Cabrera Capital Daily Game Plan

Wednesday June 29, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:30ET GDP; 9:00ET Fed’s Powell speaks at ECB conference; 11:30ET Fed’s Mester speaks; 1:05ET Fed’s Bullard speaks

Yesterday, the US Conference Board Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—decreased
sharply to 66.4 from 73.7 and is at its lowest level since March 2013.

TODAY’S HIGHLIGHTS:   

• China firmly opposes any form of official exchanges between Taiwan island and countries that have diplomatic ties with China

World markets fell on renewed worries about global economic growth as monetary policy tightens in much of the world to fight inflation. Inflation
fears are being fanned further by oil prices which extended their rise into a fourth day. Spanish inflation unexpectedly surged to a record 10%, dashing hopes that inflation in the euro zone’s fourth-biggest economy had peaked.  Sweden and Finland looked set
for fast-track membership of NATO after Turkey lifted a veto on them joining. Markets are awaiting remarks from Federal Reserve Chairman Jerome Powell, European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey, who are due
to speak on a panel in Sintra today.                                                                    

US EQUITIES: 

US equity futures reversed overnight losses after German inflation fell.  Data on Tuesday showed US consumer confidence dropped to a 16-month
low in June, yet several Fed policymakers pledged further rapid interest-rate hikes. The US Federal Reserve is “just at the beginning” of raising interest rates to control inflation, according to Fed president Loretta Mester. She wants to see the benchmark
lending rate reach 3% to 3.5% this year and “a little bit above 4% next year” to rein in price pressures even if that tips the economy into a recession. Her baseline forecast is for growth to be slower this year,” but not a recession.     

E-mini S&P futures +0.3%, Nasdaq +0.2%, Russell 2000 futures +0.4%, Dow futures +0.4%.  Looking for 4085 in SPX before finding some real resistance.

In pre-market trading, Carnival fell over 7% as Morgan Stanley analysts warned that the cruise vacation company’s shares
could lose all their value in the event of another demand shock. Tesla slipped after the company laid off hundreds of workers on its Autopilot team as it shuttered a California facility. Altria (MO) shares fall 4% as Barclays cut its rating on the tobacco
group to underweight. Bed Bath & Beyond (BBBY) plunges 14% after reporting an earnings miss. McCormick (MKC) shares slump as much as 7% after cutting guidance. Ormat Technologies (ORA) rallies as much as 5% after the renewable energy company is set to be included
in the S&P Midcap 400 Index. Upstart Holdings (UPST) shares slump as much as 9% after a Morgan Stanley downgrade.

European equities snapped three days of gains, with sentiment also hurt by China remaining committed to its zero-Covid approach.
Germany’s consumer price index unexpectedly fell to 7.6% from 7.9%, and harmonized inflation rate fell to 8.2% from 8.8%, helping indices move off their morning lows. The Stoxx Europe 600 Index was down 1.3% before paring some losses. Automotive shares led
the declines, while energy outperformed.  In individual names, Hennes & Mauritz AB gained 5% after the Swedish low-cost retailer’s earnings beat analyst estimates. Just Eat Takeaway.com tumbled 20% to a record low after Berenberg analysts rated the stock a
sell. Autos -2%, travel -1.75%, tech -1.7%, energy +1.3%. CAC -1%, DAX -1.5%, FTSE 100 is flat.

Asian stocks were broadly lower, halting a four-day gain, on renewed concerns over the outlook for global economic growth
and inflation.  Chinese blue-chips, which hit four-month highs yesterday, slumped 1.5% and Hong Kong lost nearly 2% after Xi Jinping reiterated his firm stance on Covid zero. The MSCI Asia Pacific Index dropped as much as 1.5%, led by consumer discretionary
and information sectors. Kospi -1.8%, CSI 300 -1.55%, Taiwan -1.3%, Nikkei 225 -1.3%, Sensex -0.3%.

FIXED INCOME: 
                                        

US treasuries are higher as bund futures jumped after the first monthly drop since November in a German regional CPI gauge.
Yields are lower across the curve with 10-year declining 4.5bp. Focal points for the US session include a final revision of 1Q GDP, comments by Fed Chair Powell, and anticipation of quarter-end flows favoring bonds. Quarter-end is anticipated to cause rebalancing
flows into bonds; Wells Fargo estimated that $5b will be added to bonds, with most of the flows occurring Wednesday and Thursday.     

METALS: 
                               

Gold is slightly higher, near the lowest in almost two weeks as Federal Reserve officials played down the risk of a US recession
even as they tighten monetary policy.  Bullion is heading for a third straight monthly drop as rising interest rates globally reduce the allure of the metal. New York Fed President John Williams and San Francisco’s Mary Daly both acknowledged on Tuesday they
had to cool the hottest inflation in 40 years, but insisted that a soft landing was still possible.  Spot gold +0.4%, silver +0.8%.            

ENERGY:     

Oil gained for a fourth day as shipments from key Libyan ports were suspended, the latest factor compounding market tightness.
Output in Ecuador has also been lower due to ongoing protests. Both disruptions come as Shell said spare energy production capacity is running very low. The OPEC+ crude exporters group started a two-day meeting today but big policy changes look unlikely, with
the United Arab Emirates Energy Minister already indicating his country is pumping close to capacity. We will see an unusual US inventory data release today, with two weeks being published simultaneously after an outage caused by a power issue.  China said
it will offer subsidies to refiners and won’t raise domestic prices if international crude rises above $130 a barrel. Still, the world’s largest crude importer doubled down on the nation’s Covid Zero strategy, raising concerns about the outlook for demand.
 WTI +1.5%, Brent +1.4%.                                      

CURRENCIES:                      

The US$ is steady after yesterday’s bounce as traders await data that’s expected to provide further clues on the health
of the US economy.  GBPUSD -0.25%, USDJPY +0.2%, AUDUSD -0.15%, USDCAD -0.2%, EURUSD flat, USDBRL -0.75%, USDCHF -0.7%.

