Cabrera Capital Daily Game Plan

Monday June 13, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:30ET Producer price index final demand; FOMC two day meeting begins

FOMC rate decision tomorrow; Bank of England rate decision Thursday, Bank of Japan policy decision Friday

TODAY’S HIGHLIGHTS:   

• Nearly 40% of law enforcement agencies nationwide failed to report their 2021 crime data to the FBI
• BIDEN TO VISIT SAUDI ARABIA IN JULY
  
• COINBASE TO CUT ABOUT 18% OF JOBS, CITES ECONOMIC DOWNTURN
  

World shares are mixed as US equity futures pared gains and a rebound in European stocks proved short-lived, suggesting markets aren’t out of
the woods after a rout driven by expectations of sharper interest-rate hikes to fight inflation. With the Federal Reserve due to start a two-day meeting later today, markets are waiting to see if it raises rates by 75 bps, instead of the 50 bps originally
anticipated. This quarter is set to deliver the biggest combined loss for global bonds and stocks on record. The Bank of Japan ramped up the defense of its policy framework today, unveiling a further set of unscheduled buying operations, including purchases
of much longer maturities. The outlook for Chinese stocks has started to improve as monetary policy remains loose amid a global shift toward tightening.                                                

US EQUITIES: 

US equity futures are trying to hold onto overnight gains as investors await tomorrow’s policy decision. Several investment banks are now looking
for a 75bps rate hike, which is almost fully priced in for Wednesday and would be the biggest increase since 1994. S&P 500 contracts are well off session highs to trade around 0.25%, signaling some relief after Monday’s plunge that erased $1.3 trillion in
market capitalization and sent the gauge into a bear market. State Street Global strategists remain bearish on equity outlook, saying inflation is still a huge problem and central banks need to be very aggressive to fight it.                      

E-mini S&P futures +0.3%, Nasdaq +0.6%, Russell 2000 futures +0.2%, Dow futures +0.25%. ES higher, but unable to lift above the May significant
low of 3807.50.     

In pre-market trading, Oracle (ORCL) shares rose 11.5% after the software company reported fourth-quarter results that beat
expectations. Kaival Brands shares surge as much as 57% after the vaping products distributor reached deal with Philip Morris to distribute electronic nicotine delivery products outside of the US. US Silica Holdings (SLCA) gains 4% after it was upgraded to
outperform from inline at Evercore ISI.  US-listed Chinese stocks post broad-based gains, on track to rebound from a three-day drop.

European stocks extended declines to hit their lowest level since March 2021.  The Stoxx Europe 600 index extended its decline
to a seventh day, on track for the longest losing streak since the start of the pandemic. Retail and construction sectors led declines, while banks outperformed. The Bank of England faces more grim economic data ahead of Thursday’s meeting. Household spending
power fell the most in at least 21 years as wage increases were eaten up by inflation. June’s ZEW investor morale readings for Germany showed minor gains but remained well below February levels. Investors believe hawkish central banks are the biggest risk
for European stocks, followed by global recession and inflation, according to Bank of America’s June fund manager survey. Stoxx 600 -0.9%, CAC -0.8%, DAX -0.3%, FTSE 100 -0.45%. Banks +1.3%, energy +0.4%, retail -2%, construction -1.85%, healthcare -1.8%.    
         

Shares in Asia were mostly lower as investor concerns worsened that aggressive interest rate increases in the US could erode
corporate earnings. Earnings by Asian companies in March declined for the first time in seven quarters, dented by slowing demand due to lockdowns in China and diminishing margins as input costs rise. The MSCI Asia Pacific Index dropped as much as 2% before
paring some losses. Australian miners led heavy losses in the ASX 200 as metal prices sank amid concerns of weaker demand in China. Shares in China staged an impressive rebound late Tuesday as a number of brokerages rallied by the daily limit, bucking declines
across most of the region. The benchmark CSI 300 Index closed up 0.8%, flipping from a loss of more than 2%. Financials and energy shares gained the most, with brokerages such as CSC Financial and Everbright Securities jumping 10%. The Jakarta Composite rose
0.8%, taking its advance to 7% on the year. Hang Seng Index was little changed, ASX 200 -3.55%, Nikkei 225 down 1.3%, Kospi -0.45%, Sensex -0.3%, Taiwan -0.15%

FIXED INCOME: 
                                        

Treasuries snapped a selloff which took the 10-year yield to the highest since 2011 on Monday. Two-year yields eased to
3.217%, versus its 3.43% peak, its highest since 2007. The yield curve remained flat, underscoring worries about an economic downturn sparked by tighter monetary policy. Traders now see about 200 basis points of tightening by the Fed’s September decision and
the possibility of a 75 basis-point hike tomorrow.            

