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 Orders

TODAY’S HIGHLIGHTS:  

• Ukraine’s parliament approves Reznikov’s resignation as defense minister
  
• BMW Warns Gasoline Car Ban Poses “Imminent Risk” To European Automakers
  
• CHINA TO LAUNCH $40B STATE FUND TO BOOST CHIP INDUSTRY: RTRS
  

Global equities fell as weak service sector data rekindled worries over China’s sputtering post-pandemic economy.  Optimism quickly faded after a private-sector survey
showed that China’s services activity expanded at the slowest pace in eight months in August as weak demand continued to dog the world’s second-largest economy. A record selloff in Chinese stocks by global funds has pushed their positioning to the lowest since
October, with money managers unswayed by the recent stimulus measures.  In a bit of good news for the crisis-hit Chinese property sector, Country Garden made interest payments on US dollar bonds hours ahead of a grace period deadline, avoiding a default. In
other news, Kim Jong Un will meet Vladimir Putin in Russia’s Far East as the US is warning Pyongyang may provide Moscow arms for its war on Ukraine.                                     

EQUITIES: 

US equity futures are modestly lower on fresh signs of an economic slowdown in China and the euro area. Goldman cut the chance of a US recession to 15%, down from 20% previously. US equity
investors are in for disappointment as economic growth is set to be weaker than expected this year, according to Morgan Stanley bear Michael Wilson. JPMorgan is also concerned that buyers have gotten too confident.                           

Futures ahead of the bell: E-Mini S&P -0.2%, Nasdaq -0.3%, Russell 2000 -0.7%, Dow -0.1%.

In pre-market trading, Blackstone (BX) gained 3.8% and Airbnb (ABNB) rose over 5% after the S&P Dow Jones Indices said the stocks will join the S&P 500 index prior to the opening of trading
on Sept. 18.  Manchester United (MANU) fell 10% amid ongoing speculation over a possible deal for the Premier League team. Oracle (ORCL) gains 1.5% after Barclays upgrades to overweight from equal-weight. Associated Banc-Corp (ASB) shares rise as much as 0.8%
after Baird upgraded the Midwest bank to outperform from neutral. Lowe’s (LOW +1%) recommendation was raised to outperform from market perform at Bernstein. NetApp Inc. (NTAP) shares are up 1.8% after Susquehanna Financial upgraded the data storage company
to positive from neutral. Olin Corp. (OLN +2%) is upgraded to overweight from sector weight at KeyBanc.

European equity indexes opened in the red, before paring losses as the composite purchasing managers’ index undershot expectations, posting a contraction for a third straight month. Both
Spain and Italy’s PMI came in weaker while UK’s PMI came in unchanged. The disappointing Chinese PMI figures weighed heavily on European stock sectors exposed to the world’s No. 2 economy, with luxury and consumer names such as LVMH and Kering as well as sportswear
maker Adidas losing more than 2%. Financial sector is outperforming as Partners Group rises as much as 8.4% and is the biggest gainer on the Stoxx 600 after the Swiss investment manager delivered performance fees that analysts describe as a material beat. 
Stoxx 600 is flat, DAX -0.05%, CAC -0.1%, FTSE 100 +0.25%. Financial Services +0.6%, Insurance +0.4%, Healthcare +0.3%. Chemicals -0.6%, Travel & Leisure -0.5%.                      

Asian stocks declined as a property-led rally in Chinese equities fizzled amid disappointing economic data. Investor sentiment on China remains fragile, with Monday’s wave of optimism
giving way on Tuesday to rekindled worries about the world’s second-biggest economy, after the release of a new set of weak data. China’s Caixin Services PMI fell to its lowest this year at 51.8 versus 53.6 consensus. The blue-chip CSI 300 Index fell 0.7%,
while Hong Kong’s Hang Seng Index slid 2.1%, after those markets clocked their best day in over a month on Monday. South Korean stocks also declined after August inflation accelerated faster than economists forecast, keeping the door open to a rate hike. Shares
were little changed in Australia, where the central bank kept rates unchanged for a third-straight month. Japan’s household spending fell 5% year on year in July, double the estimated drop. Philippine and Thai inflation both quickened in August. The MSCI Asia
Pacific Index fell 0.8%, it first drop in seven days. Hang Seng Tech Index -2.6%, Kospi -0.1%, ASX 200 -0.1%. Vietnam +0.9%, Nikkei 225 +0.3%, Sensex +0.2%, Philippines +0.2%,
Taiwan was flat.         

FIXED INCOME: 
 

Treasuries are under pressure as cash trading resumed following the US holiday, extending a slide that began Friday in anticipation of a surge in corporate bond sales
this week.  US yields are higher by 3bp-5bp across the curve led by intermediate tenors, leaving curve spreads narrowly mixed.  At least six US high-grade corporate bond issuers have slated offerings for Tuesday; sales are expected to total about $120b this
month. 10 year yield ~4.23%, 2 year yield 4.92%.  Markets are pricing in a 93% chance of the Fed keeping rates unchanged later this month, CME’s FedWatch tool showed.      

METALS: 
           

Gold weakened as the dollar gained following disappointing data from China that weighed on risk sentiment across markets.  Spot gold fell 0.6%, silver -1.5%.                    

