TODAY’S GAME PLAN: from the trading
desk, this is not research
TODAY’S ECONOMIC DATA: 8:30ET Empire Manufacturing
Highlights and News:
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Trump expects a ‘big cut’ from Federal Reserve this week
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ELON MUSK BUYS OVER 2.5M SHARES, FILING SAYS
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US-China talks head into second day focused on trade, TikTok
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TRUMP: US-CHINA MEETING HAS GONE VERY WELL; SPEAKING TO PRESIDENT XI ON FRIDAY
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TRUMP IS WILLING TO LET TIKTOK BAN GO AHEAD: US OFFICIAL
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CHINA SAYS PRELIM PROBE FINDS NVIDIA VIOLATED ANTI-MONOPOLY LAW
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BESSENT: CHINESE COUNTERPART HAVE AN ‘AGGRESSIVE ASK’
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TRUMP: THREATENS TO CALL NATIONAL EMERGENCY, FEDERALIZE DC
Global stocks hovered near records at the start of an action-packed week that looks certain to see the US Federal Reserve resume its easing cycle and potentially
signal multiple future rate cuts. The Bank of Canada is also expected to cut rates by a quarter point this week, while the Bank of Japan and the Bank of England are both expected to hold rates steady. French bonds underperformed in Europe after Fitch Ratings
cut the nation’s rating in the wake of political turmoil. The United States and China are close to an agreement on social media platform TikTok, but a deal could hinge on Chinese demands for trade concessions, Treasury Secretary Scott Bessent said today. Investors
are closely monitoring US-China trade negotiations in Madrid, which began on Sunday, as Washington pushes its allies to impose tariffs on Chinese imports due to China’s purchases of Russian oil. During President Trump’s second state visit this week, the US
and UK will unveil agreements on technology and civil nuclear energy, while the UK aims to finalize promised lower tariffs for steel and aluminum. A spokesperson for PM Starmer said the leaders would sign “a world-leading tech partnership”.
EQUITIES:
US equity futures were muted after Nvidia was hit by a Chinese antitrust ruling, dampening optimism ahead of a widely expected Federal Reserve interest-rate cut this week, with Friday’s
$5 trillion triple-witching expiration looming as well. Traders are almost fully pricing reductions at each of the next three Fed meetings. Nvidia slipped over 2% in premarket trading after Chinese regulators said in a preliminary ruling that the chipmaker
had violated anti-monopoly laws. The surprise announcement came as US and Chinese officials entered a second day of wide-ranging trade talks in Madrid. Strategists, meanwhile, are continuing to raise their S&P 500 targets, with Morgan Stanley’s Mike Wilson
leaning toward his bull case for benchmark to rally to 7,200 points by mid-2026.
Futures ahead of the bell: E-Mini S&P +0.2%, Nasdaq +0.1%, Russell 2000 +0.4%, DJI +0.2%
In pre-market trading,
Tesla (TSLA) surges 7% after Elon Musk purchased about $1 billion worth of Tesla shares on Sept. 12, according to a filing. Nvidia Corp. (NVDA) slips 1.6% after China ruled that the company violated anti-monopoly laws with its 2020 deal to acquire Mellanox
Technologies. Auto and industrial chipmakers such as Texas Instruments (TXN) and ON Semiconductor (ON) slip after China launched two investigations targeting the US chip sector as trade talks between the two countries went on in Madrid. Texas Instruments -2%,
ON Semiconductor -2%. Corteva Inc. (CTVA) rises 1% after the WSJ reported that the company is considering separating its seed and pesticide businesses into separate companies. Hain Celestial (HAIN) falls 14% after the food company reported net sales for the
fourth quarter that missed. Hims & Hers Health (HIMS) falls 2.8% after FDA Commissioner Marty Makary said a widely watched TV commercial by the telehealth firm earlier this year breached the agency’s regulations. Smurfit WestRock (SW) shares are up 3.7% after
UBS initiates coverage for the packaging company with a buy rating on “significant” organic growth potential. VF Corp. (VFC) gains 3% after agreeing to sell the Dickies brand to brand management firm Bluestar Alliance for $600 million in cash.
