Daily Game Plan

by Contributor
on December 13, 2024

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

TODAY’S ECONOMIC DATA:  8:30ET Import/Export Prices

Highlights and News:  

  • MACRON NAMES CENTRIST BAYROU AS NEW FRENCH PRIME MINISTER: AFP
  • China’s Central Economic Work Conference seemed to underwhelm investors
  • Trump Backs US Dockworkers Poised to Strike Over Automation 
  • Russia launches major missile attack on Ukrainian power facilities, Kyiv says
  • Amazon is donating $1 million to Donald Trump’s inaugural fund; Bezos to meet with Trump next week

 

Global stocks eased amid continued disappointment over the lack of concrete stimulus measures from China, and as traders waited for a new French prime minister to
be named. Macron later named centrist François Bayrou as the new PM. Britain’s economy contracted for a second straight month in October as consumers braced for a painful budget. The weak growth figures are unlikely to force a late policy pivot from the Bank
of England, which is widely expected to keep interest rates on hold at next week’s meeting. German exports fell more than expected in October with exports to China decreasing by 3.8% on the month. The week ahead is packed with monetary policy decisions from
the Federal Reserve as well as central banks in Japan, Indonesia, Thailand, Philippines and Taiwan.

 

EQUITIES:  

US equity futures are higher, led by the tech-heavy Nasdaq as shares in Broadcom jumped 15% in post-market trading after it predicted a boom in demand for its artificial intelligence
chips. Investors are looking ahead to the final Federal Reserve interest-rate decision of the year next week, with a rate cut almost fully priced in. US equity funds are headed for record annual inflows at $480 billion, BofA said. Trump voiced support for
the International Longshoremen’s Association that shut East and Gulf coast ports in October and which may strike again in just over a month.

Futures ahead of the bell: E-Mini S&P +0.4%, Nasdaq +0.85%, Russell 2000 +0.05%, DJI +0.1%.

In pre-market trading, Broadcom (AVGO) rises 18% after the chip supplier for Apple and other big tech companies predicted a boom in demand for its artificial intelligence
chips. The company predicted 65% growth in AI product sales in the current quarter. EVgo (EVGO) rises 11% after the company closed on a $1.25 billion Energy Department loan to help expand its EV charging network. RH (RH) jumps 18% after the furniture retailer
raised its revenue forecast for 2025 and swung to a profit in the third quarter. TaskUS (TASK) gains 8% after Morgan Stanley turned bullish on the IT services firm, saying the company is a beneficiary from AI with exposure to key customers Meta and OpenAI.

Consumer Discretionary sector has outperformed the broader S&P 500 by roughly 20% since mid-August.

European gauges are mixed as investors weighed the lack of policy details on fiscal stimulus in China, the region’s key trading partner. The Stoxx 600 Index underperforms
and is set to snap a three-week winning streak. Autos and insurance stocks outperformed, while real estate, miners and health care were the biggest laggards. Munich Re was a notable gainer after it forecast a net income boost next year.  President Emmanuel
Macron picked Francois Bayrou to be France’s new prime minister, calling on a longstanding centrist ally to navigate a fractured political landscape. Stoxx 600 -0.2%, DAX +0.1%, CAC +0.1%, FTSE 100 +0.05%. Insurance +1.3%, Autos +1.1%, Banks +0.6%. Healthcare
-1.3%, Basic Resources -1.1%, Real Estate -1%.   

Shares in Asia declined, led by losses in China after authorities again left investors waiting on the specifics of the fiscal stimulus. The MSCI Asia Pacific Index
fell 0.9%, the most in a month. Tencent, Meituan and Sony were among the biggest drags. Japanese gauges fell, while South Korean shares gained for a fourth day. Authorities vowed to raise China’s fiscal deficit target next year and made “lifting consumption
vigorously” and stimulating overall domestic demand their top priority. Retail sales data due next week will help shed light on the state of China’s economy. CSI 300 -2.4%, Hang Seng Index -2.1%, Topix -1%, Indonesia -1%, ASX 200 -0.4%, Vietnam -0.4%, Philippines
-0.4%, Taiwan -0.1%. Sensex +1%, Kospi +0.5%, Singapore +0.05%.

