Cabrera Capital Daily Game Plan

Monday June 27, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:30ET  Durable goods orders; 10:00ET Pending home sales; 1:00ET Auctions $47B in 5-year notes, $46B in 2-year notes  

TODAY’S HIGHLIGHTS:   

• US Durable Goods Orders Unexpectedly Jumped In May; +0.7%; Consensus +0.2%
  

Global stocks extended gains after posting their best performance in a month last week. China further eased COVID-19 restrictions and off-peak
oil prices helped sentiment improve and temper fears of prolonged inflation. Investors are monitoring a summit of the Group of Seven leaders, who plan to commit to indefinite support for Ukraine.  G7 leaders also agreed on a pledge to raise $600 billion in
private and public funds for developing countries to counter China’s growing influence and soften the impact soaring food and energy prices. The Kremlin on Monday rejected claims that it has defaulted on its external debt for the first time in more than a
century, after a grace period on $100 million interest payments ran out. A Kremlin spokesperson said Russia made bond payments due in May but the fact they had been blocked by Euroclear because of Western sanctions on Russia was “not our problem”.                                                                

US EQUITIES: 

US futures climbed as an earlier rally in Asian tech stocks buoys sentiment.  Quarterly portfolio rebalancing by institutional buyers could also
be helping equities, as investors assess whether inflation is cresting and recession can be averted.  JPMorgan’s Marko Kolanovic is calling for stocks to rise 7% this week as pension and sovereign wealth funds shift their exposures. Morgan Stanley strategists
say the S&P 500 Index may climb another 5% to 7%, before resuming losses.     

E-mini S&P futures +0.4%, Nasdaq +0.55%, Russell 2000 futures +0.3%, Dow futures +0.2%. 

JD.com (JD +5%) leads a rise in Chinese stocks in the US amid Prosus stake sale. Robinhood (HOOD) rose as much as 4% after
Goldman Sachs raised to neutral from sell.  Selective Insurance Group (SIGI) shares may be in focus after Morgan Stanley initiated an overweight rating on the stock. Chewy Inc. (CHWY) shares are up 4% as Needham upgrades the online retailer for pet products
to buy. Coinbase (COIN) shares fall 4% as the stock was downgraded to sell at Goldman.

European shares edged higher, following a bounce last week, as traders questioned how far slowing growth might temper central
banks’ tightening plans. Mining stocks lead gains in the Stoxx 600 Index as iron ore and base metals recover ground amid signs of improvement in China’s economy. Among notable European stock moves, Prosus NV soared 19% on plans to sell more of its stake in
Chinese internet giant Tencent Holdings to finance a buyback program. Nordex shares jump as much as 12% after the firm announced a cash injection from Acciona. Lundbeck soars as much as 15% after the Danish pharmaceutical company reported positive data in
a clinical study in patients with Alzheimer’s dementia. Stoxx 600 +0.5%, DAX +0.6%, FTSE 100 +.06%, CAC lags, down 0.15%. Basic resources +2.1%, tech +2.1%, energy +1.35%, insurance -0.4%, utilities -1%.  

Asian stocks advanced after battered technology shares rebounded as easing recession fears underpinned investor sentiment. 
Profits at China’s industrial firms shrank at a slower pace in May following a sharp fall in April, as activity in major manufacturing hubs resumed. The MSCI Asia Pacific Index rose as much as 2.1%, its biggest intraday gain this month, as chip and internet
companies led the advance. Almost all markets in the region rose, with Hong Kong’s Hang Seng Index leading gains, +2.35%.  China’s blue chip benchmark is coming closer to a bull market as Shanghai’s leader declared victory in defending the financial hub against
Covid. Tech-heavy markets such as Taiwan and South Korea extended gains made Friday, up 1.6% and 1.5% respectively. ASX 200 +1.9%, Vietnam +1.45%, Nikkei 225 +1.4%, China’s CSI 300 +1.1%, Sensex +0.8%. 

FIXED INCOME: 
                                        

Treasuries are weaker amid a selloff in core European rates. Broad risk-asset rally puts added cheapening pressure on Treasury
yields and two coupon auctions slated for today may also be weighing. US yields are cheaper by 4bp at long end, steepening 2s10s by ~2.4bp, 5s30s by ~1bp on the day; 10-year is up 3.8bp at ~3.17%.  Monday’s auctions include $46b 2-year at 11:30am ET and $47b
5-year notes at 1pm.     

METALS: 
                               

Gold rose after the Group of Seven nations planned to announce a ban on new gold imports from Russia, even as analysts saw
the move as “largely symbolic.”  At the start of the G7 meeting in Germany, the United States, Britain, Japan and Canada plan to announce a ban on imports of Russian gold to tighten the sanctions squeeze on Moscow and cut off its means of financing the invasion
of Ukraine. Russian gold could still find a home in other markets, such as China and India, which are not members of the G7. Copper steadied and most other base metals rebounded after their worst week in a year as China’s economy showed signs of recovering
and Goldman Sachs said global supplies were still constrained.  Spot gold is up 0.6%, silver +1.4$.    

