Daily Game Plan

by Contributor
on December 9, 2024

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

TODAY’S ECONOMIC DATA:  10:00ET Wholesale Inventories; 11:00ET NY Fed 1-Yr Inflation Expectations

Highlights and News:  

  • China Signals Bolder Stimulus for Next Year
  • CHINA PROBES NVIDIA ON SUSPICION OF ANTI-MONOPOLY LAW BREACHES
  • ZELENSKIY PLANS TO CALL BIDEN TO DISCUSS NATO INVITATION
  • Trump said on Sunday he would not try to replace Fed Chair Jerome Powell
  • Israel moved troops into Syrian territory while US airstrikes hit ISIS targets

 

Global stocks fluctuated as investors took geopolitical unrest in stride after the rapid fall over the weekend of Syrian President Bashar al-Assad’s regime.  Political
uncertainty was also a feature in Asia where South Korean stocks slid after President Yoon Suk Yeol survived an impeachment vote, only for prosecutors to name him as a subject of a criminal investigation. Sentiment was further strained by a surprisingly sharp
0.6% month-on-month drop in China’s consumer price index in November. Sentiment improved after China’s top leaders signaled bolder economic support next year using their most direct language on stimulus in years, as Beijing braces for a trade war when Donald
Trump takes office. Of the central banks meeting this week, the ECB is seen cutting by 25 basis points and the BoC by 50 bps. The SNB could also go by 50 bps given how much it has been spending to restrain the Swiss franc. The Reserve Bank of Australia meets
on Tuesday and is one of the central banks expected to hold rates steady, while Brazil’s central bank is set to hike again to contain inflation.

 

EQUITIES:  

US equity futures are subdued as investors keep an eye on political developments in Syria, France and South Korea. Investors are also bracing for a data-packed week, including a key US
inflation report on Wednesday that will provide more clues regarding the Federal Reserve’s plans for interest rates. Markets now imply an 85% chance of a quarter-point cut at the Dec. 17-18 meeting, up from 68% ahead of last week’s jobs figures, and have a
further three cuts priced in for next year. Nvidia shares fell premarket as Chinese media said authorities are probing the company on suspicion of anti-monopoly law breaches.

Futures ahead of the bell: E-Mini S&P -0.05%, Nasdaq -0.15%, Russell 2000 +0.4%, DJI +0.05%.

In pre-market trading, US-listed shares of Chinese companies gained after the Chinese Politburo hinted at a shift to looser monetary policy next year and more proactive
fiscal policy to spur economic growth. Alibaba was up 6.5%, PDD Holdings climbed 9.8% and Baidu added 5.6%. Super Micro Computer Inc. (SMCI) gains 9% after the embattled server maker said Nasdaq had granted the firm more time to become compliant with listing
rules.  Interpublic Group (IPG) advanced 15% after a report said marketing conglomerate Omnicom was in advanced talks to acquire the advertising company. Omnicom shares were down 2.6%. Apollo Global (APO) and  Workday (WDAY) shares climb as the stocks are
set to replace Qorvo and Amentum in the S&P 500 Index. Apollo +5%, Workday +8%. Arcellx (ACLX) rises 7% after the drug developer provided data from a mid-stage trial of its experimental therapy for a form of blood cancer. BioAge Labs (BIOA) sinks 72% following
news late Friday that the clinical-stage biopharmaceutical company is halting a Phase-2 trial evaluating its azelaprag drug for the treatment of obesity. Macy’s (M) rises 3% after the Wall Street Journal reported that activist investor Barington Capital has
built a position in the department-store operator. Pactiv Evergreen (PTVE) shares are halted as Novolex said it will purchase the packaging maker for $18 a share. Reddit (RDDT) rises 4% after a Morgan Stanley analyst admits he missed the boat on the company’s
huge post-initial public offering gains.

