Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:50ET Fed’s Bowman speaks on economic outlook; 9:00ET ECB’s Lagarde speaks; 9:45ET MNI
Chicago PMI; 10:30ET Dallas Fed Manf. Activity; 1:55ET Fed Chair Powell speaks

HIGHLIGHTS and News:  

• Israel rejects the proposal for a settlement with Hezbollah and does not accept the ceasefire
• Iran said it won’t send forces to Lebanon or Gaza to fight Israel
• Kris Kristofferson dies at 88 years old
• US ports along the East and Gulf coasts are on the verge of shutting down after labor talks stalled
  

World equities ticked lower as economic uncertainty fueled by conflict in the Middle East offset policy measures meant to buoy markets, ahead of a week packed with
data that could determine central banks’ next steps. LSEG data showed investors offloaded a net $10.4B worth of global equity funds during the week, with US equities being sold the most, while investors actively bought European and Asian equity funds. Israel
bombed the center of Beirut for the first time in almost a year of hostilities with Lebanon’s Hezbollah, as the military steps up air assaults. Hamas said the head of its Lebanese branch died in an Israeli strike on his home. Hezbollah says it is ready for
any Israeli land invasion in Lebanon. Iran said it won’t send forces to Lebanon or Gaza to fight Israel. Meanwhile, in China, brokerages were overwhelmed by a pre-holiday rush of retail clients, jamming up trading systems as investors rotated money out of
bonds and deposits into stocks.            

EQUITIES:  

US equity futures start the week on the backfoot ahead of a slew of Fed speakers this week, led by Chair Jerome Powell later today. Traders are already looking forward to key data on
the American labor market due Friday and its impact on Federal Reserve interest-rate cuts. Investors reduced holdings in US equity funds for the fifth consecutive week through Sept. 25, driven by lingering concerns about the economy’s health and caution ahead
of the presidential election.  Large-cap equity funds experienced substantial outflows of $15.2B, the largest weekly net selling since December 2022. In corporate news, DirecTV and Dish agreed to combine in a deal that will create the biggest pay-tv provider
in the US. Meanwhile, US ports along the East and Gulf coasts are on the verge of shutting down after labor talks stalled. No negotiations are planned before dockworkers’ contracts expire today, and Joe Biden said he wouldn’t intervene.  

Futures ahead of the data: E-Mini S&P -0.25%, Nasdaq -0.3%, Russell 2000 -0.5%, DJI -0.15% 

In pre-market trading, AT&T Inc. (T) gains 1% after agreeing to sell its majority stake in DirecTV to private equity firm TPG Inc. for $7.6 billion in cash. Baxter
International (BAX) falls 3% after the Medtech company said late Sunday that its North Cove facility was affected by flooding following Hurricane Helene. CVS Health Corp. (CVS) rises 3% as the Wall Street Journal reported that Glenview Capital Management plans
to meet Monday with CVS management to propose ways for the health-care company to improve its operations. Gogo Inc. (GOGO) gains 4% after the in-flight broadband company agreed to buy Satcom Direct. Stellantis (STLA) drops 13% after slashing its forecasts
for the year. US-listed China stocks are rallying after three of the country’s largest cities eased rules for homebuyers.

KWEB had its second biggest weekly rally since its creation.

European gauges are broadly lower as investor caution kicked in at the start of a week packed with a slew of economic data from the region. The euro zone releases inflation
figures this week, along with producer prices and unemployment. The Stoxx 600 Index is near the lows of the day, with autos hit after several guidance cuts from Volkswagen, Aston and Stellantis rekindled concerns over the sector’s earnings outlook in a year
marred by slowing demand and aggressive Chinese competition. Stellantis fell over 14% after slashing forecasts and saying it would burn more cash than initially expected. Aston Martin plunged by as much as 28%. Despite rock-bottom valuations, autos are the
most underweighted sector among regional fund managers, a BofA survey showed earlier this month. Britain’s GDP figures for the second quarter showed its economy grew slower than expected. Italian inflation sank below 1% — heaping more pressure on the ECB to
accelerate interest-rate cuts. Stoxx 600 -1%, DAX -0.7%, CAC -1.7%, FTSE 100 -0.6%. Autos -4.1%, Construction -2%, Travel -1.9%.

Shares in Asia are mixed to lower with the MSCI Asia Pacific Index falling 1%. Japan led losses as investors fretted over a surprise outcome in the ruling party’s leadership
race, offsetting the optimism in Chinese markets. Chinese stocks were materially higher ahead of a weeklong holiday, entering bull market territory today after China’s largest cities relaxed rules for homebuyers, while the central bank also moved to lower
mortgage rates. China’s CSI 300 ended up 8.5%, its biggest daily gain since 2008 and marking a 28+% run-up from the September low. China’s factory activity shrank for a fifth straight month and the services sector slowed sharply in September, suggesting Beijing
will need even more stimulus. PMI figures did nudge up in September to 49.8 from 49.1 in August but still below the 50-mark separating growth from contraction. The reading was the highest in five months. Benchmarks in Taiwan and Korea fell more than 2% after
declines in US tech shares on Friday. Shanghai Composite ++8%, Hang Seng Tech +6.7%, Hang Seng Index +2.4%, ASX 200 +0.7%, Singapore +0.3%. Vietnam -0.2%, Sensex -1.5%, Philippines -2.1%, Kospi -2.1%, Taiwan -2.6%, Nikkei 225 -4.8%.

