Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET EMPLOYMENT REPORT; 9:00ET Fed’s Williams speaks: 10:00ET Fed’s Goolsbee speaks; 10:30ET
Goolsbee speaks again; 4:00ET Goolsbee again

US SEPT. NONFARM PAYROLLS RISE 254,000 M/M; EST. +150K; US SEPT. UNEMPLOYMENT RATE 4.1%; EST. 4.2%.

HIGHLIGHTS and News:  

• US Dockworkers Go Back to Work as Talks Extended to January
• Walz promises Muslims an equal role in Harris administration
• EU votes to impose tariffs of up to 45% on China-made EVs
• Israel bombs Beirut targets as Iran calls for Arab world to unite

Global stocks rose while oil prices were headed for their biggest weekly gain in two years, as escalating tensions in the Middle East kept markets on edge. Gains
were contained ahead of an important US employment report. Shipping companies globally fell after US dockworkers agreed to end a three-day strike. The ILA and US Maritime Association reached a tentative deal, extending their previous contract through January
15, the two groups said in a joint statement Thursday. US dockworkers go back to work with ports reopening today and the two sides will restart negotiations on a long-term agreement, which will include a pay increase of about 62% over six years. Meanwhile,
Israel carried out huge bombing raids overnight near Beirut airport aimed at Hezbollah commanders and facilities, as the US and its allies warned of “uncontrollable escalation” in the Middle East.  The European Union voted today to impose tariffs as high as
45% on electric vehicles from China, which would last for five years.    

EQUITIES:  

US equity futures edge up ahead of key jobs data that could clarify the path for interest rates. US dockworkers agreed to end a three-day strike that had paralyzed trade on the US East
and Gulf coasts and threatened to become a factor in the presidential election. The deal ends the biggest work stoppage of its kind in nearly half a century. Shipping stocks fall, spurring predictions of a decline in the price of transporting goods by sea.
The spotlight today will be on the US non-farm payrolls report. Economists expect 140,000 job additions, while unemployment is anticipated to keep steady at 4.2%.

Futures ahead of the data: E-Mini S&P +0.25%, Nasdaq +0.3%, Russell 2000 +0.6%, DJI +0.15%. 

In pre-market trading, Rivian (RIVN) drops 8% after the EV company cut its production guidance for the full year. SilverCrest Metals (SILV) gains 11% after entering
a pact to be purchased by Coeur Mining. Spirit Airlines (SAVE) sinks 37% as the budget carrier’s efforts to restructure debt and avoid filing for bankruptcy hit a snag. Align Technology (ALGN) slips 1% after CFRA downgraded the Invisalign owner to strong sell.
Summit Therapeutics (SMMT) rises 11% after the company said FDA granted fast track designation for the proposed use of its ivonescimab cancer drug in combination with platinum-based chemotherapy.

Late April through early July the S&P 500 greatly outperformed the equal-weight S&P 500 (RSP). Since the August lows both have traded pretty much in tandem.

SPX has been struggling of late but still holding above the previous July all-time high.

European gauges are mixed with the auto sector outperforming as the European Union voted to impose tariffs as high as 45% on electric vehicles from China. Shares in
shipping companies fell heavily in Europe after workers and US port operators agreed a deal to end a strike on the East and Gulf coast docks far sooner than expected. A.P. Moller-Maersk A/S dropped as much as 6.6% and Hapag-Lloyd AG fell 12%. The stocks had
rallied yesterday on expectations the strike would lead to increased container rates.  BOE Chief Economist Huw Pill warned against cutting interest rates “too far or too fast” as he set out his case for a “gradual withdrawal” of restrictive monetary policy
over the coming months.  With tensions rising in the Middle East, he added that policymakers “need to be alert to disturbances in the global economy.” Euro-area inflation is now very near to the ECB’s 2% target for consumer-price growth, according to Governing
Council member Mario Centeno. French industrial production rose 1.4% in August, far outpacing the 0.3% consensus in a boost
to the new government.  Stoxx 600 +0.1%, DAX +0.2%, CAC +0.5%, FTSE 100 -0.5%. Autos +1.5%, Energy +1.2%, Travel +1.1%, REITs +0.8%. Healthcare -0.7%, Media -0.6%.

Shares in Asia were mixed to higher with the rally in Hong Kong resuming as investors pinned hopes on Golden Week holiday spending data that may give the market another
leg up. The mainland Chinese market is shut through Monday. The MSCI Asia Pacific Index rose 0.4%, with Tencent and Alibaba among the biggest boosts. Several Hong Kong-listed Chinese chipmakers rallied the most in years, with Morningstar citing investor expectations
of further government support for the sector. Shares of shipping lines in Asia fell as the suspension of the strike damped expectations that container rates would rise due to reduced capacity. Taiwan edged lower after the market reopened following a two-day
closure due to a typhoon. Hang Seng Tech +5%, Hang Seng Index +2.8%, Philippines +1.1%, Topix +0.4%, Singapore +0.3%, Kospi +0.3%. Taiwan -0.4%, Vietnam -0.6%, ASX 200 -0.7%, Sensex -1%. 

FIXED INCOME: 
 

Treasuries hold small losses concentrated in short maturities, flattening the yield curve slightly. US yields trail steeper increases for UK and euro-zone yields
ahead of September US employment data that may revive the case for a half-point Fed rate cut in November. Markets are pricing in a 33% chance of the Fed cutting interest rates in November by 50 basis points, down from 49% last week, the CME FedWatch tool showed.
US 10-year yield at about 3.87% is 2bp higher on the day.

METALS: 

Gold is stead, erasing earlier overnight highs, while trading in a narrow band ahead of a jobs print that’ll offer clues on the health of the US economy. After three
consecutive weekly gains that included bullion reaching a record high in late September, the precious metal was on track to finish the week little changed. Spot gold +0.03%, Silver +0.1%, Copper +0.5%.

