientific (CORZ) Rated New Outperform at Macquarie; PT $16
    • Ichor (ICHR) Rated New Market Perform at Oppenheimer; PT $35
    • KLA Corp (KLAC) Rated New Market Perform at Oppenheimer; PT $750
    • LFTD Partners (LIFD) Rated New Overweight at Zuanic
    • MARA Holdings Inc (MARA) Rated New Outperform at Macquarie; PT $22
    • Onto Innovation Inc (ONTO) Rated New Outperform at Oppenheimer; PT $260
    • Perspective Therapeutics (CATX) Rated New Buy at Truist Secs; PT $21
    • Portland General (POR) Rated New Outperform at Evercore ISI; PT $53
    • Primo Water (PRMW CN) Rated New Buy at William O’Neil
    • Riot Platforms (RIOT) Rated New Outperform at Macquarie; PT $15
    • Shopify (SHOP CN) Reinstated Buy at William O’Neil
    • Ultra Clean (UCTT) Rated New Outperform at Oppenheimer; PT $70
    • Vertiv Holdings (VRT) Reinstated Buy at William O’Neil
    • Vizsla Royalties (VROY CN) Rated New Outperform at Raymond James

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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