FIXED INCOME: 
 

Treasuries bear-flatten, with front-end yields cheaper by around 4bp on the day, following similar front-end-led selloff in bunds after September German regional
CPIs. US 10-year yield around 3.78%, cheaper by about 4bp. Front-end-led losses flatten 2s10s, 5s30s spreads by 2bp-3bp on the day. Focal points of US session include comments from Fed Chair Powell in the afternoon.  

METALS: 

Gold slipped ahead of a speech by Federal Reserve Chair Jerome Powell, which may give clues on the scale of the central bank’s next interest-rate cut. The metals
world converges on London for the annual LME Week gathering.  Copper is lower after touching its highest level in four months earlier in the day. Spot gold -0.8%, Silver -1%, Copper -0.4%.

ENERGY:   

Oil fluctuated, with the market waiting to see how Iran will respond and as traders responded to China’s stimulus measures. Continued Israeli strikes across Lebanon
added to geopolitical uncertainty, though oil prices were still restrained by the risk of increased supply. The Southeastern US began a huge cleanup and recovery effort on Sunday and the death toll climbed towards 100 after Hurricane Helene knocked out power
for millions, destroyed roads and bridges and caused dramatic flooding from Florida to Virginia.  Damage estimates ranged from $15 billion to more than $100 billion. While storm Helene had mostly passed, a new tropical depression headed for landfall was expected
to become another large and powerful hurricane later this week. WTI +0.05%, Brent +0.1%, US Nat Gas -0.2%, RBOB -0.05%.

CURRENCIES:   

In currency markets, the dollar fluctuated as China announced more measures to revive its economy. The euro climbed after German regional inflation data. Month-on-month
readings came higher yet the yearly ones support calls for the ECB to cut interest rates in October. Germany’s government is poised to cut its prediction for Europe’s biggest economy and now expects no expansion at all this year, according to sources. The
yen slipped after Japan’s incoming Prime Minister Shigeru Ishiba is planning to dissolve the country’s lower house on Oct. 9 and hold a general election on Oct. 27. Sterling inched higher as the UK economy grew more slowly than thought in the second quarter,
suggesting the recovery from recession was already losing steam as Labour came to power. US$ Index -0.1%, GBPUSD +0.15%, EURUSD +0.25%, USDJPY +0.5%, AUDUSD +0.25%, NZDUSD +0.1%, USDCHF +0.3%.

Spot Bitcoin -3%, Spot Ethereum -1.2%.   

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
• Accenture (ACN) Raised to Buy at TD Cowen; PT $400
• Amerant Bancorp (AMTB) Raised to Overweight at Piper Sandler; PT $26.50
• BlackLine Inc (BL) Raised to Overweight at Morgan Stanley; PT $70
• Brown-Forman (BF/B) Raised to Overweight at Barclays; PT $53
• Cadence Bank (CADE) Raised to Overweight at Morgan Stanley; PT $39
• Disney (DIS) Raised to Buy at Seaport Global Securities; PT $108
• Frontier Airlines (ULCC) Raised to Market Perform at Raymond James
• Hess (HES) Raised to Outperform at Wolfe; PT $150
• U.S. Bancorp (USB) Raised to Overweight at Morgan Stanley; PT $57
• Westlake Corp (WLK) Raised to Overweight at Barclays; PT $180
• Zions (ZION) Raised to Equal-Weight at Morgan Stanley; PT $54
• Downgrades
• Bruker Corp (BRKR) Cut to Peerperform at Wolfe
• Charter Communications (CHTR) Cut to Underperform at Wolfe; PT $300
• Commerce Bancshares (CBSH) Cut to Underweight at Morgan Stanley; PT $64
• Enbridge (ENB CN) Cut to Hold at Jefferies; PT C$58
• Freeport (FCX) Cut to Sector Perform at Scotiabank; PT $52
• Frontier (FYBR) Cut to Peerperform at Wolfe
• Interpublic (IPG) Cut to Underperform at BNPP Exane
• JPMorgan (JPM) Cut to Equal-Weight at Morgan Stanley; PT $224
• P&G (PG) Cut to Equal-Weight at Barclays; PT $163
• Initiations
• BioLife Solutions (BLFS) Rated New Buy at HC Wainwright; PT $29
• Celldex (CLDX) Rated New Neutral at Goldman; PT $45
• Crescent Capital BDC (CCAP) Rated New Buy at Ladenburg Thalmann; PT $20
• Horizon Bancorp Inc/IN (HBNC) Rated New Outperform at Hovde Group
• Klaviyo (KVYO) Rated New Buy at Benchmark; PT $42
• Permian Resources (PR) Rated New Buy at Goldman; PT $19
• ProKidney (PROK) Rated New Neutral at JPMorgan
• Scorpius Holdings Inc (SCPX) Rated New Buy at ThinkEquity; PT $5
• Skye Bioscience (SKYE) Rated New Sector Outperform at Scotiabank
• South Bow (SOBO CN) Rated New Sector Outperform at Peters & Co; PT C$36
• Tenax Therapeutics (TENX) Rated New Outperform at William Blair
• Verastem (VSTM) Rated New Buy at Guggenheim; PT $13
• Vistra Corp (VST) Rated New Outperform at CICC; PT $132
• ZKH Group (ZKH) ADRs Rated New Outperform at CICC; PT $4

Data sources: Bloomberg, Reuters, CQG

David Wienke