Daily Game Plan

by Contributor
on December 4, 2024

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

TODAY’S ECONOMIC DATA:  8:15ET ADP Employment Change; 8:45ET Fed’s Musalem speaks; 9:00ET Fed’s Barkin speaks; 9:45ET
S&P Global US Services PMI, Composite PMI; 10:00 ISM Services, Factory Orders, Durable Goods Orders, Cap Goods; 1:40ET Fed’s Powell speaks; 2:00ET Fed’s Beige Book; 6:00ET Fed’s Daly speaks

Highlights and News:  

  • Euro zone business activity declines sharply in November
  • OECD warns of protectionism risk to global growth outlook
  • South Korea Opposition Seeks Impeachment
  • Trump is considering Ron DeSantis for secretary of defense – WSJ
  • Russian ship in the Baltic Sea shot signal ammunition at a German military helicopter

 

World markets are mixed as markets digested political turmoil in South Korea, where martial law was imposed and then lifted hours later, and France, where an upcoming
no-confidence vote is due. The global economy faces proliferating risks ranging from trade tensions to wars and debt troubles that could threaten its “remarkable resilience” of past years, the OECD said. “Robust overall performance masks significant differences
across regions and countries, and is surrounded by important downside risks and uncertainties,” OECD Chief Economist wrote in a report that sees the world economy expanding 3.3% in each the next two years. Business activity across the euro zone fell sharply
last month as the bloc’s dominant services sector joined the manufacturing sector in contracting, PMI showed. China’s services expansion unexpectedly cooled in November, according to the Caixin PMI survey.     

 

EQUITIES:  

US equity futures are higher, led by tech-heavy Nasdaq traders looked ahead to remarks from Fed Chair Jerome Powell for clues on the outlook for interest rates, in what is expected to
be his last public remarks ahead of the meeting. S&P 500 contracts edged higher after the benchmark eked out its 55th record high of the year on Tuesday. Salesforce shares were on track for a record high in early trading after reporting quarterly revenue that
topped analysts’ estimates. Lilly shares rose premarket after its weight-loss drug Zepbound outperformed Novo’s Wegovy in a head-to-head trial. US nonfarm payroll figures due Friday are the next major data point before the Dec. 18 meeting, where a 25-point
cut is expected. 

Futures ahead of the bell: E-Mini S&P +0.3%, Nasdaq +0.7%, Russell 2000 +0.2%, DJI +0.4%. 

In pre-market trading, Salesforce (CRM) climbs 12% after the software company reported fiscal third-quarter results that beat expectations on a number of key metrics. Marvell Technology
(MRVL) jumps 13% after the chipmaker delivered better-than-expected results and an upbeat earnings forecast, citing demand for artificial intelligence computing. Okta (OKTA) jumps 14% after the cloud-software provider posted raised its full-year forecast.
Pure Storage (PSTG) soars 23% after the cloud storage provider’s posted quarterly revenue that beat estimates and announced a big design win. Dollar Tree (DLTR) gains 3% as sales improved in the third quarter. Foot Locker (FL) drops 15% after the company cut
its full-year sales and profit forecasts, citing more discounts and a pullback in consumer spending. Intuitive Machines (LUNR) sinks 18% as an offering of about 9.52m shares prices at $10.50 each. Novavax (NVAX) rises 2% after the biotech firm signed a pact
to sell its manufacturing facility in Bohumil, Czech Republic to Novo Nordisk.

European gauges are mostly higher with Germany’s DAX climbing to a record high. The CAC 40 rises alongside its regional peers ahead of an upcoming no-confidence vote
that could lead to the collapse of the French government.  The ECB will continue to ease policy in the coming months as inflation has slowed to the targeted 2% and euro-area economic growth is fragile, Governing Council member Olli Rehn said. A quarter-point
rate cut next week is widely expected. The Stoxx 600 is higher for a fifth straight day, with retail and autos shares outperforming. The health care sector lagged as Novartis AG fell following a downgrade from HSBC. Stoxx 600 +0.4%, DAX +1%, CAC +0.6%, FTSE
100 -0.2%. Retail +2%, Autos +2%, Technology +1.4%. Healthcare -0.8%, Utilities -0.3%.