European gauges are mostly higher, lifted by financial shares ahead of a pivotal week of central bank meetings. UBS rose 1.8$ after reports of the lender mulling a
move to the United States in response to proposals from the Swiss government on new capital requirements. Fitch’s rating downgrade of France’s sovereign credit late on Friday did not seem to hurt the benchmark CAC 40 index, which jumped over 1% to a three-week
high. A report of bids for Rubis from CVC Capital Partners and Trafigura lifted the French fuel retailer’s shares over 9% to the top of the STOXX 600 index. Supermarket group Sainsbury gained as much as 6.3% after terminating talks to sell its Argos unit to
Chinese e-commerce giant JD.com, while AstraZeneca shares fell after Handelsbanken cut the stock to hold from buy. Orsted A/S plans to sell new shares at a 67% discount as the offshore wind developer works to rebuild investor confidence after a bet on the
US market went wrong. The broader defense sector leads sectoral gains as geopolitical tensions flared in eastern Europe. Stoxx 600 +0.6%, DAX +0.6%, CAC +1.3%, FTSE 100 ~flat. Luxury +1.9%, Aero & Defense +1.4%, Banks +1.3%, Financial Services +1.2%. Telecom
-0.3%, Healthcare -0.2%.
Shares in Asia were mixed to positive as investors remain optimistic that Asia’s strong performance will continue, as the Federal Reserve’s anticipated easing enhances
the attractiveness of emerging-market assets in the region. The MSCI Asia Pacific index ended up 0.1% after briefly topping its February 2021 peak. China’s economic activity slowed more than expected, adding to the likelihood that policymakers will roll out
more stimulus to hit the official growth goal. Data showed the Chinese economy lost some momentum in August, with a slew of activity indicators – from industrial output to retail sales – coming below forecasts. Falls in property investment deepened, while
home prices declined another 0.3% in August. China ruled that Nvidia Corp. violated anti-monopoly laws with a high-profile 2020 deal, ratcheting up the pressure on Washington during sensitive trade negotiations. South Korea’s Kospi index hit a fresh record
after the government abandoned a plan to lower the capital gains tax threshold for stock investors. Japan was closed for a holiday. Vietnam +1.1%, Indonesia +1.1%, Hang Seng Tech +0.9%, Thailand +0.5%, Kospi +0.3%, CSU 300 +0.2%, Hang Seng Index +0.2%. ASX
200 -0.1%, Sensex -0.15%, Taiwan -0.5%, Philippines -0.8%.
FIXED INCOME:
Treasuries are narrowly mixed, keeping yields within a basis point of Friday’s closing levels. US session has few calendar events today, ahead of Tuesday’s 20-year
bond auction and Wednesday’s Federal Reserve policy announcement. US 10-year near 4.07% is less than 1bp higher on the day and the curve a tad steeper. Treasury auctions this week include $13 billion 20-year bond reopening Tuesday and $19 billion 10-year TIPS
reopening Thursday.
METALS:
Gold prices steadied as investors held back from major moves before the Federal Reserve’s policy meeting later this week, where the central bank is anticipated to
lower interest rates and provide further guidance on the pace of additional easing. Traders are pricing in a near-certain 25 basis point cut to the Fed’s key interest rate at the conclusion of the two-day policy meeting on September 17, with a small chance
of a 50bps reduction, according to CME FedWatch tool. Spot gold +0.05%, Silver +0.05%, Copper futures +0.2%.
ENERGY:
Oil prices extended gains as investors assessed the impact of Ukrainian drone attacks on Russian refineries that could disrupt its crude and fuel exports. Ukraine
launched a large attack with at least 361 drones targeting Russia overnight, sparking a brief fire at the vast Kirishi oil refinery. Trump said he was prepared to impose sanctions on Russia if NATO nations stop buying Russian oil implemented similar measures.
WTI +0.5%, Brent +0.25%, US Nat Gas -0.5%, RBOB +0.4%.
