Cabrera Capital Daily Game Plan

Friday May 13, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES   
8:30ET Import Prices; 10:00ET UMichigan Consumer Sentiment;  11:00ET Fed’s Kashkari speaks; 12:00ET Fed’s Mester speaks

TODAY’S HIGHLIGHTS:   

• $40 billion Ukraine aid bill delayed; Rand Paul demands inspector general to oversee spending
• North Korea reports first COVID-19 death as fever spreads explosively

World stocks rose from 18 month lows after US Federal Reserve Chair Jerome Powell pushed back against speculation of steeper interest-rate hikes.
Global equity funds have seen a surge in outflows of more than $10B in the latest weekly data, according to Refinitiv Lipper. Investors were net buyers in Asian funds. Meanwhile, global bond funds posted outflows of $13 billion in a sixth straight week of
net selling. Russia is threatening retaliation over Finland’s plan to apply for NATO membership, including unspecified “military-technical” measures. Joining the 30-nation Western military alliance would end the neutrality the neighbors maintained throughout
the Cold War in one of the biggest shifts in European security in decades. Food stocks were in focus as wheat surged after a US report said global stockpiles in the coming season will dwindle to a six-year low. At least one person has died from COVID-19 in
North Korea and hundreds of thousands have shown fever symptoms, in a country that had reported no previous confirmed cases since the pandemic began.     

US EQUITIES: 

US equity-index futures rose after Fed Chair Jerome Powell reaffirmed the Fed is likely to raise rates by a half point at each of its next two
meetings and isn’t “actively considering” a 75 basis-point move. The prospect of a recession will come down to factors outside the Fed’s control, he said.   

E-mini S&P futures +1.45%, Nasdaq +2%, Russell 2000 futures +1.25%, Dow futures +1%.  

I have only seen a 1 once in the Fear & Greed Index.  That was March 12, 2020.  F&G was a 2 in December 2018. Fear & Greed currently at 6.       

In pre-market trading, Twitter shares tumbled over 20% after an Elon Musk tweet that the deal to buy Twitter is “temporarily
on hold” as he seeks more details on the platform’s new estimate that spam and fake accounts represent less than 5% of users. Later Musk said that he is still committed to the acquisition. Tesla rose 5%. Robinhood Markets surged 21% after cryptocurrency billionaire
Sam Bankman-Fried disclosed a new 7.6% stake in the online brokerage. US cryptocurrency-exposed stocks including Riot Blockchain and Marathon Digital also rallied premarket as bitcoin gained over 6%. Affirm Holdings (AFRM) rallies 36% after reporting better
than expected results and raising guidance. Duolingo Inc. (DUOL) shares are up 16.5% after the language-learning app reported a beat

European shares climbed as bargain hunters scooped up shares, recouping by midday the steep losses suffered on Thursday. 
Europe’s Stoxx 600 index rose 1.4% as the lowest valuations since the start of the pandemic drew buyers. Travel and leisure, technology and construction stocks were among those leading the gains, while real estate and telecommunication shares underperformed,
although all sectors are in the green.  Evotec shares rise as much as 9.5% after Deutsche Bank raised to a buy.  Fortum gained as much as 11% after upgrades due to its Russia exit.  Drax falls as much as 7.6% and is among weakest performers in the Stoxx 600
after Credit Suisse gives a negative rating.  CAC +1.5%, FTSE 100 +1.6%, DAX +1.35%. Travel +3%, Tech +1.9%, Energy +1.5%, Banks +1.6%, Media +0.95%, Telecom +0.75%.

Asian stocks rallied as battered technology shares bounced back, with the regional benchmark still on track for its worst
weekly losing streak since 2015. The MSCI Asia Pacific Index rose as much as 1.8%, with SoftBank leading with a gain of 12% after its results. Japan’s Nikkei rose 2.6%, boosted by a 5.5% gain in Tokyo Electron after strong profits as well. Hong Kong was the
regional leader, with the Hang Seng Index up 2.67% and its tech index rising 4.5%.  In Beijing, officials denied the city will be locked down, while Shanghai said it plans to achieve “no community spread” of the virus by mid-May. Shanghai Composite +0.95%,
ASX 200 +1.9%, Kospi +2.1%, Vietnam -4.5%, Philippines -2.3%.

FIXED INCOME: 
                                       

Treasuries pressed lower as stock futures push through Thursday’s session highs, leaving Treasury yields cheaper by up to
6bp across long-end of the curve where 20-year sector underperforms. 10-year yields up to around 2.90%, cheaper by 5bp on the day. Long-end led losses steepening 5s30s by 2bp on the day and 2s10s by 2.8bp.    

METALS: 
                               

Gold prices hovered near a three-month low and were set for their fourth straight weekly fall, as the strongest dollar in
two decades dampened demand. Gold’s recent decline has wiped out nearly all of its gains driven by Russia’s invasion of Ukraine.  Spot gold -0.35%, spot silver +0.15%.       

