Daily Game Plan

by Contributor
on November 1, 2024

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

TODAY’S ECONOMIC DATA:  8:30ET Employment Report*, 9:45ET S&P Global US Manufacturing PMI; 10:00ET Construction
Spending, ISM Manufacturing

US OCT. NONFARM PAYROLLS RISE 12K M/M – Median survey estimate for nonfarm payrolls change was 100k, lower than all prints since 2020 – US BLS: NOT POSSIBLE TO QUANTIFY EFFECT OF STORMS
ON PAYROLLS

HIGHLIGHTS and News:  

  • Oil Rallies on Middle East risk; Iran prepping a major attack on
    Israel before the election
  • October jobs report expected to show slowing growth amid hurricane aftermath, Boeing strike
  • Boeing reached a tentative deal with workers that includes a 38% wage increase over 4 years and a $12,000 signing bonus
  • Warren Buffett’s Berkshire acquired $60.7mm of shares in Sirius XM, taking its stake to 33%
  • S&P 500 on track for its worst weekly performance in more than a year
  • More than 65 million Americans have voted early

 

World stocks started the month cautiously, with MSCI’s world share index roughly flat. Shares steadied ahead of US jobs data, with increased volatility in British
government bonds after this week’s budget adding to the sense of nervousness. The US payrolls report is in focus today before Tuesday’s US presidential election and the Federal Reserve’s policy decision next Thursday. Swiss inflation slowed unexpectedly, with
consumer prices +0.6% y-o-y, strengthening the case for further rate cuts by the SNB. China’s first major economic indicators since the recent stimulus suggest the economy has stabilized somewhat, with manufacturing and housing sectors showing tentative signs
of recovery. The Caixin manufacturing purchasing managers index unexpectedly rose to 50.3 last month from 49.3 in September, echoing official data yesterday.  

 

EQUITIES:  

US equity futures rise ahead of Friday’s key US jobs data, at the end of a volatile week in which mixed earnings from tech megacaps had the market on the defensive. Amazon and Intel shares
rally post-earnings, offsetting a fall in shares of Apple.  That helped raise market morale after a tech-driven slump in Thursday’s session saw the Nasdaq slump 2.7%, its worst day in nearly two months. Heading into its most critical sales period of the year,
Apple sparked fresh concerns about revenue growth and lingering weakness in an intensely competitive China market.  Focus this morning will be on the crucial nonfarm payrolls data for clues on the Federal Reserve’s interest-rate trajectory. The report is expected
to show job gains slowed significantly during the month as recent hurricanes and a strike by Boeing workers weigh on the labor market.  

Futures ahead of the data: E-Mini S&P +0.4%, Nasdaq +0.4%, Russell 2000 +0.2%, DJI +0.3%.

In pre-market trading, Amazon.com (AMZN) soared 7% as strong retail sales lifted its profit above Wall Street estimates. Intel (INTC) jumped 6% after a better-than-expected revenue forecast,
lifting other chip stocks, with Nvidia rising 2%. Apple (AAPL) dropped 1.1% despite beating quarterly sales forecasts, as investors worried about a decline in China sales. Shares of Boeing (BA) rose 2.4% after a union of striking workers endorsed an improved
contract offer that includes a 38% pay rise, with members expected to vote on Monday. Abbott Laboratories (ABT US) shares rise 5.1% after a St. Louis jury cleared the company, along with a unit of Reckitt Benckiser, over claims they hid risks their premature-infant
formulas can cause a bowel disease. ADMA Biologics (ADMA) shares rise 14% after KPMG agreed to be the biotech’s auditor. Atlassian (TEAM) shares soar 21% after the enterprise software developer forecast revenue for its fiscal second quarter ahead of expectations
and also beat on earnings. Globalstar (GSAT) shares surge 56% after the company agreed to deliver expanded services to Apple.

Apple remains the most valuable company on the planet, but it’s had to contend with a sluggish smartphone market, more competition in China and regulatory scrutiny
around the world.

European gauges gain for the first time in four days, led by banks and energy names. Travel and leisure underperformed but is only slightly lower on the day. Among
single stocks, Fielmann Group AG fell in early trading before being halted for volatility after posting a miss. Reckitt Benckiser Group Plc surged as much as 12% after a unit was cleared by a jury over claims it hid risks relating to premature-infant formulas.
Investors are bracing for a potential victory for Donald Trump, which last time around drove the sharpest underperformance in regional equities relative to US peers during any of the last eight American administrations. Stoxx 600 +0.9%, DAX +0.6%, CAC +0.7%,
FTSE 100 +0.8%. Banks +1.4%, Energy +1.4%, Media +1.2%, Household Goods +1%. Travel -0.2%.

Shares in Asia declined, as a stream of earnings reports failed to lift sentiment ahead of next week’s US election and a key meeting of China’s legislative body. The
MSCI Asia Pacific Index fell 0.5%, capping its fifth-straight week of losses, its longest weekly losing streak in more than two years. Japanese stocks fell the most after the yen strengthened against the dollar following comments from BOJ Governor Ueda. Shares
rose in Hong Kong after a private survey showed China’s manufacturing activity unexpectedly picked up last month, a sign of stabilization on Beijing’s stimulus blitz. Traders are awaiting a session by the Standing Committee of National People’s Congress over
Nov. 4-8, where further fiscal measures may be announced. Nikkei 225 -2.6%, Indonesia -0.9%, Vietnam -0.8%, Kospi -0.5%, ASX 200 -0.5%, Taiwan -0.2%, Singapore -0.1%, CSI 300 -0.03%.