Shares in Asia were mixed to lower as a brief imposition of martial law in South Korea overnight spurred risk-off sentiment. The MSCI Asia Pacific Index dropped 0.4%
snapping its longest win streak since September. Financial firms Sumitomo Mitsui and Mitsubishi UFJ were among its biggest drags. South Korea’s Kospi ended the day down 1.4% after President Yoon Suk Yeol briefly declared martial law amid a political tussle,
before rescinding it just hours later. Indonesia stocks led gains around the region, while Singapore stocks advanced toward a record high. Chinese semiconductor stocks rose after domestic industry associations warned firms about US chips and called for a security
investigation. Kospi -1.4%, Vietnam -0.7%, CSI 300 -0.5%, Topix -0.5%, ASX 200 -0.4%, Hang Seng Index was flat. Indonesia +1.8%, Taiwan +1%, Singapore +0.4%, Sensex +0.1%, Nikkei 225 +0.05%.

FIXED INCOME: 
 

Treasuries are cheaper across a slightly steeper yield curve — an extension of Tuesday’s price action — ahead of a heavy US economic data slate and an appearance
by Fed Chair Powell during the session. US yields are up 2bp-5bp across maturities with 2s10s curve steeper by 2bp on the day, exceeding Tuesday’s highs; 10-year at 4.27% is ~4bp cheaper on the day. Fed Bank of San Francisco President Mary Daly said a December
rate reduction isn’t certain but remains on the table.

 

 

METALS: 

Gold eased after rising on Tuesday as the political turmoil in South Korea and France buoyed demand for haven assets. JPMorgan Chase maintained its bullish outlook
for gold in its 2025 year-ahead outlook, saying the post-election sell off “was a positioning-driven stumble, not a sea change.” The bank forecasts gold will reach an average of $2,950 an ounce in the fourth quarter of next year.  Spot gold -0.2%, Silver -1.4%,
Copper -0.4%.

 

 

ENERGY:   

 

Oil prices steadied after the biggest advance in more than two weeks as market participants weighed up geopolitical tensions. OPEC+ ministers are set to meet Thursday
after a meeting that had been set for Dec. 1 was postponed.  The group is firming up an agreement — to be finalized tomorrow — that would push back a sequence of monthly hikes from January until the second quarter. US gasoline inventories jumped by 4.6 million
barrels last week, the API reported. That would be the most in more than 10 months if confirmed by the EIA today. WTI +0.2%, Brent +0.2%, US Nat Gas -1.8%, RBOB +0.2%.

 

 

CURRENCIES: 

In currency markets, the euro is seeing modest pressure ahead of the no-confidence vote in France. The ECB will continue to ease policy in the coming months, Governing
Council member Olli Rehn said. Aussie dollar lags G-10 currencies after 3Q GDP missed estimates, bringing forward the likely timing of future rate cuts. South Korea’s won rebounded after President Yoon Suk Yeol rescinded his shock declaration of martial law. 
The Bank of Korea said it will increase short-term liquidity and take “active” steps in currency markets as needed to ensure stability. US$ Index +0.15%, GBPUSD ~flat, EURUSD -0.1%, USDJPY +1%, AUDUSD -1.2%, NZDUSD -0.8%, USDCHF +0.05%.  

 

 

 

Spot Bitcoin -0.1%, Spot Ethereum +2.7%.

