Cabrera Capital Daily Game Plan

Thursday June 30, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:30ET PCE Inflation, Core PCE, Consumer Spending, Weekly Jobless Claims; 9:45ET Chicago PMI

 US MAY CORE PCE PRICE INDEX RISES 0.3% M/M; EST. 0.4%

TODAY’S HIGHLIGHTS:   

• Supreme Court to issue final two major decisions today on ‘Remain in Mexico,’ environmental regulation
• Prosecutors Say Prince Andrew ‘Next Target’ After Ghislaine Maxwell Sentenced To 20 Years
  
• Biden will meet tomorrow with governors whose states moved to protect women’s access to abortion
• Putin said yesterday that inflation rise is a result of long-term irresponsible macroeconomic policy of G7 states, uncontrolled money creation
  and accumulated unsecured debts 

Global markets fell to extend what is the worst first half of the year for global share prices on record. This year’s dramatic slide in asset
prices has been led by tech-heavy indexes and stocks more sensitive to rising interest rates. Fed Chair Jerome Powell and his counterparts in Europe and the UK warned inflation is going to be longer lasting as they gathered at the European Central Bank’s annual
forum. Sweden and Hungary became the latest to raise borrowing costs.  Meanwhile, President Xi Jinping has arrived in Hong Kong to celebrate the 25th anniversary of the British handover. Putin said yesterday that he didn’t have a problem with Finland and Sweden
joining NATO, but added Russia would respond in kind if NATO deployed troops and infrastructure in those countries after they join the alliance.                                                                     

EQUITIES: 

US equity futures extended losses after central bankers issued warnings on inflation and fueled concern that aggressive policy will end in recession.
Stock futures pare some losses after slightly better inflation figures this morning. The S&P 500 is having its worst first half since 1970; the worst for the Nasdaq since the 2002 dot com bubble. Traders are also bracing for volatility linked to end-of-quarter
portfolio rebalancing. Focus will be on the personal consumption expenditure deflator, the Fed’s preferred measure of inflation.      

E-mini S&P futures -1.3%, Nasdaq -1.5%, Russell 2000 futures -1.6%, Dow futures -1%. 

In pre-market trading, major technology and internet stocks are lower with stock futures as traders await key inflation
data.  Duck Creek Technologies (DCT) shares fall 19% after the software company issued weak guidance. RH (RH) fell 5% post-market with analysts slashing their price targets on the stock after the luxury furniture maker cut its revenue forecast for the year.
Aspen Aerogels (ASPN) shares jump 45% after the insulation maker said it won’t proceed with concurrent public offerings of common stock.

European stocks are poised for their biggest drop in any half-year period since 2008, as investors focused on the prospects
for economic slowdown and stubbornly high inflation in the region. Data today showed French inflation quickened to 6.5% in June, the fastest since the euro was introduced. That followed figures on Wednesday showing Spanish inflation unexpectedly rose to a
record. The Stoxx Europe 600 Index fell 2.1%, extending its year-to-date drop to over 18% for the first half. All sectors were in the red, with banks and technology showing the biggest declines. Uniper SE plunged to a five-year low after the German utility
withdrew its outlook and said it was discussing a possible bailout from the German government.  Among other notable moves, SAP SE sank more than 6% after Exane BNP Paribas downgraded the stock. DAX -2.7%, CAC -2.7%, FTSE 100 -2%. Banks -4.2%, tech -3.3%, retail
-2.7%

Asian stocks fell for a second day as tech-heavy indexes in Taiwan and South Korea continued to get pummeled amid concerns
over the potential for aggressive monetary tightening. The MSCI Asia Pacific Index declined as much as 1.2%, dragged down by technology shares including TSMC, Alibaba and Tencent.  Japanese industrial output dived 7.2% in May, versus expectations for a dip
of only 0.3%.  The Nikkei 225 fell 1.5%. Taiwan slid more than 2.7%, while gauges in South Korea and Australia dropped nearly 2%. Shares in China bucked the trend after PMI data indicated the economy is recovering from Covid disruptions. The PBOC also helped
sentiment after it reiterated a pledge to provide stronger monetary policy support for the economy, emphasizing goals to stabilize jobs and inflation and providing further signals it will focus on boosting credit growth. The CSI 300 gained 1.45%.  

FIXED INCOME: 
                                        

There was decent buying of US Treasuries out of Asia due to “risk-off” sentiment.  Treasuries extend their recent rally,
following wider gains across bunds after French June inflation failed to top median estimates. Month-end extension flows may continue to support the long-end of the curve. US yields richer by as much as 5.4bp across front-end and belly of the curve which outperforms,
steepening 2s10s, 5s30s by 2bp and 2.8bp. 10-year yields around 3.035%, richer by 5.5bp.  Focal points of the US session include PCE deflator and Chicago PMI.    

METALS: 
                               

Gold slips 0.8% as traders await key inflation data this morning. Investors have been tracking closely what the central
banks have been saying, as they struggle to tame inflation across the globe. Silver falls 1.5%.             

