Daily Game Plan

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

DATA/HEADLINES   8:30ET Import Export Price Indexes; 9:00ET: Fed’s Harker speaks on the 2023 economic outlook; 10:00ET
U. of Mich. Sentiment; 3:15ET Biden to discuss Bidenomics

TODAY’S HIGHLIGHTS:  

• Jeff Bezos will pay $79 million for a seven-bedroom mansion in South Florida
• Hamas called for a “Day of Rage” across the Muslim world for today
• BlackRock sees significant interest among pension funds to cut equity exposure, lock in yields
  

Global shares are on the defensive as havens got a bid on ratcheting tensions in the Middle East. Israel called for an evacuation of all civilians in Gaza City, indicating
a ground operation may be coming soon. The UN called the order to leave within the next 24 hours “impossible.” Iran said a new front was possible if Israeli “war crimes” continue. Like Middle East wars of the past, the latest conflict has the potential to
disrupt the world economy, and even tip it into recession if more countries are drawn in. Hamas, designated a terrorist group by the US, European Union and UK, called for a “Day of Rage” across the Muslim world and mass protests on Friday against Israel. 
About $8.2 billion left global stock funds in the week through Oct. 11, EPFR data showed.  China was said to be considering a stabilization fund to boost its stock market, but the immediate market response was muted. Argentina’s central bank sharply raised
its key rate to 133%, the sixth hike this year, as it struggles to contain inflation.           

EQUITIES: 

US equity futures nudge lower as big banks kick off the earnings season while investors keep an eye on the conflict in the Middle East. Financial giants JPMorgan Chase (JPM), BlackRock
(BLK), Citigroup (C), and Wells Fargo (WFC) are among the companies reporting their earnings pre-bell. Steve Scalise ended his short-lived campaign to become House Speaker following days of contentious meetings among fellow Republicans. US lawmakers said the
House may need to grant legislative powers to Interim Speaker Patrick McHenry so it can act on a security package for Israel. In corporate news, Microsoft’s $69 billion Activision acquisition was approved by the UK competition watchdog, removing the final
major global regulatory hurdle.            

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

In pre-market trading, JPMorgan (JPM) gained ~1% after it posted another quarter of record net interest income and boosted its forecast for the year as the company benefits from higher
interest rates and its purchase of First Republic Bank. Wells Fargo gained over 2% after beating analysts’ expectations for net interest income and again raised its full-year guidance. Citigroup gains 2% after reporting 3Q FICC sales and trading revenue that
beat estimates. Dollar General (DG) was up 7% after the company said overnight it rehired Todd Vasos as its chief executive officer, nearly less than a year after he stepped down. Outset Medical (OM) slumps 41% after analysts slash their price target on the
stock as the dialysis machine maker gave preliminary third-quarter revenue that was below estimates. Smart Global (SGH) is plummeting 26% after the semiconductor device company gave a first-quarter forecast that was much weaker than expected.    

European stocks slipped, mirroring a widespread global risk-averse trend, as the Israel-Hamas conflict prompted investors to seek refuge in safe-haven bonds.  Euro-area industrial production
recovered in August, rising by a better-than-expected 0.6% month on month after July’s 1.1% retreat. Sweden’s CPIF inflation decelerated to 4% year on year. In corporate news, Sartorius AG plummeted by 10.8% following a downward revision of its full-year forecast,
while Swiss Re gained 1.4% after an upgrade from Berenberg. St. James’s Place felt the regulatory heat, tumbling 14.3% as it grapples with an overhaul of its fee structure. Energy stocks outperformed as oil rose sharply on fears that the fighting could destabilize
the Middle East and crimp global supply. Stoxx 600 -0.7%, DAX -0.8%, CAC -0.7%, FTSE 100 -0.4%. Travel & Leisure -1.5%, Banks -1.5%. Energy +1.3%, Telecom +0.05%.     

Asian stocks fell for the first time in more than a week after brisk US inflation data bolstered rate-hike bets and weakness in China’s economy further dampened investor sentiment.  The
MSCI Asia Pacific Index slid 1.4% with Chinese tech giants Tencent, Alibaba and JD.com among the biggest drags. Gauges in Hong Kong were the worst performers after China’s consumer and producer prices came in below estimates, underscoring weak demand. Mainland
shares only briefly pared losses following a report that China is considering forming a state-backed stabilization fund to shore up confidence in the stock market. New Zealand’s equity benchmark traded lower ahead of a general election Saturday, with polls
suggesting a change in government to be likely. Hang Seng Tech -3.5%, Hang Seng Index -2.3%, Topix -1.4%, CSI 300 -1%, Kospi -1%, Singapore -1%, ASX 200 -0.6%, Taiwan -0.25%, Sensex -0.2%. Vietnam +0.3%, Philippines +0.05%.

FIXED INCOME: 
 

Treasuries hold gains across the curve, unwinding a portion of Thursday’s sharp bear-steepening move, with yields richer by 4bp-8bp as the US session begins. Intermediates
lead, flattening 2s10s back to middle of Thursday’s range. US 10-year yield was down more than 7bp at 4.62% amid signs Israel will soon launch a ground assault in Gaza, igniting fears the conflict could escalate and widen.             

METALS: 
   

Gold strengthened and is set for its largest weekly gain in nearly seven months due to demand for safety amid rising tensions in Gaza. The United Nations said Israel called for the evacuation
of 1.1 million people living in northern Gaza within the next 24 hours, describing the order as “impossible” and appealing for a reversal. Newmont got approval from Newcrest shareholders for its $15 billion purchase in the gold sector’s largest-ever takeover. 
Gold +1.4%, silver +2.1%. 

