Cabrera Capital Daily Game Plan

Friday June 17, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:45ET  Fed’s Powell speaks; 9:15ET May industrial and manufacturing production; 10:00ET Leading Indicators

TODAY’S HIGHLIGHTS:   

• Per CBP sources, there have been 440,000 known gotaways at the border since FY’22 began Oct 1
• The S&P 500 now implies an 85% chance of a US recession amid fears of a policy error by the Fed, according to quant and derivatives strategists
  at JPMorgan
• There is an inflow of Covid funds to states and municipalities over the last couple of days
  
  link

Global stocks are mixed after one of their worst weeks since pandemic-induced turmoil of 2020. Japan retained super-easy monetary policy and
yield curve control, defying pressure to track the global trend toward tightening. Brazil’s central bank hiked rates by a further 50bp as it attempts to fight stubborn inflation, and hints that tightening will continue. President Biden signed legislation on
Thursday aimed at cutting overseas shipping prices, calling the new law another move by his administration to curb inflation stuck at a four-decade high. In part it directs the Federal Maritime Commission to prevent ocean carriers from unreasonably refusing
to fill open cargo space with US exports. The World Shipping Council said in a statement that it is inaccurate to “demonize ocean carriers” and America needs to make a commitment to invest in its land-side logistics infrastructure.                                               

US EQUITIES: 

US equity indices push higher, unwinding some of Thursday session losses and hinting of a relief rally at the end of its worst week since March
2020. The percentage of S&P 500 members that are trading above their 50-day moving average sank below 5% this week, the lowest level since Covid-19 fears battered shares more than two years ago. Both that selloff and the one that hit markets in late 2018 reversed
course shortly after seeing a similar share of stocks dip below the closely watched technical average.  Today’s quarterly event known as triple witching could generate a bit of chaos for the underlying stocks. The $3.5 trillion options expiry may lead to short
covering, which could bring temporary relief for the stock market.

E-mini S&P futures +1%, Nasdaq +1.2%, Russell 2000 futures +1.2%, Dow futures +0.75%.

In pre-market trading, Revlon surged over 77% after a report that Reliance Industries is considering buying the company.
Major technology and internet stocks are higher, rebounding from Thursday’s drubbing. Shares of US-listed companies continue their bounce. E-commerce giants Alibaba Group and JD.com both jumped more than 9% ahead of their 618 online shopping events. This morning
China’s central bank has agreed to accept Ant Group Co.’s application to set up a financial holding company. Adobe (ADBE) shares fall 4% after the software company cut its revenue forecast. 

Look for the 200 week moving average in QQQ to be major support. Q’s have not fallen below its 200 week mvg avg since 2009.

The post COVID gains are gone for consumer discretionary, Russell 2000, and Dow Industrials

European shares rebounded broadly after a rout triggered by fears of an economic downturn as major central banks close the
liquidity taps. Italy’s FTSE MIB index rises as much as 2%, leading gains in the region.  The Stoxx Europe 600 index jumped about 1.4%.  Banks outperformed as ABN AMRO Bank NV surged more than 10% after BNP Paribas SA expressed interest in buying the Dutch
lender.  Bank of America raised European stocks to neutral from negative, saying the impact of economic news is now priced in. European real estate companies are among the best performers, rebounding after several days of losses following concerns higher interest
rates will weigh on the sector’s financing abilities. DAX +1.3%, CAC +1.25%, FTSE 100 +1%, Banks +3.4%, Food & Beverage +2.2%, Travel +2.15%, Media +1.9%. 

Japanese shares led today’s slump in Asia, with the decision by the Bank of Japan to keep its ultra-loose monetary settings
unchanged providing limited relief as volatility in the yen grows. Stocks in China and Hong Kong bucked the regional selloff, as Beijing’s pro-growth policy lends support to views that Chinese equities can keep outperforming.  Benchmarks in Australia and Vietnam
were among the biggest losers, with each dropping more than 1.5%. Nikkei 225 fell 1.8%, ASX 200 -1.75%, Vietnam -1.55%, Taiwan -1.25%, Kospi -0.4%, Sensex -0.25%. Hang Seng +1.1%, CSI 300 +1.4%, Hang Seng Tech +2.35.

FIXED INCOME: 
                                        

Treasuries are cheaper across the curve with losses led by the long-end. US yields cheapen by up to 5bp across long-end
of the curve, steepening 5s30s spread by 3.5bp on the day; 10-year yields around 3.22%, cheaper by 2.5bp.  The second tranche of COVID relief funds has made its way to states and municipalities over the last couple of days. This has likely helped the short
end lift as the money has to be parked in the short term. Italian bonds led a rally in European debt after ECB President Christine Lagarde pledged that borrowing costs of more indebted nations in the euro-area won’t be allowed to spiral out of control. Italy’s
10-year yield fell 20 basis points and German equivalents dropped six basis points.             

METALS: 
                               

Gold declined as the dollar strengthened, and headed for a weekly drop as traders weigh the impact of tighter monetary policy
on global growth.  Spot gold fell 0.5%, silver is down 0.45%.                          