FIXED INCOME: 
 

Treasuries are narrowly mixed with the yield curve slightly flatter ahead of October jobs data for which nonfarm payrolls change estimates range from -10k to 180k.
Front-end yields are higher by 1bp-2bp inside Thursday’s ranges, which included the highest 2- and 5-year yields since July-August.  The 10-year yield is around 4.30%.  Ahead of the jobs data Fed OIS contracts price in around 22bp of rate cuts for the Nov.
7 policy decision and a combined 41bp of cuts over this year’s two remaining meetings. 

 

 

METALS: 

Gold edged higher after its biggest one-day decline since July, as traders awaited important US jobs data and assessed potential market volatility leading up to the
presidential election.  Bullion climbed as much as 0.5%, putting the precious metal on track for a small weekly gain. Payroll figures due this morning may offer further clues on the Federal Reserve’s easing trajectory, after markets slashed bets on aggressive
interest-rate cuts on Thursday following an unexpected drop in new jobless claims and a pick-up in underlying inflation. Spot gold +0.25%, Silver +0.2%, Copper +0.5%.

 

 

ENERGY:   

 

Oil extended its rally to a third day on reports that Iran was preparing to attack Israel from Iraqi territory in the coming days. Iran is planning a strike through
militias that it backs in Iraq, with the assault expected to be carried out using drones and ballistic missiles, Axios reported, citing Israeli sources. The Israeli military said the nation would hit back “very hard” should Iran attack again. The oil and gas
industry has achieved the biggest labor productivity gains of any US sector over the past decade. Crude output has risen to a record 13.3 million barrels a day, 48% more than Saudi Arabia. WTI +2.4%, Brent +2.2%, US Nat Gas -1%, RBOB +1.8%.

 

 

CURRENCIES:   

In currency markets, the dollar inches higher ahead of the US employment report. US is expected to report steady unemployment rate even as storms and strikes put
a temporary dent in hiring. October saw the dollar’s strongest monthly performance in over two years, fueled by lowered expectations for sharp Federal Reserve rate cuts.  The yen weakened after the DPP chief said the BOJ shouldn’t raise interest rates before
March. The Swiss franc dropped after Swiss inflation slowed unexpectedly to its weakest since mid-2021.  Sterling edged higher but on course for a fifth straight weekly drop as UK bond yields rose and the dollar strengthened ahead of the US payroll report.
US$ Index +0.1%, GBPUSD +0.2%, EURUSD -0.1%, USDJPY +0.4%, AUDUSD -0.25%, NZDUSD -0.1%, USDCHF +0.5%.

 

US$ Index and USDJPY both holding above their 200 day moving averages.

 

 

 

Spot Bitcoin +0.15%, Spot Ethereum +0.05%.

 

 

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
    • Adobe (ADBE) Raised to Buy at Punto Casa de Bolsa; PT $612.48
    • Annaly (NLY) Raised to Buy at Argus; PT $21
    • Atlassian (TEAM) Raised to Overweight at KeyBanc; PT $260
    • Comcast (CMCSA) Raised to Sector Outperform at Scotiabank; PT $48
    • Idacorp (IDA) Raised to Outperform at Mizuho Securities; PT $116
    • Wingstop (WING) Raised to Buy at Northcoast; PT $350
    • YPF (YPFD AR) ADRs Raised to Buy at Citi; PT $33
  • Downgrades
    • Argenx (ARGX BB) ADRs Cut to Neutral at Baird; PT $650
    • Bombardier (BBD/B CN) Cut to Sector Perform at Scotiabank; PT C$120
    • Clorox (CLX) Cut to Hold at CFRA
    • Diana Shipping (DSX) Cut to Hold at Arctic Securities; PT $2.22
    • Edison International (EIX) Cut to Sell at Ladenburg Thalmann
    • Entergy (ETR) Cut to Hold at CFRA
    • Equillium (EQ) Cut to Hold at JonesTrading
    • Estee Lauder (EL) Cut to Neutral at JPMorgan; PT $74
      • Cut to Hold at CFRA
    • Huntington Ingalls (HII) Cut to Hold at TD Cowen
    • Hyatt (H) Cut to Hold at HSBC; PT $156
    • Kellanova (K) Cut to Neutral at BNPP Exane; PT $83
    • Kontoor Brands (KTB) Cut to Hold at Stifel; PT $93
    • Malibu Boats (MBUU) Cut to Neutral at DA Davidson; PT $45
    • Open Text (OTEX CN) Cut to Sector Perform at RBC; PT C$45.96
    • Pampa Energia (PAMP AR) ADRs Cut to Neutral at Citi; PT $75
    • PayPal (PYPL) Cut to Accumulate at Phillip Secs; PT $90
    • PTC Inc. (PTC) Cut to Hold at Berenberg; PT $196
    • Regeneron (REGN) Cut to Hold at CFRA
    • Sabre (SABR) Cut to Hold at CFRA
    • Veren (VRN CN) Cut to Hold at CFRA
    • Zymeworks (ZYME) Cut to Equal-Weight at Wells Fargo; PT $12
  • Initiations
    • Boise Cascade (BCC) Rated New Buy at Loop Capital; PT $155
    • Myriad Uranium (M CN) Rated New Buy at Singular Research
    • Penguin Solutions Inc (PENG) Rated New Buy at Goldman; PT $21

 

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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Charts

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