TODAY’S GAME PLAN: from the trading
desk, this is not research
DATA/HEADLINES 8:00ET Fed’s Bostic speaks; 10:00ET JOLTS Job Openings
Atlanta Fed President Raphael Bostic (non-voter) speaks on economic outlook and inflation
TODAY’S HIGHLIGHTS:
- House Republicans meet behind closed doors at 9am EST
- Mexico’s president said 10,000 people have been reaching the northern border with the US daily
- El Chapo’s sons ban fentanyl production in Sinaloa, according to roadside banners
- Woman sues Disney theme park over claims water slide gave her ‘painful wedgie’
- US Department of Defense announced its ready to transfer some long-range missiles with cluster warheads to
Ukraine as soon as Biden gives the ok
Global shares fell for a second day, as a surge in US bond yields weighed after Federal Reserve officials served a reminder that borrowing costs won’t drop any time
soon. The MSCI All-World index slipped 0.3%, near its weakest in four months. Australia’s central bank held interest rates steady for a fourth month, but again warned that further tightening might be needed.
EQUITIES:
US equity futures fell, weighed by rising Treasury yields and reminders not to expect a Federal Reserve interest-rate cut any time soon. Hawkish comments by two Fed policymakers reminded
investors that resilience in the US economy likely means borrowing costs will stay higher for longer. JPMorgan’s Marko Kolanovic said the recent moves higher in the greenback, crude and yields remain a “problematic, and ultimately unsustainable, combination.”
Goldman strategists joined peers at Morgan Stanley and JPM in warning that elevated rates could spark further declines in equities. Meanwhile, Republican Matt Gaetz officially moved to oust House speaker McCarthy, teeing up a vote that may shift Washington’s
balance of power. The vote may come as soon as today.
Futures ahead of the bell: E-Mini S&P -0.5%, Nasdaq -0.6%, Russell 2000 -0.5%, Dow -0.4%.
In premarket trading, Tesla dipped over 1% after third-quarter delivery numbers missed estimates. HP Inc. (HPQ) gains 2.8% as BofA double upgrades its rating on the PC maker to buy from
underperform. MSP Recovery (LIFW US) jumps 14% on reports of insider buying. ALX Oncology (ALXO) surges as much as 149% after reporting interim mid-stage data from a trial of its drug evorpacept for the treatment of advanced gastric cancer. McCormick (MKC)
slides 3% after the spice maker reported net sales that trailed the average analyst estimate. Point Biopharma (PNT) surges 85% after Eli Lilly & Co. agreed to buy the biotech firm for $12.50 per share in cash. Aqua Metals (AQMS) and Vinfast Auto (VFS) are
among the most active industrials stocks in early premarket trading, gaining ~5% and falling 10%, respectively.
European stocks extended declines after Monday’s selloff that saw the regional equity benchmark hit a six-month low, as bond yields rose further and worsened risk appetite. Bond proxies
such as utilities were hard hit in Europe, while retail stocks were dragged down on a warning from online retailer Boohoo Group, which fell 10%. Basic resources shares lagged as copper fell for a second day following hawkish signals from the Federal Reserve
and weak manufacturing data across major economies. The ECB has more work to do in fighting inflation, Chief Economist Philip Lane said, noting that volatile gas prices will be a key factor. HSBC strategists said the biggest risk to financial markets still
comes from the swing in rates rather than weak growth. Stoxx 600 -0.8%, DAX -0.9%, CAC -0.9%, FTSE 100 -0.25%. Utilities -2.5%, Basic Resources -2.4%, Retail -1.8%. Food & Bev +0.2%.
Asian stocks dropped as hawkish signals from Federal Reserve officials spurred risk-off sentiment, with Chinese shares listed in Hong Kong leading regional losses on their return from
a holiday. Positive Chinese travel data did little to lift sentiment. The MSCI Asia Pacific Index fell 1.5% to reach its lowest since late December. The Hang Seng China Enterprises Index slumped 3.25% to be the worst performer among major gauges in Asia,
dragged lower by tech stocks like Meituan and Alibaba. Stocks in Australia declined as the Reserve Bank held interest rates for a fourth straight meeting, while retaining a tightening bias. New Zealand’s central bank is also expected to keep rates unchanged
Wednesday, just days before a general election. Mainland China remains shut for Golden Week holiday, while South Korean markets are set to return from a break tomorrow. Vietnam -3.2%, Hang Seng Index -2.7%, Topix -1.7%, Thailand -1.5%, ASX 200 -1.3%, Taiwan
-0.6%, Sensex -0.5%, Philippines flat.
FIXED INCOME:
US Treasury yields resumed their rise, heading back toward the 16-year highs reached yesterday, as policy makers continued their hawkish tone. Yields are another
2-5bps higher across the curve, with 10 year yield ~4.73%. 30-year yield rises to 4.85%, its highest since 2007. US 2s10s curve steeper by 3bp on the day with front-end slightly outperforming. One more rate hike is probably needed this year before the Fed
stands pat for some time, Loretta Mester said. Traders are attaching a 1-in-3 chance of another US rate hike in November and a 45% chance of an increase by December, according to CME Group’s FedWatch Tool. US session highlights include August JOLTS job openings
data and comments from Fed’s Bostic.
METALS:
Gold fluctuated after falling for its sixth straight day on Monday, to the lowest level in almost seven months. Investors continue to sell the metal in response to surging bond yields.
Gold -0.05%, silver +0.4%.
ENERGY:
Oil prices slipped, after falling to a three-week low yesterday on a stronger US dollar, and as rising US interest rates creates expensive storage of inventories.