ENERGY:     

Oil is heading for its first weekly decline since April after a period of choppy trading as investors weigh the prospect
of further monetary tightening from central banks to curb rampant inflation. Robust demand from Latin America is set to lift US Gulf Coast fuel exports to new heights this month, hampering efforts to build up national inventories amid soaring prices. Top Biden
administration officials are weighing limits on exports of fuel as the White House struggles to contain gasoline prices that have topped $5 per gallon. Discussions around capping gasoline and diesel exports have picked up in recent days, as President Biden
intensified his criticism of soaring oil company profits. Freeport LNG has declared force majeure on its liquefied natural gas shipments loading from its US export plant until the first week of September. WTI is down 0.6%, Brent is -0.4%.                                      

CURRENCIES:                      

The US dollar is higher after two days of losses. The yen weakened in the wake of the BOJ decision to maintain ultra-easy
monetary stance. The BOJ defied the global trend of tightening monetary policy by keeping its ultra-low interest-rate settings and affirming a commitment to ease further if needed. US$ Index is up 0.9%, USDJPY +1.9%, GBPUSD -0.7%, AUDUSD -1%, EURJPY +1.25%,
EURUSD -0.6%, USDBRL +1.6%.        

Bitcoin +1.5%, Ethereum -0.5%. Bitcoin snapped its longest streak of losses going back to 2010, climbing back toward $21,000.
   

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:

• American Express (AXP) raised to outperform at Baird; PT $175
• Capital One (COF) raised to outperform at Baird; PT $145
• Ferrari (RACE) raised to add at Intesa Sanpaolo; PT $205.31
• Fifth Third (FITB) raised to outperform at Baird; PT $44
• M&T Bank (MTB) raised to outperform at Baird; PT $200
• NextEra Energy Partners (NEP) raised to outperform at RBC; PT $89
• Utz Brands (UTZ) raised to buy at Goldman; PT $16
• ZIM Integrated Shipping Services (ZIM) raised to neutral at JPMorgan

DOWNGRADES:

• American Eagle (AEO) cut to neutral at B Riley; PT $13
• MDC Holdings (MDC) cut to underweight at Wells Fargo; PT $27
• Meritage Homes (MTH) cut to underweight at Wells Fargo; PT $65
• PROG Holdings (PRG) cut to market perform at Raymond James
• Roblox (RBLX) cut to hold at Truist Secs; PT $29
• Toll Brothers (TOL) cut to equal-weight at Wells Fargo; PT $48
• Urban Outfitters (URBN) cut to neutral at B Riley; PT $23

INITIATIONS:

• APi Group (APG) rated new neutral at JPMorgan; PT $17
• Acadia Health (ACHC) rated new hold at Loop Capital; PT $72
• Anthem (ANTM) rated new buy at Loop Capital; PT $550
• Apellis Pharma (APLS) rated new buy at Stifel; PT $60
• Archaea Energy (LFG) rated new overweight at Barclays; PT $26
• Beam Global (BEEM) rated new buy at B Riley; PT $23
• Beam Therapeutics (BEAM) rated new market perform at BMO; PT $41
• BeiGene ADRs (BGNE) rated new buy at CMB International; PT $248.52
• Blink Charging (BLNK) rated new neutral at B Riley; PT $15
• Broadmark Realty (BRMK) rated new neutral at Piper Sandler; PT $7
• CC Neuberger Principal Holdings II (PRPB) rated new buy at Benchmark
• CTO Realty (CTO) rated new outperform at Raymond James; PT $69
• CVS (CVS) rated new buy at Loop Capital; PT $120
• Centene (CNC) rated new buy at Loop Capital; PT $100
• Centessa Pharmaceuticals ADRs (CNTA) rated new outperform at BMO
• ChargePoint (CHPT) rated new buy at B Riley; PT $20
• Cigna (CI) rated new hold at Loop Capital; PT $270
• Community Health (CYH) rated new hold at Loop Capital; PT $5
• Crispr Therapeutics (CRSP) rated new outperform at BMO; PT $98
• Datadog (DDOG) rated new buy at President Capital Management; PT $115
• Eneti (NETI) rated new buy at DNB Markets; PT $11
• Grab Holdings (GRAB) rated new buy at Deutsche Bank; PT $3.20
• Graphite Bio (GRPH) rated new outperform at BMO; PT $12
• HCA Healthcare (HCA) rated new buy at Loop Capital; PT $240
• Hub Group (HUBG) rated new buy at Benchmark; PT $90
• Humana (HUM) rated new buy at Loop Capital; PT $510
• Intellia Therapeutics (NTLA) rated new market perform at BMO; PT $54
• Legend Biotech ADRs (LEGN) rated new outperform at BMO; PT $77
• Molina (MOH) rated new hold at Loop Capital; PT $310
• Pear Therapeutics (PEAR) rated new outperform at LifeSci Capital; PT $8
• Precision BioSciences (DTIL) rated new outperform at BMO; PT $7
• Starry Group (STRY) rated new outperform at Cowen; PT $9
• Tenet (THC) rated new buy at Loop Capital; PT $80
• Tritium DCFC (DCFC) rated new buy at B Riley; PT $12
• UnitedHealth (UNH) rated new buy at Loop Capital; PT $575
• Universal Health (UHS) rated new hold at Loop Capital; PT $115
• Verve Therapeutics (VERV) rated new outperform at BMO; PT $48
• ZimVie (ZIMV) rated new neutral at JPMorgan; PT $20

David Wienke

Cabrera Capital Markets, LLC