Daily Game Plan

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

DATA/HEADLINES   10:00ET Factory Orders, Durable Goods Orders, Cap Goods

TODAY’S HIGHLIGHTS:  

• The College Football Playoff snubs undefeated Florida State for Alabama
• Gen Z is expected to overtake baby boomers in the workforce by next year
  
• The Israeli military struck around 200 targets in southern Gaza
• A US Navy ship responded to drone and missile attacks against commercial ships in the Red Sea
• Beijing criticized the US after an American warship sailed in disputed waters
• White House Warns Congress Nearly ‘Out of Time’ on Ukraine Funds  

Global shares were mixed at the start of a busy week for economic data that will test market wagers on rate cuts from major central banks next year. Investors are
looking for fresh drivers after stocks added $1.5 trillion last month and yields on sovereign dollar bonds dropped by 87 basis points. Attacks on commercial vessels in the Red Sea on Sunday raised investor worries about a widening of the war between Israel
and Hamas. Also on Sunday, a US military official said the United States carried out a self-defense strike in Iraq against an “imminent threat” at a drone staging site. In Europe, top representatives from the EU announced they will meet with Chinese President
Xi Jinping and other key leaders this week.                                         

EQUITIES: 
 

US equity futures are mixed to lower, looking to retreat from 20-month highs on concerns that a five-week long rally might be overdone. A slew of economic reports
this week are expected to shed light on the state of the US labor market and whether markets are prematurely excited that softer economic conditions can open the door for the Fed to cut rates. Morgan Stanley strategist Michael Wilson warned of “near term volatility
in both rates and equities” before more favorable seasonal trends and the January effect support stocks next month again.                       

Futures ahead of the bell: E-Mini S&P -0.3%, Nasdaq -0.4%, Russell 2000 +0.6%, Dow -0.2%.

In pre-market trading, Uber Technologies (UBER +4%), Jabil (JBL +2.7%) and Builders FirstSource (BLDR +2%) all rise in premarket trading as the companies are set to join the S&P 500 Index.
Hawaiian Holdings (HA) shares soar 181% after rival Alaska Air (ALK) agreed to purchase the carrier.  Carvana (CVNA) rose 4.5% after JPMorgan upgraded the online used-car dealer to neutral from underweight. Lululemon (LULU) fell 2% after Wells Fargo downgraded
the athletic-apparel brand to equal-weight from overweight.  Spotify (SPOT) rises 1.7% after its CEO said the firm will reduce its total headcount by ~17% across the company. Virgin Galactic (SPCE) fell 14% after Richard Branson told the Financial Times that
he doesn’t plan further investments in the space tourism startup he founded.

European gauges are mostly lower ahead of a busy week for economic data, including PMIs, retails sales and Eurozone GDP.  The Stoxx Europe 600 is roughly flat with retail sector outperforming
while miners and energy shares fell. Among other individual stocks, Roche Holding AG gained after agreeing to buy Carmot Therapeutics, a maker of weight-loss drugs.  Flutter Entertainment Plc weighed on the travel and leisure sector after news that the gambling
company will be deleted from the Euro Stoxx 50 Index. Focus will be on industrial production data this week, starting with France and Spain on Tuesday. Markets are pricing in an 80% chance of the ECB easing in March, although the hawkish head of Bundesbank
pushed back against such prospects in an interview over the weekend. Meanwhile, Swiss inflation unexpectedly slowed to a two-year low of 1.4%, lower than expectations. Fitch said this morning that it expects the ECB to cut its policy rates by 75bps from June
to 3.75% by the end of 2024. Stoxx 600 -0.2%, DAX +0.1%, CAC -0.3%, FTSE 100 -0.5%. Retail and Media +0.6%. Basic Resources -2%, Energy -2%.

