Daily Game Plan

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

TODAY’S ECONOMIC DATA:  1:00ET 30-Year Bond Auction

Highlights and News:  

• Donald Trump won the presidential election after securing key swing states
• Kamala Harris’s campaign earlier said she’ll speak (concede) this morning
  
• CHINA OCT. PRELIM RETAIL NEV SALES RISE 14% M/M

Major stock markets around the world rallied as Donald Trump’s victory in the US presidential election rippled through global markets. Trump trades erupted as the
Republican Party also secured the Senate and may even win the House of Representatives.  Commodities from oil to metals and grains slid as the dollar was set for its biggest one-day jump since early 2023.  Traders pared Fed interest-rate cut bets while amping
up their bets of European rate reductions, pricing in a faster pace of easing by the ECB and BOE. Investors are keenly tracking a key Chinese legislature meeting this week that may unveil ramped-up fiscal spending. Brazil’s central bank is expected to increase
its key rate by 50 bps today, doubling the pace of tightening.   

EQUITIES:  

US equity futures surged, with the S&P climbing more than 2% and small caps Russell 2000 contracts soaring over 6%. The fact that the election result was called early is likely adding
to optimism. Tesla rose sharply pre-market as investors wagered it will benefit from Elon Musk’s all-in bet on Trump. Other stocks in the electric vehicle sector were falling, given Trump’s pledge to entirely reverse Biden’s EV policy. The biggest US lenders
advanced on expectations of a looser regulatory backdrop. Goldman Sachs Group’s trading desk said a Republican sweep may push the S&P 500 up by 3%, while moves would be half as much in the event of a divided government.  

Futures ahead of the bell: E-Mini S&P +2.2%, Nasdaq +1.7%, Russell 2000 +6%, DJI +3%. 

In pre-market trading, Tesla (TSLA) surged as much as 15% while Trump Media & Technology Group (DJT) jumped more than 35%. Super Micro (SMCI) slumped 15% after its sales forecast missed
and it said it doesn’t know when it’ll file last year’s financial statements. US health insurers focused on the Medicare market jumped on expectation that the second Trump administration will pay higher rates to companies that provide private versions of the
US health program for seniors. Bigbear.ai (BBAI) slides 6% after the AI software company reported revenue for the 3Q that missed. Coupang (CPNG) drops 6% after the e-commerce company reported third-quarter net sales that fell short of estimates. Exact Sciences
(EXAS) tumbles 22% as the colon cancer test maker cut guidance. Qualys (QLYS) jumps 20% after the information-security company’s 3Qearnings beat estimates and it raised its outlook for the year.

European stock gains have faded slightly from earlier gains as investors contemplate the risk of increased potential trade protectionism by a Trump administration. Euro-area business
activity held up better than initially reported in October, PMIs showed, as growth in the services sector kept the region from contracting for a second month in a row. The Stoxx Europe 600 Index is rising for the second day, led by financial services and travel,
while utilities and auto sectors underperform. Novo Nordisk shares rose after Wegovy sales beat expectations last quarter. Stoxx 600 +0.8%, DAX +0.5%, CAC +0.9%, FTSE 100 +0.8%. Financial Services +2.6%, Travel & Leisure +2.6%, Media +2%. Utilities -1.7%,
Autos -1.6%.

Shares in Asia were mixed on investors’ concerns about a second term for Trump, which may bring about heightened trade tensions and policy surprises. Japan’s Nikkei
surged 2.6% as the yen slid. Hong Kong shares and the yuan weakened as investors factored in an increase in trade tensions. The Hang Seng China Enterprises Index closed down 2.6%, leading losses in Asia. Shares in China saw narrower losses amid expectations
of more stimulus measures from policymakers this week. Stocks in India rose on bets that Donald Trump winning the US election would intensify US companies’ supply chain diversification away from China in favor of countries like India. MSCI Asia Pacific Index
fell 0.3%. Topix +1.9%, Vietnam +1.25%, Sensex +1.1%, ASX 200 +0.8%, Singapore +0.6%, Taiwan +0.5%. CSI 300 -0.5%, Kospi -0.5%, Thailand -1%, Philippines -1.3%, Indonesia -1.4%, Hang Seng Index -2.2%.

FIXED INCOME: 
 

Treasuries extend bear-steepening move in early US session, pushing 30-year yields cheaper by as much as 23bp, biggest daily jump since 2020.  US 10-year yield jumped
~17bps to a four-month high of around 4.47%, breaking last week’s top of 4.388%. Two-year yields climbed to 4.31%.  2s10s spread steepened by ~9bp, 5s30s by ~6bp. A Republican sweep is seen favoring further bear-steepening in Treasuries, but it could be days
before it’s known which party controls the House.  Before today’s $25 billion auction, WI 30-year yield near 4.66% is ~27bp cheaper than the October auction, which drew strong demand and stopped through by 1.5bp.

