Daily Game Plan

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

TODAY’S ECONOMIC DATA:  8:00ET Fed’s Lane and Hammack speak; 00ET Pending Home Sales; 10:30ET Dallas Fed Manf. Activity;
1:15ET Trump, Netanyahu to hold press conference; 1:30ET Fed’s Musalem speaks; 6:00ET Fed’s Bostic speaks

Highlights and News:  

• TRUMP MEETS CONGRESSIONAL LEADERS TODAY ON GOVT SHUTDOWN
  
• S&P’s price to sales ratio hit a record 3.33x last week, more than a point above its Dot Com peak
• S&P Equal Weight’s price to sales is in the middle of its ten-year range, well below its 2021 high
• Pentagon Pushes Missile Makers to Double Production – WSJ
• Trump to host Israel’s PM Netanyahu today with a ceasefire in Gaza once again appearing close
• New York City Mayor Eric Adams ended his reelection bid amid sagging polls
• Three US mass shooting in less than 24 hours over the weekend
• Bad Bunny to perform Super Bowl LX halftime show (no idea who that is)

Global stocks rose as investors braced for a possible shutdown of the US government, which could delay publication of the September payrolls report and a raft of
other key data. Without a deal, a shutdown would begin from Wednesday, which is also when new US tariffs on heavy trucks, patented drugs and other items go into effect. BofA analysts estimated a shutdown would subtract only a slight 0.1 percentage point from
economic growth for every week it lasted. Global equities are likely to extend a rally into the year-end given a resilient US economy, supportive valuations and a dovish pivot from the Federal Reserve, according to Goldman Sachs strategists. They downgraded
credit to underweight from neutral over the short term and retained a bullish recommendation on equities over 12 months. Global hedge funds recorded their largest weekly selloff in emerging Asia equities in more than five months last week, ahead of a major
holiday season, Goldman said. The hedge fund selling was led by Chinese equities – both onshore and offshore – followed by India and Taiwan. Emerging Asian stocks have far outperformed global markets this year.  

EQUITIES: 

US equity futures climbed, kicking off a potentially eventful week, as investors await comments from a slate of Federal Reserve policymakers and weigh the threat of a government shutdown.
The S&P500 is on track for its best September since at least 2013. President Trump will meet with Congressional leaders today in a bid to avert a looming government shutdown. Lawmakers have until Oct. 1 to reach a deal, though the proposal being discussed
would only fund government spending until mid-November. In premarket trading, US-listed shares of cannabis-related companies rose with Canopy Growth and Cronos Group climbing 21% and 11%, respectively. Trump on Sunday shared a video promoting the health benefits
of hemp-derived cannabidiol. AstraZeneca laid out plans today to directly list its shares in the United States, as the drugmaker seeks to maximize gains from its biggest market and investor pool, although it said that it was not exiting London. Morgan Stanley
analysts raised the target on AppLovin Corp. Class A to $750 from $480, maintaining an overweight rating. The Pentagon, alarmed at the low weapons stockpiles the US would have on hand for a potential future conflict with China, is urging its missile suppliers
to double or even quadruple production rates on a breakneck schedule.

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

In pre-market trading, Electronic Arts (EA) is up over 5% after announcing that it has entered into a definitive agreement to be acquired by an investor consortium
comprised of PIF, Silver Lake, and Affinity Partners in an all-cash transaction that values EA at an enterprise value of approximately $55 billion. Merus (MRUS) soars 37% after Danish biotechnology group Genmab announced a deal to buy the company for $8 billion.
MoonLake Immunotherapeutics (MLTX) sinks 88% following disappointing late-stage clinical trial data on the biopharmaceutical company’s experimental drug to treat a debilitating skin condition. Occidental Petroleum (OXY) gains 1.5% after the Financial Times
reported that the company is in talks to sell its OxyChem petrochemical unit in a deal worth at least $10 billion. Tilray (TLRY) climbs 16%, rising with other cannabis stocks, after President Donald Trump posted a video on social media Sunday that touts medical
benefits of “hemp-derived CBD” for seniors. USA Rare Earth (USAR) gains 5% after the company agreed to acquire UK-based manufacturer LCM in a cash and stock deal.