FIXED INCOME: 
 

Treasuries are slightly cheaper across the curve, tracking bigger losses in European rates. US yields are 1bp-2.5bp cheaper across maturities with 10-year around
4.345%. The 10-year yield has risen 17 bps this week while 30-year yields surged 22 bps, the biggest weekly rise in more than a year. The curve is mixed with 2s10s 1bp steeper and 2s5s 1bp flatter. A 25bp rate cut is almost fully priced in, however, futures
imply little chance of a move in January, with just two more easings priced in by the end-2025.

 

 

METALS: 

Gold edged lower after mixed US data, with investors focusing on the Federal Reserve’s final policy meeting of the year next week. Gold is still set to notch a weekly
gain, with optimism increasing that the US central bank will cut rates by 25 basis points at its meeting on Dec. 18. Spot gold -0.4%, Silver -0.7%, Copper -0.2%.

 

 

 

ENERGY:   

 

Oil prices ticked higher and set for a weekly gain of around 3% on the prospect for tighter US sanctions against Iran and Russia despite the likelihood of soft fundamentals
in 2025. Oil extended its rally after a Russian air strike against Ukraine heightened geopolitical tensions.  In the options market, traders are again betting on a price spike with call options at a premium to puts for the first time in three weeks. Moscow
forces fired almost 200 drones and more than 90 missiles, including at least one made by North Korea, Ukrainian President Zelenskiy said on Telegram. Neighboring Poland scrambled fighter jets in response. WTI +0.4%, Brent +0.4%, US Nat Gas -1.1%, RBOB +0.4%.

 

 

CURRENCIES: 

In currency markets, the US Dollar Index is lower but on track for a second straight week of gains. Sterling weakened after Britain’s economy unexpectedly contracted
for a second straight month in October. The euro strengthened after the European Central Bank sounded less dovish on rates than some expected after its policy announcement Thursday. Traders have pared bets on ECB policy easing next year. The yen weakened after
Reuters reported that the BOJ is leaning toward skipping a rate hike in December. The Indonesian rupiah hit a four-month low and its central bank had to intervene repeatedly to shore up the currency. US$ Index -0.2%, GBPUSD -0.1%, EURUSD +0.4%, USDJPY +0.55%,
AUDUSD +0.2%, USDNOK -0.7%, EURJPY +1%, USDSEK -0.6%.

 

 

 

Spot Bitcoin %, Spot Ethereum %.

 

 

