TODAY’S GAME PLAN: from the trading
desk, this is not research
DATA/HEADLINES 9:45ET S&P Global US Services PMI; 10:00ET ISM Services Index, JOLTS Job Openings
TODAY’S HIGHLIGHTS:
- Moody’s lowers China outlook to negative
- US stock market rally out of gas, Goldman says
- Mathematics, reading skills in unprecedented decline in teenagers – OECD survey shows
- US Navy plans to arm submarines with Tomahawk missiles to challenge Chinese forces, particularly around Taiwan
Global stock markets were slightly lower, with Moody’s decision to cut the outlook for China’s sovereign credit rating to negative adding pressure on shares. The
downgrade reflects growing evidence that authorities will have to provide more financial support for debt-laden local governments and state firms, posing broad risks to China’s economic strength, Moody’s said. The Moody’s decision was leaked on social media
several hours before the announcement. French industrial production unexpectedly fell for a third month in October, and Spanish output dropped too. Brazil GDP rose 0.1%, beating estimates of -0.3%.
EQUITIES:
US equity futures slipped as traders pushed back on optimism that central bankers will cut interest rates in time to avert recession. A barrage of US job numbers
are expected every day for the rest of week, including JOLTS, ADP, jobless claims, non-farm payrolls and the unemployment rate. Goldman said to brace for a pullback in US stocks as the positive dynamics have “run out of gas.” Citi joined in, warning bullish
sentiment is weakening.
Futures ahead of the bell: E-Mini S&P -0.3%, Nasdaq -0.4%, Russell 2000 -0.3%, Dow -0.25%.
In premarket trading, Take-Two Interactive (TTWO) declined 6% after the company’s Rockstar Games unit released the first trailer for the highly-anticipated Grand Theft Auto VI video game;
analysts were disappointed by the lack of an exact release date. Robinhood (HOOD) gained 2% after the online brokerage said November crypto notional trading volumes were about 75% above October levels. Albemarle (ALB) and Livent (LTHM) fell over 2% after Piper
Sandler cut its rating on both stocks to underweight from neutral. Gitlab (GTLB) jumped 16% after the application software company reported third-quarter results that beat expectations and raised its full-year forecast. JOANN (JOAN) shares slumped 18% after
the fabric and crafts retailer reported third-quarter net sales that missed estimates. Nio ADRs (NIO) gained 3% after the Chinese EV maker reported profitability that beats estimates. CVS Health (CVS) climbs about 3% after the drugstore chain forecasted sales
for 2024 that topped estimates. Designer Brands (DBI) sinks 32% after the owner of DSW shoe stores cut guidance. G-III Apparel Group (GIII) gains about 8% after the owner of DKNY and Karl Lagerfeld brands raised its annual projections, yet tempered sales outlook.
European stocks hovered near a four-month high as investors monitored the outlook for interest rates. Euro-Zone Services PMI came in better than expected and UK PMI also improved. German
markets got a boost from comments from ECB policymaker Isabel Schnabel that further interest rate hikes are unlikely in light of last week’s consumer-price data. The Stoxx Europe 600 Index was little changed with REITs outperforming while miners lagged. Germany’s
DAX gained slightly and is within striking distance of its record closing high. Among individual names, Barclays fell as much as 4.5% after Qatar’s wealth fund revealed it’s offloading almost half of its stake. Ericsson soared after it was tapped by AT&T
to modernize its US network for as much as $14 billion over five years. Rival Nokia dropped as much as 10%. Stoxx 600 +0.1%, DAX +0.3%, CAC +0.4%, FTSE 100 -0.5%. REITs +1.7%, Construction +0.7%, Technology +0.4%. Basic Resources -0.8%, Financial Services
-0.3%
Asian equities declined as sharp selling in Chinese and Hong Kong shares hurt sentiment. China’s blue-chip stocks slumped to nearly five-year lows amid worries about the country’s growth,
with talk of a cut by Moody’s denting sentiment during the session, while Hong Kong stocks extended losses. The MSCI Asia Pacific Index slid 1%, dragged by a selloff in technology stocks across the region. Japanese stocks extended their selloff for a second
day as the continued strength in the currency weighs on the outlook for exporters. Gauges in India extended Monday’s gains, hitting a record close buoyed by Prime Minister Narendra Modi-led party’s victory in key state polls and resumption of net buying from
global funds. Stocks in Thailand were closed for a public holiday. Hang Seng Index -1.9%, CSI 300 -1.9%, Nikkei 2255 -1.4%, ASX 200 -0.9%, Kospi -0.8%, Taiwan -0.5%. Sensex +0.6%, Philippines +0.4%.
