Daily Game Plan

by Contributor
on December 17, 2024

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

TODAY’S ECONOMIC DATA:  8:30ET Retail Sales, New York Fed Services Business Activity; 9:15ET Industrial Production,
Capacity Utilization, Manufacturing Production; 10:00ET Business Inventories, NAHB Housing Market Index; 1:00ET 20-Year Auction

US NOV. RETAIL SALES RISE 0.7% M/M; EST. +0.6%

Highlights and News:  

  • Investors Are Most Underweight Europe Stocks in Two Years: BofA
  • BofA Says Stocks Flash Sell Signal After Cash Holdings Tumble
  • Israel Sees Signs of Breakthrough in Talks Over Gaza Ceasefire
  • Ukraine’s Security Service claimed responsibility for the assassination of Russia’s high-ranking general Igor Kirillov

 

Global stocks retreated as traders awaited the Federal Reserve’s final interest-rate decision for 2024 and its monetary policy forecasts. Markets shrugged off news
that Chinese leaders were planning to set an annual growth goal of about 5% for next year and raise the budget deficit. In the UK, traders scaled back bets on Bank of England rate cuts after wage growth accelerated for the first time in more than year.  Private-sector
regular pay growth, the gauge most closely watched by the BOE, jumped much faster than expected to 5.4% from 4.9%. The Bank of France cut its domestic growth outlook to 0.9% in 2025 instead of 1.2% it predicted in September. German business expectations unexpectedly
sank in December. Fund managers have been reducing cash holdings to a record low and pouring money into US stocks, triggering a metric that Bank of America says could be a signal to sell global equities. Allocation to US equities surged to a record high of
net 36% overweight, according to BofA.   

 

EQUITIES:  

US equity futures dip with rising bond yields adding pressure as traders braced for retail sales data that will provide more clues on the health of consumers ahead of an anticipated Federal
Reserve rate cut. Futures are lower across the board a day after the Dow fell for an eighth straight day for the first time since June 2018. The Fed decision tomorrow will be top of mind for investors, with the CME Fedwatch tool currently forecasting a 98%
chance of a 25-basis-points cut. US retail sales are expected to rise 0.6% in November, compared with 0.4% the prior month, as companies lured bargain-hunters with discounts.

Futures ahead of the bell: E-Mini S&P -0.4%, Nasdaq -0.3%, Russell 2000 -0.6%, DJI -0.5%.

In pre-market trading, Pfizer (PFE) rises 2% after the company forecast 2025 sales and earnings in line with analysts’ projections. Rockwell Medical (RMTI) climbs 14%
after the manufacturer of hemodialysis products entered into a supply pact with a provider of dialysis products and services. Shoals Technologies (SHLS) climbs 8% as Morgan Stanley upgraded the renewable energy equipment company to overweight. Mitek (MITK)
rallies 15% after the identity verification software company reported fourth quarter revenue and earnings that beat. Pacs Group (PACS) slips 3% as JPMorgan issued a downgrade after nursing home operator said it received investigative demands over its reimbursement
and referral practices.

European gauges are lower as political uncertainty in France and Germany weigh on sentiment. The Bank of England meets on Thursday, with markets so far pricing in only
a slim chance of a final rate cut of the year. The Stoxx 600 and DAX are back nearing their early lows with banks and energy leading losses while technology outperforms. Among individual movers, Bunzl Plc shares dropped over 6% after the wholesaler gave a
trading update, while Universal Music Group NV shares edged higher after its Virgin unit bought indie music specialist Downtown Music Holdings. Stoxx 600 -0.6%, DAX -0.25%, CAC -0.03%, FTSE 100 -0.9%. Banks -1.3%, Food & Bev -1.3%, Energy -1.2%, Real Estate
-1.1%. Technology +0.8%, Travel +0.05%.

