Cabrera Capital Daily Game Plan

Tuesday June 28, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:00ET Fed’s Barkin speaks; 8:30ET Trade in goods; 9:00ET  Case-Shiller U.S. home price index; 10:00ET Consumer Confidence; 12:30ET Fed’s Daly speaks

TODAY’S HIGHLIGHTS:   

• Judge strikes down NYC law granting voting rights to noncitizens – Axios
• Pelosi said she’s preparing votes on a number of bills to protect abortion
  
• Joe Biden is running for re-election and I will be his ticketmate,” Kamala Harris tells CNN
  
• Boy missing for eight days in Germany found alive in sewer
  

Global markets grind higher while oil prices firmed following China’s decision to ease some quarantine requirements for international arrivals
that raised hopes for stronger growth. The move by Beijing to cut quarantine times for travelers by half is helping gains which have made Chinese shares the world’s best-performing major equity market this month. The nation’s stock indices are now approaching
a bull market.  Meanwhile, NATO is set to label China as a “systemic challenge” when it outlines its new policy guidelines this week. ECB President Christine Lagarde said today that the central bank will move gradually when it begins raising rates but with
the option to act decisively on any deterioration in medium-term inflation. G7 leaders pledged $4.5 billion on Tuesday to fight global hunger with the US providing half of that figure, in an attempt to rally emerging countries with close ties to Russia.  
                                                                 

US EQUITIES: 

US stock futures gained as investors assessed the impact that China’s loosening Covid-19 restrictions would have on global supply chains. US-listed
Macau casino stocks and China travel stocks jumped in premarket trading. US bank stocks may be volatile during Tuesday’s trading session after the lenders announced a wave of dividend increases following last week’s successful stress test results.      

E-mini S&P futures +0.55%, Nasdaq +0.35%, Russell 2000 futures +0.6%, Dow futures +0.45%.  Looking for 4085 in SPX before finding some real resistance.

Nike is down 2.5% overnight after giving a downbeat full-year forecast for gross margins and said shipping logjams continued
to boost inventory levels. Spirit Airlines (SAVE) rises as much as 5% after JetBlue boosted its all-cash bid in response to an increased offer by rival suitor Frontier ahead of a crucial shareholder vote. Snowflake (SNOW) shares rise 3.3% after Jefferies upgraded
the stock to buy from hold citing valuation. Robinhood (HOOD), which rallied after a report that FTX is exploring an acquisition, fell over 3% as analysts said the deal was at extremely preliminary stage. Kezar Life Sciences (KZR) shares jump 92% after reporting
“positive results” for its lupus nephritis drug in its phase 2 trial. Walgreens is fading on a headline that it is abandoning its auction of its Boots unit.

European equities opened higher on signs that China is moving toward less strict Covid protocols, with investors eyeing
the European Central Bank’s annual forum for clues on monetary policies.   The Stoxx Europe 600 gains 0.7% with energy and miners leading the advance while tech and healthcare underperform. Sentiment has improved in recent days due to news the ECB is developing
a tool to deploy if yields surge.  Volkswagen’s CEO said the chip shortage is easing and the company is ramping up volumes in Germany and China. France’s Valeo gained 3.8% after it won a major contract with BMW. Airlines gained, with Deutsche Lufthansa AG
up 2.5%. Banco Santander SA rose after a newspaper report that the Spanish bank hired Credit Suisse and Goldman Sachs for its bid to buy Banco Nacional de Mexico SA. CAC 40 +1.35%, FTSE 100 +1.35%, DAX +1%. Energy ++2.7%, basic resources +2%, insurance +1.8%,
autos +1.6%, banks +1.6%. Technology -0.3%, travel -0.3%, healthcare -0.3%.

