Daily Game Plan

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

DATA/HEADLINES   8:30ET Employment Cost Index; 9:00ET FHFA House Price Index; 9:45ET MNI Chicago PMI; 10:00ET Conf.
Board Consumer Confidence; 10:30ET Dallas Fed Services Activity

TODAY’S HIGHLIGHTS:  

• Iran’s foreign minister will visit Qatar today to discuss the situation in Gaza
  

World shares struggled while the Japanese yen slid to near a one-year low against the dollar after the Bank of Japan’s moves towards ending years of massive monetary
stimulus underwhelmed investors.  China’s manufacturing activity unexpectedly contracted in October, denting sentiment. Today’s official purchasing managers’ index fell to 49.5 in October from 50.2, dipping back below the 50-point level separating contraction
from expansion, data from the National Bureau of Statistics showed. Non-manufacturing PMI fell to 50.6 from 51.7 in September.  Elsewhere, Eurostat data showed 0.1% quarterly growth in France, 0.3% in Spain and 0.5% in Belgium, a 0.1% quarterly slump in Germany
and no growth in Italy. Israel said it attacked Hamas gunmen inside their vast tunnel network beneath Gaza, after Prime Minister Netanyahu dismissed calls for a ceasefire, saying it would only allow Hamas to regroup and restock on weapons. Israeli armed forces
struck more targets in Lebanon and Syria and also bombed Gaza overnight in air, sea and ground attacks.                          

EQUITIES: 
   

US equity futures nudged higher ahead of the Federal Reserve’s policy meeting that will shape expectations for its interest rate path, while investors also awaited
a fresh batch of earnings reports.  The FOMC will begin a two-day monetary policy meeting today and is expected to let the Fed funds target rate stand at 5.25%-5.50%. US equities are tracking their third straight month in the red, with the S&P 500 and the
Nasdaq on course for their worst October since 2018.                   

Futures ahead of the bell: E-Mini S&P +0.3%, Nasdaq +0.2%, Russell 2000 +0.4%, Dow +0.2%. Nov/Dec is the best two-month period of the year with a median average increase of 3.86%; Last
11/12 Nov-Dec periods were positive.

In pre-market trading, Pinterest shares (PINS) jumped 16% as the image sharing platform beat third-quarter revenue and profit estimates. VF Corp (VFC) dropped 8% after the apparel and
footwear company withdrew guidance for the fiscal year and said it doesn’t expect performance at the Vans brand to improve in the second half of the year. Arista Networks (ANET) gained 10% on an upbeat fourth-quarter revenue forecast. Amgen (AMGN) gained 2.5%
after it raised its full-year revenue guidance after closing the purchase of rare-disease drugmaker Horizon Therapeutics earlier this month. Amkor Technology (AMKR) drops 12% after the semiconductor packaging company’s net sales forecast for the fourth-quarter
missed expectations. Chewy (CHWY US) rises over 4% as Morgan Stanley upgrades the pet products company to overweight from equal-weight. Caterpillar (CAT) falls 4% after the machinery maker reported a sequential decline in its order backlog.  JetBlue (JBLU)
drops 7% after earning miss and forecast a worse-than-expected loss this quarter. Lattice Semiconductor (LSCC) falls 15% after the chip maker’s 4Q revenue forecast fell short. PetMed (PETS) tumbles 28% after the pet pharmaceutical firm suspended its quarterly
dividend and posted 2Q earnings that disappointed.
Sarepta Therapeutics (SRPT) tumbles 46% after saying results from its Embark Phase 3 study of Elevidys missed its main goal.

European shares gained, led by real estate and chemical stocks, as investors mulled corporate earnings reports ahead of the Federal Reserve’s policy decision tomorrow. Euro zone economic
growth was weaker than expected in the third quarter, a flash estimate showed. Euro-area GDP unexpectedly contracted 0.1% Q/Q versus estimates of 0.0%.  Consumer prices rose 2.9% in October, down from the previous month’s 4.3%, and its lowest level in more
than two years. The Stoxx Europe 600 was up 0.7% , with real estate and chemicals stocks leading gains. Energy was the only sector in the red as BP Plc dropped after its third-quarter profit fell short of estimates on weak gas trading, a business that had
performed very strongly in recent quarters. Stellantis NV gained as it reported better-than-expected third-quarter revenue.  Anheuser-Busch InBev NV rose after reporting quarterly earnings that met analysts’ expectations.  DAX +0.6%, CAC +1%, FTSE 100 +0.5%.
REITs +2.4%, Chemicals +1.6%, Technology +1.5%. Energy -0.6%.            

