Cabrera Capital Daily Game Plan

Wednesday May 18, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES   
8:30ET Building permits, Housing starts; 4:00ET Fed’s Harker speaks on economy

TODAY’S HIGHLIGHTS:   

• G-7 finance ministers and central bankers meet today
• Twitter Board ‘Intends To Close The Transaction’ With Musk Despite Spam Controversy

Global markets are mixed after positive economic data from the US yesterday helped the short term mood. Today’s data showed Japan’s economy shrank
for the first time in two quarters as COVID-19 curbs hit the service sector and surging commodity prices created new pressures. The world’s No. 3 economy fell at an annualized rate of 1.0%, slower than a 1.8% contraction expected by economists. British consumer
price inflation surged to its highest rate since 1982, surpassing the peaks of the early 1990s recession that saw sky-high interest rates and widespread mortgage defaults.  Finland and Sweden formally applied to join NATO, but face objections from Turkey in
a process that is expected to take a few weeks. So far, Russia’s response has been unexpectedly muted, having previously warned of steps of a “military-technical” nature and that it could deploy nuclear weapons if the countries joined the alliance and received
Western military aid.  Meanwhile, the Biden administration is poised to fully block Russia’s ability to pay US bondholders after a deadline expires next week, a move that could bring Moscow closer to a default.                

US EQUITIES: 

US equity futures dipped with S&P futures down 0.7% overnight following a 2% gain yesterday after upbeat retail sales and industrial production
data underpinned sentiment. Russia President Vladimir Putin said he sees no threat from Finland and Sweden joining NATO and the US is set to block Russia’s debt payments after the current sanctions exemption ends on May 25.     

E-mini S&P futures -0.7%, Nasdaq -1%, Russell 2000 futures -0.65%, Dow futures -0.5%. 

In pre-market trading,  Target fell over 20% after reporting earnings and lowering its profit forecast, saying a surge in costs during the first
quarter shows little sign of easing anytime soon. Target said fuel and freight were $1 billion more than expected during the first quarter.  This comes a day after Walmart echoed similar concerns yesterday and posted its biggest stock decline since 1987. Lowe’s
slipped 2.5% after reporting a bigger drop in same store sales than was expected.  Lowe’s sales compare unfavorably with those of Home Depot, which yesterday reported a gain in the comparable measure and boosted its annual outlook. TJX gains 2% after posting
1Q results.  Doximity (DOCS) shares fall 13% after the online healthcare platform provider’s forecast for 1Q revenue missed estimates. National CineMedia (NCMI) shares jump 20% after AMC Entertainment reported a 6.8% stake in the cinema advertising company.
 

European indexes were little changed following three days of gains.  The Stoxx Europe 600 index slipped 0.4% lower, with
ABN Amro falling almost 10% after the Dutch lender reported first-quarter results hampered by rising costs. European oil and gas stocks outperform amid higher crude prices and broker upgrades.  Siemens Gamesa Renewable Energy surged after Siemens Energy said
it may offer to buy the shares it doesn’t already own. Air France-KLM shares rise as much as 7.5% on news that container line CMA CGM intends to take a stake of up to 9%. Rockwool gains as much as 8% after boosting guidance.  Premier Foods rallied over 8%
in London, after announcing plans to raise prices. CAC -0.25%, DAX -0.2%, FTSE 100 -0.25%. Energy +1.6%, banks +0.8%, travel +0.25%, technology -1.7%, healthcare -1%.   

Asian stocks advanced for a fourth session following strong US economic data.  MSCI’s Asia-Pacific equity index rose for
a fourth day, +0.8%, the longest winning streak since February. Materials shares led the gains, with Australia’s BHP Group climbing 3.2%. Benchmarks in Indonesia and the Philippines led with gains of more than 2%. Equities in China bucked the trend with property
shares leading lower after data showed the decline in China’s new home prices accelerated in April, while tech shares also lost steam ahead of Tencent’s earnings. Tencent. posted its slowest revenue gain on record, after a sweeping government crackdown. The
Hang Seng Tech Index slipped 0.3% as investors were underwhelmed by a lack of details from China on a fresh vow to support the development of digital economy companies. CSI 300 -0.35%, Kospi +0.2%, Singapore +0.8%, Topix +0.95%, ASX 200 +1%.

FIXED INCOME: 
                                       

Treasury yields ticked higher with 10 year yield around 3%. In his most hawkish remarks to date, Fed Chair Powell said yesterday
that the US central bank will keep raising interest rates until there is “clear and convincing” evidence that inflation is declining. Today’s focus will be on the $17b 20-year new-issue auction.

