Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:15ET ADP Employment Change; 9:00ET Fed’s Hammack speaks; 10:05ET: Fed’s Musalem speaks;
11:00ET Fed’s Bowman speaks; 12:15ET Fed’s Barkin speaks

HIGHLIGHTS and News:  

• White House sides with union as dockworker strike enters second day
• Google is making progress on AI software that resembles the human ability to reason
• Trump said he would block a federal abortion ban
  
• At least 14 Israeli soldiers have been killed in intense clashes with Hezbollah forces in southern Lebanon since this morning

Global stocks eased as investors held back from panic selling amid escalating Middle East hostilities that also pushed oil prices higher for a second day. Iran said
early today that its missile attack on Israel was finished barring further provocation, although Israel and the US promised retaliation. US East Coast and Gulf Coast dockworkers began their first large-scale strike in nearly 50 years on Tuesday, halting the
flow of about half the country’s ocean shipping. Meanwhile, Benjamin Netanyahu vowed to retaliate against Iran after it fired about 200 ballistic missiles at Israel, a severe escalation of hostilities that world powers fear could spiral into a Middle East-wide
war. The Israel Defense Forces said most of the missiles were intercepted and reports indicated only one person was killed.

EQUITIES:  

US equity futures edge lower ahead of potentially crucial monthly non-farm payrolls numbers on Friday. A crippling US dock strike, that could cost the economy $5 billion each day, will
also be at the front of investor minds, with hopes for a quick end dashed by a lack of active negotiation overnight. The US said it’s “well-postured” to defend Israel against Iranian threats and warned of “severe consequences” for Tehran. Axios reported Israel
plans a significant retaliation to Iran’s attack to occur within days, citing officials. Citigroup strategists recommended that investors add to “select” defensive stocks to hedge against volatility into the US election, before rotating into economy-linked
cyclical stocks. 

Futures ahead of the bell: E-Mini S&P -0.25%, Nasdaq -0.25%, Russell 2000 -0.7%, DJI -0.15% 

In pre-market trading, Nike (NKE) sank about 8% after the company reported fiscal first quarter revenue that missed estimates and withdrew its outlook for the year
amid a CEO transition. Humana (HUM) drops 20% as the proportion of its Medicare Advantage membership enrolled in highly rated plans dropped to about a quarter overall from 94%.  The company said it believed there may be potential errors in calculations by
the Centers for Medicare and Medicaid Services and that it had appealed some of the results. LPL Financial (LPLA) declines 3% after the company fired its CEO for breaking the firm’s pledge to maintain a respectful workplace. Zim Integrated Shipping (ZIM) slips
3% after Jefferies downgraded the company to hold, citing valuation — with the stock up nearly 150% this year.

European gauges erased early small gains as investors assessed the escalating crisis in the Middle East as well as the impact of more stimulus in China. The energy
sector jumped as oil advanced while utilities and travel & leisure sectors were the biggest laggards. JD Sports Fashion fell after reporting results and after Nike reported a drop in quarterly sales. Defense stocks including Saab AB and Rheinmetall AG rose
as Israel vowed to retaliate against Iran.  Stoxx 600 -0.25%, DAX -0.7%, CAC -0.2%, FTSE 100 ~flat. Energy +2.1%, Basic Resources +0.6%. Utilities -1.3%, Travel -1.3%, Retail -1.1%, REITs -1%.

Shares in Asia were mixed, although Hong Kong shares extended their stimulus-induced rally after a holiday, while rising tensions in the Middle East kept a lid on sentiment
elsewhere in the region. The MSCI Asia Pacific Index rose 0.3%, with Tencent and Meituan among the biggest boosts. Following the policy bonanza announced last week, investors are looking for early signs of improving consumer confidence during the Golden Week
holidays, which will keep the mainland market shut through Oct. 7. Japanese stocks resumed their decline after a rebound in the previous session, while Taiwan’s market was shut due to a typhoon. India was also closed for a holiday. Hang Seng Index +6.2%, Philippines
+0.3%, Singapore +0.1%. ASX 200 -0.1%, Vietnam -0.3%, Indonesia -1%, Kospi -1.2%, Nikkei 225 -2.2%.

China’s blue-chip index relative to the S&P 500.

FIXED INCOME: 
 

Treasury yields ticked up as the flight-to-quality bid faded due to the lack of new geo-political headlines from the Mideast. US yields are cheaper by 1.5bp to 4bp
across the curve near session highs, 10-year yield is higher by nearly 3bp on the day at 3.76% while the curve steepens by ~2bp. The US session includes ADP employment change and several Fed speakers. Richmond Fed President Tom Barkin will speak on the economy
in a speech named “Why Not Declare Victory?”     

METALS: 

Gold eased, following a more than 1% jump in the previous session that brought it close to last month’s record high as a flight to the safe-haven dollar constrained
gains. Investors are awaiting the potential next steps in an expanding Middle East conflict after Israel pledged to retaliate against Iran’s missile strikes. The US is actively supporting preparations to defend Israel, according to an earlier report. Along
with any further escalation of conflicts in the Middle East, traders will be looking to the latest US jobs report due Friday, which may prove to be pivotal in offering insights on the Fed’s pace of rate cuts. Spot gold -0.5%, Silver +0.1%, Copper +0.6%.