Bitcoin -0.5%, Ethereum -3.3%. A British Virgin Islands court has ordered struggling crypto hedge fund Three Arrows Capital
into liquidation.  Bitcoin dipped below $20,000 for the first time in almost a week, as the lack of sustained upward momentum caused some technical analysts to raise the prospect of further declines.

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:

• Federated Hermes (FHI) raised to outperform at KBW; PT $40
• McDonald’s (MCD) raised to overweight at Atlantic Equities; PT $278
• O’Reilly Automotive (ORLY) raised to buy at DA Davidson; PT $740
• Oracle (ORCL) raised to outperform at Exane; PT $90
• Seven Hills Realty Trust (SEVN) raised to market outperform at JMP

DOWNGRADES:

• Accenture (ACN) cut to neutral at Exane; PT $320
• Altria (MO) cut to underweight at Barclays; PT $36
• Bath & Body Works (BBWI) cut to neutral at JPMorgan; PT $30
• Coca-Cola Europacific Pa (CCEP) cut to hold at Kepler Cheuvreux
• Cogeco Communications (CCA CN) cut to neutral at CIBC; PT C$100
• Cognyte (CGNT) cut to inline at Evercore ISI; PT $5
• Crown Castle (CCI) cut to hold at Deutsche Bank; PT $183
• Eagle Bancorp Montana (EBMT) cut to neutral at DA Davidson; PT $22
• Franklin Resources (BEN) cut to underperform at KBW; PT $22
• JOANN (JOAN) cut to hold at Loop Capital; PT $8
• Janus Henderson (JHG) cut to underperform at KBW; PT $22
• Qorvo (QRVO) cut to underperform at BofA
• Sally Beauty (SBH) cut to underperform at Raymond James
• Skyworks (SWKS) cut to underperform at BofA
• T. Rowe (TROW) cut to underperform at KBW; PT $107
• Upstart (UPST) cut to underweight at Morgan Stanley; PT $19
• Victory Capital (VCTR) cut to market perform at KBW; PT $29
• WisdomTree (WETF) cut to market perform at KBW; PT $6

INITIATIONS:

• Addus HomeCare (ADUS) rated new buy at Stifel; PT $101
• Alvotech (ALVO) rated new buy at DNB Markets; PT $21
• Amazon (AMZN) rated new buy at Redburn; PT $270
• Amedisys (AMED) rated new hold at Stifel; PT $128
• Bally’s (BALY) rated new equal-weight at Barclays; PT $21
• Blue Bird (BLBD) rated new buy at DA Davidson; PT $13
• Boise Cascade (BCC) rated new hold at Truist Secs; PT $64
• Caesars Entertainment (CZR) rated new overweight at Barclays; PT $56
• Choice Hotels (CHH) rated new underweight at Barclays
• Coupang (CPNG) rated new overweight at Morgan Stanley; PT $18
• Digital Turbine (APPS) reinstated buy at B Riley; PT $29
• DraftKings (DKNG) rated new equal-weight at Barclays; PT $14
• Endexx (EDXC) rated new hold at Fundamental Research; PT 5 cents
• Energy Vault (NRGV) rated new buy at Chardan Capital Markets; PT $13
• Ess Tech (GWH) rated new neutral at Chardan Capital Markets; PT $3.50
• Ferrari (RACE) rated new buy at Sealand Securities; PT $215
• Franklin Resources (BEN) reinstated sell at Goldman; PT $23
• Generac (GNRC) rated new overweight at Wells Fargo; PT $285
• Hanover (THG) rated new equal-weight at Morgan Stanley; PT $155
• Hilton Grand Vacations (HGV) rated new overweight at Barclays; PT $50
• Hyatt (H) rated new overweight at Barclays; PT $103
• Las Vegas Sands (LVS) rated new overweight at Barclays
• Lion Electric (LEV) rated new buy at DA Davidson; PT $7
• Louisiana-Pacific (LPX) rated new hold at Truist Secs; PT $57
• Marriott Vacations (VAC) rated new overweight at Barclays; PT $136
• Microsoft (MSFT) rated new buy at Redburn; PT $370
• MongoDB (MDB) rated new sell at Redburn; PT $190
• Navios Maritime Partners (NMM) rated new buy at Arctic Securities
• Potlatch (PCH) rated new hold at Truist Secs; PT $50
• REV Group (REVG) rated new neutral at DA Davidson; PT $11
• Seagen (SGEN) rated new outperform at Raymond James; PT $220
• Snowflake (SNOW) rated new neutral at Redburn; PT $125
• Solid Power (SLDP) rated new buy at Chardan Capital Markets; PT $8
• SunPower (SPWR) reinstated underweight at Wells Fargo; PT $17
• Sunnova Energy (NOVA) rated new equal-weight at Wells Fargo; PT $22
• Sunrun (RUN) rated new equal-weight at Wells Fargo; PT $27
• Travel + Leisure Co (TNL) rated new equal-weight at Barclays; PT $39
• Vail Resorts (MTN) rated new underweight at Barclays
• Weyerhaeuser (WY) rated new hold at Truist Secs; PT $37

David Wienke

Cabrera Capital Markets, LLC