Daily Game Plan

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

DATA/HEADLINES   8:30ET Import Price Index, Weekly Jobless Claims, NY Fed Services Business Activity, Philadelphia
Fed Business Outlook, Fed’s Mester speaks; 9:15ET Industrial Production, Capacity Utilization, Manufacturing (SIC) Production; 9:25ET Fed’s Williams speaks; 10:00ET NAHB Housing Market Index; 10:30ET Fed’s Waller speaks; 11:00ET Kansas City Fed Manf. Activity;
12:00ET Fed’s Cook speaks

TODAY’S HIGHLIGHTS:  

• China Calls Biden’s Dictator Remark About Xi ‘Extremely Wrong’
• A deal for Hamas to free 50 hostages in exchange for an extended pause in fighting and the release of some
  Palestinians held in Israel is being discussed, WaPo reported
• US Senate approved a stopgap funding measure to avert a government shutdown
  
• Xi Jinping said China will once again send pandas to US zoos
  

Global stocks paused their rally, as the euphoria over a potential dovish pivot by central banks faded and earnings from a slew of companies undershot expectations.
Chinese home prices fell by the most in eight years in October, signaling the property slump is worsening even after government stimulus. Foreign investors were major buyers of Japanese equities last week, buoyed by robust corporate earnings and a broader
global market rally.  Foreign inflows saw their biggest weekly net buying since mid-June. Most economists expect the global economy to avoid a recession but have flagged possibilities of “mild recessions” in Europe and the UK. President Xi Jinping said China
wants to be friends with the US and said his nation won’t fight a war with anyone.                                     

EQUITIES: 
 

US equity futures slipped overnight as optimism around a pause in interest rate hikes waned, while a drop in shares of Cisco and Palo Alto on gloomy forecasts weighed
on sentiment. Cisco Systems lost 10% in post-market trading, set to fall the most in 18 months today after saying new product orders are slowing. Earnings beat but its revenue forecast raised concerns that corporations are reining in their technology spending. 
Palo Alto Networks (PANW) reported earnings and revenue that beat estimates and raised its adjusted earnings outlook for the fiscal year, but the stock was falling 5% after the cybersecurity company reduced guidance for total billings. Meanwhile, the Senate
took the risk of an impending partial government shutdown off the table on Wednesday as it passed a stopgap spending bill and sent it to President Biden to sign into law before a weekend deadline. More than 500 companies report earnings today and we have a
slew of Fed speakers throughout the day.                      

Futures ahead of the bell: E-Mini S&P -0.2%, Nasdaq -0.4%, Russell 2000 -0.6%, Dow -0.2%.

In pre-market trading, Cisco Systems (CSCO) shares fall 11% after the largest maker of computer networking equipment said it saw a slowdown of new product orders. Alibaba (BABA) slips
8% after calling off a spinoff of its giant cloud business, blaming US restrictions on the sale of advanced chips to China.  Plug Power (PLUG) fell 3% as Citi cut its recommendation on the fuel-cell maker’s stock to neutral from buy. Maxeon Solar Technologies
(MAXN) fell over 3% after reducing its revenue guidance. Children’s Place (PLCE) falls 19% after posting 3Q profit that fell short of estimates. Walmart (WMT) falls 6% after striking a cautious tone about the outlook for US shoppers. Target (TGT) slipped 0.7%
after TD Cowen downgraded the retailer to market perform from outperform. Target surged almost 20% on Wednesday after the retailer forecast a fourth-quarter profit above expectations on easing supply chain costs. Macy’s (M) gains 11% after reporting third-quarter
profit that beat expectations.

European equities edged lower after three days of gains as a warning from Burberry Group Plc pulled the region’s top luxury stocks lower, while HelloFresh SE sank by a record after cutting
its outlook. Europe’s Stoxx 600 index fell, with energy and luxury stocks lagging the most, while defensive sectors such as utilities outperformed.  Burberry Group slid as much as 11% after saying weaker demand for high-end goods may make its sales forecast
impossible to hit. HelloFresh SE sank 18% after the meal-kit company cut its sales forecast. Meanwhile, Siemens AG gained as analysts noted its fourth-quarter report delivered a strong showing overall. Stoxx 600 -0.4%, DAX +0.4%, CAC -0.4%, FTSE 100 -0.5%.
Utilities +1.1%, Media and Telecom +0.2%. Energy -1.7%, Travel & Leisure -1.5%, Retail -1.4%, Basic Resources -0.9%. DAX is holding back above its 200 day moving average while Stoxx 600 holding below its
200dma.

Stocks in Asia snapped a three-day winning streak as China shares dropped after poor property data and as traders cited profit-taking following the meeting between Xi Jinping and Biden.
The MSCI Asia Pacific Index fell as much as 0.8% before paring the decline to 0.3%. Xiaomi (-7.5%) was the biggest contributor to the loss as investors were unimpressed by its new electric vehicle, while Alibaba declined ahead of its earnings after the close.
Alibaba reported revenue in line with expectations and said it won’t proceed with a full spin-off of its Cloud Intelligence Group.  Shares related to fentanyl such as Henan Lingrui Pharmaceutical fall after China and the US agreed on efforts to combat the
drug.  Hong Kong and mainland benchmarks led losses across the region. Australian shares ended lower as strong wage data indicated that inflationary pressures there were still running high.  Hang Seng Index -1.4%, CSI 300 -1%, ASX 200 -0.7%, Nikkei 225 -0.3%,
Thailand and Singapore were flat, Kospi +0.05%, Taiwan +0.25%, Vietnam +0.25%, Sensex +0.5%.         

