Daily Game Plan

by Contributor
on October 7, 2024

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

TODAY’S ECONOMIC DATA:  1:00ET Fed’s Bowman speaks; 1:50ET Fed’s Kashkari speaks; 6:00ET Fed’s Bostic speaks; 6:30ET
Fed’s Musalem speaks

FOMC minutes (Wednesday); CPI* (Thursday)

HIGHLIGHTS and News:  

  • The IDF issued a warning for people to leave 25 towns as they expand their operations in Lebanon
  • Ministers called to Prime Minister Netanyahu’s Office for an urgent consultation
  • Boeing and its largest union return to wage talks today
  • Chevron agreed to sell its stake in oil sands and shale assets to Canadian Natural Resources for $6.5B
  • Biden will announce this week that he’s expanding student debt relief for public workers
  • 10-year yield back above 4%; curve reinverts

 

Global stocks fluctuate while bond yields jumped to the highest levels in two months, as investors looked to reset market forecasts following last week’s blowout
US jobs report and the expanding military tensions in the middle east region. Palestinian militants in Gaza fired a barrage of rockets into Israel today as mourners marked the anniversary of the October 7th attack. The Israeli military said it launched a wave
of artillery and airstrikes overnight and into Monday to thwart what it said was an imminent attack.  China’s top economic planner will hold a press briefing on Tuesday to discuss a package of policies aimed at boosting economic growth, as investors look for
more stimulus measures. The ECB will “quite probably” cut interest rates at its next meeting later this month, according to Governing Council member Francois Villeroy de Galhau. Inflation fell below the ECB’S 2% target in September and the core measure of
price increases should gradually recede close to that level in 2025, the Bank of France chief said in an interview.   

 

EQUITIES:  

US equity futures slipped as the rise in yields pressured rate-sensitive megacap growth stocks, while ongoing strikes in the Middle East tempered optimism. Investors dialed back bets
on the scope of the Federal Reserve rate cuts this year, ahead of key inflation data, policymakers’ comments and the third-quarter earnings season that starts later this week. Investors are looking ahead to a series of speeches from Fed policymakers today
for further clues on the path for rates. Goldman Sachs raised its 2024 year-end S&P 500 target to 6,000 from 5,600, and also lowered its odds of a US economic recession to 15% from 20%. Investors are now looking ahead to the US inflation data due Thursday
as well as the minutes from the Fed’s September policy meeting.

Futures ahead of the bell: E-Mini S&P -0.4%, Nasdaq -0.5%, Russell 2000 -0.4%, DJI -0.4%. 

In pre-market trading, shares of Pfizer (PFE) rose more than 2% after a report that activist investor Starboard Value has taken a roughly $1 billion stake in the drug
giant. Air Products (APD) rises 6% after the Wall Street Journal reported activist investor Mantle Ridge has a more than $1 billion stake in the company. Amazon.com (AMZN) slips 1.9% as Wells Fargo steps away from its bullish rating. Arcadium (ALTM) soars
29% after Rio Tinto made an approach for the lithium producer. Garmin (GRMN) declines 3% as Morgan Stanley downgrades the stock to underweight, flagging concerns about product launch timing. Casino stocks are moving higher after Wynn Resorts received a commercial
gaming operator’s license in the United Arab Emirates.
Mobileye (MBLY) slides 4.6% as JPMorgan cut the recommendation on the maker of software and hardware technologies for automobiles to underweight from neutral.

European gauges are mostly higher, reversing earlier losses after data showed factory orders in Germany plummeted in August. Germany’s DAX underperforms after news
that factory orders declined 5.8% from July, the steepest drop since January. UK salaries increased at the slowest pace in three-and-a half years in September in a fresh sign that the labor market is loosening. Among European sectors, banks and energy gained
the most, while real estate and technology shares were the worst laggards. Among single stocks, Orsted AS soared after Equinor ASA announced it bought a stake in the Danish wind energy developer. Richemont was higher after saying it will sell online luxury
retailer Yoox Net-A-Porter to Mytheresa. Heidelberg Materials AG gained after a report that the Adani Group has started talks to buy the company’s Indian cement operations. Stoxx 600 +0.05%, DAX -0.3%, CAC +0.1%, FTSE 100 +0.4%. Banks +1%, Energy +0.7%, Retail
+0.4%. Technology -1.1%, REITs -1%.