FIXED INCOME:
Treasuries hold small gains amid steeper rally in bunds after ECB’s Schnabel, one of the most hawkish ECB officials, said she sees further rate hikes as unlikely,
citing a “remarkable” fall in inflation. US yields richer by 1bp-2bp across the curve with spreads flatter but still within 1bp of Monday close; 10-year yields around 4.21%, 2 year ~4.6%.
METALS:
Gold edged lower after a dramatic session that saw it surge to a record on US rate-cut speculation, before reversing those gains to close down more than 2%. Gold
is up around 11% since early October, with the rally initially driven by haven buying following the Hamas attack on Israel before rising further on the prospect of looser monetary policy in the US. While a wave of purchases by central banks has also underpinned
gold’s strength this year, there has been a decline in the holdings of exchange-traded funds. Bullion had climbed to an all-time high of $2,135.40 yesterday, before dropping more than $100. Spot gold -0.2%, silver -0.4%.
ENERGY:
Oil is lower again, extending losses for a fourth straight day. Comments by Saudi Arabia’s energy minister that OPEC+ production cuts could continue past the first
quarter of 2024 lent some price support, according to OANDA analysts. Crude weakness may be influenced by an upcoming meeting between Russian President Vladimir Putin and Saudi Crown Prince Mohammed Bin Salman to discuss OPEC+ cooperation. The meeting suggests
that Russia and Saudi Arabia may be seeking a solution to share production cut burdens with other OPEC+ nations, as they previously had to bear the majority of the cuts in the face of resistance from African participants in the latest meeting. WTI -1%, Brent
-0.9%, US Nat Gas +1%, RBOB -0.6%.
CURRENCIES:
In currency markets, the dollar is slightly higher while the euro headed for its longest losing streak since August after dovish comments from European Central Bank
Executive Board member Isabel Schnabel. China’s major state-owned banks were busy buying the yuan in currency markets to prevent it from weakening too much, with buying intensifying after rating agency Moody’s cut China’s outlook to negative in the afternoon.
Australia’s dollar leads G-10 losses after the Reserve Bank maintains its policy rate, citing moderating inflation. US$ Index +0.05%, GBPUSD -0.05%, EURUSD -0.15%, USDJPY -0.15%, AUDUSD -0.9%, USDCAD +0.4%, USDNOK +0.4%, NZDUSD -0.5%.
Bitcoin -0.4%, Ethereum -1.2%. Max Keiser reports of rumors that Qatar’s Sovereign Wealth Fund has entered the Bitcoin market and could be interested in purchasing
up to $500B.
