Daily Game Plan

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

DATA/HEADLINES   8:00ET Fed’s Williams speaks; 8:30ET Retail Sales, NY Fed Business Activity; 9:15ET Industrial
Production, Capacity Utilization; 9:20ET Fed’s Bowman speaks; 10:00ET ; NAHB Housing Market Index, Business Inventories; 10:45ET Fed’s Barkin
speaks; 4:00ET TIC Flows; 5:00ET Fed’s Kashkari speaks

TODAY’S HIGHLIGHTS:  

• Putin arrives in China to attend the Belt and Road forum
• Israeli Defense minister told Washington sources to expect a “long war”
  
• Putin held a call with the leaders of Egypt, Syria, Iran and the Palestinian Authority
  

Global stocks inched up as diplomatic efforts to contain the Israel-Hamas war helped calm investor nerves, though risks still remain of a ground invasion by Israel
in Gaza that may escalate the crisis. Iran’s Foreign Minister said Israel would not be allowed to act in Gaza without consequences, warning of “preemptive action” by the “resistance front” in the coming hours.  Israel said it was working to allow civilians
to exit Gaza through a crossing with Egypt.  President Biden will visit Israel on Wednesday as a show of solidarity. He’ll then be in Jordan for talks with King Abdullah II and Egyptian and Palestinian Authority leaders, who’ve criticized Israel’s response. 
Secretary of State Antony Blinken also returned to Israel and announced a US-Israel plan to get aid into Gaza, with few details. Meanwhile, China looks to tighten curbs on foreign travel by bankers and state workers in a campaign against foreign influence. 
          

EQUITIES: 

US equity futures nudged lower as investors prepared for a flurry of major earnings, after Wall Street strategists warned that the outlook for earnings is weakening. Bank of America advanced
in premarket after its net interest income beat estimates. Goldman Sachs fluctuated after its third-quarter results. Johnson & Johnson rose after increasing its revenue outlook. In M&A news, Choice Hotels (CHH) proposes to buy Wyndham (WH) for $90.00 per share
in a cash-and-stock transaction. Jim Jordan closed in on the votes he needs to be the next House speaker, but a band of Republican holdouts continues to threaten his bid. Jordan plans to proceed with a vote as early as noon today and is prepared for multiple
ballots if necessary. On top of geopolitics and earnings, traders are tracking comments from a slew of Federal Reserve speakers this week.               

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

In pre-market trading, Johnson & Johnson (JNJ) rose 1.5% after its third-quarter sales beat estimates, helped by resilient demand for its blockbuster anti-inflammatory drug Stelara and
recorded a $21 billion gain from the spin-off of its consumer health unit.  BNY Mellon (BK) rose 1.3% after it beat profit estimates on a boost from higher interest rates. Dollar Tree (DLTR) climbs as much as 2.3% as Goldman Sachs raises its recommendation
on the retailer to buy from neutral. NetScout (NTCT) falls as much as 21% as the cybersecurity company cut its adjusted earnings per share guidance for the full year. Viasat (VSAT) rises as much as 6.6% as JPMorgan raised its recommendation to overweight from
neutral.  Wyndham Hotels soars 13% after Rival Choice Hotels unveils $8 Billion buyout bid.  

European gauges are mixed as UK wage growth slipped in the three months to August, while the German Zew survey came in better than expected.  Stoxx 600 Index is slightly lower with utilities
outperforming while miners slide. Shares in Ericsson AB slumped more than 9% after the Swedish 5G-equipment maker warned of persisting weak demand. Rolls Royce Holdings rose after the jet engine maker announced plans to cut jobs and streamline its business.
Poland’s stocks extended gains following Sunday’s elections, which gave pro-European Union parties a majority in parliament. Stoxx 600 -0.2%, DAX -0.4%, CAC -0.3%, FTSE 100 +0.4%, Utilities +0.3%, Media +0.2%. Basic Resources -1.8%, Financial Services -1%.

Asian equities advanced, halting a two-day selloff, as technology stocks rallied amid easing concerns over a wider conflict in the Middle East. The MSCI Asia Pacific Index climbed 0.7%,
with chipmakers giving the biggest boost. Philippine stocks were the best performers; Citigroup suggested earnings could see a positive surprise in third quarter. Stocks in Hong Kong and mainland China closed higher after China said it would tighten curbs
on short-selling activities. Investors await GDP data Wednesday that is expected to show continued weakness in the economy.  Today signifies the conclusion of a 30-day grace period for a delayed payment from developer Country Garden. Failure to receive the
coupon payment would result in a declaration of default on all of Country Garden’s offshore debts. Philippines +1.3%, Nikkei 225 +1.2%, Kospi +1%, Hang Seng Index +0.75%, ASX 200 +0.4%, Sensex +0.4%, CSI 300 +0.3%. Taiwan -0.05%, Vietnam -1.7%. 