Shares in Asia fell as concerns over China’s economy persist. The CSI 300 index rose as much as 1% before paring gains following a report on China’s 2025 growth and
deficit goals. Chinese leaders have decided to increase the country’s budget deficit to 4% of GDP in 2025 in a bid to keep economic growth at around 5% next year. South Korea’s Kospi fell more than 1%, taking its yearly losses to over 7%, making it Asia’s
worst performing market this year. Alibaba shares slipped after booking a loss from the sale of its Intime business. Philippines -1.7%, Thailand -1.7%, Indonesia -1.4%, Sensex -1.3%, Kospi -1.3%, Singapore -0.5%, Hang Seng Index -0.5%, Topix -0.4%, Vietnam
-0.2%, Taiwan -0.1%. CSI 300 +0.25%, ASX 200 +0.8%.

FIXED INCOME: 
 

Treasuries fall, with US 10-year yields rising 3 bps to 4.43%, an over three-week high, as market bets strengthened on a more cautious Fed in 2025.  Yields are 2bp-4bp
higher across maturities with curve spreads mixed. UK government bonds fall as traders pare bets on interest-rate cuts by the Bank of England after UK wage growth accelerated for the first time in more than a year.  The US session includes November retail
sales data and 20-year bond reopening.

   

 

 

METALS: 

Gold slipped along with most commodities and equity markets, as traders face a rush of interest-rate decisions by major central banks, including the US Federal Reserve. 
While a widely anticipated quarter point interest rate cut by the Fed is expected on Wednesday, traders are increasingly convinced the central bank will lower borrowing rates only gradually next year. Meanwhile, major consumer India’s gold imports are poised
for a sharp slowdown in December following record purchases in November, trade and government officials said. Spot gold -0.3%, Silver -0.6%, Copper -1%.

 

 

 

ENERGY:   

 

Oil prices are lower for a second day as traders remained cautious ahead of the Fed’s interest rate decision. On Monday, prices fell from multi-week highs on unexpected
weakness in consumer spending data from China, and as investors moved into a holding pattern ahead of the Fed’s meeting. WTI -1.1%, Brent -1%, US Nat Gas -1%, RBOB -1%.

 

 

CURRENCIES: 

In currency markets, the dollar held firm as traders grow increasingly convinced the Federal Reserve will lower borrowing rates only gradually next year.  The pound
reversed Asia-session losses after data showed UK regular wage growth accelerated for the first time in more than a year. The euro weakened after Germany’s IFO business confidence index fell more than economists expected in December. The yen strengthened a
touch after six straight days of selling, as markets have scaled back the chances of a Japanese rate hike this week in favor of a move in January. The yen’s rapid decline in the past week had strategists warning that further weakness may trigger verbal intervention
from authorities and add pressure on the Bank of Japan to hike rates.  US$ Index +0.1%, GBPUSD +0.15%, EURUSD -0.15%, USDJPY -0.2%, AUDUSD -0.4%, NZDUSD -0.35%, USDCHF +0.3%, USDNOK +0.5%.     

 

 

Spot Bitcoin +0.8%, Spot Ethereum -1%.

 

