Cabrera Capital Daily Game Plan

Friday May 6, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES   
8:30ET Employment Report*; 9:15ET Fed’s Williams speaks; 11:00ET Fed’s Kashkari speaks;  3:00ET Consumer Credit, Fed’s Bostic speaks

TODAY’S HIGHLIGHTS:   

• S&P 500 has worst 4-month start to a year since 1939
• Four astronauts were brought home to Earth by Elon Musk’s SpaceX overnight
  

World stocks fell towards their lowest in over a year as investors questioned whether the Federal Reserve’s interest rate hike was enough to
tackle inflation and on worries about the hit to growth from China’s zero-COVID policy. The raging global energy crisis and ever-more hawkish central banks are fanning fears key economies will slide into 1970s-style stagflation. A full European embargo on
Russian energy supplies will drive inflation in the UK even higher than the 40 year record that it’s on track to reach, the Bank of England’s chief economist said.  Meanwhile, German bonds fell after ECB’s Villeroy said above-zero rates are “reasonable” by
year-end.                                      

US EQUITIES: 

US equity futures dropped, signaling extended losses after Thursday’s slide of more than 3.5% in the S&P 500 index and 5% in the Nasdaq 100. 
There was nowhere to hid as every sector was in the red by at least 1% yesterday as investors grapple with fears of an economic slowdown against tightening monetary policy.  Focus today will be on the employment report where the unemployment rate likely dropped
to its pre-pandemic low of 3.5% in April, while job growth moderated amid widespread worker shortages. April is seasonally one of the strongest months for job growth.                                                  

E-mini S&P futures -0.4%, Nasdaq -0.55%, Russell 2000 futures -0.2%, Dow futures -0.3%.

In pre-market trading, shares of US-listed Chinese firms, including Alibaba Group and JD.Com, extended losses amid growing concerns about the
country’s economic growth prospects. DoorDash jumped as much as 7%, with analysts positive on the firm’s first-quarter update.  Cigna raised its outlook for the year after reporting first-quarter profit that beat.
Zillow (Z) shares decline 15% after underwhelming guidance disappoints analysts, who believe that rising mortgage rates will cool the US housing market. Tesla gains after announcing plans to boost car production
at its Shanghai plant as soon as mid-May. Peloton slipped 3% after saying it was considering selling a stake of around 20% as part of a turnaround. Block (SQ) shares rise 7% after 1Q results. Cloudflare (NET) shares drop 12% despite boosting guidance as several
analysts cut price targets. Opendoor (OPEN) jumps as much as 16% after the real estate platform provider forecast Q2 revenue that beat. DraftKings jumps 9% after raising full year revenue forecast and sees no impact from inflation on user demand. Bill.com
(BILL) shares slump 18% as analysts cut their price targets on the infrastructure software firm. Under Armour (UAA) shares fell 16% after the company reported its fiscal 2023 revenue will take a 3% hit due to canceled orders.  

European stocks extended their losses and are poised for the worst weekly drop in two months. The Stoxx 600 Index dropped 1.5% with Media, Food
& Beverage and Technology the worst performers this morning while Energy and Autos gain. The FTSE 100 fell,  with British Airways owner leading losses after disappointing results, while a recession warning from the Bank of England yesterday weighed on sentiment. 
The BOE warned on Thursday that the country risks a double-whammy of a recession and inflation above 10%. The DAX is down 1.45%.  Adidas fell 6.3% after cutting profit targets and forecasting a plunge in China sales. Energy +0.9%, Autos +0.6%. Food & Bev -2.5%,
Media -2.4%, Tech -2.3%.

Shares in Asia were broadly lower, following steep declines in US stocks, with benchmarks in Hong Kong, China, Vietnam and
Australia each declining more than 2%. The MSCI Asia Pacific Index declined by as much as 1.8%, its lowest closing level since July 2020, with tech and financials the biggest drags.   Indexes in Hong Kong and mainland China were the worst performers in the
region after the Politburo’s supreme Standing Committee reaffirmed its support for a lockdown-dependent approach on Thursday. The Hang Seng Tech Index slid 3.8% amid a lack of concrete steps to support the tech industry. Bucking the regional trend, Japanese
equities rose after a three-day holiday. Japanese travel-related stocks gained after the prime minister announced a loosening of virus-related border controls. Hang Seng Tech Index -5.2%, China’s CSI 300 -2.5%, Vietnam -2.3%, Australia’s ASX 200 -2.15%, Taiwan
-1.7%, Topix +0.9%.  

