Daily Game Plan

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

DATA/HEADLINES   8:15ET ADP Employment Change; 8:30ET Nonfarm Productivity, Unit Labor Costs, Trade Balance; 10:00ET
Bank of Canada’s Rate Decision

ADP RESEARCH INSTITUTE SAYS U.S. ADDED 103,000 JOBS IN NOV. Est. 130k

TODAY’S HIGHLIGHTS:  

• CEOs of the biggest banks on Wall Street testify to the Senate banking committee
• Global Airlines Set for Record Revenue
• Weight loss drug Wegovy is being trialed for curing alcoholism
• Unprecedented US Exports Are Weighing on Global Crude Market
  

Global stock markets ticked higher amid rising expectations that central bankers are preparing a global policy pivot toward rate cuts. In Europe, a weaker than expected
German Factory Orders figure came it -3.7% versus consensus of 0.2%.  Markets have now fully priced six quarter-point rate cuts by the ECB in 2024. Global airlines are poised to generate record revenue of $23.3 billion this year and will extend the gains in
2024, IATA said. That’s more than double what the trade body expected in June. Moody’s downgraded its outlook on Hong Kong and Macau to negative from stable, just a day after Moody’s cut China’s credit outlook. Other global ratings agencies made no changes
to their respective China credit ratings.                                           

EQUITIES: 
 

US equity futures nudge higher as a weakening labor market boosted bets that the Federal Reserve is done with interest-rate hikes and could pivot to monetary easing
sooner. US job openings dropped in October to the lowest since March 2021, data showed Tuesday. A slew of further jobs data expected over the rest of the week could shed more light on the monetary-policy outlook. Due this morning are jobs figures from the
ADP Research Institute, which will provide a preview of November’s payrolls report released on Friday. The VIX volatility index remained near the pre-pandemic lows reached last month.                         

Futures ahead of the bell: E-Mini S&P +0.2%, Nasdaq +0.2%, Russell 2000 +0.3%, Dow +0.1%.

In pre-market trading, SentinelOne (S) shares jump 19% after the infrastructure software company reported third-quarter earnings that beat expectations and raised its full-year forecast. 
Asana (ASAN) shares drop 15% with analysts flagging the continuing impact of a weak macroeconomic backdrop on the application software company’s business. Box (BOX) fell 14% after the cloud storage company cut guidance for the full year. MongoDB (MDB) fell
4% after the database software company reported its third-quarter results that may not have met elevated expectations. Nio (NIO) ADRs rise 2% after Reuters reported that the Chinese EV maker plans to spin off its battery manufacturing business. Plug Power
(PLUG) shares drop 5.7% after Morgan Stanley cut its recommendation on the renewables company. Yext Inc. (YEXT) slid 20% after the digital media technology services company cut its full-year revenue forecast. Altria (MO) drops 1.6% and Philip Morris (PM) is
down 1.2% after British American Tobacco said it would write down the value of some of its US cigarette brands by about $31.5 billion. Inmode (INMD) slides as much as 13% after the medical devices firm cut its revenue guidance for the full year. Rent the Runway
(RENT) drops 12% after the clothing-rental company reported revenue and active subscribers for the third quarter that missed estimates.  

European shares rose, with the Stoxx 600 index trading near the highest level in four months, led by miners and travel stocks. The travel & leisure sector rose over 1% as TUI jumped 10%
after Europe’s biggest travel operator forecast a sharp jump in operating profit in 2024. Germany’s DAX Index hit a fresh all-time high on a boost from carmaker Volkswagen after an audit of its jointly owned site in Xinjiang, China, found no signs of forced
labor. Merck KGaA plunged 13% after the pharmaceutical company’s experimental multiple sclerosis drug Evobrutinib failed to meet the primary goal in late-stage trials. Stoxx 600 +0.4%, DAX +0.3%, CAC +0.5%, FTSE 100 +0.5%.  Basic Resources +1.5%, Autos +1.4%,
Travel & Leisure +1.2%, Financial Services +1%. Retail lags, -0.2%.

Shares in Asia were broadly higher, boosted by rebounds in Hong Kong and Japan. The MSCI Asia Pacific Index rose 1%, with Toyota, Sony and Tencent Holdings among the biggest contributors.
Japan’s Nikkei 225 jumped 2% as falling US bond yields supported gains in tech. Indian stocks extended gains after the market breached the $4 trillion mark for the first time on Tuesday. Sentiment on Chinese equities in Hong Kong and mainland got a lift from
a local media report calling for a “mild bull market” next year, while Nomura maintained an overweight position on the market. Asian shipping companies followed their overseas peers lower after Jefferies said dry-bulk rates have reached a near-term peak and
Barclays said it sees a bad year ahead for the industry globally. Topix +1.9%, ASX 200 +1.6%, Vietnam +0.9%, Hang Seng Index +0.8%, Sensex +0.5%, Singapore +0.3%, Taiwan +0.2%, CSI 300 +0.15%, Kospi +0.05%, Indonesia -0.2%.                

FIXED INCOME: 
 

Bonds paused a rally that’s taken the US 10-year yield below 4.2%. Treasury futures push lower into early US session, leaving yields near highs of the day and cheaper
by up to 4bp across belly of the curve.  US session focus includes ADP employment change data, which comes ahead of Friday’s jobs report.  10 year yield 4.18%, 2 year yield ~4.6%.  

METALS: 
   

Gold nudged higher — after a two-day slump from a record high — as investors weighed the interest-rate outlook following data showing a slowdown in the US labor market.
Gold has traded wildly this week, surging to an all-time high on Monday, before making a rapid retreat amid signs that traders’ aggressive pricing of Fed rate cuts may have gone too far. Spot gold +0.4%, silver +0.1%.    