Shares in Asia were mixed, as Hong Kong declined while Indian equities surged, hitting a fresh record after Prime Minister Modi’s victories in three key state elections boosted expectations
of policy continuity. The MSCI Asia Pacific Index was little changed after rising as much as 0.7% earlier. Stocks in Japan slid as the yen strengthened while Chinese shares extended declines. China Evergrande rallied 9% in Hong Kong after the distressed developer
won breathing room to strike a restructuring agreement with creditors. Australian stocks closed at their highest level since September, driven by gains in basic materials. Sensex +2%, Vietnam +1.7%, ASX 200 +0.7%, Philippines +0.6%, Kospi +0.4%, Taiwan -0.1%,
Singapore -0.2%, CSI 300 -0.6%, Topix -0.8%, Hang Seng Index -1.1%.               

FIXED INCOME: 
 

Treasuries are cheaper with losses led by the front-end and belly across the curve, flattening 2s10s and 5s30s spreads by 1.2bp and 4bp on the day.  The 10-year Treasury
yield added five basis points to 4.25%, 2-year yield ~4.6%.  Futures now imply a 60% chance the Fed will ease as soon as March, up from 21% a week ago, and are pricing in around 135 basis points of cuts for all of 2024. Focus on the session includes factory
orders, while Fed speakers are now in a self-imposed quiet period ahead of Dec. 13 policy announcement.    

METALS: 
   

Gold rose above $2,100, briefly touching an all-time high overnight before reversing gains. Spot gold is down ~0.2%, silver -1.2%.      

ENERGY:  

Oil failed to sustain an early rally that followed news of attacks on commercial shipping in the Red Sea. Three vessels came under attack in international waters
on Sunday, while Yemen’s Houthi group claimed drone and missile attacks on two Israeli vessels in the area. Oil prices lost early gains amid doubts that OPEC+ will be able to maintain planned output cuts.  Meanwhile US oil production is at record levels above
13 million barrels a day which means the US is producing more oil than Saudi Arabia right now. WTI -1%, Brent -1%, US Nat Gas -3.2%, RBOB -0.6%.        

CURRENCIES:   

In currency markets, the dollar rises against all G-10 peers except the yen. Investors are waiting for more US data, including the monthly jobs report due Friday. 
The Swiss franc is one of the worst performers, falling 0.5% versus the greenback after data showed inflation slowed more than expected in November. Speculation about an eventual unwinding of the Bank of Japan’s super-loose policies has added to the pressure
on yen carry trades and could carry the Japanese currency back to its July highs. US$ Index +0.1%, GBPUSD -0.3%, EURUSD -0.15%, AUDUSD -0.4%, USDCHF +0.3%, USDJPY -0.1%, NZDUSD -0.3%.   

Bitcoin +5.5%, Ethereum +3.2%. Bitcoin topped $42,000 as frenzied speculation in cryptocurrencies gathers pace, extending the rally to more than 150% this year. Bitcoin
was last at these levels in April 2022, before the TerraUSD stablecoin collapse that accelerated a $2 trillion rout in digital assets.   