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
    • Amplitude (AMPL) Raised to Overweight at KeyBanc; PT $15
    • Cardinal Health (CAH) Raised to Equal-Weight at Wells Fargo; PT $127
    • Century Communities (CCS) Raised to Neutral at JPMorgan; PT $97
    • Ciena (CIEN) Raised to Buy at BofA
    • Gaming and Leisure (GLPI) Raised to Overweight at JPMorgan; PT $54
    • General Mills (GIS) Raised to Buy at BofA; PT $80
    • Marriott Vacations (VAC) Raised to Overweight at Barclays; PT $116
    • Norwegian Cruise (NCLH) Raised to Overweight at Barclays; PT $32
    • Patterson-UTI (PTEN) Raised to Buy at Goldman
    • PayPal (PYPL) Raised to Outperform at Wolfe; PT $107
    • Penn Entertainment Inc (PENN) Raised to Overweight at JPMorgan; PT $27
    • PTC Therapeutics (PTCT) Raised to Overweight at Morgan Stanley; PT $67
    • Robert Half Inc (RHI) Raised to Buy at Truist Secs; PT $90
    • Sangamo (SGMO) Raised to Buy at Truist Secs; PT $7
    • Sempra (SRE) Raised to Overweight at Morgan Stanley; PT $98
    • TaskUS (TASK) Raised to Overweight at Morgan Stanley; PT $21
    • Upbound Group Inc (UPBD) Raised to Overweight at Stephens; PT $38
    • Viper Energy Inc (VNOM) Raised to Overweight at KeyBanc; PT $62
  • Downgrades
    • 8×8 (EGHT) Cut to Underperform at Mizuho Securities; PT $2.50
    • Amicus (FOLD) Cut to Equal-Weight at Morgan Stanley; PT $12
    • Boundless Bio (BOLD) Cut to Neutral at Guggenheim
    • Braskem (BRKM5 BZ) ADRs Cut to Neutral at Grupo Santander; PT $10
    • D.R. Horton (DHI) Cut to Underweight at JPMorgan; PT $156
    • Editas (EDIT) Cut to Hold at Truist Secs
      • Cut to Hold at Stifel; PT $3
    • Hilton Grand Vacations (HGV) Cut to Equal-Weight at Barclays; PT $41
    • Immuneering (IMRX) Cut to Underweight at Morgan Stanley
    • Immunocore (IMCR) ADRs Cut to Equal-Weight at Morgan Stanley; PT $35
    • Installed Building (IBP) Cut to Neutral at Seaport Global Securities
    • Meritage Homes (MTH) Cut to Neutral at JPMorgan; PT $197
    • Monday.com (MNDY) Cut to Sector Weight at KeyBanc
    • Nordson (NDSN) Cut to Neutral at Baird; PT $237
    • RingCentral (RNG) Cut to Neutral at Mizuho Securities; PT $42
    • Ryman Hospitality (RHP) Cut to Underweight at JPMorgan; PT $100
    • ServiceNow (NOW) Cut to Sector Weight at KeyBanc
    • Telus (T CN) Cut to Sector Perform at National Bank; PT C$22
    • Toll Brothers (TOL) Cut to Neutral at JPMorgan; PT $150
    • TopBuild (BLD) Cut to Neutral at Seaport Global Securities
    • Ultrapar (UGPA3 BZ) ADRs Cut to Neutral at Grupo Santander; PT $3.90
    • Viking Holdings (VIK) Cut to Equal-Weight at Barclays; PT $49
    • Weatherford (WFRD) Cut to Neutral at Goldman
    • ZoomInfo (ZI) Cut to Underweight at KeyBanc; PT $10
  • Initiations
    • Adtran Holdings (ADTN) Rated New Neutral at Oddo BHF; PT $9
    • Advance Auto (AAP) Rated New Market Perform at BMO; PT $45
    • AES Corp (AES) Rated New Buy at HSBC; PT $17
    • American Eagle (AEO) Reinstated Market Perform at Raymond James
    • Atlassian (TEAM) Reinstated Neutral at Macquarie; PT $290
    • AutoZone (AZO) Rated New Outperform at BMO; PT $3,700
    • Benitec Biopharma (BNTC) Rated New Outperform at Baird; PT $30
    • Canadian Solar (CSIQ) Rated New Outperform at Mizuho Securities; PT $20
    • Cidara (CDTX) Rated New Outperform at RBC; PT $34
    • Coty (COTY) Rated New Neutral at Goldman; PT $9
    • Datadog (DDOG) Reinstated Outperform at Macquarie; PT $200
    • Dyne Therapeutics (DYN) Rated New Outperform at Baird; PT $46
    • Elf Beauty (ELF) Rated New Buy at Goldman; PT $165
    • Enliven Therapeutics (ELVN) Rated New Buy at BTIG; PT $42
    • Expedia (EXPE) Rated New Market Perform at CICC; PT $193
    • Group 1 Automotive (GPI) Rated New Buy at Jefferies; PT $500
    • Hologic (HOLX) Rated New Peerperform at Wolfe
    • Mettler-Toledo (MTD) Reinstated Peerperform at Wolfe
    • MongoDB (MDB) Reinstated Neutral at Macquarie; PT $300
    • O’Reilly Automotive (ORLY) Rated New Outperform at BMO; PT $1,400
    • Oddity Tech (ODD) Reinstated Neutral at Goldman; PT $48
    • ResMed (RMD) Rated New Hold at Stifel; PT $250
    • Salesforce Inc (CRM) Reinstated Neutral at Macquarie; PT $370
    • Solid Biosciences (SLDB) Rated New Outperform at Wedbush
    • Sonida Senior Living (SNDA) Rated New Equal-Weight at Morgan Stanley
    • Spotify (SPOT) Rated New Reduce at Inderes; PT $470
    • Stevanato Group (STVN) Rated New Outperform at Wolfe; PT $28
    • TechnipFMC (FTI) Rated New Buy at Goldman; PT $38
    • Tempus AI (TEM) Rated New Outperform at Wolfe; PT $60
    • Titan International (TWI) Rated New Buy at DA Davidson; PT $11
    • Twist Bioscience (TWST) Rated New Outperform at Wolfe; PT $60
    • West Pharma (WST) Rated New Peerperform at Wolfe

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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