Shares in Asia rose as a weaker yen buoyed Japanese equities and Hong Kong extended its rally. The MSCI Asia Pacific Index rose 0.9%, with TSMC and Recruit Holdings
among the biggest boosts to the regional gauge. Hong Kong-listed Chinese stocks continued to rally as traders awaited a press briefing by China’s top economic planner on Tuesday for more details on Beijing’s stimulus measures. Traders also prepared for the
onshore market to reopen tomorrow after the week-long Golden Week holiday. Goldman Sachs and HSBC Holdings have upgraded Chinese stocks to overweight on expectations that the latest stimulus measures will fuel further gains. Bank stocks were top performers
on Japan’s Topix as the nation’s benchmark 10-year yield climbed. Hang Seng Tech +3%, Nikkei 225 +1.8%, Taiwan +1.8%, Topix +1.7%, Hang Seng Index +1.6%, Kospi +1.6%, Philippines +1.2%, ASX 200 +0.7%, Singapore +0.3%. Vietnam -0.05%, Sensex -0.8%.

FIXED INCOME: 
 

Treasury yields extended gains, with the 10-year back above 4%, a level not seen since August 8th, after a blowout jobs report forced traders to reassess the outlook
for monetary policy. Swaps no longer fully price a 25-basis-point reduction for the Fed’s next decision in November, and for the first time since August 1 there are fewer than 50 basis points of cuts implied through year-end. 2-year yield climbed as much as
10bp in early US trading and remains higher by about 8bp at 4%. 2s10s spread inverted for the first time since Sept. 18. Key events this week include several Fed speakers and September CPI and PPI reports.

 

 

 

METALS: 

Gold held steady as traders pared expectations of Federal Reserve interest-rate cuts in the wake of stronger-than-expected US jobs data. Bullion traded near $2,660
an ounce, continuing to tread water below a recent record high.  Spot gold +0.2%, Silver -0.8%, Copper +0.05%.

 

 

ENERGY:   

 

Oil prices rise after their best week since January 2023. Hurricane Milton may reach Category 4 status and spark the largest evacuation in seven years as it heads
for Florida’s Gulf Coast and Tampa.  Brent may surge to the $90s if exports from Iran are disrupted, with the extent of the price gain contingent on whether OPEC offsets the lost supply, Goldman Sachs said. Brent climbed by more than 8% last week while WTI
soared by 9% on the possibility that Israel could strike Iranian oil infrastructure in response to an Iran’s Oct. 1 missile attack. Rockets fired by Iran-backed Hezbollah hit Israel’s third-largest city, Haifa, early today. The IDF said it is conducting extensive
strikes on Hezbollah in south Lebanon. WTI +2.2%, Brent +2%, US Nat Gas -0.8%, RBOB +1.3%.

 

 

 

CURRENCIES:   

In currency markets, the dollar was steady after jumping 1.6% last week, while the yen edged higher after newly appointed Finance Minister Katsunobu Kato said sudden
currency moves hurt companies and households and the government needs to monitor the impact. The country’s chief currency official Atsushi Mimura also said he’s looking at the FX market with a sense of urgency, including what happens to speculative moves.
The euro erases modest losses to trade little-changed after an ECB official said they will “quite probably” cut interest rates at its next meeting later this month. US$ Index ~flat, GBPUSD -0.3%, EURUSD -.05%, USDJPY -0.25%, AUDUSD -0.1%, NZDUSD -0.2%, USDCHF
-0.2%.

 

 

 

Spot Bitcoin +0.2%, Spot Ethereum +0.7%   

 

 

