Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:30ET Chicago Fed Nat Activity Index; 10:30ET Dallas Fed Manf. Activity; 1:00ET 2-Year
Auction

MSCI Rebalance

Highlights and News:  

• Futures Rise as Traders Cheer Trump’s Treasury Pick
• TRUMP PREPARES ENERGY PLAN TO BOOST GAS EXPORTS, REUTERS
• Israel is nearing a cease-fire deal with Hezbollah
  

World markets cheered the selection of fund manager Scott Bessent as US Treasury Secretary on hopes he might restrain debt levels, while falling yields weighed on
the dollar and commodities. Bessent may give China room to negotiate over trade tariffs though, due to his moderate stance on levies.  Looking ahead, traders will closely parse the Federal Reserve’s November meeting minutes this week, as well as its preferred
inflation gauge, the PCE index. Key events in Asia include earnings from China’s Meituan as well as interest rate decisions in South Korea and New Zealand.  Meanwhile, Israel is nearing a cease-fire deal with Hezbollah, potentially “within days,” the country’s
ambassador to the US said.    

EQUITIES:  

US equity futures rose as traders welcomed Trump’s pick of Scott Bessent for US Treasury Secretary, betting the hedge fund manager will bring a Wall Street mindset to the role and soften
the president-elect’s support for sweeping tax cuts and trade tariffs.  In an interview published on Sunday, Bessent told the Wall Street Journal that both tax and spending cuts were priorities. Trump’s economic advisers and congressional Republicans have
begun preliminary discussions about making significant changes to Medicaid, food stamps and other federal safety net programs to offset the enormous cost of extending Trump’s 2017 tax cuts next year. A year-end rally will start this week and push the S&P 500
to 6,200 points, according to Goldman Sachs. In corporate news, Macy’s delayed the release of its third-quarter earnings after an investigation revealed an employee hid about $132 million to $154 million of cumulative delivery expenses. Amazon is building
its own chip-making operation to turn data centers into humongous AI machines and reduce its reliance on Nvidia.  

Futures ahead of the bell: E-Mini S&P +0.5%, Nasdaq +0.5%, Russell 2000 +1.1%, DJI +0.7%. 

In pre-market trading, Rigetti Computing (RGTI) rises 40%, gaining with other quantum-computing stocks, after Amazon Web Services announced a program to help customers
get ready for quantum computing. D-Wave Quantum (QBTS) +12%, Quantum Computing (QUBT) (+15%).  Bath & Body Works (BBWI) gains 13% after the retailer boosted its earnings per share forecast for the full year. Macy’s (M) slips 2% after saying it would delay
the release of its third-quarter earnings after an investigation revealed an employee hid tens of millions of dollars of expenses. Rocket Lab (RKLB) rises 8% after the satellite company said it successfully launched its 56th electron missile. US Bancorp (USB)
rises 1% after Citi upgraded its rating to buy, saying the bank is trading at a “fairly large” discount.

European gauges erased early gains as Germany’s subdued business outlook added to concerns about the health of the region’s economy, while investors continued to monitor
dealmaking in the banking sector. UniCredit SpA launched a €10 billion ($10.6 billion) all-share offer for domestic rival Banco BPM, opening a second major takeover front as it also pursues Commerzbank AG. The probability of a Commerzbank deal reduced but
is not zero, UniCredit CEO Andrea Orcel said in call with reporters. The Stoxx Europe 600 Index inches higher as miners outperform while retail and bank sectors lag behind. Luxury stocks are among the best performers, as the sector was lifted by news that
China is expanding its visa-waiver program, raising hopes for increased travel. Stoxx 600 +0.1%, DAX +0.4%, CAC +0.1, FTSE 100 +0.4%. Luxury +1.3%, Basic Resources +1%, Household Goods +0.8%. Retail -1%, Real Estate -0.7%, Banks -0.6%.