ENERGY:  

Oil edged down from the highest level this year as traders await OPEC+’s next move on production curbs. Consensus is that Saudi Arabia will roll over the voluntary
reduction into October. The global oil market faces a “large deficit” of 2.3 million barrels a day this quarter after OPEC+ cuts, according to Goldman Sachs.  Spain increased crude imports from the US by 33% y/y in July to the highest level since May 2022. 
WTI -0.3%, Brent  -0.6%, US Nat Gas -5.9%, RBOB +0.5%.                  

CURRENCIES:   

The dollar strengthened as a fresh set of downbeat data from the euro area and China underscored the relative resilience of the US economy. Dollar gains were spurred
on Tuesday by news of another swoon in Chinese service sector growth to eight-month lows last month, dousing Monday’s optimism about a tentative recovery in a sister survey on manufacturing. Sterling and the euro fell after downbeat economic data from the
euro area and China soured global risk sentiment. The Canadian dollar slipped as BOC seen to keep rates unchanged at Wednesday’s policy decision. The Chinese data weighed on the Australian dollar, which slid 1.4%, its biggest daily drop in a month. The country’s
central bank held rates at 4.10% and said recent data were consistent with inflation returning to the 2% to 3% target range in late 2025. RBA reiterated that some further tightening may still be needed to curb inflation. US$ Index gained as much as 0.5%, touching
the highest level since March. GBPUSD -0.6%, EURUSD -0.6%, USDJPY +0.6%, AUDUSD -1.4%, USDCAD +0.4%, NZDUSD -1.2%.        

Bitcoin -0.3%, Ethereum +0.2%. 

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:

• American Express (AXP) raised to outperform at RBC; PT $200
• Associated Banc (ASB) raised to outperform at Baird; PT $24
• Belden (BDC) raised to buy at Goldman; PT $117
• Brixmor Property (BRX) raised to sector outperform at Scotiabank
• Centene (CNC) raised to neutral at BofA
• Domino’s Pizza (DPZ) raised to outperform at Cowen; PT $450
• Equity Residential (EQR) raised to overweight at Wells Fargo; PT $69
• Hudson Pacific (HPP) raised to overweight at Piper Sandler; PT $9
• Keysight (KEYS) raised to buy at Goldman; PT $164
• Lamb Weston (LW) raised to buy at Goldman; PT $127
• NetApp Inc (NTAP) raised to positive at Susquehanna; PT $100
• Olin (OLN) raised to overweight at KeyBanc; PT $67
• Oracle (ORCL) raised to overweight at Barclays; PT $150
• Regency Centers (REG) raised to outperform at Raymond James; PT $69
• Retail Opportunity (ROIC) raised to outperform at Raymond James; PT $16
• Stryker (SYK) raised to buy at BofA; PT $315
• Vail Resorts (MTN) raised to buy at Stifel; PT $268
• Woodward (WWD) raised to outperform at Cowen; PT $160

DOWNGRADES:

• Bread Financial Holdings (BFH) cut to sector perform at RBC; PT $43
• CWB CN (CWB CN) cut to reduce at Veritas Investment Research Co; PT C$29
• Chicago Atlantic (REFI) cut to neutral at Compass Point; PT $16
• Danaos (DAC) cut to hold at Fearnley; PT $77
• Douglas Emmett (DEI) cut to neutral at Piper Sandler; PT $15
• Eos Energy (EOSE) cut to neutral at Seaport Global Securities
• Equity LifeStyle (ELS) cut to equal-weight at Wells Fargo; PT $70.50
• General Mills (GIS) cut to neutral at BNPP Exane; PT $72
• Hello Group ADRs (MOMO) cut to neutral at CCB Intl; PT $9.40
• Innovative Industrial (IIPR) cut to neutral at Compass Point; PT $95
• Kite Realty (KRG) cut to market perform at Raymond James
• Newlake Capital Partners (NLCP) cut to neutral at Compass Point
• ResMed (RMD) cut to neutral at UBS; PT $170
• Synchrony Financial (SYF) cut to sector perform at RBC; PT $37

INITIATIONS:

• ADP (ADP) rated new sector perform at RBC; PT $267
• Acelyrin (SLRN) rated new buy at HC Wainwright; PT $44
• Arizona Sonoran Copper (ASCU CN) rated new buy at Paradigm Capital
• Braze (BRZE) rated new buy at Citi; PT $60
• Cabaletta Bio (CABA) rated new buy at Citi; PT $22
• Diamond Offshore (DO) rated new buy at BTIG; PT $20
• DoorDash (DASH) rated new outperform at CICC; PT $95
• Duckhorn Portfolio (NAPA) rated new market perform at BMO; PT $14
• Frontier Lithium (FL CN) rated new outperform at CIBC; PT C$4
• HubSpot (HUBS) rated new buy at Citi; PT $695
• Newmont Corp (NEM) rated new overweight at Barrenjoey; PT $45
• Patterson-UTI (PTEN) reinstated buy at Stifel; PT $19
• Paychex (PAYX) rated new sector perform at RBC; PT $130
• Pyxis Oncology (PYXS) rated new outperform at RBC; PT $7
• Rock Tech Lithium (RCK CN) rated new outperform at CIBC; PT C$3.15
• Sana Biotech (SANA) rated new buy at Citi; PT $8
• SoundHound AI (SOUN) rated new buy at HC Wainwright; PT $5
• ZoomInfo (ZI) rated new neutral at Citi; PT $19

Data sources: Bloomberg, Reuters, CQG