European gauges are higher with shares in the UK outperforming. Chancellor of the Exchequer Rachel Reeves ruled out a UK wealth tax, citing existing taxes on wealthy
people such as capital gains tax and inheritance tax. European stocks are set for their third straight quarter of gains as investors remain upbeat on the prospect of economic growth, AI advances and interest-rate cuts in the US. Miners and luxury are outperforming
while the energy and banking sectors are the biggest decliners. Analysts at BofA Global Research hiked their copper price forecasts as mine supply comes under pressure. Among individual names, UCB shares soar as much as 20% to a record high after rival MoonLake
Immunotherapeutics released late-stage clinical trial data which JPMorgan analysts called “disappointing.” Exosens rises as much as 4% after securing a contract with the Spanish army to supply 17,000 advanced monocular night vision devices. Genmab falls as
much as 5.7% after the Danish biotechnology group announced it would buy US firm Merus for $8 billion. Zara owner Inditex is planning to launch its ultra-low-cost chain Lefties in the UK. Stoxx 600 +0.3%, DAX +0.05%, CAC +0.2%, FTSE 100 +0.55%. Basic Resources
+1.5%, Luxury +1.5%, Aero & Defense +1.1%, Media +0.9%. Banks -0.6%, Energy -0.4%.

Shares in Asia were mostly higher, helped by a rally in technology shares in Hong Kong and South Korea. The MSCI Asia Pacific Index climbed 0.5%, with Alibaba and Tencent
among the biggest contributors. Hang Seng climbed for the first time in three days, while gauges in Japan bucked the trend as ex-dividend stocks weighed and amid investor caution before the ruling Liberal Democratic Party’s leadership vote on Saturday. Banks
and autos weighed most heavily on the broader Topix, which saw its biggest decline since April. Chinese industrial profits soared 20.4% year-over-year, rebounding from months of declines, indicating that national efforts to address overcapacity and intense
competition are yielding positive results. Chinese factory deflation eased for the first time in six months. China’s financial markets will be shut from Wednesday for the Golden Week holiday. Investors will be watching out for monetary policy decisions in
India and Australia this week. Hang Seng Tech +2.1%, Hang Seng Index +1.9%, CSI 300 +1.5%, Kospi +1.3%, ASX 200 +0.8%, Thailand +0.7%, Vietnam +0.3%, Indonesia +0.3%. Sensex -0.1%, Philippines -0.5%, Topix -1.7%. Taiwan was closed for holiday.

FIXED INCOME: 
 

Treasuries rose across the curve, with the 10-year yield falling two basis points to 4.15%. Treasury yields are 1bp-3.5bp richer across the curve, which is flatter,
2s10s spread by ~1.5bp on the day.  A busy week of data releases will culminate in Friday’s nonfarm payrolls report, as traders price in two Federal Reserve rate cuts by January to support the labor market. In the mix is the risk of a US government shutdown
amid an impasse in Congress that could delay some releases. Cleveland Fed President Beth Hammack said on CNBC that the central bank needs to maintain restrictive monetary policy to keep inflation in check. Several other Fed policymakers are also scheduled
to speak through the day.

METALS: 

Gold jumped to another record high. Spot gold surged beyond $3,820 an ounce, lifted by a back-to-back drop in the US dollar and the risk of a looming US government
shutdown. Trump’s latest tariffs, geopolitical tensions in the Middle East and Ukraine, and a potential US government shutdown this week have encouraged safe-haven buying. Investors will closely monitor US fiscal policy developments and employment data, including
the nonfarm payroll report for September, due out on Friday. Spot gold +1.75%, Silver +1.6%, Copper futures +1.3%.

ENERGY:   

Crude prices decline in anticipation of another production hike by OPEC+ in November, exacerbating concern about a glut. Oil prices slipped as crude started to flow
through a pipeline from the semi-autonomous Kurdistan region in northern Iraq to Turkey for the first time in 2-1/2 years. Reuters reported OPEC+ will likely approve another oil production increase of at least 137,000 barrels per day at its meeting next Sunday.
Trump officials will announce new policies today to boost coal output. Energy Secretary Chris Wright said most coal plants slated for retirement will stay open to meet AI-driven power demand. WTI -1.9%, Brent -1.7%, US Nat Gas -2%, RBOB -0.8%. 