TECHNICAL LEVELS:
|
ESZ23 |
10 Year Yield |
Feb Gold |
Jan WTI |
Spot $ Index |
|
|
Resistance |
4685.00 |
5.500% |
2200.0 |
86.30 |
107.350 |
|
|
4652.00 |
5.325% |
2180.0 |
82.23 |
106.300 |
|
|
4634.00 |
5.000% |
2150.0 |
80.90 |
105.500 |
|
|
4608.00 |
4.725% |
2135.0 |
78.07 |
104.350 |
|
|
4587.00 |
4.615% |
2100.5 |
76.75 |
103.580 |
|
Settlement |
4576.50 |
2042.2 |
73.04 |
||
|
|
4553.00 |
4.185% |
2026.7 |
72.16 |
102.540* |
|
|
4545.00 |
3.930% |
1991.5 |
70.28w |
101.240 |
|
|
4502.00 |
3.640% |
1956.8 |
66.80 |
100.000 |
|
|
4480.00 |
3.245% |
1949.0 |
63.64 |
99.580 |
|
Support |
4439.00 |
3.000% |
1927.5 |
62.00 |
99.000 |
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:
$APLS Upgrade from Neutral to Buy w/$85.00 pt (from $52.00) at BofA Securities , pre-mkt 3.3%
$CCI Upgrade from Underweight to Equal Weight w/$115.00 pt (from $90.00) at Wells Fargo , pre-mkt 0.5%
$FR Upgrade from Neutral to Buy w/$55.00 pt at Mizuho Securities , pre-mkt 0.5%
$IART Upgrade from Equal Weight to Overweight w/$49.00 pt (from $40.00) at Wells Fargo , pre-mkt 2.5%
$RWT Upgrade from Neutral to Buy w/$8.50 pt at BTIG , pre-mkt 1.4%
$TVTX Upgrade from Neutral to Buy w/$10.00 pt (from $7.00) at Citi , pre-mkt 14.6%
$XP Upgrade from Neutral to Overweight w/$30.00 pt (from $27.00) at JPMorgan , pre-mkt 1.4%
Downgrades:
$ALB Downgrade from Neutral to Underweight w/$128.00 pt (from $140.00) at Piper Sandler , pre-mkt -2.3%
$ACRE Downgrade from Market Outperform to Market Perform at JMP Securities , pre-mkt -1.8%
$EQH Downgrade from Outperform to Market Perform w/$34.00 pt at Keefe, Bruyette & Woods , pre-mkt -1.6%
$EGP Downgrade from Buy to Neutral w/$185.00 pt at Mizuho Securities , pre-mkt -0.4%
$GLOB Downgrade from Outperform to Market Perform w/$244.00 pt at Itau BBA , pre-mkt -1.5%
$LTHM Downgrade from Neutral to Underweight w/$15.00 pt (from $18.00) at Piper Sandler , pre-mkt -2.4%
$LULU Downgrade from Strong Buy to Outperform w/$495.00 pt (from $440.00) at Raymond James , pre-mkt -0.6%
$PJT Downgrade from Buy to Neutral at Seaport Global Securities , pre-mkt -1%
$PLD Downgrade from Buy to Neutral w/$125.00 pt (from $140.00) at Mizuho Securities , pre-mkt -1.4%
$SAIC Downgrade from Overweight to Neutral w/$142.00 pt (from $130.00) at JPMorgan , pre-mkt -1%
$SBSW Downgrade from Outperform to Market Perform w/$6.00 pt (from $11.00) at BMO Capital
$SASI Downgrade from Buy to Neutral w/$3.00 pt at H.C. Wainwright , pre-mkt -3.6%
$STAA Downgrade from Buy to Hold at Needham & Company , pre-mkt -2.8%
$TTC Downgrade from Buy to Neutral w/$87.00 pt at DA Davidson , pre-mkt -1.1%
$UBS Downgrade from Buy to Neutral w/$32.18 pt (from $33.33) at BofA Securities
$URI Downgrade from Buy to Neutral w/$525.00 pt (from $504.00) at UBS , pre-mkt -2.9%
Initiations:
$ABCL Initiated Overweight w/$6.00 pt at KeyBanc , pre-mkt 0%
$ABSI Initiated Overweight w/$3.00 pt at KeyBanc , pre-mkt 1%
$AMPX Initiated Buy w/$10.00 pt at Alliance Global Partners , pre-mkt 0%