ENERGY:  

Oil slipped, touching the lowest since early July, as exports of US crude are nearing a record of 6 million barrels a day — flooding the market with oil and weighing
on prices from Europe to Asia.  Putin arrived in the United Arab Emirates to start a rare foreign trip that will also include a visit to Saudi Arabia, with bolstering cooperation among strategic oil producers a top priority. Russia is minting more from oil
exports than before the invasion of Ukraine. Crude stockpiles at Cushing jumped by a massive 4.3 million barrels last week, the API reported. That would be the biggest surge in more than three years, if confirmed by the EIA today. Overall, US supplies edged
up: Gasoline and distillate inventories rose by a combined 4.7 million. WTI -0.8%, Brent -0.8%, US Nat Gas +0.5%, RBOB -1.1%.

CURRENCIES:   

In the currency market, China’s yuan slipped against the dollar even as major state-owned banks continued their efforts to stabilize the currency. The yuan extended
losses, as markets grappled with Moody’s cut to China’s credit outlook at a time of growing worries about the economy’s stuttering recovery. The euro is headed for a sixth day of losses as traders ramped up bets on the extent of monetary easing from the European
Central Bank next year. The yen fluctuated as the Bank of Japan Deputy Governor signaled that the central bank is inching closer to ending its negative interest rate regime. The Canadian Dollar steadied ahead of the Bank of Canada rate decision this morning
where it will hold rates steady and is likely done with its hiking cycle. Australian and New Zealand dollars lead gains in the Group-of-10 currencies as stronger Asian equities boosted demand for growth-linked currencies. US$ Index +0.02%, GBPUSD -0.02%, EURUSD
-0.2%, USDCAD -0.2%, AUDUSD +0.4%, NZDUSD +0.45%, USDJPY +0.1%.        

Bitcoin +0.4%, 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
• AutoZone (AZO) Raised to Strong Buy at Raymond James
• Builders FirstSource (BLDR) Raised to Buy at B Riley; PT $177
• Capital One (COF) Raised to Buy at BofA
• Devon (DVN) Raised to Overweight at JPMorgan; PT $58
• Discover Financial (DFS) Raised to Buy at BofA
• Ovintiv (OVV) Raised to Overweight at JPMorgan; PT $58
• Realty Income (O) Raised to Outperform at Wolfe; PT $66
• Shake Shack (SHAK) Raised to Strong Buy at Raymond James; PT $78
• Signet (SIG) Raised to Buy at Citi; PT $119
• Southwestern Energy (SWN) Raised to Neutral at JPMorgan; PT $8.50
• Sphere Entertainment Co (SPHR) Raised to Buy at Guggenheim; PT $40
• Downgrades
• Asana (ASAN) Cut to Reduce at HSBC; PT $18
• BRF (BRFS3 BZ) ADRs Cut to Neutral at JPMorgan
• EOG Resources (EOG) Cut to Neutral at JPMorgan
• PayPal (PYPL) Cut to Neutral at BofA
• Plug Power (PLUG) Cut to Underweight at Morgan Stanley; PT $3
• Range Resources (RRC) Cut to Underweight at JPMorgan; PT $32
• Shopify (SHOP CN) Cut to Neutral at Wedbush; PT C$68
• Initiations
• Advanced Energy (AEIS) Rated New Neutral at Seaport Global Securities
• Advantage Solutions (ADV) Rated New Buy at Canaccord; PT $4
• Agilon Health (AGL) Rated New Market Outperform at JMP; PT $18
• Alight (ALIT) Rated New Buy at Canaccord; PT $12
• AMN Healthcare (AMN) Rated New Market Outperform at JMP; PT $85
• Apollo Global (APO) Reinstated Outperform at BMO; PT $108
• ASGN (ASGN) Rated New Buy at Canaccord; PT $110
• AvidXchange (AVDX) Rated New Buy at BTIG; PT $14
• Blackstone (BX) Reinstated Market Perform at BMO; PT $95
• CI&T Inc (CINT) Rated New Hold at Canaccord; PT $5.50
• Cross Country Health (CCRN) Rated New Market Perform at JMP
• ERO Copper (ERO CN) Rated New Neutral at Eight Capital; PT C$23.50
• Evolent (EVH) Rated New Market Outperform at JMP; PT $37
• Globant (GLOB) Rated New Hold at Canaccord; PT $230
• Hamilton Insurance Group Rated New Outperform at KBW; PT $20
• HealthStream (HSTM) Rated New Market Perform at JMP
• J M Smucker (SJM) Resumed Equal-Weight at Morgan Stanley; PT $122
• Lightspeed Commerce Inc (LSPD CN) Rated New Neutral at Redburn; PT C$22.57
• Lycos Energy Inc (LCX CN) Rated New Outperform at BMO; PT C$5.50
• Meta Platforms (META) Rated New Overweight at Guotai Junan Sec
• Metals Acquisition (MTAL) Rated New Buy at Eight Capital; PT $15
• Privia Health (PRVA) Rated New Market Outperform at JMP; PT $27
• Shift4 Payments (FOUR) Rated New Sell at Redburn; PT $48.68
• Tegna (TGNA) Reinstated Neutral at JPMorgan; PT $17
• Toast (TOST) Rated New Neutral at Redburn; PT $17.45
• TPG (TPG) Reinstated Market Perform at BMO; PT $36
• Trisura (TSU CN) Rated New Outperform at RBC; PT C$40
• Vital Energy Inc (VTLE) Rated New Overweight at KeyBanc; PT $58

Data sources: Bloomberg, Reuters, CQG