CURRENCIES: 

In currency markets, the dollar eased as the clock ticks toward a US shutdown deadline. The yen outperforms peers on hawkish Bank of Japan signals, even as options
sentiment turned bearish on political risk. Asahi Noguchi, a dovish board member, pointed to the rising need for an interest rate hike. Sterling rose after Chancellor of the Exchequer Rachel Reeves ruled out a UK wealth tax. US$ Index -0.15%, GBPUSD +0.3%,
EURUSD +0.2%, USDJPY -0.6%, AUDUSD +0.3%, NZDUSD +0.2%, USDCHF -0.05%, USDCAD -0.1%, USDSEK -0.1%, USDNOK -0.2%.

Bitcoin +1.2%, Ethereum +1.2%.

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
• Amer Sports (AS) Raised to Overweight at Wells Fargo; PT $40
• Citizens Financial (CFG) Raised to Overweight at Morgan Stanley
• Eli Lilly (LLY) Raised to Buy at CFRA; PT $835
• General Dynamics (GD) Raised to Buy at Seaport Global Securities
• Innoviz Technologies (INVZ) Raised to Buy at Goldman; PT $2.50
• Ivanhoe Mines (IVN CN) Raised to Sector Outperform at Scotiabank; PT C$17
• Stora Enso (STERV FH) ADRs Raised to Neutral at BNPP Exane; PT $10.80
• Transocean (RIG) Raised to Buy at Arctic Securities; PT $3.50
• Downgrades
• AvalonBay (AVB) Cut to Neutral at BNPP Exane
• Brookfield Business (BBU-U CN) Cut to Sell at Veritas Investment Research Co
• CarMax (KMX) Cut to Neutral at Seaport Global Securities
• Choice Hotels (CHH) Cut to Underperform at BofA
• Dentalcorp (DNTL CN) Cut to Market Perform at BMO; PT C$11
• Cut to Sell at TD Cowen; PT C$11
• Cut to Sector Perform at RBC; PT C$11
• Cut to Hold at Jefferies; PT C$11
• Electronic Arts (EA) Cut to Hold at Freedom Capital; PT $195
• Equity Residential (EQR) Cut to Neutral at BNPP Exane
• Essex Property (ESS) Cut to Neutral at BNPP Exane
• M&T Bank (MTB) Cut to Equal-Weight at Morgan Stanley; PT $251
• Mid-America (MAA) Cut to Underperform at BNPP Exane
• MoonLake Immunotherapeutics (MLTX) Cut to Neutral at BTIG
• Cut to Sector Perform at RBC; PT $10
• Cut to Hold at Stifel; PT $13
• Novo (NOVOB DC) ADRs Cut to Underweight at Morgan Stanley; PT $47
• U.S. Bancorp (USB) Cut to Equal-Weight at Morgan Stanley; PT $56
• UDR (UDR) Cut to Neutral at BNPP Exane
• UWM Holdings (UWMC) Cut to Equal-Weight at Morgan Stanley; PT $6.50
• Waterdrop Inc. (WDH) ADRs Cut to Neutral at Goldman; PT $2
• Wells Fargo (WFC) Cut to Equal-Weight at Morgan Stanley; PT $95
• Western Alliance (WAL) Cut to Underweight at Wells Fargo; PT $90
• Initiations
• Aardvark Therapeutics (AARD) Rated New Buy at Stifel; PT $24
• Alto Neuroscience (ANRO) Rated New Buy at Chardan Capital Markets
• AppLovin (APP) Rated New Accumulate at Phillip Secs; PT $725
• Atour Lifestyle (ATAT) ADRs Rated New Buy at Jefferies; PT $48
• Condor Energies Inc (CDR CN) Rated New Buy at Canaccord; PT C$4
• Immunic Inc (IMUX) Rated New Buy at Chardan Capital Markets; PT $3
• Kiniksa Pharmaceuticals (KNSA) Rated New Buy at TD Cowen; PT $60
• Nasus Pharma (NSRX) Rated New Buy at Laidlaw; PT $22
• NuScale Power (SMR) Rated New Equal-Weight at Barclays; PT $45
• Oklo (OKLO) Rated New Overweight at Barclays; PT $146
• Pony AI (PONY) ADRs Rated New Buy at Citi; PT $29
• Reviva Pharmaceuticals (RVPH) Rated New Buy at Chardan Capital Markets
• Up Fintech (TIGR) ADRs Rated New Buy at Jefferies; PT $12
• VSE (VSEC) Rated New Outperform at Wolfe; PT $190
• WeRide (WRD) ADRs Rated New Buy at Citi; PT $15.50

Data sources: Bloomberg, Reuters, CQG

David Wienke