$ASPI Initiated Buy w/$3.25 pt at H.C. Wainwright , pre-mkt 0%
$AVDX Initiated Market Perform w/$11.00 pt at BMO Capital , pre-mkt 0.5%
$SQ Initiated Outperform w/$84.00 pt at BMO Capital , pre-mkt -0.7%
$CRGX Initiated Overweight w/$23.00 pt at JPMorgan , pre-mkt 0%
$CRGX Initiated Outperform at TD Cowen , pre-mkt 0%
$CRGX Initiated Buy w/$28.00 pt at Jefferies , pre-mkt 0%
$CRGX Initiated Buy w/$34.00 pt at Truist Securities , pre-mkt 0%
$CERT Initiated Sector Weight at KeyBanc , pre-mkt 0%
$REFI Initiated Overweight at Zuanic and Associates , pre-mkt 0.5%
$CMT Initiated Buy w/$24.00 pt at Roth/MKM , pre-mkt 1.1%
$CRGY Initiated Strong Buy w/$16.00 pt at Raymond James , pre-mkt 0%
$DDOG Initiated Sector Outperform w/$138.00 pt at Scotiabank , pre-mkt -0.8%
$DT Initiated Sector Outperform w/$62.00 pt at Scotiabank , pre-mkt -0.5%
$EOSE Initiated Buy w/$6.00 pt at Roth/MKM , pre-mkt 6.7%
$EVER Initiated Buy w/$16.00 pt at Craig, pre-mkt 3.4%
$FI Initiated Outperform w/$152.00 pt at BMO Capital , pre-mkt -0.2%
$FLT Initiated Outperform w/$300.00 pt at BMO Capital , pre-mkt 0%
$GPN Initiated Market Perform w/$138.00 pt at BMO Capital , pre-mkt 0%
$HG Initiated Market Outperform w/$21.00 pt at JMP Securities
$HG Initiated Buy w/$19.00 pt at Citi
$HLT Initiated Equal Weight w/$168.00 pt at Wells Fargo , pre-mkt 0%
$HDSN Initiated Buy w/$17.00 pt at B.Riley , pre-mkt 0%
$H Initiated Overweight w/$138.00 pt at Wells Fargo , pre-mkt 0%
$HY Initiated Buy w/$85.00 pt at Roth/MKM , pre-mkt 0.8%
$IIIV Initiated Market Perform w/$24.00 pt at BMO Capital , pre-mkt 0%
$IMXI Initiated Outperform w/$30.00 pt at BMO Capital , pre-mkt 0%
$ITRI Initiated Buy w/$82.00 pt at Roth/MKM , pre-mkt 0%
$LVRO Initiated Equalweight w/$7.00 pt at Barclays , pre-mkt 0%
$MAR Initiated Equal Weight w/$220.00 pt at Wells Fargo , pre-mkt 0%
$MA Initiated Outperform w/$475.00 pt at BMO Capital , pre-mkt -0.2%
$MSFT Initiated Buy w/$466.00 pt at China Renaissance , pre-mkt -0.5%
$MPB Initiated Outperform w/$26.00 pt at Keefe, Bruyette & Woods , pre-mkt 0%
$NLCP Initiated Overweight at Zuanic and Associates
$NR Initiated Buy w/$12.00 pt at H.C. Wainwright , pre-mkt 0%
$NKE Initiated Buy w/$139.00 pt at Goldman Sachs , pre-mkt -0.7%
$NVEI Initiated Outperform w/$30.00 pt at BMO Capital
$OCS Initiated Buy w/$30.00 pt at Chardan Capital Markets , pre-mkt 0%
$OTRK Initiated Buy w/$4.00 pt at Roth/MKM , pre-mkt 1.2%
$PYPL Initiated Market Perform w/$65.00 pt at BMO Capital , pre-mkt -0.6%
$RELY Initiated Market Perform w/$25.00 pt at BMO Capital , pre-mkt 0%
$RPAY Initiated Market Perform w/$9.00 pt at BMO Capital , pre-mkt 0%
$SDGR Initiated Overweight w/$38.00 pt at KeyBanc , pre-mkt 2.1%
$V Initiated Outperform w/$280.00 pt at BMO Capital , pre-mkt -0.2%
$WU Initiated Market Perform w/$12.00 pt at BMO Capital , pre-mkt 0.1%
$XTNT Initiated Buy w/$2.00 pt at BTIG
Data sources: Bloomberg, Reuters, CQG
No responses yet