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
    • Albertsons Cos (ACI) Raised to Outperform at Telsey; PT $26
    • Ambev (ABEV3 BZ) ADRs Raised to Outperform at Grupo Santander; PT $3.56
    • Antero Resources (AR) Raised to Equal-Weight at Wells Fargo; PT $32
    • AvalonBay (AVB) Raised to Overweight at JPMorgan; PT $262
    • Berkshire Hills (BHLB) Raised to Buy at Seaport Global Securities
    • Bioventus (BVS) Raised to Neutral at JPMorgan; PT $13
    • Broadstone Net Lease (BNL) Raised to Market Outperform at JMP; PT $21
    • Cloudflare (NET) Raised to Buy at Stifel; PT $136
    • CNH Industrial (CNH) Raised to Overweight at Morgan Stanley; PT $16.50
    • Cousins Properties (CUZ) Raised to Overweight at KeyBanc; PT $34
    • Ecolab (ECL) Raised to Outperform at BMO; PT $290
    • EOG Resources (EOG) Raised to Overweight at Wells Fargo; PT $150
    • EPAM Systems (EPAM) Raised to Overweight at Barclays; PT $290
    • First Industrial Realty (FR) Raised to Sector Weight at KeyBanc
    • Getty Realty (GTY) Raised to Overweight at KeyBanc; PT $35
    • Global Net Lease (GNL) Raised to Market Outperform at JMP; PT $9
    • Horizon Technology (HRZN) Raised to Neutral at Compass Point; PT $8.25
    • Macerich (MAC) Raised to Sector Perform at Scotiabank; PT $22
    • Mid-America (MAA) Raised to Overweight at KeyBanc; PT $180
    • MidWestOne Financial (MOFG) Raised to Outperform at KBW; PT $39
    • Nordson (NDSN) Raised to Buy at Seaport Global Securities; PT $250
    • Owens Corning (OC) Raised to Overweight at Wells Fargo; PT $225
    • Quest Diagnostics (DGX) Raised to Overweight at Morgan Stanley
    • Shoals Technologies (SHLS) Raised to Overweight at Morgan Stanley
    • SolarEdge (SEDG) Raised to Buy at Goldman
    • Tesla (TSLA) Raised to Outperform at Mizuho Securities; PT $515
    • Timken (TKR) Raised to Overweight at Morgan Stanley; PT $93
    • Veris Residential Inc (VRE) Raised to Neutral at JPMorgan; PT $17
    • WillScot Holdings Corp (WSC) Raised to Overweight at Morgan Stanley
    • Zimmer Biomet (ZBH) Raised to Overweight at JPMorgan; PT $128
  • Downgrades
    • Agree Realty (ADC) Cut to Market Perform at JMP
    • Alector (ALEC) Cut to Neutral at Mizuho Securities; PT $2.50
    • APA Corp (APA) Cut to Equal-Weight at Wells Fargo; PT $25
    • Apellis Pharma (APLS) Cut to Neutral at Goldman; PT $36
    • Arcos Dorados (ARCO) Cut to Neutral at Grupo Santander; PT $9.80
    • Axalta (AXTA) Cut to Sector Weight at KeyBanc
    • Brown-Forman (BF/B) Cut to Underweight at JPMorgan; PT $43
    • Camden Property (CPT) Cut to Underweight at JPMorgan; PT $128
    • Canadian Solar (CSIQ) Cut to Sell at Goldman
    • CervoMed Inc (CRVO) Cut to Neutral at HC Wainwright
    • CommScope (COMM) Cut to Underweight at Morgan Stanley; PT $5
    • EastGroup (EGP) Cut to Sector Weight at KeyBanc
    • Elme Communities (ELME) Cut to Neutral at JPMorgan; PT $18
    • Essex Property (ESS) Cut to Underweight at JPMorgan; PT $303
    • Exelixis (EXEL) Cut to Neutral at BofA; PT $39
    • Honest Co. (HNST) Cut to Hold at Loop Capital; PT $7
    • Innovage (INNV) Cut to Underweight at JPMorgan; PT $5
    • Lucero Energy Corp (LOU CN) Cut to Hold at Canaccord
    • Marqeta (MQ) Cut to Equal-Weight at Barclays
    • Masco (MAS) Cut to Equal-Weight at Wells Fargo; PT $85
    • Match Group (MTCH) Cut to Hold at Jefferies; PT $32
    • Pacs Group (PACS) Cut to Neutral at JPMorgan; PT $18
    • PPG Industries (PPG) Cut to Sector Weight at KeyBanc
    • TransMedics (TMDX) Cut to Neutral at JPMorgan; PT $75
    • Viavi (VIAV) Cut to Underweight at Morgan Stanley; PT $9.50