CURRENCIES:
In currency markets, the dollar eased as traders position for this week’s key risk events, including the Federal Reserve policy meeting. The euro gave little reaction
to Fitch’s downgrade of France. The Fed won’t be the only major central bank in focus this week. Policy decisions from the Bank of Canada on Wednesday, the Bank of England on Thursday, and the Bank of Japan at week’s end will round out a packed calendar for
half of the world’s 10 most-traded currencies. Norwegian crown rose to multi-month highs against the euro and to a 2023 high against the dollar ahead of the Norges Bank policy meeting later this week. US$ Index -0.2%, GBPUSD +0.4%, EURUSD +0.2%, USDJPY -0.15%,
AUDUSD +0.1%, NZDUSD +0.05%, USDCHF -0.2%, USDCAD -0.15%, USDSEK -0.5%, USDNOK -0.35%.
Bitcoin -0.6%, Ethereum -1.8%
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
- Allied Properties REIT (AP-U CN) Raised to Buy at Canaccord; PT C$22
- C4 Therapeutics (CCCC) Raised to Overweight at Stephens; PT $6
- CNX Resources (CNX) Raised to Neutral at Mizuho Securities
- Dream Office REIT (D-U CN) Raised to Buy at Canaccord; PT C$25.50
- Eaton Corp (ETN) Raised to Buy at Melius; PT $495
- GE Vernova (GEV) Raised to Buy at Melius; PT $740
- Healthpeak Properties (DOC) Raised to Outperform at Raymond James
- Open Text (OTEX CN) Raised to Outperform at National Bank; PT C$62.33
- Parex Resources (PXT CN) Raised to Outperform at BMO; PT C$20
- TRUE North Commercial (TNT-U CN) Raised to Buy at Canaccord; PT C$10.65
- Union Pacific (UNP) Raised to Buy at Citi; PT $251
- Upbound Group (UPBD) Raised to Buy at Loop Capital; PT $36
- Valley National (VLY) Raised to Buy at Citi
- Downgrades
- Allied Properties REIT (AP-U CN) Cut to Sell at Desjardins; PT C$18
- Builders FirstSource (BLDR) Cut to Neutral at Wedbush; PT $145
- CVR Energy (CVI) Cut to Underperform at Mizuho Securities
- Healthcare Realty Trust (HR) Cut to Underperform at Raymond James
- NextDecade (NEXT) Cut to Hold at TD Cowen; PT $8
- Prosperity Banc (PB) Cut to Neutral at Citi
- Talos Energy (TALO) Cut to Neutral at Mizuho Securities; PT $11
- Tourmaline Bio Inc (TRML) Cut to Market Perform at BMO; PT $48
- Under Armour (UAA) Cut to Neutral at Rothschild & Co Redburn; PT $6
- Initiations
- BridgeBio Oncology Therapeutics (BBOT) Rated New Buy at HC Wainwright
- Bullish (BLSH) Rated New Market Perform at KBW; PT $55
- CNX Resources (CNX) Rated New Hold at SWS
- Cognex (CGNX) Reinstated Neutral at JPMorgan; PT $45
- CoreWeave (CRWV) Rated New Neutral at Seaport Global Securities
- Fractyl Health (GUTS) Rated New Buy at HC Wainwright; PT $9
- Kyivstar Group (KYIV) Rated New Buy at Rothschild & Co Redburn
- Maison Solutions (MSS) Rated New Buy at Ascendiant Capital Markets
- Microchip (MCHP) Reinstated Equal-Weight at Wells Fargo; PT $60
- Nebius Group (NBIS) Rated New Neutral at Seaport Global Securities
- NuScale Power (SMR) Rated New Sector Perform at RBC; PT $35
- Ocular Therapeutix (OCUL) Rated New Buy at Chardan Capital Markets
- Okeanis Eco Tankers (ECO) Rated New Buy at Arctic Securities
- Regal Rexnord (RRX) Rated New Overweight at JPMorgan; PT $200
- Scholar Rock (SRRK) Rated New Outperform at Leerink; PT $51
- Smurfit WestRock (SW) Rated New Buy at UBS; PT $60
- Timken (TKR) Rated New Neutral at JPMorgan; PT $80
- West Coast Community (WCCB) Rated New Buy at DA Davidson; PT $50
- West Pharma (WST) Rated New Buy at Rothschild & Co Redburn; PT $311
- Zegna Group (ZGN) Rated New Overweight at JPMorgan; PT $11
Data sources: Bloomberg, Reuters, CQG
David Wienke
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