FIXED INCOME: 
 

Treasuries dipped as the diplomatic scramble to prevent further escalation in the Middle East softened haven demand. Weakness continues to be led by long-end and
intermediates, steepening the curve. US yields cheaper by more than 6bp at long end, steepening 2s10s, 5s30s curves by ~4bp and ~2bp on the day; 10-year yield rose ~5bps to 4.75%. The Fed shouldn’t be thinking about more rate hikes with so many small businesses
“really struggling” to access capital, Philadelphia Fed chief Patrick Harker said.                

METALS: 
   

Gold steadied as haven demand waned with President Biden set to travel to Israel Wednesday in a visit designed to signal US solidarity with its closest Middle East ally and prevent the
conflict from widening. Still, the threat of further escalation continues to provide support for bullion, with Israeli defense minister telling the US to expect a “long war” against Hamas. Spot gold +0.2%, silver +0.3%.

ENERGY:  

Oil prices stabilized after a drop of over $1 on Monday, driven by expectations that the US might ease sanctions on Venezuelan oil producers and increased efforts
by Washington to prevent an escalation of the conflict between Israel and Hamas.  The Biden administration and the government of Venezuela have agreed to a deal under which the US would ease sanctions on Venezuela’s oil industry, according to a report Monday
by the Washington Post. Venezuela, in return, would conduct a competitive, internationally monitored presidential election next year. The report said the deal was expected to be signed Tuesday in Barbados.  WTI +0.2%, Brent +0.3%, US Nat Gas +0.3%, RBOB +0.4%. 
    

CURRENCIES:   

In currency markets, the dollar nudged lower as traders mulled ongoing diplomatic efforts to contain an escalation in the Israel-Hamas war.  The pound weakened after
UK wage growth slipped, suggesting a cooling of labor-market pressures that will make it easier for the Bank of England to keep interest rates on hold next month. The Kiwi is weakest among the G-10’s, dropping 0.7% after CPI slowed more than expected to a
two year low. The yen briefly jumped after a report that the BOJ is set to discuss raising its inflation projection for fiscal year 2023-24 to 2% or more. US$ Index -0.1%, GBPUSD -0.25%, USDJPY -0.05%, EURUSD +0.1%, AUDUSD +0.3%, NZDUSD -0.5%.              

Bitcoin +0.1%, Ethereum -0.1%.   