Shares in Asia were mixed to higher with the MSCI Asia Pacific Index gaining 0.7%, while benchmarks in mainland China and Hong Kong edged lower as investors continued
to digest a slew of disappointing earnings from the nation’s tech giants. China’s blue-chip index dropped to a five-week low and Hong Kong shares sank to their lowest in two months.  Exporters lifted Japanese equities higher amid expectations that corporate
activity in the US may expand under Trump’s incoming administration.  Sentiment in the Asian region got a boost after news of the nomination of Bessent, who is seen as market friendly given his Wall Street background. Indian stocks were among the best performers
in the region as Prime Minister Narendra Modi’s party won key state polls. Indonesia +1.6%, Kospi +1.3%, Nikkei 225 +1.3%, Sensex +1.25%, Philippines +1%, Vietnam +0.5%, ASX 200 +0.3%, Taiwan +0.2%. Thailand -0.2%, Singapore -0.4%, Hang Seng Index -0.4%, CSI
300 -0.45%.

FIXED INCOME: 
 

Treasuries rose, with the yield curve flatter as the market reacts to Trump’s pick for Treasury Secretary, Scott Bessent, who is seen as someone who can cut deficit
spending. US yields remain richer by 4bp-7bp across maturities with 2s10s spread tighter by ~2bp. US 10-year yield fell as much as seven basis points to 4.33%, the lowest level since mid-November. Bessent’s nomination has eased concerns over the incoming president’s
inflationary agenda, which had sparked a selloff in government bonds that drove the benchmark Treasury yield to a four-month high.  Treasury auction cycle begins today with $69b 2-year notes, followed by $70b 5-year and $44b 7-year sales Tuesday and Wednesday.  

METALS: 

Gold tumbled as traders digested Donald Trump’s pick of Scott Bessent as Treasury Secretary and looked toward the Federal Reserve’s next interest-rate decision. Bullion
slid as much as 2.1%, after capping the biggest weekly rally in 20 months on Friday as an escalation in the Russia-Ukraine conflict bolstered the metal’s haven appeal. A slew of data this week may give clues on the Fed’s likely rate path. These include minutes
of the central bank’s November meeting, consumer confidence and personal consumption expenditure data — the monetary authority’s preferred gauge of inflation. Spot gold -1.2%, Silver -1.9%, Copper +0.6%.

ENERGY:   

Oil prices eased, consolidating after a surge that saw the US benchmark jump more than 6% last week as investors reacted to Russia’s nuclear threats as its war with
Ukraine intensified. Geopolitical concerns remain although no new major escalation was seen over the weekend.  Brent has traded between $70 and $75 a barrel in recent weeks, with worries about the demand outlook capping prices at the top of the band while
geopolitical worries have provided a floor. WTI -0.2%, Brent -0.2%, US Nat Gas +6%, RBOB -0.6%.

CURRENCIES: 

In currency markets, the dollar fell after Donald Trump picked Scott Bessent to run the Treasury, who is expected to pursue more hawkish fiscal policies, reining
in spending, and take a measured approach to trade tariffs.  Bessent said his priority will be to deliver on Trump’s various tax cut pledges, while also cutting spending and “maintaining the status of the dollar as the world’s reserve currency.” Morgan Stanley
expects strength in the dollar to peak by the end of the year, before the currency enters a “bear regime.” BofA sees a 5% EM currency slide as trade war risks are underpriced.  The euro rose after European Central Bank governing Council member Francois Villeroy
de Galhau said ECB policy will develop regardless of what happens at the Federal Reserve. US$ Index -0.7%, GBPUSD +0.4%, EURUSD +0.7%, USDJPY -0.5%, AUDUSD +0.2%, NZDUSD +0.3%, USDCHF -0.6%, USDNOK -0.2%. 