Fears over the global economy have seen Brent drop over 5% since last Wednesday’s close. Russian crude exports to India jumped 15% to 1.8 million barrels a day in September from a seven-month low in August, boosted by plentiful supply and price discounts,
Kpler said. OPEC+ is showing no signs of cooling a rally as the group’s ministers prepare to review global oil markets tomorrow. Delegates from the grouping don’t expect the panel to recommend any policy changes. WTI -0.5%, Brent -0.7%, US Nat Gas +0.3%,
RBOB -1.1%.
CURRENCIES:
In currency markets, the dollar rose against G-10 peers, while the Australian dollar slipped after the central bank held interest rates unchanged for the fourth meeting.
The drop in the yen to one-year lows this week has brought it very near the USDJPY 150 level that many believe is where the Bank of Japan could intervene to prop it up. Japanese Finance Minister Shunichi Suzuki said on Tuesday authorities were watching the
currency market closely and stood ready to respond. Suzuki said he’ll judge the possibility of a FX intervention on volatility instead of the currency’s level. US$ Index +0.25%, GBPUSD -0.2%, EURUSD is flat, USDJPY +0.1%, AUDUSD -0.9%, USDCAD +0.3%, NZDUSD
-0.8%, USDCHF +0.5%.
Bitcoin -1%, Ethereum -0.5%. Sam Bankman-Fried goes on trial in New York. He has so far pleaded not guilty to all charges.
TECHNICAL LEVELS:
|
ESZ23 |
10 Year Yield |
Dec Gold |
Nov WTI |
Spot $ Index |
|
|
Resistance |
4475.00 |
5.500% |
2022.0 |
100.00 |
111.525 |
|
|
4437.00 |
5.325% |
1996.0 |
98.00 |
110.000 |
|
|
4399.50 |
5.000% |
1982.5 |
97.07 |
108.970 |
|
|
4355.00 |
4.710% |
1936.5 |
95.00 |
107.990 |
|
|
4324.00 |
4.675% |
1913.5 |
93.71 |
107.180 |
|
Settlement |
4324.25 |
1847.2 |
88.82 |
||
|
|
4294.00 |
4.210% |
1842.0 |
88.37 |
105.310 |
|
|
4267.00 |
4.000% |
1821.0 |
86.30 |
104.420 |
|
|
4245.00 |
3.750% |
1800.0 |
84.81 |
103.800 |
|
|
4225.00 |
3.530% |
1796.7* |
83.05 |
103.100 |
|
Support |
4200.00 |
3.265% |
1776.5 |
81.50 |
102.920 |
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:
$AB Upgrade from Neutral to Buy w/$36.75 pt at Goldman Sachs
$BAH Upgrade from Neutral to Buy w/$130.00 pt (from $110.00) at BofA Securities
$CLNE Upgrade from Outperform to Strong Buy w/$6.00 pt at Raymond James
$DOW Upgrade from Underweight to Sector Weight at KeyBanc
$EVRG Upgrade from Underperform to Neutral w/$49.00 pt (from $52.00) at BofA Securities
$FVRR Upgrade from Neutral to Buy w/$33.00 pt at Roth/MKM
$HPQ Upgrade from Underperform to Buy w/$33.00 pt at BofA Securities
$K Upgrade from Underperform to Neutral w/$55.00 pt at Exane BNP Paribas
$LYB Upgrade from Underweight to Sector Weight at KeyBanc
$ODD Upgrade from Hold to Buy w/$54.00 pt at Truist Securities
$REYN Upgrade from Sell to Neutral w/$30.00 pt at Goldman Sachs
$WRBY Upgrade from In Line to Outperform w/$20.00 pt at Evercore ISI
$WLK Upgrade from Underweight to Sector Weight at KeyBanc
$WING Upgrade from Underperform to Hold w/$170.00 pt (from $150.00) at Jefferies
Downgrades:
$EMR Downgrade from Buy to Neutral w/$104.00 pt (from $97.00) at UBS
$GETY Downgrade from Buy to Neutral w/$6.00 pt at Redburn
$NGVT Downgrade from Buy to Hold w/$53.00 pt (from $62.00) at Loop Capital
$SPWR Downgrade from Strong Buy to Outperform w/$9.00 pt (from $17.00) at Raymond James
$TPIC Downgrade from Outperform to Market Perform at Raymond James
$DCFC Downgrade from Outperform to Market Perform at Raymond James
Initiations:
$AWK Initiated Buy w/$134.00 pt at Mizuho Securities
$APLD Initiated Buy w/$14.00 pt at Roth/MKM
$CTLP Initiated Buy w/$9.00 pt at Berenberg
$CARM Initiated Overweight w/$10.00 pt at CapitalOne
$CHDN Initiated Buy w/$148.00 pt at Stifel
$CGNX Initiated Sector Weight at KeyBanc
$DY Initiated Buy w/$120.00 pt at BofA Securities
$EWBC Initiated Buy w/$68.00 pt at Janney
$EMR Initiated Overweight w/$120.00 pt at KeyBanc
$ISPR Initiated Buy w/$14.00 pt at US Tiger Securities
$MRC Initiated Buy w/$14.00 pt at Loop Capital
$NVT Initiated Buy w/$62.00 pt at Citi
$OTIS Initiated Neutral w/$87.00 pt at UBS
$PBPB Initiated Hold at Benchmark
$PMN Initiated Buy w/$8.00 pt at BTIG
$ROK Initiated Sector Weight at KeyBanc
$SYM Initiated Overweight w/$50.00 pt at KeyBanc
$TREX Initiated Buy w/$78.00 pt at Goldman Sachs
$VLTO Initiated Buy w/$108.00 pt at Melius
$VSTS Initiated Outperform w/$24.00 pt at Baird
$KLG Initiated Neutral w/$14.00 pt at Exane BNP Paribas
$ZBRA Initiated Sector Weight at KeyBanc
Data sources: Bloomberg, Reuters, CQG
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