European gauges pared earlier gains as concern about geopolitical instability offset optimism about stimulus in China. Miners and consumer products were outperformers
amid optimism about bolder China stimulus. Luxury stocks continue to be strong on the news, with watchmaker Richemont gaining as much as 4.1% and LVMH rising more than 2%. Traders are now looking ahead to the European Central Bank’s interest rate decision
on Thursday, with a quarter-point cut priced in by the market.  Among single stocks, CVC Capital Partners Plc offered to take CompuGroup Medical SE & Co. KGaA private in a deal that values the German software provider at €1.18 billion ($1.2 billion), shares
jumped as much as 34%.  DocMorris AG shares dropped after Zuercher Kantonalbank cut its recommendation on the Swiss pharmaceutical products retailer to market perform, citing a liquidity shortage. Stoxx 600 +0.2%, DAX -0.05%, CAC +0.5%, FTSE 100 +0.5%. Basic
Resources +3.3%, Energy +1.7%, Personal Goods +1.1%, Autos +0.8%. Real Estate -1.4%, Food & Bev -0.5%.

Shares in Asia were mostly higher as stocks in Hong Kong staged a late rally after Beijing pledged to adopt a “moderately loose” monetary policy and expand fiscal spending
next year to support growth. The MSCI Asia Pacific Index rose 0.4%, after trading in a narrow range earlier in the day. The Hang Seng China Enterprises Index jumped as much as 2.5%, erasing an earlier loss of 0.9%, after China’s top leaders changed their stance
on monetary policy for the first time in some 14 years. It will also stabilize stock and property markets and must “vigorously” boost consumption and expand domestic demand “in all directions”, Xinhua cited the Politburo as saying.  South Korea’s Kospi slid
nearly 3% even as authorities pledged all-out efforts to stabilize financial markets amid uncertainty over the fate of President Yoon Suk Yeol.  South Korea’s finance ministry was out early on Monday to reassure markets of all the support they needed. Hang
Seng Tech +4.3%, Hang Seng Index +2.8%, Indonesia +0.7%, Taiwan +0.3%, Vietnam +0.3%, Topix +0.3%, ASX 200 ~flat. CSI 300 -0.15%, Sensex -0.25%, Philippines -0.7%, Kospi -2.8%.

FIXED INCOME: 
 

Treasury yields edge higher with the yield curve steeper, unwinding a portion of Friday’s rally sparked by November jobs data. This week’s risk events include CPI
and PPI reports and coupon auctions beginning Tuesday.  Long-end yields are ~3bp cheaper on the day, with 2s10s, 5s30s spreads steeper by 1bp. US Treasury auction cycle begins with $58b 3-year new issue tomorrow, followed by $39b 10-year and $22b 30-year reopenings
Wednesday and Thursday. 

 

 

METALS: 

Gold rose after China’s central bank added bullion to its reserves for the first time in seven months, and the collapse of Syria’s ruling dynasty further destabilized
the Middle East. Bullion climbed as much as 1%, after the People’s Bank of China said Saturday, it bought 160,000 fine troy ounces last month. That was the first addition since April, which was the end of an 18-month run of purchases that had helped underpin
prices. Still, the volume it bought — about five tons — was relatively small compared with monthly additions earlier this year. Spot gold +0.9%, Silver +2.5%, Copper +2%.

 

 

 

ENERGY:   

 

Oil climbed as top importer China flagged its first move toward a loosened monetary policy since 2010 aiming to bolster economic growth. Also supporting crude prices
was uncertainty after the fall of Syrian President Bashar al-Assad, who fled to Moscow.  US airstrikes hit ISIS targets and Israel moved troops into Syrian territory. US airstrikes hit dozens of Islamic State targets in the central part of the country on Sunday
as President Joe Biden cautioned that Assad’s downfall could lead to a resurgence of Islamic extremism. Saudi Arabia is meanwhile cutting the price of oil for buyers in Asia by more than expected, implying a weak market outlook. Money managers dumped short-only
positions on Brent for a third week, taking them to a seven month low.  WTI +1.4%, Brent +1.2%, US Nat Gas +4.2%, RBOB +1.5%

 

 

CURRENCIES: 

In currency markets, the offshore yuan erased losses to trade 0.1% stronger on bets China’s economy will recover due to monetary and fiscal stimulus. Regional currencies
also got a boost, with Australian dollar rising more than 1% and New Zealand’s currency trimming losses to trade higher.  The dollar is slightly lower ahead of US inflation data this week that could cement a December rate cut. US$ Index -0.02%, GBPUSD +1%,
EURUSD +0.05%, USDJPY +0.5%, AUDUSD +1.05%, NZDUSD +0.7%, USDNOK -0.5%, USDCAD -0.35% 

 

 

 

Spot Bitcoin -1.2%, Spot Ethereum -2.8%.