ENERGY:   

Oil rose again, adding to the biggest one-day jump in almost a year as fears that Israel may decide to strike Iranian crude facilities keep the market on edge.  Crude
oil prices are on track for strong weekly gains of more than 8% as investors weighed the prospect of a wider Middle East conflict disrupting crude flows against a well-supplied global market. The US is discussing whether it would support Israeli strikes on
Iran’s oil facilities as retaliation for Tehran’s missile attack on Israel, President Biden said on Thursday. Biden’s comments contributed to a 5% rally in oil prices yesterday. WTI +1.2%, Brent +0.7%, US Nat Gas +0.8%, RBOB +0.6%.

CURRENCIES:   

In currency markets, the dollar slipped as traders waited for US non-farm payroll data to assess the size of Federal Reserve interest rate cuts, paring gains in what
is set to be the greenback’s second-best weekly performance this year. The yen rose, though it remained close to a six-week low, as Japan’s Prime Minister instructed the cabinet to draw up comprehensive economic measures. New Japanese PM Shigeru Ishiba emphasized
in his first speech to parliament that his top economic priority is to defeat deflation and put the nation on a stable growth track. Sterling rises after sharp losses on Thursday, boosted by BOE Chief Economist Pill who warned against cutting interest rates
“too far or too fast.” A decent beat for UK construction PMI also helped. The dollar inched lower, hovering near a six-week high ahead of crucial jobs data this morning. The US$ index is up nearly 1.5%, for the week, its strongest performance since April.
US$ Index -0.1%, GBPUSD +0.35%, EURUSD ~flat, USDJPY -0.25%, AUDUSD ~flat, NZDUSD -0.1%, USDCHF -0.1%.

Spot Bitcoin +1%, Spot Ethereum +1.8%   

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
• CVS (CVS) Raised to Buy at TD Cowen; PT $85
• Diamondback (FANG) Raised to Outperform at BMO; PT $215
• Digital Realty (DLR) Raised to Hold at HSBC; PT $160
• Equinix (EQIX) Raised to Buy at HSBC; PT $1,000
• Jacobs (J) Raised to Outperform at Raymond James; PT $160
• M&T Bank (MTB) Raised to Outperform at Wolfe; PT $210
• Morgan Stanley (MS) Raised to Buy at HSBC; PT $118
• Tamarack Valley Energy (TVE CN) Raised to Outperform at BMO; PT C$4.50
• Williams Cos (WMB) Raised to Overweight at Morgan Stanley; PT $58
• Downgrades
• Align Technology (ALGN) Cut to Strong Sell at CFRA
• AZEK (AZEK) Cut to Hold at Loop Capital; PT $47
• BHP (BHP AU) ADRs Cut to Hold at Jefferies; PT $68
• Bilibili (BILI) ADRs Cut to Hold at Daiwa; PT $28.50
• Chubb (CB) Cut to Underperform at BofA
• Dine Brands (DIN) Cut to Hold at Truist Secs; PT $37
• GE Vernova (GEV) Cut to Hold at HSBC; PT $255
• Gulfport Energy (GPOR) Cut to Inline at Evercore ISI; PT $170
• Hartford Financial (HIG) Cut to Neutral at BofA
• Li Auto (LI) ADRs Cut to Neutral at Macquarie; PT $33
• Mobileye (MBLY) Cut to Neutral at UBS; PT $14
• PBF Energy (PBF) Cut to Market Perform at BMO; PT $35
• Sage Therapeutics (SAGE) Cut to Underperform at RBC; PT $4
• Source Energy (SHLE CN) Cut to Market Perform at BMO; PT C$14
• Stellantis (STLA) Cut to Sector Perform at RBC; PT $14.34
• Trican Well Service (TCW CN) Cut to Market Perform at BMO; PT C$5.50
• Vermilion Energy (VET CN) Cut to Market Perform at BMO; PT C$16
• Warner Music (WMG) Cut to Underperform at BofA; PT $30
• Woodward (WWD) Cut to Hold at TD Cowen; PT $160
• Initiations
• ASP Isotopes (ASPI) Rated New Buy at Canaccord; PT $4.50
• Atyr Pharma (ATYR) Rated New Overweight at Wells Fargo; PT $17
• Axis Capital (AXS) Rated New Buy at TD Cowen; PT $118
• Cameco (CCO CN) Rated New Buy at Janney Montgomery; PT C$81.36
• Condor Energies Inc (CDR CN) Rated New Buy at Fundamental Research
• Curbline Properties Rated New Overweight at JPMorgan; PT $25
• Geely Auto (175 HK) ZK US Rated New Outperform at Macquarie; PT $33
• GFL Environmental (GFL CN) Rated New Sector Outperform at Scotiabank
• iRhythm (IRTC) Rated New Neutral at Goldman; PT $78
• LivaNova (LIVN) Reinstated Buy at Goldman; PT $65
• MINISO (MNSO) ADRs Rated New Buy at Citi; PT $26.80
• Mural Oncology (MURA) Rated New Strong Buy at Raymond James; PT $18
• Republic Services (RSG) Rated New Sector Perform at Scotiabank
• Secure Energy Services (SES CN) Rated New Sector Outperform at Scotiabank
• Tandem Diabetes (TNDM) Rated New Neutral at Goldman; PT $46
• TSMC (2330 TT) ADRs Rated New Buy at ABC International; PT $207.80
• Waste Connections (WCN CN) Rated New Sector Perform at Scotiabank
• WM (WM) Rated New Sector Perform at Scotiabank; PT $220

Data sources: Bloomberg, Reuters, CQG

David Wienke