Asian stocks fell on renewed fears over the prospects for the Chinese economy following weak manufacturing data. The MSCI Asia Pacific Index erased an early advance to slip 0.6% after
the Chinese data, with technology shares the worst performers. Asian EV-related stocks followed Tesla lower after Panasonic’s EV battery loss added to headwinds for the sector. Japanese equities bucked the broader decline after the central bank further loosened
its grip on government bond yields while sticking with negative interest rates. Topix +1%, Nikkei 225 +0.5%, Philippines +0.2%. Hang Seng Index -1.7%, Kospi -1.4%, Vietnam -1.4%, Taiwan -0.9%, Sensex -0.4%, CSI 300 -0.3%.            

FIXED INCOME: 
 

Treasuries gained on the BOJ’s smaller-than-expected step toward policy normalization. Treasuries bull flatten with futures near the top of today’s range into early
US session, with yields richer by 3bp to 8bp across the curve. Treasuries were well supported overnight, following the Bank of Japan’s modest policy tweak, saying the 1% level for JGB 10-year yields is now a reference point and adopts a flexible bond-buying
stance, disappointing investors who expected a clearer policy signal.  US 10 year yield is around 4.83%, a day after the Treasury Department said it expects to borrow $76 billion less this quarter than previously anticipated.  US yields richer by up to 8bp
across long-end of the curve, flattening 5s30s spread by 1.5bp on the day — 2s10s spread tightens 4bp with front-end underperforming.  

METALS: 
   

Gold is edging higher and is on pace to for its best month since November 2022, with demand for “safe-haven” assets jumping due to investors’ worries about the ongoing war between Israel
and Hamas. Traders are now looking ahead to the outcomes of central bank meetings scheduled for this week, with particular emphasis on the US Federal Reserve’s policy outlook. Spot gold +0.2%, silver -0.6%. 

ENERGY:  

Oil bounced, after a drop of more than 3% yesterday, as worries over supply from the conflict in the Middle East offset dismal China data. In China, weaker-than-expected
manufacturing and non-manufacturing activity data stoked fears of slowing fuel demand from the world’s No. 2 oil consumer.  In the Middle East, Israel’s ground invasion of Gaza has yet to spark a wider regional conflict that could risk crude supplies. Elsewhere,
Saudi Arabia’s military is on high alert after clashes with Yemen’s Iran-backed Houthi rebels. WTI +0.7%, Brent +0.6%, US Nat Gas +1.3%, RBOB +0.7%. 

CURRENCIES:   

The yen fell, leading losses in the G-10 space after the BOJ made only minor tweaks to its yield-control strategy. Governor Ueda said the 1% cap on 10-year JGB yields
is now just a “reference,” but doubts they’ll rise much higher. The yen fell as traders focused on the BOJ’s dovish pledge to “patiently” maintain accommodative policy and forecast for inflation to slow back below 2% in 2025. The euro reversed losses versus
the greenback after the Tokyo fix. The euro is one of the best performing G-10 currencies despite euro-area CPI and GDP coming in below forecasts. US$ Index -0.1%, GBPUSD +0.1%, EURUSD +0.4%, USDJPY +1.1%, AUDUSD -0.1%, EURJPY +1.5%.         

Bitcoin +0.05%, Ethereum +0.5%. Bitcoin, which some crypto bulls see as a digital alternative to gold, has seen its value shoot up by more than 25% in October, jumping
thanks to investors’ optimism that US regulators will soon approve a spot bitcoin ETF.   