 

 

 

 

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
    • Blackstone (BX) Raised to Buy at TD Cowen; PT $230
    • BNY Mellon (BK) Raised to Overweight at Morgan Stanley; PT $94
    • C.H. Robinson (CHRW) Raised to Overweight at Wells Fargo; PT $130
    • Coca-Cola Europacific (CCEP) Raised to Overweight at Morgan Stanley
    • Cummins (CMI) Raised to Neutral at JPMorgan; PT $420
    • Enhabit (EHAB) Raised to Buy at Jefferies; PT $9.50
    • Equitable Holdings (EQH) Raised to Outperform at KBW; PT $58
    • Hess (HES) Raised to Overweight at Wells Fargo; PT $193
    • JD.com (JD) ADRs Raised to Outperform at Bernstein; PT $46
    • Jefferies (JEF) Raised to Overweight at Morgan Stanley; PT $97
    • Kenvue (KVUE) Raised to Outperform at RBC; PT $24
    • Kodiak Sciences (KOD) Raised to Buy at Jefferies; PT $20
    • McCormick (MKC) Raised to Buy at Jefferies; PT $91
    • Moelis & Co (MC) Raised to Overweight at Morgan Stanley; PT $92
    • Newell Brands (NWL) Raised to Buy at Truist Secs; PT $17
    • Nokia (NOKIA FH) ADRs Raised to Overweight at JPMorgan; PT $6.35
    • Northern Trust (NTRS) Raised to Equal-Weight at Morgan Stanley; PT $127
    • Omega Healthcare (OHI) Raised to Outperform at BMO; PT $45
    • PayPal (PYPL) Raised to Buy at BofA; PT $103
    • RealReal (REAL) Raised to Overweight at Wells Fargo; PT $15
    • Reddit (RDDT) Raised to Overweight at Morgan Stanley; PT $200
    • Robinhood (HOOD) Raised to Overweight at Barclays; PT $49
    • Rockwell Automation (ROK) Raised to Overweight at KeyBanc; PT $345
    • Schwab (SCHW) Raised to Overweight at Barclays; PT $95
    • State Street (STT) Raised to Overweight at Morgan Stanley; PT $139
    • Synchrony Financial (SYF) Raised to Overweight at JPMorgan; PT $72
    • Tenaris (TEN IM) ADRs Raised to Buy at Jefferies; PT $47
    • TFI International (TFII CN) Raised to Buy at Desjardins; PT C$236
    • Timken (TKR) Raised to Buy at Citi; PT $90
    • Trulieve Cannabis (TRUL CN) Raised to Outperform at ATB Capital; PT C$17
    • VeriSign (VRSN) Raised to Outperform at Baird; PT $250
    • Vertex Pharmaceuticals (VRTX) Raised to Buy at Jefferies; PT $550
    • Victoria’s Secret (VSCO) Raised to Neutral at JPMorgan; PT $45
    • Xylem (XYL) Raised to Buy at Citi
  • Downgrades
    • AMD (AMD) Cut to Neutral at BofA; PT $155
    • Bank of America (BAC) Cut to Equal-Weight at Morgan Stanley; PT $55
    • BioAge Labs (BIOA) Cut to Neutral at Citi; PT $7
      • Cut to Hold at Jefferies; PT $7
    • Biogen (BIIB) Cut to Hold at Jefferies; PT $180
    • CareTrust REIT (CTRE) Cut to Market Perform at BMO
    • Cboe (CBOE) Cut to Equal-Weight at Barclays; PT $220
    • Cresco Labs (CL CN) Cut to Sector Perform at ATB Capital; PT C$3.50
    • DocuSign (DOCU) Cut to Reduce at HSBC
    • Fortive (FTV) Cut to Neutral at Citi; PT $86
    • HF Sinclair (DINO) Cut to Equal-Weight at Wells Fargo; PT $45