FIXED INCOME: 
                                       

Treasuries extend Thursday’s bear-steepening move, with yields cheaper by 2bp to 4bp across the curve. The 10 year yield
trades 3.09%, near its highest level since November 2018. Focal points for today’s  session include the April jobs report and a packed Fed speaker slate.        

METALS: 
                               

Gold prices edges 0.35% higher as investors turned their attention to the monthly US employment data.  Thursday’s modest
gains for gold and silver came amid tumbling stock markets, rising Treasury yields and a surging dollar. Silver is lower by 0.35%.           

ENERGY:     

Oil prices rose, shrugging off concerns about global economic growth as worries about tightening supply underpinned prices.
The European Union has proposed a revision to its Russia oil sanctions ban that would give Hungary and Slovakia, who are heavily reliant on Russian oil, an extra year until the end of 2024 to comply.  All other member states would phase out their imports by
the end of this year as originally proposed, with imports of crude halting in six months and refined petroleum products in eight months. The US government said Thursday that it would begin a buyback of crude to replenish the nation’s reserve. While the process
could begin in the fall, the actual deliveries won’t take place until sometime in the future.  Brent and WTI are up 2%.

CURRENCIES:   
 

The US Dollar Index drifts 0.4% lower ahead of the US jobs report. China’s yuan tumbled to an 18-month low in both onshore
and offshore markets. China will fight any comments and actions that distort, doubt or deny the country’s COVID-19 response policy, state television reported after a meeting of the country’s highest decision-making body. GBP/USD is flat after yesterday’s more
than 2% plunge following a bleak economic forecast by the Bank of England.  USD/JPY advanced 0.2%, EURGBP +0.5%, EURJPY +0.6%.      

Bitcoin is -1.8%, Ethereum -2.65%. 

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:

• Aaon (AAON) raised to buy at DA Davidson; PT $70
• Bombardier (BBD/B CN) raised to buy at Vertical Research; PT C$2.20
• Boot Barn (BOOT) raised to overweight at Piper Sandler; PT $121
• DIRTT (DRT CN) raised to buy at Industrial Alliance; PT C$1.85
• Epam Systems (EPAM) raised to buy at BofA; PT $400
• Hersha Hospitality (HT) raised to buy at Stifel; PT $14.50
• MaxLinear (MXL) raised to buy at Deutsche Bank; PT $55
• Owl Rock Capital (ORCC) raised to outperform at Hovde Group; PT $15
• Pactiv Evergreen (PTVE) raised to outperform at RBC; PT $13
• Sailpoint Technologies (SAIL) raised to overweight at Wells Fargo
• Stellantis (STLA) raised to buy at DZ Bank; PT $16.82
• TPI Composites (TPIC) raised to buy at Roth Capital; PT $16

DOWNGRADES:

• AbbVie (ABBV) cut to neutral at Daiwa; PT $150
• Amarin ADRs (AMRN) cut to underweight at JPMorgan
• Ardelyx (ARDX) cut to neutral at Cantor; PT $1
• BancFirst (BANF) cut to underweight at Piper Sandler; PT $79
• Black Hills (BKH) cut to neutral at Mizuho Securities; PT $76
• Corteva (CTVA) cut to neutral at JPMorgan; PT $58
• EBay (EBAY) cut to hold at CFRA; PT $55
• Entasis Therapeutics (ETTX) cut to neutral at Cantor; PT $2
• Hanesbrands (HBI) cut to hold at Stifel; PT $13
• IRobot (IRBT) cut to underweight at JPMorgan; PT $45
• Lancaster Colony (LANC) cut to hold at Benchmark
• Northwest Bancshares (NWBI) cut to underweight at Piper Sandler; PT $12
• Synaptics (SYNA) cut to hold at Summit Insights
• TherapeuticsMD (TXMD) cut to neutral at Cantor; PT $1
• Vapotherm (VAPO) cut to hold at Canaccord; PT $5
• Vertex Pharmaceuticals (VRTX) cut to neutral at Baird; PT $250
• Vimeo (VMEO) cut to neutral at Piper Sandler; PT $10
• Virgin Galactic (SPCE) cut to hold at Canaccord; PT $8
• Wayfair (W) cut to neutral at Piper Sandler; PT $65
• fuboTV (FUBO) cut to neutral at Roth Capital; PT $4.25

INITIATIONS:

• Ball (BLL) reinstated sector perform at RBC; PT $81
• FinVolution ADRs (FINV) rated new outperform at CICC; PT $5.63
• Payfare (PAY CN) reinstated buy at Stifel Canada; PT C$12
• Quoin Pharmaceuticals ADRs (QNRX) rated new buy at Ladenburg Thalmann

David Wienke

Cabrera Capital Markets, LLC