Asian stocks erased earlier losses, with most benchmarks in the region finishing higher as China’s move to ease its travel
rules bolstered sentiment. The MSCI Asia Pacific Index rose 0.5% after falling by a similar amount, led by the energy and utilities sectors. China’s technology firms were among the biggest losers as a plan by Tencent’s major backer to further cut its stake
fueled concern of more profit-taking. Shares in Japan, Hong Kong, South Korea and Australia rose while those in Taiwan and Indonesia fell. Chinese stocks tied to the reopening theme including hotels, tourism and airline shares jumped. Meanwhile, the People’s
Bank of China pledged to keep monetary policy supportive to help the nation’s economy. Japan’s Topix +1.1%, China’s CSI 300 +1.05%, Australia’s ASX 200 +0.9%, Hang Seng +0.85%, Thailand +1%; Vietnam +1.3%, Kospi +0.8%. Taiwan’s Taiex -0.7%, Jakarta -0.3%.

FIXED INCOME: 
                                        

Treasuries are under pressure as the US trading day begins, following steeper declines for euro-zone and UK bond markets
for a second straight day. Yields across the curve are higher by 2bp-5bp led by the 7-year ahead of the $40 billion auction.  Several euro-zone 10-year yields are 10bp higher on the day after comments by an ECB official spurred money markets to price in more
policy tightening. Policy maker Pierre Wunsch said the next 200bps of hikes are a “no brainer,” adding there should be no limits to the fragmentation tool in an interview with Reuters. Italian bonds also slide but outperform German peers, tightening the BTP-bund
spread as much as 6bps to 191bps. ECB President Lagarde earlier said flexibility will be applied to PEPP reinvestments starting Friday.     

METALS: 
                               

Gold is steady as traders weighed the prospects for tighter monetary policy and the outlook for economic growth. Geopolitical
tensions are also threatening to heat up. NATO is set to label China a “systemic challenge” when it outlines new policy guidelines that will also highlight Beijing’s deepening partnership with Russia.  G7 leaders have agreed to push for a ban on imports of
Russian gold as part of efforts to tighten the sanctions squeeze on Moscow, an EU official said on Tuesday.  The focus this week will be on the release of the personal consumption expenditures price index on Thursday, which will be scrutinized to see whether
inflationary pressures are dissipating. Spot gold is +0.1%, silver +0.5%.  
    

ENERGY:     

Oil prices moved higher after China eased quarantine rules, with focus already on tight supply as G7 leaders proposed placing
price caps on imports of Russian oil and gas. The OPEC+ alliance is set for an easy meeting this week as it cruises to the conclusion of a two-year pact on oil supplies. When it gathers on Wednesday and Thursday, the 23-nation group led by Saudi Arabia is
expected to rubber-stamp another production increase scheduled for August. Doubts over the ability of Saudi Arabia and the United Arab Emirates to significantly boost output and unrest in Ecuador and Libya put supply worries back in the spotlight.  WTI +1.6%,
Brent +1.9%  

According to preliminary DoE data, the US released 6.9 million barrels of crude from its Strategic Petroleum Reserve last
week, pushing the SPR below the 500 million barrels mark for the first time since 1986.                                     

CURRENCIES:                      

US$ Index nudged higher ahead of a busy slate of economic data.  Canada and Australia’s commodity-linked dollars were the
strongest among G-10 currencies. Traders weighed a meeting between Germany’s leader and Prime Minister Justin Trudeau as the European nation hopes to shift its energy dependence toward Canada — and away from Russian fossil fuels. The euro reversed gains from
a report on an anti-crisis tool by the European Central Bank and a speech by President Christine Lagarde. US$ -0.15%, USDJPY +0.45%, AUDUSD +0.3%, USDCAD -0.35%, EURJPY +0.25%.

Bitcoin +0.6%, Ethereum +1.9%. 