ENERGY:     

Oil prices trade 1.5% higher, bookending another tumultuous week of trading, as investors weighed the prospect of a EU ban
on Russian crude imports and uncertainty over China’s virus resurgence.  Some European Union nations are saying it may be time to consider delaying a push to ban Russian oil so they can proceed with the rest of a proposed sanctions package if the bloc can’t
persuade Hungary to back the embargo.  Prices for gas in Europe surged on Thursday after Moscow said it would halt gas flows to Germany through the main pipeline over Poland.  The Democrats on Thursday introduced the ‘Consumer Fuel Price Gouging Prevention
Act’ that will give the President the power to issue an Energy Emergency Declaration that would make it unlawful to increase gasoline and home energy fuel prices in an excessive or exploitative manner. Meanwhile, US gasoline prices jump to an intraday record
high.       

CURRENCIES:   
 

Currencies were choppy with the dollar fading small losses. The US Dollar Index was slightly lower, near a fresh 20-year
high and is bound for a sixth consecutive weekly gain. The yen weakened against all its Group-of-10 peers as investor demand for haven assets ebbed. The Russian ruble firmed past 63 per dollar for the first time since early February 2020 and touched a fresh
five-year high versus the euro, supported by continuing restrictions on currency trading. The ruble has become the world’s best-performing currency this year thanks to artificial support from capital controls that Russia imposed to shield its financial sector
after its invasion.  AUD/USD climbed 0.6%, paring its weekly decline to 3.1%. USDJPY +0.5%. EURJPY +0.6%.         

Cryptocurrencies nursed large losses, with bitcoin trading near $30,000 and set for a record losing streak as the collapse
of TerraUSD rippled through markets. Tether, the biggest stablecoin and one whose developers say is backed by dollar assets, was back at one dollar today. Tether’s operating company says it has the necessary assets in Treasuries, cash, corporate bonds and
other money-market products. Nomura said it had begun offering bitcoin derivatives to clients, the latest move by a traditional financial institution into the asset class.

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:

• BXSL US (BXSL) raised to outperform at Raymond James; PT $26
• Canadian Western Bank (CWB CN) raised to buy at Stifel Canada; PT C$37
• Constellation Energy (CEG) raised to buy at Guggenheim; PT $70
• Copa Holdings (CPA) raised to overweight at Barclays; PT $96
• Duolingo (DUOL) raised to outperform at Raymond James; PT $98
• Endeavor Group (EDR) raised to overweight at Barclays; PT $27
• Exchange Income (EIF CN) raised to outperform at CIBC; PT C$56.50
• First Solar (FSLR) raised to overweight at Piper Sandler; PT $90
• Krispy Kreme (DNUT) raised to buy at HSBC; PT $17
• Mercury Systems (MRCY) raised to buy at Truist Secs; PT $71
• Old National (ONB) raised to overweight at Stephens; PT $19
• Squarespace (SQSP) raised to outperform at Wedbush
• Wesdome Gold Mines (WDO CN) raised to buy at Echelon Wealth; PT C$13.50

DOWNGRADES:

• Atmos Energy (ATO) cut to neutral at Goldman; PT $113
• Avaya Holdings (AVYA) cut to market perform at Cowen; PT $6
• Carvana (CVNA) cut to hold at Jefferies; PT $40
• Energy Focus (EFOI) cut to neutral at HC Wainwright
• Fluence Energy (FLNC) cut to neutral at Goldman; PT $9.50
• KB Home (KBH) cut to underperform at Wolfe
• LifeSpeak (LSPK CN) cut to sector perform at RBC; PT C$1
• LifeSpeak (LSPK CN) cut to speculative buy at Canaccord; PT C$3
• Manulife Financial (MFC CN) cut to hold at Canaccord; PT C$23
• Medical Facilities (DR CN) cut to sector perform at National Bank
• Meritage Homes (MTH) cut to peerperform at Wolfe
• NFI Group (NFI CN) cut to underperform at CIBC; PT C$12
• Outbrain (OB) cut to inline at Evercore ISI
• PetIQ (PETQ) cut to perform at Oppenheimer
• Pulse Biosciences (PLSE) cut to neutral at HC Wainwright
• Rubellite Energy (RBY CN) cut to hold at Stifel Canada; PT C$4.75
• Switch (SWCH) cut to equal-weight at Barclays; PT $34
• UPS (UPS) cut to neutral at JPMorgan; PT $202
• Xebec Adsorption (XBC CN) cut to market perform at BMO; PT C$1.75

INITIATIONS:

• Inseego (INSG) reinstated hold at Stifel; PT $2.50
• NuScale Power (SMR) rated new outperform at Cowen; PT $15
• Redwood Trust (RWT) reinstated overweight at JPMorgan; PT $11.50
• Sportsman’s Warehouse (SPWH) rated new buy at R5 Capital; PT $24

David Wienke

Cabrera Capital Markets, LLC