ENERGY:  

Oil prices jumped on fears that the fighting between Israel and Hamas could destabilize the Middle East and crimp global supply as Iran said a new front to the conflict
was possible. Tehran-backed militants could open a new front in Israel’s war against Hamas if the blockade of Gaza and attacks on civilians there continue, Iran’s Foreign Minister said, signaling a potential expansion of the conflict ahead of a meeting with
Lebanon’s Hezbollah. On Thursday, the US imposed the first sanctions on owners of tankers carrying Russian oil priced above the G7’s price cap of $60 a barrel, to close loopholes in the mechanism designed to punish Moscow for its invasion of Ukraine. Oil prices
shrugged off data released today showing a month-on-month decline in Chinese crude imports. WTI +4.1%, Brent +3.9%, US Nat Gas -2.1%, RBOB +3.3%.

CURRENCIES:   

In currency markets, the US dollar is roughly flat and well off the overnight lows. The yen traded just below the key 150 per dollar level amid speculation Japanese
authorities will step in to support it should the yen suddenly weaken. The Swedish krona leads gains in G-10; support initially emerged after data showed the country’s core inflation rate declined less than expected in September. US$ Index -0.02%, GBPUSD +0.03%,
EURUSD -0.05%, USDJPY -0.15%, USDSEK -0.4%, AUDUSD +0.03%, USDCHF -0.1%.          

Bitcoin +0.3%, Ethereum +0.7%.    

TECHNICAL LEVELS: 

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
• (AFYA) Afya Raised to Overweight at Morgan Stanley; PT $20.50
• (AMAT) Applied Materials Raised to Buy at Needham; PT $180
• (HL) Hecla Mining Raised to Buy at Roth MKM; PT $4.40
• (IMVT) Immunovant Raised to Buy at UBS; PT $55
• (KRC) Kilroy Raised to Buy at Jefferies; PT $35
• (LRCX) Lam Research Raised to Buy at Needham; PT $800
• (M) Macy’s Raised to Buy at CFRA; PT $19
• (MCW) Mister Car Wash Raised to Outperform at Baird; PT $10
• (MOR GR) MorphoSys ADRs Raised to Overweight at Morgan Stanley; PT $9.20
• (OSK) Oshkosh Raised to Buy at Citi; PT $115
• (VRNS) Varonis Systems Raised to Overweight at Barclays; PT $37
• Downgrades
• (ARQT) Arcutis Biotherapeutics Cut to Neutral at Goldman; PT $6
• (DPZ) Domino’s Pizza Cut to Hold at CFRA; PT $370
• (ES) Eversource Cut to Neutral at Guggenheim; PT $60
• (FTI) TechnipFMC Cut to Hold at Jefferies; PT $22
• (FTNT) Fortinet Cut to Equal-Weight at Barclays; PT $63
• (JD) JD.com ADRs Cut to Equal-Weight at Morgan Stanley; PT $33
• (JD) ADRs Cut to Neutral at Macquarie; PT $32
• (NFLX) Netflix Cut to Peerperform at Wolfe
• (TSCO) Tractor Supply Cut to Market Perform at Oppenheimer; PT $210
• Initiations
• (ACGL) Arch Capital Rated New Buy at William O’Neil
• (AMT) American Tower Rated New Sector Outperform at Scotiabank
• (AXP) American Express Rated New Buy at HSBC; PT $181
• (CCI) Crown Castle Rated New Sector Perform at Scotiabank; PT $110
• (COF) Capital One Rated New Reduce at HSBC; PT $84
• (CPB) Campbell Soup Rated New Overweight at Stephens; PT $50
• (DFS) Discover Financial Rated New Buy at HSBC; PT $104
• (DLR) Digital Realty Rated New Buy at DBS Bank; PT $149.15
• (DLR) Rated New Sector Perform at Scotiabank; PT $132
• (EQIX) Equinix Rated New Buy at DBS Bank; PT $907.89
• (EQIX) Rated New Sector Outperform at Scotiabank; PT $856
• (GRPN) Groupon Rated New Buy at Roth MKM; PT $30
• (HSY) Hershey Rated New Overweight at Stephens; PT $240
• (LANC) Lancaster Colony Rated New Overweight at Stephens; PT $205
• (LEU) Centrus Energy Rated New Buy at B Riley; PT $72
• (MA) Mastercard Rated New Hold at HSBC; PT $424
• (MBCN) Middlefield Banc Rated New Market Perform at Hovde Group
• (MED) Medifast Rated New Equal-Weight at Stephens; PT $82
• (META) Meta Platforms Reinstated Buy at William O’Neil
• (MREO) Mereo Biopharma ADRs Reinstated Buy at BTIG; PT $4
• (OVID) Ovid Therapeutics Rated New Outperform at Oppenheimer; PT $8
• (POST) Post Holdings Rated New Overweight at JPMorgan; PT $100
• (PYPL) PayPal Rated New Buy at HSBC; PT $69
• (SMR) NuScale Power Rated New Buy at B Riley; PT $12
• (SQ) Block Inc Rated New Hold at HSBC; PT $46
• (SYF) Synchrony Financial Rated New Hold at HSBC; PT $32
• (THS) TreeHouse Rated New Equal-Weight at Stephens; PT $48
• (V) Visa Rated New Hold at HSBC; PT $266
• (VEEV) Veeva Rated New Buy at Jefferies; PT $265
• (XPOF) Xponential Rated New Hold at Stifel; PT $18

Data sources: Bloomberg, Reuters, CQG