 

 

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
    • AirBoss of America (BOS CN) Raised to Neutral at CIBC; PT C$5
    • Brookline Bancorp (BRKL) Raised to Outperform at KBW; PT $14.50
    • Macerich (MAC) Raised to Neutral at Mizuho Securities; PT $22
    • Merck & Co (MRK) Raised to Buy at HSBC; PT $130
    • New Fortress Energy (NFE) Raised to Hold at Deutsche Bank; PT $11
    • NFI Group (NFI CN) Raised to Outperform at CIBC; PT C$21
    • Petrobras (PETR4 BZ) ADRs Raised to Outperform at Safra; PT $17
    • Pinnacle West Capital (PNW) Raised to Overweight at KeyBanc; PT $101
    • Pure Storage (PSTG) Raised to Overweight at Piper Sandler; PT $76
    • Salesforce Inc (CRM) Raised to Buy at Fubon; PT $415
    • Shore Bancshares (SHBI) Raised to Outperform at KBW; PT $20
    • Trimble (TRMB) Raised to Overweight at JPMorgan; PT $92
  • Downgrades
    • ACM Research (ACMR) Cut to Hold at Needham
    • Aecon Group (ARE CN) Cut to Sector Perform at National Bank; PT C$30
    • Alector (ALEC) Cut to Underperform at BofA
    • Avid Bioservices (CDMO) Cut to Equal-Weight at Stephens; PT $12.50
    • Bristol Myers (BMY) Cut to Hold at CFRA; PT $60
    • CAE (CAE CN) Cut to Neutral at CIBC; PT C$33
    • Coveo Solutions (CVO CN) Cut to Underperform at BofA
    • DTE Energy (DTE) Cut to Sector Weight at KeyBanc
    • Entergy (ETR) Cut to Sector Weight at KeyBanc
    • First Citizens (FCNCA) Cut to Market Perform at KBW; PT $2,500
    • Hanmi Financial (HAFC) Cut to Market Perform at KBW; PT $29
    • IPG Photonics (IPGP) Cut to Neutral at Northcoast
    • M&T Bank (MTB) Cut to Neutral at JPMorgan; PT $223.50
    • MSC Industrial (MSM) Cut to Equal-Weight at Stephens; PT $85
    • Novartis (NOVN SW) ADRs Cut to Reduce at HSBC; PT $95
    • Pinnacle Financial (PNFP) Cut to Market Perform at KBW; PT $135
    • TGS (TGSU2 AR) ADRs Cut to Neutral at Grupo Santander; PT $34
    • YPF (YPFD AR) ADRs Cut to Neutral at UBS
  • Initiations
    • Abivax (ABVX FP) ADRs Rated New Market Outperform at JMP; PT $33
    • Absci (ABSI) Rated New Buy at JonesTrading; PT $9
    • Align Technology (ALGN) Rated New Outperform at Mizuho Securities
    • Coherent Corp (COHR) Rated New Buy at Jefferies; PT $135
    • Dentsply (XRAY) Rated New Neutral at Mizuho Securities; PT $21
    • Doximity (DOCS) Rated New Neutral at Mizuho Securities; PT $55
    • Envista Holdings (NVST) Rated New Underperform at Mizuho Securities
    • Everus Construction Group (ECG) Rated New Outperform at Oppenheimer
    • GE Vernova (GEV) Rated New Outperform at Wolfe; PT $403
    • Generac (GNRC) Rated New Equal-Weight at Barclays; PT $189
    • GoodRx Holdings (GDRX) Rated New Neutral at Mizuho Securities; PT $5
    • Headwater Exploration Inc (HWX CN) Rated New Outperform at ATB Capital
    • HealthEquity (HQY) Rated New Outperform at Mizuho Securities; PT $126
    • Henry Schein (HSIC) Rated New Neutral at Mizuho Securities; PT $75
    • Huntington Bancshares (HBAN) Reinstated Overweight at JPMorgan; PT $20
    • LifeMD (LFMD) Rated New Neutral at Mizuho Securities; PT $7
    • Patterson Cos (PDCO) Rated New Neutral at Mizuho Securities; PT $24
    • Solventum (SOLV) Rated New Neutral at Mizuho Securities; PT $70
    • Structure Therapeutics (GPCR) ADRs Rated New Buy at HC Wainwright
    • Talen Energy Corp (TLN) Rated New Buy at Daiwa; PT $248
    • Talkspace (TALK) Rated New Outperform at Mizuho Securities; PT $5
    • Veeva (VEEV) Rated New Outperform at Mizuho Securities; PT $275
    • Vigil Neuroscience (VIGL) Rated New Outperform at William Blair

 

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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