Spot Bitcoin +0.3%, Spot Ethereum +3.3%. TRUMP’S ‘CRYPTO ADVISORY COUNCIL’ EXPECTED TO SETUP PROMISED BITCOIN RESERVE: REUTERS

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
• Elastic (ESTC) Raised to Outperform at Wedbush; PT $135
• KinderCare Learning (KLC) Raised to Overweight at Morgan Stanley
• P&G (PG) Raised to Buy at DA Davidson
• Robinhood (HOOD) Raised to Overweight at Morgan Stanley; PT $55
• Sally Beauty (SBH) Raised to Buy at TD Cowen; PT $16
• Santander (SAN SM) Brasil ADRs Raised to Overweight at JPMorgan; PT $6
• Snowflake (SNOW) Raised to Outperform at Wedbush; PT $190
• Synchronoss (SNCR) Raised to Buy at Roth Capital Partners; PT $13
• Trade Desk (TTD) Raised to Neutral at New Street Research
• U.S. Bancorp (USB) Raised to Buy at Citi; PT $65
• W R Berkley Corp (WRB) Raised to Buy at Goldman
• Downgrades
• Arthur J Gallagher (AJG) Cut to Neutral at Goldman
• Baidu (BIDU) ADRs Cut to Hold at China Renaissance; PT $86
• Barrick Gold (ABX CN) Cut to Neutral at CIBC; PT C$30.75
• Berry Global (BERY) Cut to Neutral at Citi; PT $76
• Block (SQ) Cut to Market Perform at BMO; PT $100
• Bradesco (BBDC4 BZ) ADRs Cut to Neutral at JPMorgan
• Citius Pharma (CTXR) Cut to Hold at D. Boral Capital LLC
• Community Health (CYH) Cut to Underweight at Wells Fargo; PT $2.50
• Despegar.com (DESP) Cut to Sell at TD Cowen; PT $14
• Eagle Materials (EXP) Cut to Hold at Loop Capital; PT $315
• Editas (EDIT) Cut to Underperform at BofA
• Expensify (EXFY) Cut to Market Perform at JMP
• Five Below (FIVE) Cut to Market Perform at Telsey; PT $95
• H World Group Ltd (HTHT) ADRs Cut to Equal-Weight at Morgan Stanley
• HCA Healthcare (HCA) Cut to Underweight at Wells Fargo; PT $320
• M&T Bank (MTB) Cut to Neutral at Citi; PT $230
• Mainz Biomed (MYNZ) Cut to Neutral at HC Wainwright
• Newmark (NMRK) Cut to Peerperform at Wolfe
• NIO Inc. (NIO) ADRs Cut to Sell at Goldman; PT $3.90
• Red Rock Resorts (RRR) Cut to Neutral at Mizuho Securities; PT $44
• Select Medical (SEM) Cut to Hold at Benchmark
• Tenet (THC) Cut to Equal-Weight at Wells Fargo; PT $150
• Initiations
• Apogee Therapeutics (APGE) Rated New Buy at Canaccord; PT $89
• Berry Global (BERY) Reinstated Overweight at JPMorgan; PT $76
• Brown-Forman (BF/B) Rated New Outperform at BNPP Exane; PT $48
• Constellation Brands (STZ) Rated New Neutral at BNPP Exane; PT $261
• Coursera (COUR) Rated New Neutral at JPMorgan; PT $8
• CSW Industrials (CSWI) Rated New Equal-Weight at Wells Fargo; PT $425
• EHang Holdings (EH) ADRs Rated New Buy at GF Securities; PT $21.66
• ADRs Rated New Outperform at GuoSen; PT $20.16
• Immunic Inc (IMUX) Rated New Buy at HC Wainwright; PT $10
• Manhattan Associates (MANH) Rated New Overweight at Piper Sandler
• MARA Holdings Inc (MARA) Rated New Equal-Weight at Barclays; PT $27
• Molson Coors (TAP) Rated New Neutral at BNPP Exane; PT $64
• Nasdaq Inc. (NDAQ) Rated New Outperform at William Blair
• Sarepta (SRPT) Rated New Sell at HC Wainwright; PT $80
• SPS Commerce (SPSC) Rated New Neutral at Piper Sandler; PT $198
• V2X Inc (VVX) Rated New Buy at BTIG; PT $80
• Viridian Therapeutics Inc (VRDN) Rated New Buy at TD Cowen

Data sources: Bloomberg, Reuters, CQG

David Wienke