    • VICI Properties (VICI) Cut to Sector Weight at KeyBanc
    • WEX (WEX) Cut to Equal-Weight at Barclays
  • Initiations
    • Agilon Health (AGL) Rated New Neutral at Macquarie; PT $3
    • Agree Realty (ADC) Rated New Underweight at Barclays; PT $76
    • American Homes (AMH) Rated New Equal-Weight at Barclays; PT $39
    • Aquestive Therapeutics (AQST) Rated New Overweight at Cantor; PT $17
    • Astrana Health Inc (ASTH) Rated New Neutral at Macquarie; PT $41
    • Atkore (ATKR) Rated New Buy at Roth Capital Partners; PT $100
    • Avalo Therapeutics (AVTX) Rated New Buy at Lucid Capital Markets
    • AvalonBay (AVB) Rated New Equal-Weight at Barclays; PT $243
    • Centerspace (CSR) Rated New Neutral at Wedbush; PT $72
    • Credo Technology (CRDO) Rated New Neutral at Susquehanna; PT $80
    • Descartes Systems (DSG CN) Rated New Buy at Loop Capital; PT C$199.91
    • Duolingo (DUOL) Rated New Buy at SPDB Intl HK; PT $400
    • Elastic (ESTC) Rated New Overweight at Morgan Stanley
    • Equity Residential (EQR) Rated New Overweight at Barclays; PT $83
    • Esperion Therapeutics (ESPR) Rated New Overweight at Cantor; PT $8
    • Essential Properties (EPRT) Rated New Overweight at Barclays; PT $35.94
    • Essex Property (ESS) Rated New Equal-Weight at Barclays; PT $316
    • Evry (EVRY NO) TriSalus Life Sciences Rated New Overweight at Cantor; PT $10
    • Four Corners Property (FCPT) Rated New Equal-Weight at Barclays; PT $31
    • Galaxy Digital (GLXY CN) Rated New Overweight at Piper Sandler
    • Gaming and Leisure (GLPI) Rated New Equal-Weight at Barclays; PT $54.53
    • Globant (GLOB) Rated New Positive at Susquehanna; PT $255
    • Groupe Dynamite (GRGD CN) Rated New Equal-Weight at Barclays; PT C$25
    • Healthcare Services (HCSG) Rated New Neutral at Macquarie; PT $13
    • Hesai Group (HSAI) ADRs Rated New Buy at SPDB Intl HK; PT $13.10
    • Hims & Hers Health (HIMS) Rated New Overweight at Morgan Stanley
    • Hut 8 Corp (HUT CN) Rated New Overweight at Piper Sandler; PT $33
    • iBio (IBIO) Rated New Buy at Lucid Capital Markets; PT $6
    • Inari Medical (NARI) Rated New Outperform at Oppenheimer; PT $75
    • Independence Realty (IRT) Rated New Equal-Weight at Barclays; PT $23
    • Invitation Homes (INVH) Rated New Overweight at Barclays; PT $38
    • Leon’s Furniture (LNF CN) Reinstated Neutral at CIBC; PT C$29
    • Manchester United (MANU) Rated New Buy at UBS; PT $23
    • MARA Holdings Inc (MARA) Rated New Overweight at Piper Sandler; PT $34
    • Mid-America (MAA) Rated New Equal-Weight at Barclays; PT $166
    • MongoDB (MDB) Rated New Buy at Rosenblatt Securities Inc
    • NNN REIT Inc (NNN) Rated New Overweight at Barclays; PT $48
    • Pediatrix Medical (MD) Rated New Outperform at Macquarie; PT $18
    • Penumbra (PEN) Rated New Outperform at Oppenheimer; PT $275
    • Privia Health (PRVA) Rated New Outperform at Macquarie; PT $25
    • Realty Income (O) Rated New Equal-Weight at Barclays; PT $59
    • Repligen (RGEN) Rated New Hold at Canaccord; PT $165
    • Riot Platforms (RIOT) Rated New Overweight at Piper Sandler; PT $23
    • Rubrik (RBRK) Rated New Neutral at Rosenblatt Securities Inc
    • Silicon Labs (SLAB) Rated New Neutral at Susquehanna; PT $130
    • Spire (SR) Rated New Neutral at Janney Montgomery; PT $73
    • StorageVault Canada (SVI CN) Reinstated Neutral at CIBC; PT C$5
    • UDR (UDR) Rated New Overweight at Barclays; PT $50

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

David Wienke

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