Daily Game Plan

by Contributor
on October 11, 2024

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

TODAY’S ECONOMIC DATA:  8:30ET PPI Final Demand; 9:45ET Fed’s Goolsbee speaks; 10:00ET U. of Mich. Sentiment; 10:45ET
Fed’s Logan speaks; 1:10ET Fed’s Bowman speaks

HIGHLIGHTS and News:  

  • US SEPT. PRODUCER PRICES UNCHANGED M/M; EST. +0.1%
  • US SEPT. PRODUCER PRICES RISE 1.8% Y/Y; EST. +1.6%
  • US Officials Probe Severity of China-Tied Cyberattacks to Broadband Providers – WSJ
  • North Korea says it will retaliate if South Korea sends drones again

 

Global stocks fluctuated as investors held back from placing more bets ahead of a much-anticipated update on fiscal stimulus from Beijing this weekend. The French
government unveiled a budget for next year that aims to deliver a $66.2 billion remedy for its creaking public finances and rebuild investor confidence even as it risks eviction by a hostile parliament. The Bank of Korea cut rates by 25 bps to 3.25%, as expected,
and slightly moderated its restrictive policy. Israel has yet to decide how to retaliate against Iran after a security cabinet meeting last night ended without resolution. Members of the Gulf Cooperation Council have spoken to senior US officials in recent
days, requesting they ask Israel not to launch Strikes against Iran’s oil industry, due to fears that Iran would retaliate with missile strikes against Gulf oil facilities. Saudi Arabia, Oman, and Qatar are also said to have banned the use of their airspace
to Israel for any military action against Iran.

 

EQUITIES:  

US equity futures edged lower, a day after Core CPI inflation rose to 3.3%, the first increase since March 2023. The Nasdaq 100 was dragged down by a 6% premarket drop in Tesla shares,
after its robotaxi Cybercab launch was seen as light on detail.  Three Fed policymakers — John Williams, Austan Goolsbee and Thomas Barkin were unfazed by a higher-than-forecast consumer price index, suggesting officials can continue lowering rates. Earnings
season officially kicks off today and Wall Street firms have significantly lowered their forecasts.  It is estimated that S&P 500 earnings will grow by 4% in Q3, a sharp decline from an 11% increase reported in Q2.  Companies excluding Magnificent 7 are forecasted
to grow earnings by just 1%. BlackRock pulled in $160 billion of client cash to its long-term investment funds last quarter, pushing it to a record
$11.5 trillion of assets. US officials are racing to understand the full scope of a China-linked hack of major US broadband providers.  

Futures ahead of the bell: E-Mini S&P -0.05%, Nasdaq -0.2%, Russell 2000 -0.1%, DJI +0.02%.  

In pre-market trading, JPMorgan (JPM) gains 1% after reporting beats on investment banking revenue and managed net interest income, but profits fell in the third quarter
as it set aside more money to cover future loan losses.  It sees full-year NII coming in above estimates. Wells Fargo (WFC) gains 3% after posting a profit beat on a surge in IB fees, though NII missed. BNY Mellon (BK) gains 1% after the bank’s 3Q adjusted
earnings per share beat the average analyst estimate. BNY Mellon’s profit, net interest margin and AUM all exceeded estimates. Aehr Test Systems (AEHR) jumps 13% after the semiconductor manufacturing firm reported fiscal 1Q results. A.O. Smith (AOS) falls
10% after the manufacturer of water heating and water treatment equipment lowered its annual forecasts for net sales and adjusted earnings per share, citing continued softness in its China business. Tesla (TSLA) falls 6% as Elon Musk unveiled prototypes of
the automaker’s long-awaited robotaxi Cybercab. Humana (HUM) slips 3% after the US Medicare program released final quality ratings for private Medicare Advantage plans.