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
• 3M Co (MMM) Raised to Equal-Weight at Barclays; PT $107
• Carvana (CVNA) Raised to Neutral at JPMorgan; PT $40
• CNX Resources (CNX) Raised to Buy at Truist Secs; PT $27(Earlier)
• Coca-Cola Europacific (CCEP) Raised to Buy at Goldman; PT $70
• Comcast (CMCSA) Raised to Outperform at BNPP Exane; PT $49
• CyberArk (CYBR) Raised to Overweight at Wells Fargo; PT $250
• East West Bancorp (EWBC) Raised to Overweight at Morgan Stanley; PT $76
• Fluence Energy (FLNC) Raised to Buy at Roth MKM; PT $31
• General Motors (GM) Raised to Buy at Mizuho Securities; PT $42
• Hawaiian Holdings (HA) Raised to Buy at Deutsche Bank; PT $16
• Incyte (INCY) Raised to Buy at Guggenheim; PT $86
• Insulet (PODD) Raised to Overweight at Morgan Stanley
• Pampa Energia (PAMP AR) ADRs Raised to Neutral at JPMorgan; PT $43
• Stewart Information (STC) Raised to Buy at BTIG; PT $70
• Teleflex (TFX) Raised to Overweight at Morgan Stanley; PT $261
• YPF (YPFD AR) ADRs Raised to Neutral at JPMorgan; PT $16
• Downgrades
• Alaska Air (ALK) Cut to Market Perform at Raymond James
• Cut to Hold at Deutsche Bank; PT $44
• Alcon (ALC SW) Cut to Underweight at Morgan Stanley; PT $65
• Allegion (ALLE) Cut to Equal-Weight at Barclays; PT $119
• Antero Resources (AR) Cut to Hold at Truist Secs; PT $28
• Bilibili (BILI) ADRs Cut to Neutral at UBS; PT $13.20
• Citizens Financial (CFG) Cut to Equal-Weight at Morgan Stanley
• Equitrans (ETRN) Cut to Peerperform at Wolfe
• Fisker (FSR) Cut to Inline at Evercore ISI; PT $2
• Genesco (GCO) Cut to Neutral at Seaport Global Securities
• Herc Holdings (HRI) Cut to Sector Weight at KeyBanc
• ImmunoGen (IMGN) Cut to Neutral at Piper Sandler; PT $31
• Lululemon (LULU) Cut to Equal-Weight at Wells Fargo
• Sea Ltd (SE) ADRs Cut to Equal-Weight at Morgan Stanley; PT $47
• United Rentals (URI) Cut to Sector Weight at KeyBanc
• Initiations
• AT&T (T) Rated New Underperform at BNPP Exane; PT $13
• Banc of California (BANC) Rated New Hold at Truist Secs; PT $14
• Biodexa Pharmaceuticals (BDRX LN) BDRX US Reinstated Corporate at Edison Investment Research
• Cable One (CABO) Rated New Underperform at BNPP Exane; PT $418
• Coca-Cola Andina (ANDINAA CI) ADRs Rated New Buy at Jefferies; PT $18.28
• Coca-Cola Femsa (KOFUBL MM) ADRs Rated New Buy at Jefferies; PT $100.58
• Dish (DISH) Rated New Underperform at BNPP Exane; PT $1
• Frontier (FYBR) Rated New Outperform at BNPP Exane; PT $30
• Glaukos (GKOS) Rated New Equal-Weight at Morgan Stanley
• Korro Bio, Inc. (KRRO) Rated New Buy at HC Wainwright; PT $100
• Lantheus (LNTH) Rated New Outperform at Cowen; PT $100
• Liberty Broadband (LBRDA) Rated New Underperform at BNPP Exane; PT $66
• Longeveron (LGVN) Rated New Buy at HC Wainwright; PT $6
• Lumen Technologies (LUMN) Rated New Neutral at BNPP Exane; PT $1.40
• NanoXplore (GRA CN) Rated New Outperform at RBC; PT C$3.25
• NCR Voyix Corp (VYX) Rated New Buy at Needham; PT $22
• PaxMedica (PXMD) Rated New Buy at HC Wainwright; PT $3
• RxSight (RXST) Rated New Overweight at Morgan Stanley; PT $36
• Sensei Bio (SNSE) Rated New Buy at HC Wainwright; PT $4
• Staar Surgical (STAA) Rated New Equal-Weight at Morgan Stanley; PT $35
• Verizon (VZ) Rated New Outperform at BNPP Exane; PT $47
• Vicarious Surgical (RBOT) Rated New Equal-Weight at Morgan Stanley
• Wolfspeed Inc (WOLF) Rated New Buy at President Capital Management
• Worthington Steel (WS) Rated New Overweight at KeyBanc; PT $29

Data sources: Bloomberg, Reuters, CQG