METALS: 

Gold sank to around three-week lows on a surging dollar in the wake of Donald Trump’s victory in the US presidential election. Treasuries have soared on the election
result, damping gold’s appeal. Gold buyers may also have been positioning themselves for a more closely contested election, but the Republican sweep may have caused the offloading of positions. Spot gold -2.1%, Silver -3.7%, Copper -4.6%.

ENERGY:   

Oil fell more than 2% on a surging dollar and as Trump will look to materially increase domestic oil production. Additionally, weakening demand signals also weighed
on oil prices. US crude inventories rose by 3.1 million barrels last week, the API reported. That would take total holdings to the highest in almost three months if confirmed by the EIA today. Meanwhile, oil and gas producers in the Gulf of Mexico began shutting
output and pulling workers off ahead of a late hurricane season storm threatening offshore fields, as Tropical Storm Rafael is forecast to become a Category 1 hurricane by early Wednesday. WTI -2%, Brent -1.8%, US Nat Gas +0.4%, RBOB -2.2%.

CURRENCIES:   

In currency markets, the dollar surged, putting it on track for its best one-day gain since March 2020. Concern that higher tariffs under a Trump presidency could
deal the region’s economy a fresh blow pushed the euro down over 2%. China is seen on the front line of tariff risk, and its currency in particular is trading on tenterhooks with implied volatility against the dollar around record highs. The Mexican peso is
one of the biggest losers overall with more than a 2% drop to its weakest level in over two years. Some Asian monetary authorities are already moving to guard their currencies as US election-related volatility fuels a surge in the dollar. So far, there have
been signals from China, India and Indonesia. US$ Index +1.9%, GBPUSD -1.5%, EURUSD -2.2%, USDJPY +1.8%, AUDUSD -1.2%, NZDUSD -1.1%, USDCHF +1.5%, USDSEK +1.9%.

Spot Bitcoin +7.3%, Spot Ethereum +9%. Bitcoin spiked to a record high as markets digested Trump’s victory. 

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
• Beam Therapeutics (BEAM) Raised to Outperform at Leerink; PT $39
• Celanese (CE) Raised to Buy at Deutsche Bank
• Clorox (CLX) Raised to Hold at TD Cowen; PT $170
• Enbridge (ENB CN) Raised to Equal-Weight at Wells Fargo; PT C$57
• Inspire Medical (INSP) Raised to Buy at CFRA
• InterRent REIT (IIP-U CN) Raised to Buy at TD Cowen; PT C$14
• Raised to Outperform at CIBC; PT C$15
• Yum China (YUMC) Raised to Overweight at JPMorgan
• Downgrades
• Aris Water Solutions Inc (ARIS) Cut to Neutral at JPMorgan; PT $22
• Ballard Power Systems (BLDP CN) Cut to Hold at HSBC; PT C$2.64
• Brown-Forman (BF/B) Cut to Hold at TD Cowen; PT $48
• Cboe (CBOE) Cut to Underweight at Morgan Stanley; PT $199
• Choice Hotels (CHH) Cut to Hold at Jefferies; PT $150
• Cummins (CMI) Cut to Hold at Vertical Research; PT $350
• DigitalBridge Group Inc (DBRG) Cut to Market Perform at KBW; PT $14
• Fortis (FTS CN) Cut to Market Perform at Raymond James; PT C$61
• Grocery Outlet (GO) Cut to Hold at TD Cowen; PT $16
• Infinera (INFN) Cut to Neutral at B Riley; PT $6.65
• MGP Ingredients (MGPI) Cut to Hold at TD Cowen; PT $50
• Myers Industries (MYE) Cut to Sector Weight at KeyBanc
• Portillo’s (PTLO) Cut to Hold at Stifel; PT $13
• Sirius XM (SIRI) Cut to Neutral at Guggenheim; PT $30
• Super Micro Computer (SMCI) Cut to Underweight at JPMorgan; PT $23
• Trulieve Cannabis (TRUL CN) Cut to Sector Perform at ATB Capital; PT C$20
• Verrica Pharma (VRCA) Cut to Neutral at HC Wainwright
• Initiations
• AMD (AMD) Rated New Add at Sealand Securities
• BitFuFu (FUFU) Rated New Buy at HC Wainwright; PT $7
• Bonterra Energy (BNE CN) Rated New Outperform at ATB Capital; PT C$5.75
• Fresenius Medical Care (FME GR) ADRs Rated New Buy at Berenberg
• Insulet (PODD) Rated New Outperform at Bernstein; PT $300
• Pacs Group (PACS) Resumed Overweight at JPMorgan; PT $40
• Rambus (RMBS) Rated New Overweight at Wells Fargo; PT $62
• Ryman Hospitality (RHP) Rated New Buy at Jefferies; PT $130
• Smith & Nephew (SN/ LN) ADRs Rated New Hold at Berenberg; PT $27.27
• Tandem Diabetes (TNDM) Rated New Outperform at Bernstein; PT $42
• Tencent Music (TME) ADRs Rated New Overweight at Barclays; PT $16

Data sources: Bloomberg, Reuters, CQG

David Wienke