ENERGY:   

Oil climbed for a second day amid speculation Israel’s retaliation against Iran’s missile attack may target oil infrastructure.  Brent crude is up another 3+% after
surging more than 5% following Iran’s assault on Tuesday. Iran’s missile attack on Israel restored a war premium to oil markets as the prospect of military escalation between the two Middle East foes calls into question vital flows from the world’s top petroleum-producing
region. The latest developments come after money managers and hedge funds held the most bearish stance on oil on record late last month amid a backdrop of demand concerns and supply surplus. Still, analysts and traders say the market hasn’t fully priced in
the risk of a further attacks on Iranian oil facilities, or the idea that Tehran might try to block the Strait of Hormuz. Focus is now shifting to Israel’s next move.  WTI 3.5%, Brent 3.2%, US Nat Gas 1.5%, RBOB 2.3%.

CURRENCIES:   

In currency markets, the dollar added to yesterday’s gains following Iran’s missile attack on Israel, which drove investors towards safe haven assets.  The yen is
weaker after Japan’s Prime Minister Shigeru Ishiba said the environment doesn’t call for raising interest rates again. Aussie and kiwi earlier advanced on export demand and a surge in the Hong Kong stock index. US$ Index +0.1%, GBPUSD +0.03%, EURUSD +0.05%,
USDJPY +0.9%, AUDUSD +0.2%, NZDUSD +0.05%, USDCHF +0.2%, USDNOK -0.75%.

Spot Bitcoin +0.5%, Spot Ethereum is flat.   

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
• Bank of Hawaii (BOH) Raised to Market Perform at KBW; PT $67
• CVB Financial (CVBF) Raised to Outperform at KBW; PT $22
• Daqo New Energy (DQ) ADRs Raised to Buy at HSBC; PT $29.30
• Hanmi Financial (HAFC) Raised to Outperform at KBW; PT $22
• Home Depot (HD) Raised to Buy at Gordon Haskett; PT $450
• Par Pacific (PARR) Raised to Overweight at JPMorgan; PT $30
• Rio Tinto (RIO LN) ADRs Raised to Buy at Berenberg; PT $79
• Salesforce Inc (CRM) Raised to Outperform at Northland; PT $400
• Science Applications (SAIC) Raised to Overweight at JPMorgan; PT $170
• Sphere Entertainment (SPHR) Raised to Outperform at Wolfe; PT $60
• Tompkins (TMP) Raised to Outperform at KBW; PT $68
• Towne Bank (TOWN) Raised to Outperform at KBW; PT $40
• Downgrades
• Booz Allen (BAH) Cut to Underweight at JPMorgan; PT $158
• Esquire Finl (ESQ) Cut to Market Perform at KBW; PT $72
• First Mid Bancshares Inc (FMBH) Cut to Market Perform at KBW; PT $42
• GE Vernova (GEV) Cut to Market Perform at Raymond James
• Gritstone (GRTS) Cut to Hold at JonesTrading
• Harley-Davidson (HOG) Cut to Neutral at Baird; PT $40
• IBM (IBM) Cut to Hold at DZ Bank; PT $215
• Kezar Life Sciences (KZR) Cut to Neutral at HC Wainwright
• MercadoLibre (MELI) Cut to Neutral at JPMorgan; PT $2,400
• Mobileye (MBLY) Cut to Underperform at BNPP Exane; PT $12
• Nike (NKE) Cut to Hold at CFRA
• Occidental (OXY) Cut to Neutral at Goldman; PT $55
• PBF Energy (PBF) Cut to Neutral at JPMorgan; PT $40
• Primo Water (PRMW CN) Cut to Market Perform at Raymond James
• PVH (PVH) Cut to Neutral at BofA
• Shattuck Labs (STTK) Cut to Hold at Needham
• Cut to Neutral at Citi; PT $2
• SITE Centers (SITC) Cut to Equal-Weight at Wells Fargo; PT $19
• T-Mobile (TMUS) Cut to Outperform at Raymond James
• ZIM Integrated Shipping (ZIM) Cut to Hold at Jefferies; PT $25
• Initiations
• Absci (ABSI) Rated New Buy at Guggenheim; PT $10
• Allurion Technologies (ALUR) Rated New Buy at TD Cowen; PT $2
• Amdocs (DOX) Rated New Buy at Stifel; PT $100
• AppLovin (APP) Rated New Buy at SPDB Intl HK; PT $148
• Archrock (AROC) Rated New Outperform at Mizuho Securities; PT $24
• Atmos Energy (ATO) Rated New Hold at Jefferies; PT $155
• Blackrock (BLK) BlackRock Funding Rated New Outperform at BNPP Exane; PT $940
• BlackSky Technology (BKSY) Rated New Outperform at Oppenheimer; PT $10
• Carter Bankshares (CARE) Rated New Outperform at Hovde Group; PT $22
• Curbline Properties Rated New Buy at Stifel; PT $24.75
• FactSet (FDS) Rated New Inline at Evercore ISI; PT $470
• Iris Energy (IREN) Rated New Buy at Roth Capital Partners; PT $14
• Larimar Therapeutics Inc (LRMR) Rated New Buy at HC Wainwright; PT $15
• Miller Industries (MLR) Rated New Buy at DA Davidson; PT $82
• Moody’s (MCO) Rated New Outperform at Evercore ISI; PT $521
• MSCI (MSCI) Rated New Outperform at Evercore ISI; PT $690
• NCR Atleos (NATL) Rated New Hold at Stifel; PT $31
• Ryan Specialty (RYAN) Rated New Buy at William O’Neil
• S&P Global (SPGI) Rated New Outperform at Evercore ISI; PT $599
• South Bow (SOBO CN) Rated New Equal-Weight at Wells Fargo; PT C$28
• Rated New Market Perform at BMO; PT C$31
• Rated New Neutral at CIBC; PT C$31
• Tandem Diabetes (TNDM) Rated New Outperform at RBC; PT $65
• TXNM Energy Inc (TXNM) Rated New Buy at Jefferies; PT $50

Data sources: Bloomberg, Reuters, CQG

David Wienke