Daily Game Plan

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

DATA/HEADLINES   9:45ET S&P Global US Manufacturing PMI; 10:00ET Construction Spending, ISM Manufacturing, ISM Prices
Paid, ISM Employment, ISM New Orders; 11:00ET Fed’s Powell and Harker speak; 1:30ET Fed’s Williams speaks; 3:15ET Fed’s Harker speaks

TODAY’S HIGHLIGHTS:  

• Mortgage rates are the highest they’ve been since Bill Clinton was president
• By the end of 2024, CVS will have closed 900 retail stores because of crime
• Bill Ackman is “absolutely” interested in pursuing a deal with Elon Musk’s X through a new investment vehicle,
  with the intention of taking it public – WSJ

Global shares are on the defensive, erasing an initial boost from a temporary resolution to the US government shutdown. However, the focus turned back to interest
rates, especially as rising oil threatens to fan inflation. The global bond selloff resumed as investors waited for a speech today by Federal Reserve chief Jerome Powell to provide clues on the direction of interest rates. Elsewhere, the World Bank slashed
its outlook for China’s growth in 2024, even as it kept its forecast for 2023 unchanged. Several Asian markets were closed today, including Hong Kong, India, South Korea and Singapore. China mainland markets are shut all week for its eight-day Golden Week
holiday.    

EQUITIES: 

US equity futures gave up earlier overnight gains due to optimism after US lawmakers reached a deal over the weekend to avoid a government shutdown. The deal will keep the government
running until November 17. President Biden urged House Speaker McCarthy to follow up on funding for Ukraine after the bill approved by Congress omitted money for Kyiv. And Matt Gaetz said he plans to file a motion to oust the House speaker, triggered by the
lack of spending cuts GOP hardliners wanted. US technology stocks may be about to turn a corner after the Nasdaq’s biggest monthly decline this year, according to Goldman Sachs strategists, saying the selloff has led to historically cheap valuations when earnings
estimates are still rising. Still hanging over markets is the UAW strike, which was extended to more Ford and GM plants on Friday. Auto companies are set to report deliveries for the quarter later this week.     

Futures ahead of the data: E-Mini S&P -0.2%, Nasdaq +0.05%, Russell 2000 -0.2%, Dow -0.2%.

In pre-market trading, Cryptocurrency-exposed stocks rise as Bitcoin advanced to a six-week high as inflows picked up at the start of October. Riot Platforms (RIOT US) +9%, Marathon Digital
(MARA US) +8%. Macerich (MAC) rose as much as 5.4% as Piper Sandler raised the recommendation on the real estate investment trust’s stock to neutral from underweight. Syndax Pharmaceuticals (SNDX) rose as much as 45% after the drug developer scheduled an event
to reveal clinical data. US-listed shares of Nio (NIO), XPeng (XPEV) and Li Auto (LI) climbed after the Chinese electric-vehicle makers reported September delivery figures. Meanwhile, Tesla fluctuated ahead of its monthly delivery announcement. Rivian (RIVN)
rose as much as 4.3% as Evercore ISI raised the recommendation on the electric-vehicle maker to outperform from inline.

In Europe, benchmark indexes retreated, weighed down by losses in construction and drugmaker stocks. Euro zone manufacturing activity remained mired in broad-based downturn last month,
according to final euro zone manufacturing PMI data compiled by S&P Global. UK house prices were unchanged from the previous month in September, Nationwide said, beating expectations for a drop. The Stoxx Europe 600 fell 0.4% after rising as much as 0.5%,
as Treasury yields rose. Among individual movers, Vivendi SE gained after Barclays Plc analysts upgraded their rating and said it was one of their favorite media stocks. Asset manager Mandatum debuted on Helsinki’s stock market, the biggest listing in five
years. DAX -0.3%, CAC -0.4%, FTSE 100 -0.5%. Chemicals -1%, Construction -0.95%, Media -0.75%, Healthcare -0.7%. REITs +0.4%, Telecom +0.2%.                    

Asian stocks edged lower as muted manufacturing activity raised concerns over the region’s growth outlook. The MSCI Asia Pacific Index fell 0.2%, led by health-care shares. Japanese equities
reversed earlier gains to close lower, dragging on the regional benchmark, as the nation’s factory activity fell further in September. Meanwhile, China’s factory activity also underperformed, Caixin PMI data showed. The Philippines is bracing for flash floods
and landslides that may be triggered by heavy rains brought by tropical cyclone Koinu, which reached a typhoon category today. South Korean exports eased further in September, with the headline number falling 4.4%. Taiwan +1.25%, Indonesia +0.3%, Vietnam +0.1%,
ASX 200 -0.2%, Philippines -0.25%, Topix -0.4%.   

FIXED INCOME: 
 

Treasury futures remain near session lows into early US session after gapping down at the open, spurred by weekend accord by US lawmakers averting a government shutdown.
US yields cheaper by 4bp-7bp across the curve with belly leading losses on the day, flattening 5s30s spread by ~2bp.  US 10-year yield is back near the highest since 2007, rising five basis points to ~4.63%; 2 year yield ~5.11%.