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
• (APD) Air Products Raised to Overweight at Wells Fargo; PT $345
• (ARRY) Array Raised to Equal-Weight at Morgan Stanley; PT $23
• (BR) Broadridge Raised to Peerperform at Wolfe
• (CHX) ChampionX Raised to Overweight at Barclays
• (CYBR) CyberArk Raised to Overweight at JPMorgan; PT $200
• (DLTR) Dollar Tree Raised to Buy at Goldman; PT $137
• (ED) Con Edison Raised to Equal-Weight at Wells Fargo; PT $94
• (FIS) Fidelity National Raised to Outperform at Wolfe; PT $65
• (HASI) Hannon Armstrong Raised to Overweight at Morgan Stanley; PT $23
• (LII) Lennox Raised to Buy at Mizuho Securities; PT $460
• (MDLZ) Mondelez Raised to Outperform at BNPP Exane; PT $75
• (NBR) Nabors Raised to Overweight at Morgan Stanley; PT $175
• (OLLI) Ollie’s Bargain Raised to Buy at Goldman; PT $83
• (PGR) Progressive Raised to Neutral at Citi; PT $158
• (PSI CN) Pason Systems Raised to Equal-Weight at Barclays
• (SXT) Sensient Raised to Outperform at Baird; PT $70
• (TRP CN) TC Energy Raised to Peerperform at Wolfe
• (VSAT) Viasat Raised to Overweight at JPMorgan; PT $30
• (WEX) WEX Raised to Outperform at Wolfe; PT $240
• (WHD) Cactus Raised to Overweight at Barclays
• Downgrades
• (ACDC) ProFrac Holding Cut to Equal-Weight at Morgan Stanley; PT $14
• (BJ) BJ’s Wholesale Cut to Neutral at Goldman; PT $73
• (CMC) Commercial Metals Cut to Hold at CFRA; PT $48
• (CMG CN) Computer Modelling Group Cut to Hold at Canaccord; PT C$10
• (CRSP) Crispr Therapeutics Cut to Neutral at Cantor
• (DXC) DXC Technology Cut to Underperform at Wolfe; PT $22
• (ENB CN) Enbridge Cut to Underperform at Wolfe
• (EYE) National Vision Cut to Neutral at Goldman; PT $16
• (FUL) HB Fuller Cut to Neutral at Baird; PT $80
• (GHLD) Guild Holdings Cut to Neutral at JPMorgan; PT $13
• (LB CN) Laurentian Bank of Canada Cut to Underperform at National Bank
• (NOV) NOV Inc Cut to Underweight at Barclays
• (OPRT) Oportun Cut to Neutral at JPMorgan; PT $8
• (PTEN) Patterson-UTI Cut to Equal-Weight at Morgan Stanley; PT $17
• (SBRA) Sabra Health Cut to Market Perform at BMO
• (SPWR) SunPower Cut to Underweight at Morgan Stanley; PT $5
• (TWKS) Thoughtworks Cut to Peerperform at Wolfe
• Initiations
• (AMAT) Applied Materials Rated New Outperform at Raymond James
• (AMEH) Apollo Medical Rated New Buy at BTIG; PT $45
• (AMGN) Amgen Resumed Equal-Weight at Morgan Stanley; PT $300
• (AMZN) Amazon Rated New Buy at Stifel; PT $173
• (BLUE) Bluebird Bio Rated New Neutral at Cantor
• (COTY) Coty Rated New Market Perform at Cowen; PT $11
• (CWST) Casella Waste Rated New Outperform at Wolfe; PT $77.24
• (DHI) D.R. Horton Rated New Overweight at Wells Fargo; PT $123
• (DSGR) Distribution Solutions Rated New Overweight at Stephens; PT $38
• (EBAY) EBay Rated New Hold at Stifel; PT $46
• (ETSY) Etsy Rated New Hold at Stifel; PT $64
• (EYEN) Eyenovia Rated New Buy at Brookline Capital; PT $8
• (FCX) Freeport Reinstated Neutral at JPMorgan; PT $42
• (FERG) Ferguson Rated New Equal-Weight at Wells Fargo; PT $175
• (FRBA) First Bank/Hamilton NJ Reinstated Overweight at Piper Sandler
• (GDDY) GoDaddy Rated New Perform at Oppenheimer
• (GFL CN) GFL Environmental Rated New Outperform at Wolfe; PT C$48.99
• (HITI CN) High Tide Rated New Buy at Eight Capital; PT C$5
• (IE) Ivanhoe Electric/US Rated New Overweight at JPMorgan; PT $18
• (KBH) KB Home Rated New Equal-Weight at Wells Fargo; PT $49
• (KLAC) KLA Corp Rated New Outperform at Raymond James
• (LEN) Lennar Rated New Overweight at Wells Fargo; PT $123
• (LRCX) Lam Research Rated New Outperform at Raymond James
• (MAS) Masco Rated New Overweight at Wells Fargo; PT $58
• (MHK) Mohawk Industries Rated New Underweight at Wells Fargo; PT $85
• (MSFT) Microsoft Rated New Buy at Loop Capital; PT $425
• (NATL-W) NCR Atleos Rated New Buy at DA Davidson; PT $25
• (NCR) NCR Rated New Buy at DA Davidson; PT $24
• (OC) Owens Corning Rated New Equal-Weight at Wells Fargo; PT $143
• (PAR) PAR Technology Rated New Equal-Weight at Stephens
• (PGR) Progressive Reinstated Buy at William O’Neil
• (PHM) PulteGroup Rated New Overweight at Wells Fargo; PT $80
• (RC) Ready Capital Rated New Neutral at Wedbush; PT $11
• (ROIV) Roivant Sciences Rated New Buy at Guggenheim; PT $17
• (RSG) Republic Services Rated New Peerperform at Wolfe
• (TECK/B CN) Teck Resources Reinstated Overweight at JPMorgan; PT C$70
• (TOL) Toll Brothers Rated New Overweight at Wells Fargo; PT $80
• (TRIP) TripAdvisor Reinstated Buy at Goldman; PT $22
• (TRNS) Transcat Rated New Outperform at Oppenheimer; PT $110
• (TYL) Tyler Tech Rated New Outperform at Oppenheimer
• (W) Wayfair Rated New Hold at Stifel; PT $51
• (WCN CN) Waste Connections Rated New Outperform at Wolfe; PT C$206.84
• (WM) WM Rated New Peerperform at Wolfe
• (YOU) Clear Secure Reinstated Buy at Goldman; PT $24

Data sources: Bloomberg, Reuters, CQG