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:

• Fortinet (FTNT) raised to outperform at BMO; PT $70
• Microchip (MCHP) raised to buy at Stifel; PT $75
• Molson Coors (TAP) raised to neutral at Goldman; PT $54
• Ovintiv (OVV) raised to overweight at JPMorgan; PT $64
• Riot Blockchain (RIOT) raised to buy at Compass Point; PT $14
• ShaMaran Petroleum (SNM CN) raised to buy at Pareto Securities
• Snowflake (SNOW) raised to buy at Jefferies; PT $200
• Tenneco (TEN) raised to overweight at JPMorgan; PT $20

DOWNGRADES:

• Boston Beer (SAM) cut to sell at Goldman; PT $318
• Burcon NutraScience (BU CN) cut to speculative buy at Canaccord; PT C$3
• Epizyme (EPZM) cut to market perform at Cowen; PT $1.50
• Jeld-Wen (JELD) cut to equal-weight at Wells Fargo; PT $16
• Nestle ADRs (NESN SW) cut to equal-weight at Morgan Stanley; PT $128
• Portland General (POR) cut to neutral at Mizuho Securities; PT $50
• Shenandoah Telecom (SHEN) cut to market perform at Raymond James
• Smart Share Global ADRs (EM) cut to neutral at Goldman; PT $1.40
• State Street (STT) cut to hold at Deutsche Bank; PT $67

INITIATIONS:

• Albemarle (ALB) rated new underperform at Credit Suisse; PT $185
• ArcBest (ARCB) rated new outperform at Credit Suisse; PT $102
• Bally’s (BALY) rated new market perform at JMP
• C.H. Robinson (CHRW) rated new underperform at Credit Suisse; PT $102
• CSX (CSX) rated new outperform at Credit Suisse; PT $35
• Canadian National (CNR CN) rated new neutral at Credit Suisse; PT $122
• Canadian Pacific (CP CN) rated new neutral at Credit Suisse; PT $74
• Celanese (CE) rated new underperform at Credit Suisse; PT $105
• Chinook Therapeutics (KDNY) rated new buy at Stifel; PT $30
• Cogent Biosciences Inc (COGT) rated new buy at Guggenheim; PT $15
• DraftKings (DKNG) rated new market outperform at JMP; PT $25
• GXO Logistics (GXO) rated new outperform at Credit Suisse; PT $178
• Golden Entertainment (GDEN) rated new market outperform at JMP; PT $63
• Holley (HLLY) rated new overweight at JPMorgan; PT $14
• International Flavors (IFF) rated new outperform at Credit Suisse
• JB Hunt (JBHT) rated new neutral at Credit Suisse; PT $178
• Kanzhun ADRs (BZ) rated new outperform at Credit Suisse; PT $37
• Knight-Swift (KNX) rated new outperform at Credit Suisse; PT $70
• LyondellBasell (LYB) rated new underperform at Credit Suisse; PT $70
• MGM Resorts (MGM) rated new market outperform at JMP; PT $55
• Norfolk Southern (NSC) rated new outperform at Credit Suisse; PT $267
• Old Dominion (ODFL) rated new neutral at Credit Suisse; PT $282
• Penn National (PENN) rated new market outperform at JMP; PT $52
• Polaris (PII) rated new hold at Jefferies; PT $105
• Portillo’s (PTLO) rated new equal-weight at Morgan Stanley; PT $19
• RPM International (RPM) rated new outperform at Credit Suisse; PT $95
• Rush Street (RSI) rated new market outperform at JMP; PT $12
• Saia (SAIA) rated new outperform at Credit Suisse; PT $234
• Schneider National (SNDR) rated new outperform at Credit Suisse; PT $32
• SoundHound AI (SOUN) rated new outperform at Wedbush; PT $7
• TFI International (TFII CN) rated new outperform at Credit Suisse
• WP Carey (WPC) rated new peerperform at Wolfe; PT $88
• Werner Enterprises (WERN) rated new outperform at Credit Suisse; PT $51
• XPO Logistics (XPO) rated new outperform at Credit Suisse; PT $65

David Wienke

Cabrera Capital Markets, LLC