ENERGY:     OPEC+
RATIFIES PLANNED AUGUST OIL-SUPPLY HIKE: DELEGATES

Oil is lower and heading for the first monthly decline since November as oil ministers gather to discuss the group’s supply
policy.  OPEC+ enters its final day of meetings with sources saying the group is unlikely to decide to pump more barrels to the market beyond August. But for now, traders are more concerned about aggressive interest-rate hikes and possible recessions in the
US and Europe, meaning oil prices are being weighed down even with the supply situation still so tight. China’s imports from Russia have surged to record highs.  Roughly 80% of those imports are oil & gas.  WTI -1.1%, Brent -0.9%.                                      

CURRENCIES:                      

Currency markets are relatively quiet as month/quarter end flows make for choppy price action. The US$ Index is slightly
higher ahead of US inflation data and set for its best quarter in five years. The dollar is set for its best performance on a quarterly basis since 2016 and it’s up against the yen for the sixth quarter in a row for the first time since 1997.
The Swiss franc had little reaction to inflation data, which came in as expected. 
French inflation quickened to the fastest since the euro was introduced, raising pressure on President  Macron and the European
Central Bank to do more to contain the shock for companies and households.  US$ Index +0.3%, USDJPY -0.15%, EURJPY -0.7%, EURGBP -0.4%, USDSEK +1%, the ruble falls 3.5%.  

Bitcoin -5.5%, Ethereum -8%. Ethereum is set to close out its worst month on record. Bitcoin is on track for its worst quarter in
more than a decade, as more hawkish central banks and a string of high-profile crypto blowups hammer sentiment.  The 58% drawdown in the biggest cryptocurrency is the largest since the third quarter of 2011. For all the gloom, some analysts are pointing to
signs that the bottom may be near. The deleveraging that accelerated the rout in past months may not have much further to run, JPMorgan strategists said in a note published Wednesday. They also pointed to venture capital funding that “continued at a healthy
pace in May and June.”
“Bitcoin has had good success over the last dozen years at making cyclical lows every 90 weeks,” Fundstrat technical strategist
Mark Newton said. “Lows should be right around the corner according to this cycle composite.”

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:

• AMD (AMD) raised to outperform at Northland; PT $95
• Brookfield Infrastructure (BIP) raised to outperform at Credit Suisse
• Crown Castle (CCI) raised to buy at Jefferies; PT $200
• Digital Realty (DLR) raised to buy at Jefferies; PT $160
• Equinix (EQIX) raised to buy at Jefferies; PT $790
• ShotSpotter (SSTI) raised to outperform at William Blair
• Ventas (VTR) raised to buy at Jefferies; PT $59

DOWNGRADES:

• Acadia Realty (AKR) cut to hold at Jefferies; PT $15
• Angion Biomedica (ANGN) cut to hold at Stifel; PT $1.50
• Angion Biomedica (ANGN) cut to market perform at Oppenheimer
• Brixmor Property (BRX) cut to hold at Jefferies; PT $20
• Highwoods (HIW) cut to hold at Jefferies; PT $35
• Kite Realty (KRG) cut to hold at Jefferies; PT $20
• MSC Industrial (MSM) cut to market perform at William Blair
• Omega Healthcare (OHI) cut to hold at Jefferies; PT $28
• RPT Realty (RPT) cut to hold at Jefferies; PT $10
• SAP ADRs (SAP GR) cut to neutral at Exane; PT $105
• Sabra Health (SBRA) cut to hold at Jefferies; PT $14
• Simon Property (SPG) cut to hold at Jefferies; PT $100

INITIATIONS:

• Acumen Pharma (ABOS) rated new buy at HC Wainwright; PT $15
• Algoma Steel Group (ASTL CN) rated new hold at Stifel Canada; PT C$15.50
• Amkor Technology (AMKR) rated new buy at DA Davidson; PT $30
• AppLovin (APP) rated new overweight at KeyBanc; PT $55
• Ballard Power Systems (BLDP CN) reinstated sector weight at KeyBanc
• Bath & Body Works (BBWI) rated new overweight at Piper Sandler; PT $58
• CarGurus (CARG) rated new market perform at JMP
• Carvana (CVNA) rated new market outperform at JMP; PT $35
• Coty (COTY) rated new neutral at Piper Sandler; PT $8
• IronSource (IS) rated new overweight at KeyBanc; PT $3.50
• NRX Pharmaceuticals (NRXP) rated new buy at HC Wainwright; PT $2
• New Relic (NEWR) rated new neutral at President Capital Management
• Nutanix (NTNX) rated new overweight at Barclays; PT $19
• Perficient (PRFT) rated new sector outperform at Scotiabank; PT $110
• Plug Power (PLUG) reinstated overweight at KeyBanc; PT $30
• PropertyGuru Group (PGRU) rated new market outperform at JMP; PT $7.50
• SoFi Technologies (SOFI) rated new neutral at Autonomous; PT $6
• Stelco Holdings (STLC CN) reinstated hold at Stifel Canada; PT C$39
• Texas Instruments (TXN) rated new buy at Benchmark; PT $205
• Theseus Pharma (THRX) rated new buy at HC Wainwright; PT $22
• Unity Software (U) rated new sector weight at KeyBanc
• Upstart (UPST) rated new underperform at Autonomous; PT $25
• Warner Bros Discovery (WBD) rated new buy at Benchmark; PT $26
• Zurn Water Solutions Cor (ZWS) rated new buy at Stifel; PT $34

David Wienke

Cabrera Capital Markets, LLC