ENERGY:     

Oil fluctuated near $108/bbl in New York as investors monitored developments from the gathering of G-7 leaders, while fears
of a demand-sapping recession continued to hang over the market. WTI swung between gains and losses today, after posting its first back-to-back weekly loss since April. The G-7 will commit to providing indefinite support to Ukraine for its defense against
Russia, a draft statement showed. The group will also commit on Tuesday to a new package of coordinated actions meant to raise pressure on Russia over its war in Ukraine, and will finalize plans for a price cap on Russian oil, a senior US official said today.
European Union countries’ energy ministers will discuss options today for how they could jointly curb gas demand, as the bloc grapples with cuts to Russian supplies and prepares for possible further supply shocks. WTI +0.4%, Brent +0.7%.                                       

CURRENCIES:                      

The dollar weakened slightly as equities advanced amid a revival in risk sentiment. Trading was more sedate than in recent
weeks as markets awaited US durable goods data today. EURUSD is +0.15% ahead of an ECB forum on central banking in Portugal. ECB President Christine Lagarde to speak later. GBP/USD reversed an earlier gain of half a percent to trade slightly lower. USD/JPY
+0.2%, AUDUSD -0.3%, EURJPY +0.4%, USDBRL +0.2%.

Bitcoin -0.7%, Ethereum -2.2%. 

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:

• Atlassian (TEAM) raised to buy at Goldman; PT $300
• AutoZone (AZO) raised to buy at Goldman; PT $2,296
• Chemtrade Logistics (CHE-U CN) raised to sector outperform at Scotiabank
• Chewy (CHWY) raised to buy at Needham; PT $55
• Choice Properties REIT (CHP-U CN) raised to buy at TD; PT C$15.50
• Eastman Chemical (EMN) raised to neutral at On Field; PT $95
• Fresenius Medical ADRs (FME GR) raised to buy at Jefferies; PT $33.70
• Gitlab (GTLB) raised to buy at Goldman; PT $80
• National Vision (EYE) raised to buy at Goldman; PT $32
• Old Dominion (ODFL) raised to overweight at Wells Fargo; PT $300
• Ollie’s Bargain (OLLI) raised to neutral at Goldman; PT $57
• Pampa Energia ADRs (PAMP AR) raised to overweight at Morgan Stanley
• Robinhood (HOOD) raised to neutral at Goldman
• Simply Good Foods (SMPL) raised to overweight at Stephens; PT $45
• Vermilion Energy (VET CN) raised to sector outperform at Scotiabank
• WEC Energy (WEC) raised to overweight at KeyBanc; PT $104

DOWNGRADES:

• Alnylam (ALNY) cut to neutral at Guggenheim
• Altair Eng (ALTR) cut to sell at Goldman; PT $41
• Avangrid (AGR) cut to underweight at KeyBanc; PT $40
• Celanese (CE) cut to underperform at On Field; PT $115
• Coinbase (COIN) cut to sell at Goldman; PT $45
• Cracker Barrel (CBRL) cut to underperform at BofA; PT $94
• Descartes Systems (DSG CN) cut to neutral at CIBC; PT C$91.72
• Etsy (ETSY) cut to hold at Needham
• Fission Uranium (FCU CN) cut to market perform at BMO
• Floor & Decor (FND) cut to neutral at Goldman; PT $64
• LyondellBasell (LYB) cut to underperform at On Field; PT $75
• Mister Car Wash (MCW) cut to sell at Goldman; PT $10
• United Fire (UFCS) cut to neutral at Piper Sandler; PT $37
• Varonis Systems (VRNS) cut to equal-weight at Morgan Stanley; PT $35
• Westlake Corp (WLK) cut to underperform at On Field; PT $100

INITIATIONS:

• AXT (AXTI) rated new buy at Needham; PT $8
• American Lithium (LI CN) rated new buy at Eight Capital; PT C$8.25
• Blackboxstocks (BLBX) rated new buy at Ascendiant Capital Markets
• Blueprint Medicines (BPMC) rated new underweight at Wells Fargo; PT $40
• Brinker (EAT) reinstated underperform at BofA; PT $26
• Cardinal Energy (CJ CN) rated new neutral at CIBC; PT C$10
• Darden (DRI) reinstated buy at BofA; PT $145
• Deckers Brands (DECK) resumed equal-weight at wells Fargo; PT $280
• Eve Holding (EVEX) rated new neutral at BTIG
• Grove Collaborative (GROV) rated new outperform at Telsey; PT $10
• Oracle (ORCL) reinstated sell at Goldman; PT $75
• Selective Insurance (SIGI) rated new overweight at Morgan Stanley
• Sweetgreen (SG) rated new neutral at BofA; PT $15
• Texas Roadhouse (TXRH) rated new buy at BofA; PT $96

David Wienke

Cabrera Capital Markets, LLC