METALS: 
                               

Gold steadied ahead of a much-anticipated US Federal Reserve meeting, after posting the largest drop in three months on
concerns that policy makers may consider the biggest interest-rate increase since 1994 to rein in persistently high inflation. Spot gold -0.1%, silver is flat.                       

ENERGY:     

Crude oil gained as investors evaluated a tight supply outlook and the impact of China’s eventual return from virus curbs.
OPEC expects the pace of oil demand growth to halve next year as inflation and conflict grip the global economy.  With most OPEC+ nations already pumping at their limit, idle reserves are confined to the Saudi Arabia, the United Arab Emirates, Iraq and Kuwait. 
The IEA, which advises Western governments on energy policy, will give its first 2023 demand forecast in a monthly report on Wednesday. WTI +0.4%, Brent +0.5%.

CURRENCIES:                      

The US$ Index paused after its largest four-day rally since March 2020 as global markets showed some signs of stabilizing.
The yen hovered near a 24-year low against the dollar after the BOJ boosted scheduled purchases of five-to-10-year debt after the benchmark yield failed to come down from 0.255%, above the upper end of its 0.25% tolerance band. Data from the bank showed that
it bought a record amount ($16.3 billion) of bonds through their fixed-rate operation, surpassing the previous high hit in 2018. Rabobank strategists say the yen is going to get much, much worse, while the BOJ on Friday will only flag more bond-buying. The
pound sank to its lowest level against the dollar since March 2020 as concerns grew the BOE might have to take a more cautious approach to raising rates after data Monday showed a surprise contraction in the economy in April. Both the Fed and the BOE are set
to announce rate decisions this week.      

Bitcoin -5.5%, Ethereum -6.3%.  There was little let up for crypto markets, where bitcoin and ether plumbed new 18-month
lows, reacting to interest rate expectations and crypto lender Celsius Network’s decision to freeze withdrawals.  Bitcoin fell to as low as $20,816, and is now down over 50% year to date and 28% since Friday. Cryptocurrencies have become emblematic of a flight
from speculative assets as monetary policy is tightened around the world to fight inflation.  

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:

• B&G Foods (BGS) raised to neutral at Piper Sandler
• NetApp (NTAP) raised to buy at Deutsche Bank; PT $84
• PBF Energy (PBF) raised to overweight at Wells Fargo; PT $57
• Thomson Reuters (TRI CN) raised to outperform at CIBC; PT C$147.90
• Tractor Supply (TSCO) raised to buy at BofA
• U.S. Silica (SLCA) raised to outperform at Evercore ISI; PT $20

DOWNGRADES:

• Aeroclean Technologies (AERC) cut to hold at Benchmark
• Best Buy (BBY) cut to neutral at BofA; PT $90
• Coinbase (COIN) cut to neutral at JPMorgan; PT $68
• Dialogue Health (CARE CN) cut to neutral at CIBC; PT C$4
• Duke Realty (DRE) cut to hold at Edward Jones
• Envista Holdings (NVST) cut to neutral at Baird; PT $46
• HP Enterprise (HPE) cut to hold at Deutsche Bank; PT $16
• Henry Schein (HSIC) cut to neutral at Baird; PT $88
• Legacy Housing (LEGH) cut to neutral at B Riley; PT $16
• Netflix (NFLX) cut to sell at Benchmark; PT $157
• Omnicom (OMC) cut to hold at Edward Jones
• Q4/Canada (QFOR CN) cut to neutral at CIBC; PT C$5
• Softchoice (SFTC CN) cut to neutral at CIBC; PT C$21

INITIATIONS:

• Ashford (AINC) rated new outperform at Oppenheimer; PT $28
• Lineage Cell Therapeutics (LCTX) rated new buy at B Riley; PT $4
• Marathon Petroleum (MPC) rated new outperform at BMO; PT $135
• Phillips 66 (PSX) rated new outperform at BMO; PT $132
• Valero Energy (VLO) rated new market perform at BMO; PT $155
• Viad (VVI) rated new outperform at Oppenheimer; PT $42

David Wienke

Cabrera Capital Markets, LLC