METALS: 
                               

Gold is slightly lower after falling half a percent yesterday, with spot gold down 0.25%. Bullion has fallen about 12% from
an early March peak as rising US bond yields weighed on the non-interest bearing metal. Silver is lower by 0.1%.       

ENERGY:     

Oil rose as tight US product markets and the prospect of higher demand in China.  Meanwhile, the Biden administration plans
to ease sanctions on Venezuelan oil in a bid to bring more crude to Europe. With the summer driving season about to begin, there’s plenty of pain at the pump. Retail gasoline prices have risen above $4 a gallon in all US states for the first time, with California,
the most expensive state, seeing prices average more than $6 a gallon, according to data from auto club AAA. WTI +1.9%, Brent +1.5%.      

CURRENCIES:   
 

In currency markets, sterling was the big loser, shedding as much as 0.9% after UK consumer price inflation hit 9%, its
highest level in 40 years. The US Dollar Index nudged higher after a three day decline. Japanese yen outperforms as risk-off sentiment returns. US$ Index +0.15%, USDJPY -0.25%, GBPUSD -0.55%, USDCHF +0.25%, EURJPY -0.45%.                

Bitcoin slipped below $30,000. Ethereum -1.1%.

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:

• AeroVironment Inc (AVAV) raised to outperform at RBC; PT $100
• Canadian National (CNR CN) raised to outperform at BMO; PT C$170
• Cardinal Health (CAH) raised to outperform at Evercore ISI; PT $68
• Cellectis ADRs (ALCLS FP) raised to outperform at Baird; PT $10
• Endeavor Group (EDR) raised to buy at Goldman; PT $29
• Expedia (EXPE) raised to buy at Redburn
• Great Ajax (AJX) raised to buy at Compass Point; PT $16
• Mercury Systems (MRCY) raised to outperform at RBC; PT $72
• Monster Beverage (MNST) raised to outperform at Bernstein; PT $110
• On Holding (ONON) raised to hold at Williams Trading; PT $19
• Penn National (PENN) raised to buy at Jefferies; PT $49
• Questor Technology (QST CN) raised to sector perform at ATB Capital
• Ventas (VTR) raised to outperform at Credit Suisse; PT $63
• Welltower (WELL) raised to outperform at Credit Suisse; PT $100
• World Fuel (INT) raised to buy at Stifel; PT $35

DOWNGRADES:

• Century Aluminum (CENX) cut to peerperform at Wolfe; PT $14
• Charlotte’s Web (CWEB CN) cut to hold at Benchmark
• Comstock Resources (CRK) cut to underweight at Piper Sandler; PT $16
• Galmed Pharma (GLMD) cut to market perform at Raymond James
• Hanmi Financial (HAFC) cut to neutral at DA Davidson; PT $25
• Hope Bancorp (HOPE) cut to neutral at DA Davidson; PT $16
• VSE (VSEC) cut to sector perform at RBC; PT $48
• Warby Parker (WRBY) cut to neutral at Goldman; PT $18

INITIATIONS:

• Alerus Financial (ALRS) rated new market perform at Hovde Group; PT $29
• Amplitude (AMPL) rated new overweight at Piper Sandler; PT $25
• Caledonia Mining (CMCL) rated new buy at Cenkos Securities
• Fidelity National (FIS) rated new buy at Goldman
• First Savings Finl (FSFG) rated new outperform at Hovde Group; PT $30
• Fiserv (FISV) rated new neutral at Goldman; PT $108
• Five9 (FIVN) reinstated buy at Roth Capital; PT $129
• Global Payments (GPN) rated new neutral at Goldman; PT $151
• Greenland Tech (GTEC) rated new buy at Litchfield Hills; PT $15
• Karora Resources Inc (KRR CN) rated new neutral at CIBC; PT C$6.50
• Mastercard (MA) rated new buy at Goldman
• PAR Technology (PAR) rated new neutral at Goldman; PT $43
• Performance Food (PFGC) rated new buy at Berenberg; PT $71
• Shift4 Payments (FOUR) rated new neutral at Goldman; PT $55
• Stock Yards Bancorp (SYBT) rated new market perform at Hovde Group
• Terreno Realty (TRNO) reinstated market outperform at JMP; PT $75
• US Foods Holding (USFD) rated new buy at Berenberg; PT $53
• Visa (V) rated new buy at Goldman
• Western Union (WU) rated new sell at Goldman
• Youdao ADRs (DAO) rated new buy at Huatai Research; PT $12.95

David Wienke

Cabrera Capital Markets, LLC