Cabrera Capital Daily Game Plan

Friday May 20, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES    

 The US session has no Fed speakers or economic data slated.  

TODAY’S HIGHLIGHTS:   

• China dispatching a senior envoy to Brussels next week in bid to salvage its troubled ties with the EU
• Biden kicked off his first presidential trip to Asia as he aims to ease chip supply-chain strains
• A member of President Biden’s security team has been arrested in Seoul, accused of drunkenly assaulting a South Korean citizen

Global markets are broadly higher after China cut a key lending benchmark to support its economy. China cut its five-year loan prime rate (LPR)
by 15 basis points this morning, a sharper reduction than expected.                   

US EQUITIES: 

US equity futures rose by over 1% as sentiment increased after China’s latest measure to bolster its economy injected some optimism at the end
of another volatile week. Today’s monthly expiration of options tied to equities and exchange-traded funds for an estimated $1.9 trillion of derivatives may add some volatility. The S&P 500 and Nasdaq are headed for a seventh straight weekly decline, the longest
losing streak since the bursting of the dotcom bubble. President Biden arrived in South Korea, where he’s set to visit a Samsung Electronics chip plant today in an effort to bolster supply chains that reduce reliance on China. According to Bloomberg data,
analysts raised price targets on 62 stocks in the S&P 500 yesterday.  They downgraded price targets on 162 stocks. This ranks in the bottom 1.5% of all days in over a decade for net upgrades-downgrades.        

E-mini S&P futures +1.1%, Nasdaq +1.4%, Russell 2000 futures +1.2%, Dow futures +0.8%.  

In pre-market trading, Palo Alto Networks (PANW) rises 11% after raising guidance. Applied Materials (AMAT) slips after Q2 results missed expectations
as persistent chip shortages weighed on outlook.  Ross Stores (ROST) sank 28% after the discount retailer cut its full-year outlook and earnings fell short of expectations. Deckers Outdoor (DECK) jumped 13% as revenue outlook beats estimates. Deere (DE) falls
over 5% despite reporting better-than-expected earnings. 

European stocks gained, erasing their weekly decline, as dip buyers returned amid more appealing valuations. The Stoxx Europe
600 index added 1.5%, erasing this week’s losses. Carmakers led the advance, with all sectors in the green. The FTSE 100 is up 1.85% after a surprise increase in April retail sales outweighed a decline in consumer confidence. In individual names, THG shares
surge as much as 32% as British entrepreneur Nick Candy considers an offer to acquire the UK online retailer.  Rockwool rises as much as 10% on several upgrades after reporting earnings.  Lonza shares gain as much as 4% after the pharmaceutical ingredients
maker was raised to outperform at RBC. Cartier and Montblanc manufacturer, Richemont shares tumble as much as 14% after an earnings miss. The company said that supply-chain disruptions weren’t over and that stagflation represents the largest headwind. CAC
+1.5%, DAX +1.9%. Autos +3.2%, travel +3%, tech +2.4%.

Shares in Asia rallied sharply after Chinese lenders lowered the five-year loan prime rate by a record amount in an effort
to boost mortgages and loans to boost the ailing housing market. The cut is a significant move to boost loan demand, as consumer and business confidence has been battered by Covid lockdowns. Gains in the region were led by Hang Seng, which closed 3% higher
while Nikkei and CSI 300 rose 1.3% and 2%. Hang Seng Tech +4.75%, Sensex +2.9%, Kospi +1.8%.   

FIXED INCOME: 
                                       

Treasury yields edged higher as risk sentiment increased, with the 10 year yield around 2.86%. Yields are higher by 2bp-3bp
across the curve.    

METALS: 
                               

Gold is marginally higher, headed for its first weekly gain in five weeks as rising concerns over economic growth and high
inflation buoyed demand. Spot gold added 0.15%, silver is up 0.1%.          

ENERGY:     

Crude oil prices are slightly higher, on course for little change on the week as a planned European ban on Russian oil balanced
out investor concerns about weakening economic growth hitting demand.  The European Union is hoping to clinch a deal on a proposed ban of Russian crude imports which includes carve-outs for EU states most dependent on Russian oil such as Hungary.  China kept
buying more energy from Russia, with purchases of oil, gas and coal jumping 75% in April to over $6 billion, even as domestic demand slowed due to a resurgent virus and the US and Europe moved away from purchases.       

CURRENCIES:   
 

Currency markets were quiet with the US Dollar Index up 0.2%.  The Japanese yen underperformed most Group-of-10 currencies,
as China’s move to bolster the economy helped lift risk sentiment.  China’s offshore yuan took a breather from its worst weekly selloff in four years as easing Covid lockdowns in Shanghai tempered concerns over a slowdown in the world’s second-largest economy.
It had fallen for six straight weeks, the longest string of losses since China’s trade war with the US in 2018.                 

Bitcoin +0.3%, Ethereum +1.6%.

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:

• Banco de Chile ADRs (CHILE CI) raised to outperform at Grupo Santander
• Comerica (CMA) raised to outperform at Baird; PT $85
• Mirati Therapeutics (MRTX) raised to buy at Guggenheim; PT $115
• Nubank (NU) raised to neutral at Banco BTG Pactual; PT $4
• Ollie’s Bargain (OLLI) raised to buy at BofA; PT $75
• Trex (TREX) raised to neutral at Exane; PT $75

DOWNGRADES:

• Freshpet (FRPT) cut to neutral at Atlantic Equities; PT $70
• HP Enterprise (HPE) cut to neutral at BofA
• PPG Industries (PPG) cut to hold at Berenberg; PT $140
• Pure Storage (PSTG) cut to neutral at BofA
• Ross Stores (ROST) cut to market perform at Telsey; PT $80
• Spero Therapeutics (SPRO) cut to hold at Berenberg; PT $2
• Vipshop ADRs (VIPS) cut to sell at Citi
• Wix.com (WIX) cut to equal-weight at Morgan Stanley; PT $85

INITIATIONS:

• Bentley Systems (BSY) rated new outperform at Oppenheimer; PT $40
• Bill.com (BILL) rated new overweight at JPMorgan; PT $140
• Coupa Software (COUP) rated new neutral at DA Davidson; PT $75
• Esab (ESAB) rated new buy at Stifel; PT $56
• Inspirato (ISPO) rated new inline at Evercore ISI; PT $6
• Leafly Holdings (LFLY) rated new outperform at Cowen; PT $12
• Revolution Medicines (RVMD) rated new neutral at BofA; PT $240
• Rubellite Energy (RBY CN) rated new outperform at BMO; PT C$6
• SVF Investment Corp. 3 (SVFC) rated new buy at DA Davidson; PT $15
• Univar (UNVR) rated new buy at Fermium Research; PT $35

David Wienke

Cabrera Capital Markets, LLC