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
    • Alibaba (BABA) ADRs Raised to Outperform at Macquarie; PT $145
    • Ally Financial (ALLY) Raised to Overweight at JPMorgan; PT $40
    • Arcadium Lithium (ALTM) Raised to Sector Outperform at Scotiabank
    • Campbell Soup (CPB) Raised to Outperform at Bernstein; PT $58
    • Canadian National (CNR CN) Raised to Overweight at Wells Fargo
    • Coty (COTY) Raised to Buy at Jefferies; PT $12
    • Couchbase (BASE) Raised to Overweight at Barclays; PT $19
    • Coupang (CPNG) Raised to Outperform at Bernstein; PT $30
    • Dynatrace (DT) Raised to Overweight at Barclays; PT $64
    • Elastic (ESTC) Raised to Overweight at Barclays; PT $95
    • Frontline PLC (FRO) Raised to Buy at BTIG; PT $30
    • Gilead (GILD) Raised to Overweight at Wells Fargo; PT $100
    • Integra LifeSciences (IART) Raised to Neutral at BTIG
    • Mohawk Industries (MHK) Raised to Equal-Weight at Wells Fargo; PT $160
    • Netflix (NFLX) Raised to Overweight at Piper Sandler
    • NXP Semi (NXPI) Raised to Buy at UBS; PT $285
    • PDD (PDD) ADRs Raised to Outperform at Macquarie; PT $224
    • Tyler Tech (TYL) Raised to Overweight at Barclays; PT $700
    • Western Alliance (WAL) Raised to Buy at Deutsche Bank
  • Downgrades
    • Amazon (AMZN) Cut to Equal-Weight at Wells Fargo; PT $183
    • American Express (AXP) Cut to Neutral at JPMorgan; PT $286
    • Ametek (AME) Cut to Sell at TD Cowen; PT $158
    • Celanese (CE) Cut to Sector Weight at KeyBanc
    • Charles River (CRL) Cut to Inline at Evercore ISI
    • Ciena (CIEN) Cut to Neutral at JPMorgan; PT $65
    • Constellation Brands (STZ) Cut to Neutral at BofA
    • Deckers Outdoor (DECK) Cut to Neutral at Seaport Global Securities
    • DuPont de Nemours (DD) Cut to Underweight at Barclays; PT $84
    • Evotec SE (EVT GR) ADRs Cut to Hold at Jefferies; PT $3.80
    • Garmin (GRMN) Cut to Underweight at Morgan Stanley; PT $139
    • Halozyme (HALO) Cut to Equal-Weight at Wells Fargo; PT $62
    • Hershey (HSY) Cut to Market Perform at Bernstein; PT $205
      • Cut to Neutral at UBS; PT $209
    • Humana (HUM) Cut to Hold at TD Cowen; PT $261
      • Cut to Hold at Jefferies; PT $253
    • Immunocore (IMCR) ADRs Cut to Neutral at Guggenheim
    • Intapp (INTA) Cut to Equal-Weight at Barclays; PT $44
    • KB Home (KBH) Cut to Underweight at Wells Fargo; PT $83
    • Lamb Weston (LW) Cut to Neutral at JPMorgan; PT $68
    • Lennar (LEN) Cut to Equal-Weight at Wells Fargo; PT $190
    • Mobileye (MBLY) Cut to Underweight at JPMorgan; PT $10
    • Netflix (NFLX) Cut to Underweight at Barclays; PT $550
    • Sherwin-Williams (SHW) Cut to Sector Weight at KeyBanc
    • SilverCrest Metals (SIL CN) Cut to Neutral at PI Financial; PT C$15.50
    • SITE Centers (SITC) Cut to Sector Weight at KeyBanc
    • Vesta (VESTA* MM) ADRs Cut to Neutral at Goldman; PT $32
  • Initiations
    • Andrew Peller (ADW/A CN) Rated New Buy at Canaccord; PT C$8.50
    • ARM Holdings (ARM) ADRs Rated New Neutral at Haitong Intl; PT $129
    • Celldex (CLDX) Rated New Buy at Citi; PT $70
    • Celsius Holdings (CELH) Rated New Market Perform at CICC; PT $34
    • Dave & Buster’s (PLAY) Rated New Hold at Benchmark
    • DiaMedica (DMAC) Rated New Buy at HC Wainwright; PT $7
    • Immatics (IMTX) Rated New Overweight at Piper Sandler
    • MasTec (MTZ) Rated New Overweight at JPMorgan; PT $153
    • MKS Instruments (MKSI) Rated New Outperform at Mizuho Securities
    • Monster Beverage (MNST) Rated New Market Perform at CICC; PT $58
    • Nova Minerals ADRs Rated New Buy at ThinkEquity; PT $25
      • Curbline Properties Rated New Sector Weight at KeyBanc
    • Oruka Therapeutics Inc (ORKA) Rated New Buy at HC Wainwright; PT $45
    • Primoris Services (PRIM) Rated New Overweight at JPMorgan; PT $71
    • Quanta Services (PWR) Rated New Neutral at JPMorgan; PT $297
    • Sabesp (SBSP3 BZ) ADRs Rated New Buy at Goldman; PT $24.50
    • Serve Robotics (SERV) Rated New Buy at Seaport Global Securities
    • Sila Realty Trust (SILA) Rated New Buy at Truist Secs; PT $29
    • Solventum (SOLV) Rated New Neutral at Piper Sandler
    • South Bow (SOBO CN) Rated New Outperform at Wolfe; PT C$34
    • Toast (TOST) Rated New Buy at William O’Neil
    • Uranium Royalty (URC CN) Rated New Buy at B Riley; PT C$4.75
    • Vertiv Holdings (VRT) Rated New Buy at Jefferies; PT $125
    • Westrock Coffee (WEST) Rated New Buy at Truist Secs; PT $10
    • Zevra Therapeutics Inc (ZVRA) Rated New Buy at Guggenheim; PT $20

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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