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
• Air Canada (AC CN) Raised to Buy at Veritas Investment Research Co
• Arista Networks (ANET) Raised to Overweight at Morgan Stanley; PT $220
• Asbury Auto (ABG) Raised to Overweight at JPMorgan; PT $245
• Asur (ASURB MM) ADRs Raised to Outperform at Bradesco BBI; PT $250
• AutoNation (AN) Raised to Neutral at JPMorgan; PT $145
• AvalonBay (AVB) Raised to Overweight at Piper Sandler; PT $194
• Boeing (BA) Raised to Buy at Northcoast; PT $217
• Check Point Software (CHKP) Raised to Neutral at Piper Sandler
• Chewy (CHWY) Raised to Overweight at Morgan Stanley; PT $28
• Deciphera Pharma (DCPH) Raised to Buy at JonesTrading; PT $16
• ERO Copper (ERO CN) Raised to Buy at PI Financial; PT C$25
• GAP Airports (GAPB MM) ADRs Raised to Outperform at Bradesco BBI; PT $135
• Genelux (GNLX) Raised to Buy at Brookline Capital; PT $30
• Globe Life (GL) Raised to Overweight at Wells Fargo; PT $137
• L3Harris (LHX) Raised to Outperform at Baird; PT $216
• Lincoln Electric (LECO) Raised to Buy at Seaport Global Securities
• McDonald’s (MCD) Raised to Buy at DZ Bank; PT $300
• Phillips 66 (PSX) Raised to Outperform at Wolfe; PT $146
• Pinterest (PINS) Raised to Buy at BofA
• Roku (ROKU) Raised to Neutral at MoffettNathanson LLC; PT $55
• Saia (SAIA) Raised to Positive at Susquehanna; PT $420
• SoFi Technologies (SOFI) Raised to Equal-Weight at Morgan Stanley
• T. Rowe (TROW) Raised to Neutral at Citi; PT $95
• Viant (DSP) Raised to Outperform at Raymond James
• Williams-Sonoma (WSM) Raised to Hold at Jefferies; PT $144
• XPO Inc (XPO) Raised to Buy at Jefferies; PT $95
• Downgrades
• Camden Property (CPT) Cut to Underweight at Piper Sandler; PT $80
• Clearwater Paper (CLW) Cut to Sector Perform at RBC; PT $39
• Diodes (DIOD) Cut to Neutral at Baird; PT $70
• EngageSmart (ESMT) Cut to Neutral at Citi; PT $23
• First Quantum Minerals (FM CN) Cut to Sector Perform at Scotiabank
• Cut to Neutral at Eight Capital; PT C$31
• Heritage Commerce (HTBK) Cut to Equal-Weight at Stephens; PT $10
• Lithia & Driveway (LAD) Cut to Neutral at JPMorgan; PT $295
• Local Bounti (LOCL) Cut to Hold at Deutsche Bank; PT $1
• Lyft (LYFT) Cut to Sell at MoffettNathanson LLC; PT $7
• Mid-America (MAA) Cut to Neutral at Piper Sandler; PT $130
• ON Semi (ON) Cut to Neutral at Baird; PT $60
• Cut to Hold at Craig-Hallum; PT $78
• Sarepta (SRPT) Cut to Perform at Oppenheimer
• Cut to Neutral at Cantor; PT $40
• Sonic Automotive (SAH) Cut to Underweight at JPMorgan; PT $50
• Spirit Realty (SRC) Cut to Market Perform at JMP
• STMicroelectronics (STMPA FP) ADRs Cut to Neutral at Baird; PT $35
• UDR (UDR) Cut to Underweight at Piper Sandler; PT $30
• Initiations
• Affirm Holdings (AFRM) Rated New Equal-Weight at Wells Fargo; PT $17
• Amprius Technologies (AMPX) Rated New Buy at HC Wainwright; PT $10
• Arlo Technologies (ARLO) Rated New Buy at Roth MKM; PT $13
• AvidXchange (AVDX) Rated New Equal-Weight at Wells Fargo; PT $9
• BILL Holdings Inc (BILL) Reinstated Overweight at Wells Fargo; PT $115
• Block Inc (SQ) Rated New Equal-Weight at Wells Fargo; PT $45
• Celsius Holdings (CELH) Rated New Equal-Weight at Morgan Stanley
• CleanSpark (CLSK) Rated New Outperform at Bernstein; PT $5.30
• Deckers Outdoor (DECK) Reinstated Buy at William O’Neil
• Flywire (FLYW) Reinstated Overweight at Wells Fargo; PT $35
• Immunocore (IMCR) ADRs Rated New Outperform at Baird; PT $84
• Lightspeed Commerce Inc (LSPD CN) Rated New Equal-Weight at Wells Fargo
• Marathon Digital Holding (MARA) Rated New Market Perform at Bernstein
• Marqeta (MQ) Rated New Equal-Weight at Wells Fargo; PT $6
• NaaS Tech (NAAS) ADRs Rated New Buy at Jefferies; PT $4.50
• PayPal (PYPL) Reinstated Equal-Weight at Wells Fargo; PT $55
• Riot Platforms Inc (RIOT) Rated New Outperform at Bernstein; PT $15.60
• Shift4 Payments (FOUR) Rated New Overweight at Wells Fargo; PT $55
• Shopify (SHOP CN) Rated New Overweight at Wells Fargo; PT $65
• Toast (TOST) Reinstated Underweight at Wells Fargo; PT $16
• Tourmaline Bio Inc (TRML) Rated New Buy at Guggenheim; PT $50

Data sources: Bloomberg, Reuters, CQG