    • Houlihan Lokey (HLI) Cut to Underweight at Morgan Stanley; PT $200
    • Jushi Holdings (JUSH CN) Cut to Underperform at ATB Capital
    • Kanzhun (BZ) ADRs Cut to Market Perform at Bernstein; PT $15
    • Lazard Inc (LAZ) Cut to Equal-Weight at Morgan Stanley; PT $63
    • Myriad Genetics (MYGN) Cut to Market Perform at Leerink; PT $21
    • Payoneer Global (PAYO) Cut to Market Perform at KBW; PT $12
    • PBF Energy (PBF) Cut to Equal-Weight at Wells Fargo; PT $34
    • Redwood Trust (RWT) Cut to Neutral at JPMorgan; PT $7
    • Regions Financial (RF) Cut to Equal-Weight at Morgan Stanley; PT $32
    • Shift4 Payments (FOUR) Cut to Market Perform at KBW; PT $112
    • SLM (SLM) Cut to Market Perform at KBW; PT $30
    • SoFi Technologies (SOFI) Cut to Underperform at BofA; PT $12
    • Sunnova Energy (NOVA) Cut to Sector Perform at RBC; PT $5
    • TerrAscend (TSND CN) Cut to Sector Perform at ATB Capital; PT C$1.75
    • Valaris (VAL) Cut to Neutral at Citi; PT $47
    • Victoria’s Secret (VSCO) Cut to Equal-Weight at Wells Fargo
    • Vodafone (VOD LN) ADRs Cut to Neutral at Goldman; PT $10.45
  • Initiations
    • Abaxx Technologies Inc (ABXX CN) Rated New Buy at Canaccord; PT C$20
    • Alphabet (GOOGL) Rated New Buy at SPDB Intl HK; PT $202
    • Amazon (AMZN) Rated New Buy at SPDB Intl HK; PT $263
    • Apple Hospitality (APLE) Rated New Outperform at BMO; PT $18
    • Atour Lifestyle (ATAT) ADRs Rated New Buy at Goldman; PT $34.40
    • Avista (AVA) Rated New Hold at Jefferies; PT $40
    • Bentley Systems (BSY) Rated New Neutral at JPMorgan; PT $52
    • Carlyle Credit Income Fund (CCIF) US Rated New Market Perform at Oppenheimer; PT $8
    • EBay (EBAY) Rated New Neutral at Wedbush; PT $70
    • Gri Bio (GRI) Rated New Buy at HC Wainwright; PT $10
    • Hut 8 Corp (HUT CN) Rated New Overweight at Cantor; PT C$49.46
    • Meta Platforms (META) Rated New Buy at SPDB Intl HK; PT $763
    • Monogram Technologies (MGRM) Rated New Buy at Roth Capital Partners
    • Newcore Gold Ltd (NCAU CN) Rated New Speculative Buy at Canaccord
    • ONE Gas (OGS) Rated New Hold at Jefferies; PT $79
    • Pharming (PHARM NA) ADRs Rated New Buy at Jefferies; PT $14
    • Qualcomm (QCOM) Rated New Hold at Melius; PT $180
    • Quanta Services (PWR) Rated New Outperform at Daiwa; PT $355
    • Rivian (RIVN) Rated New Buy at Benchmark; PT $18
    • Ryman Hospitality (RHP) Rated New Outperform at BMO; PT $133
    • Scotts Miracle-Gro (SMG) Rated New Hold at Jefferies; PT $72
    • Six Flags (FUN) Rated New Buy at Jefferies; PT $59
    • Talkspace (TALK) Rated New Overweight at KeyBanc; PT $4.50
    • Tempus AI (TEM) Rated New Buy at Guggenheim; PT $74
    • Western Copper (WRN CN) Rated New Speculative Buy at Canaccord; PT C$3.75

 

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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Charts

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