European gauges are mixed to slightly higher as investors focused more on prospective European Central Bank monetary easing next week than an economic slowdown across
the currency bloc. Europe’s Stoxx 600 index traded flat, with France’s CAC 40 recouping early losses after authorities unveiled a budget that will raise taxes on businesses and wealthy citizens.  The UK economy returned to growth in August, expanding 0.2%
as expected. Some of Europe’s largest companies, such as LVMH and ASML Holding NV, report earnings next week. Stoxx 600 +0.1%, DAX +0.1%, CAC +0.05%, FTSE 100 -0.05%. REITs +1%, Basic Resources +0.6%, Utilities +0.5%. Telecomm -0.5%,Autos -0.4%, Technology
-0.25%. 

Shares in Asia were mixed as a rally in China peters out. The MSCI Asia Pacific Index ended higher by just 0.1% and Chinese stocks were lower in front of Beijing announcement
of a $283B stimulus package tomorrow. Chinese stocks have been volatile this week as traders digested weaker-than-expected holiday spending data and await further announcements from the key meeting this weekend. Japanese stocks were mixed with the Nikkei 225
making gains while the Topix fell. Hong Kong was closed for a holiday. Taiwan +1.1%, Nikkei 225 +0.6%, Indonesia +0.5%, Vietnam +0.15%, Thailand +0.1%. Kospi -0.1%, ASX 200 -0.1%, Topix -0.25%, Sensex -0.3%, Singapore -0.3%, Philippines -1.4%, CSI 300 -2.8%.  

EEM versus SPY holding above the key 200 day moving average.

FIXED INCOME: 
 

Treasury yields held above 4% after Thursday’s US data showed a strong inflation print but a sharp rise in jobless claims, underscoring the challenge facing the Federal
Reserve. Investors will monitor producer-price numbers this morning to gauge if the Fed’s battle to bring prices to target is stalling. Swaps markets price a roughly 80% chance of a 25 basis-point cut in November. 10-year yield around 4.1% and the curve is
slightly steeper.

 

 

METALS: 

Metal prices gained as investors continued to wait for Israel’s potential retaliation against Iran. Gold pared a weekly decline, after hotter-than-expected US inflation
and a slowdown in the labor market amplified debate over the size of the Federal Reserve’s expected interest rate cut next month. Fed policymakers John Williams, Austan Goolsbee and Thomas Barkin were unfazed by the higher-than-expected consumer price index,
suggesting officials can continue lowering rates. Spot gold +0.6%, Silver +0.4%, Copper +0.8%.

 

 

ENERGY:   

 

Oil prices slipped, trimming some of Thursday’s 3.6% gain, which was triggered by news that Israel’s security cabinet was meeting to discuss retaliation against Iran.
Israel is seen potentially targeting Iran’s oil industry, with Tehran potentially responding with attacks on other oil infrastructure in the region. After Milton, about 2.5 million customers in Florida were still without electricity, according to PowerOutage.us.
Some commercial ports reopened.  WTI -0.9%, Brent -0.8%, US Nat Gas +0.6%, RBOB -0.5%.

 

 

 

CURRENCIES:   

In currency markets, the dollar trades mixed versus G-10 peers in a slow session thus far, as the market is in waiting mode before PPI data and in search of fresh
stimulus. US data later today also includes University of Michigan consumer sentiment, Canada jobs report also in focus. Sterling reverses earlier losses after data showed the UK economy returned to growth in August. The Aussie$ is little changed as investors
await China’s weekend fiscal briefing for details on further stimulus measures to shore up growth. US$ Index -0.02%, GBPUSD +0.05%, EURUSD -0.01%, USDJPY +0.25%, AUDUSD -0.1%, NZDUSD +0.03%, USDCHF +0.1%, USDCAD +0.2%. 