METALS: 
   

Gold slipped further after falling 4% last week, its biggest weekly drop in more than two years. Gold is lower for a sixth straight day to the lowest in almost seven months, as the metal
continued to test lower levels following hawkish signaling by the Federal Reserve. Non-interest bearing gold is now in a vulnerable position as it comes under pressure from a surge in bond yields from the US to Germany and Japan. Copper declined as China breaks
for a national holiday. Copper still remains trapped in a fairly tight range as investors wait for a decisive shift in economic data from top consumer China. An official gauge of manufacturing activity just barely returned to growth for the first time in six
months in September, a sign of the muted impact of stimulus measures so far.  Spot gold -0.6%, silver -1.8%. copper -1.7%.              

ENERGY:  

Oil moved higher, after suffering losses at the end of last week, as investors’ focus returned to a tight global supply outlook while a last-minute deal that avoided
a US government shutdown restored some risk appetite. Citi forecast a collapse in Brent crude to low $70s a barrel next year on “more oil coming into the market.” Oil production in countries that are not part of the OPEC+ alliance, such as the US and Canada,
is growing faster than demand, according to S&P Global.  Elsewhere, Turkey said a key pipeline bringing up to 500,000 barrels of oil a day from northern Iraq can resume this week. An Iraqi official cast doubt on that statement, saying flows can’t restart until
commercial and financial issues have been resolved. The UAE’s Mazrouei said at the Adipec conference in Abu Dhabi that prices will increase if there’s no further investment in the industry, and OPEC’s Secretary General sees under-investment as a risk to energy
security.  OPEC+ is unlikely to tweak its current oil output policy when the Joint Ministerial Monitoring Committee meets on Wednesday, four OPEC+ sources said. WTI +0.7%, Brent +0.8%, US Nat Gas -1.5%, RBOB +0.9%.        

CURRENCIES:   

The dollar edged higher, after having just completed its best quarter in a year, as focus turns to upcoming remarks by Federal Reserve Chair Jerome Powell.  Against
the yen, it briefly touched a year-to-date high of 149.82, after the Bank of Japan said it would conduct an additional buying operation on Wednesday. The Swiss franc led Group-of-10 currency gains after data showed Swiss Sept. Manufacturing PMI rose to 44.9
versus est. 40.8.  US$ Index +0.35%, GBPUSD -0.35%, USDJPY +0.25%, EURUSD +0.4%, AUDUSD -0.6%, USDCHF is flat, EURCHF -0.4%. 

Bitcoin +4.2%%, Ethereum +3.2%.  

TECHNICAL LEVELS: 

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
• (CLX) Clorox Raised to Buy at DA Davidson; PT $152
• (COOP) Mr. Cooper Raised to Outperform at KBW; PT $65
• (DDOG) Datadog Raised to Overweight at Piper Sandler; PT $115
• (FDX) FedEx Raised to Positive at Susquehanna; PT $315
• (LGIH) LGI Homes Raised to Neutral at BTIG; PT $103
• (MAC) Macerich Raised to Neutral at Piper Sandler; PT $12
• (PFSI) PennyMac Raised to Outperform at KBW; PT $81
• (PODD) Insulet Raised to Buy at Jefferies; PT $240
• (RH) RH Raised to Hold at CFRA; PT $280
• (RIVN) Rivian Raised to Outperform at Evercore ISI; PT $35
• (X) U.S. Steel Raised to Overweight at Morgan Stanley; PT $40
• (ZS) Zscaler Raised to Overweight at Piper Sandler; PT $190
• Downgrades
• (AGRO) Adecoagro Cut to Market Perform at Itau BBA; PT $12
• (BFH) Bread Financial Holdings Cut to Sell at Goldman; PT $32
• (CB) Chubb Cut to Neutral at JPMorgan; PT $250
• (CHS) Chico’s FAS Cut to Neutral at B Riley; PT $7.60
• (FNF) FNF Cut to Market Perform at KBW; PT $43
• (NEP) NextEra Energy Partners Cut to Equal-Weight at Wells Fargo
• (SASR) Sandy Spring Cut to Neutral at DA Davidson; PT $22
• (SEDG) SolarEdge Cut to Equal-Weight at Barclays; PT $152
• (SPLK) Splunk Cut to Neutral at Piper Sandler; PT $157
• (TOST) Toast Cut to Neutral at Mizuho Securities; PT $16
• Initiations
• (BBAI) BigBear.ai Rated New Market Perform at Cowen; PT $2
• (CCL) Carnival Reinstated Outperform at William Blair
• (CRDO) Credo Technology Rated New Overweight at Barclays; PT $18
• (KLG) WK Kellogg Rated New Hold at Jefferies; PT $15
• (MARA) Marathon Digital Holding Rated New Hold at Needham
• (SOY CN) SunOpta Rated New Buy at Mizuho Securities; PT C$12.23
• (SXTP) SXTP US Rated New Buy at Ascendiant Capital Markets; PT $2.40
• (TKO) Tko Group Rated New Buy at Benchmark; PT $100

Data sources: Bloomberg, Reuters, CQG