FIXED INCOME: 
 

Treasuries are richer by ~4bp across long-end of the curve, unwinding a portion of Wednesday’s losses and following wider gains in gilts where yields are richer by
almost 10bp across long-end of the curve. 10-year is around 4.5%, 2 year yield ~4.9%.  US session features several economic data releases and at least five Fed speakers. Also, corporate deal flow is expected to be heavy for a second straight day.             

METALS: 
   

Gold edged up, after a modest decline on Wednesday as US data pointed to signs of resilience in the US economy.  Focus is now shifting to the overall health of the
US economy as traders try to anticipate rate cuts by the central bank next year. Gold is up so far this week after falling more than 3% over the previous two weeks amid a fading war-risk premium.  Spot gold +0.2%, silver +0.7%.            

ENERGY:  

Oil prices fell, extending losses from the previous session as signals of higher supply from the United States met concern over lackluster energy demand from China.
WTI’s front-month contract traded in contango, suggesting that investors expect prices to increase. The EIA said crude stocks rose by 3.6 million barrels last week, far exceeding analysts’ expectations. US crude production held steady at a record 13.2 million
bpd. China’s oil refinery throughput fell back in October as industrial fuel demand weakened. WTI -0.9%, Brent -0.7%, US Nat Gas +1.8%, RBOB -1.3%.        

CURRENCIES:   

In currency markets, Taiwan’s dollar rose after China’s President Xi Jinping and Joe Biden agreed to reinstate key military communications. Risk sentiment took a
hit after US President Joe Biden referred to his Chinese counterpart as a “dictator,” as he repeated remarks that sparked criticism from China earlier this year. AUDUSD dropped as much as 0.7%; Australian employment came in much stronger than expected in October
while the jobless rate edged higher. US$ Index +0.1%, GBPUSD -0.2%, EURUSD -0.05%, USDJPY -0.05%, AUDUSD -0.5%, USDCAD +0.3%, NZDUSD -0.75%.

Bitcoin -1.1%, Ethereum +0.4%.  

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
• BorgWarner (BWA) Raised to Buy at Guggenheim; PT $41
• Catalent (CTLT) Raised to Outperform at Baird; PT $53
• CommScope (COMM) Raised to Market Perform at Raymond James
• Installed Building (IBP) Raised to Buy at Goldman; PT $178
• Intel (INTC) Raised to Buy at Mizuho Securities; PT $50
• StoneCo (STNE) Raised to Buy at BofA; PT $17
• Target (TGT) Raised to Overweight at Wells Fargo; PT $148
• Tencent Music (TME) ADRs Raised to Overweight at JPMorgan; PT $10
• UNITY Biotech (UBX) Raised to Outperform at Wedbush; PT $4
• Downgrades
• Americas Gold & Silver Corp (USA CN) Cut to Sell at Stifel Canada
• Asensus Surgical Inc (ASXC) Cut to Neutral at Cantor
• Brainsway (BWAY IT) ADRs Cut to Market Perform at Raymond James
• Canaccord Genuity (CF CN) Cut to Hold at TD; PT C$8.50
• Deckers Outdoor (DECK) Cut to Neutral at Piper Sandler; PT $650
• Enviva (EVA) Cut to Market Perform at Raymond James
• Li-Cycle (LICY) Cut to Neutral at Chardan Capital Markets; PT 75 cents
• Plug Power (PLUG) Cut to Neutral at Citi; PT $5
• Target (TGT) Cut to Market Perform at Cowen
• Vale (VALE3 BZ) ADRs Cut to Hold at Deutsche Bank; PT $17
• Initiations
• Accenture (ACN) Rated New Buy at Redburn; PT $410
• Amkor Technology (AMKR) Rated New Buy at UBS; PT $31
• Rated New Buy at B Riley; PT $35
• Bancorp Inc (TBBK) Rated New Buy at William O’Neil
• Cincinnati Financial (CINF) Rated New Perform at Oppenheimer
• Cognizant (CTSH) Rated New Neutral at Redburn; PT $68
• Dentsply (XRAY) Rated New Buy at Needham; PT $35
• DoorDash (DASH) Reinstated Buy at Deutsche Bank; PT $125
• Envista Holdings (NVST) Rated New Hold at Needham
• Hanover (THG) Rated New Outperform at Oppenheimer
• Hartford Financial (HIG) Rated New Perform at Oppenheimer
• HCI Group (HCI) Rated New Outperform at Oppenheimer
• Kiwetinohk Energy (KEC CN) Rated New Buy at Stifel Canada; PT C$18
• Lavoro (LVRO) Rated New Buy at Stifel; PT $12
• MongoDB (MDB) Rated New Overweight at Wells Fargo; PT $500
• Palantir (PLTR) Reinstated Buy at William O’Neil
• Philip Morris (PM) Reinstated Neutral at Redburn; PT $95
• Progressive (PGR) Rated New Perform at Oppenheimer
• Revolution Medicines (RVMD) Rated New Outperform at Raymond James
• Selective Insurance (SIGI) Rated New Outperform at Oppenheimer
• Sterling Check (STER) Rated New Neutral at Citi; PT $13
• Travelers (TRV) Rated New Perform at Oppenheimer
• Vox Royalty (VOXR CN) Rated New Outperform at BMO; PT $3
• Wayfair (W) Reinstated Buy at Deutsche Bank; PT $55
• ZimVie (ZIMV) Rated New Hold at Needham

Data sources: Bloomberg, Reuters, CQG