 

 

 

Spot Bitcoin +2.4%, Spot Ethereum +2.2%   

 

 

 

  • Upgrades
    • Affirm Holdings (AFRM) Raised to Overweight at Wells Fargo; PT $52
    • Ferrari (RACE) Raised to Overweight at JPMorgan; PT $525
    • United Natural (UNFI) Raised to Buy at Northcoast
  • Downgrades
    • Arcadium Lithium (ALTM) Cut to Sector Weight at KeyBanc
    • Duckhorn Portfolio (NAPA) Cut to Sector Perform at RBC; PT $11.10
    • Edwards Life (EW) Cut to Equal-Weight at Morgan Stanley; PT $70
    • Flywire (FLYW) Cut to Equal-Weight at Wells Fargo; PT $18
    • General Dynamics (GD) Cut to Neutral at Seaport Global Securities
    • General Motors (GM) Cut to Hold at DZ Bank; PT $49
    • Mobileye (MBLY) Cut to Neutral at Mizuho Securities; PT $13
    • ProFrac Holding (ACDC) Cut to Hold at Stifel; PT $7
    • Qorvo (QRVO) Cut to Equal-Weight at Morgan Stanley; PT $120
    • SQM (SQM/B CI) ADRs Cut to Neutral at JPMorgan; PT $44
    • TD Bank (TD CN) Cut to Sector Perform at RBC; PT C$82
      • Cut to Sell at CFRA
    • Theratechnologies (TH CN) Cut to Hold at JonesTrading
  • Initiations
    • Acadia Health (ACHC) Rated New Sector Weight at KeyBanc
    • Addus HomeCare (ADUS) Rated New Overweight at KeyBanc; PT $150
    • Alignment Healthcare (ALHC) Rated New Sector Weight at KeyBanc
    • Alphabet (GOOGL) Rated New Sector Outperform at Scotiabank
    • Amazon (AMZN) Rated New Buy at Pivotal; PT $260
      • Rated New Sector Outperform at Scotiabank
    • ANI Pharma (ANIP) Rated New Overweight at Piper Sandler; PT $68
    • Ardent Health Partners (ARDT) Rated New Overweight at KeyBanc; PT $24
    • Arhaus (ARHS) Rated New Neutral at Wedbush; PT $11
    • Arizona Sonoran Copper (ASCU CN) Reinstated Buy at Stifel Canada; PT C$4
    • Astrana Health Inc (ASTH) Rated New Sector Weight at KeyBanc
    • Axos Financial (AX) Rated New Buy at Needham; PT $82
    • BrightSpring Health Services (BTSG) Rated New Sector Weight at KeyBanc
    • Camden Property (CPT) Rated New Hold at Jefferies; PT $123
    • Encompass Health (EHC) Rated New Overweight at KeyBanc; PT $115
    • Gibson Energy (GEI CN) Rated New Strong Buy at Raymond James; PT C$28.50
    • HCA Healthcare (HCA) Rated New Overweight at KeyBanc; PT $475
    • Humana (HUM) Rated New Sector Weight at KeyBanc
    • Innovage (INNV) Rated New Sector Weight at KeyBanc
    • MercadoLibre (MELI) Rated New Buy at Redburn; PT $2,800
    • Meta Platforms (META) Rated New Sector Perform at Scotiabank
    • Monopar (MNPR) Rated New Buy at Rodman & Renshaw; PT $50
    • Nurix (NRIX) Rated New Buy at Jefferies; PT $41
    • Nutanix (NTNX) Rated New Buy at William O’Neil
    • Oruka Therapeutics Inc (ORKA) Rated New Buy at Stifel; PT $49
    • Pembina Pipeline (PPL CN) Rated New Outperform at Raymond James; PT C$63
    • Privia Health (PRVA) Rated New Overweight at KeyBanc; PT $23
    • Surgery Partners (SGRY) Rated New Sector Weight at KeyBanc
    • Tenet (THC) Rated New Overweight at KeyBanc; PT $200
    • UnitedHealth (UNH) Rated New Overweight at KeyBanc; PT $675
    • Universal Health (UHS) Rated New Sector Weight at KeyBanc
    • V2X Inc (VVX) Rated New Outperform at Baird; PT $75

 

 

 

Colors within the report:
Green is always the 200 period (day, week).
Red is always 21,
Blue = 50,
Brown =
100 *Stars have added importance 

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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Charts

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