Cabrera Capital Daily Game Plan

Tuesday July 19, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES   
8:30ET  Building permits, Housing Starts

TODAY’S HIGHLIGHTS:   

• UK temperatures reach highest on record
• Biden may declare a national climate emergency this week, WaPo
• Starbucks will close more stores citing safety risks
  

Global markets are mixed in choppy trading. Investors slashed their exposure to risk assets to levels not seen even during the global financial
crisis in a sign of full capitulation amid a “dire” economic outlook, Bank of America Corp.’s monthly fund manager survey showed.  European Central Bank policymakers are considering raising interest rates by a bigger-than-expected 50 basis points at their
meeting on Thursday, according to sources.  The ECB is under pressure to subdue inflation, but the potential for a Russian gas shutdown could plunge Europe into a recession.  European Union leaders are preparing to tell members to cut gas consumption “immediately”
to preserve supplies for winter, according to a report. Meanwhile, China and the EU hold a high-level dialogue on the economy and trade today.                                                                                   

EQUITIES: 

US equity futures advanced as investors assessed the outlook for corporate earnings amid concern about global growth.  Nasdaq 100 and S&P 500
futures climbed 0.9% after yesterday’s rally unraveled on Apple’s plans to slow hiring to brace for a potential economic downturn. Apple’s cautious stance mimics the approach of its tech peers, including Amazon.com, Alphabet, Google and Microsoft.  Investor
allocation to stocks plunged to levels last seen in October 2008 while exposure to cash surged to the highest since 2001, according to Bank of America’s monthly fund manager survey. The US Senate Is due to begin voting today on a slimmed-down version of legislation
to provide more than $50 billion in subsidies for the computer chip industry.                  

E-mini S&P futures +0.7%, Nasdaq +0.8%, Russell 2000 futures +0.7%, Dow futures +0.45%. 

Earnings Before the Open: ALLY, CATC, CFG, FHN, HAL, HAS, JNJ, LMT, MAN, MRTN, SBNY, SI, TFC

Earnings After the Close: AEHR, ASPU, CALM, EQBK, FOR, HOPE, HWC, IBKR, JBHT, NFLX, OMC, PNFP, UCBI

In pre-market trading, IBM slipped over 5% after lowering its forecasts for free cash flow this year due to the impact of
a strong dollar and the loss of business in Russia, sending the shares lower and overshadowing better-than-expected sales growth. J&J lowered its guidance due to the dollar’s strength after beating on sales and profit. Halliburton beat on profit and revenue
and reported a $344 million charge related to its exit from Russia. Lockheed (LMT +3.4%) profit topped consensus, though net sales missed. Novartis (NVS +2.9%) raised its forecast for its Sandoz generic-drug business as it considers a sale or spinoff. Netflix
reports after the bell with the focus on recovery signs as subscriber losses may total 2 million in the second quarter.

European equities were little changed, reversing early losses, as traders worried that the continent’s energy crisis will
hamper economic growth and braced for a potentially bigger European Central Bank rate hike.  The Stoxx Europe 600 Index slipped less than 0.1%, paring a drop of as much as 0.7%. Banks and retail outperformed while basic resources and chemicals lagged. European
stocks could slump another 10% if Russia cuts off gas to the region, triggering a recession, according to Citigroup strategists. A halt to Russian gas exports to the European Union could potentially reduce the region’s gross domestic product by as much as
1.5%, according to new estimates from the bloc. The ECB reportedly may consider raising interest rates on Thursday by double the quarter-point it outlined just last month because of the worsening inflation backdrop.  Among individual names, Electricite de
France SA surged to the highest since December after the French government announced a buyout offer to renationalize the power producer, offering a premium of more than 50% to minority investors. Stoxx 600 -0.05%, DAX is flat, CAC -0.15%, FTSE 100 +0.2%, FTSE
MIB +0.2%. Banks +1.4%, Retail +0.6%, Media +0.35%, Basic Resources -0.8%, Tech -0.65%, Energy -0.6%.

Asian stocks fluctuated as China’s policy efforts to resolve the mortgage boycott crisis failed to lift sentiment.  Technology
shares were the biggest drags after a report on Apple’s plan to slow hiring highlighted growth risks. Industrial and financial shares gained. Hong Kong and Chinese indices were among the worst performers regionally, while China’s Covid cases are on the rise
again, raising the risk of more lockdowns.  Japanese shares edged higher after reopening from a holiday, with traders looking ahead to a policy decision from the Bank of Japan on Thursday.  Asia’s energy-related shares advanced after oil futures rose on concerns
about tighter supplies globally. Hang Seng -0.9%, CSI 300 -0.55%, Kospi -0.2%, Jakarta +1.15%, Nikkei 225 +0.65%, Sensex +0.45%.  

FIXED INCOME: 
                                        

Treasuries were little change on the day with yields broadly within one basis point of Monday’s close despite weakness seen
across European core rates after Reuters reported ECB officials are discussing a half-point hike on Thursday.  US 10-year yields around 2.99%.  US auctions this week include 20-year bond reopening Wednesday and 10-year TIPS on Thursday.

METALS: 
                               

Gold held near an 11-month low as traders assess the outlook for further monetary policy tightening and the impact on global
growth. Dollar weakness has yet to lift gold but gold futures are holding key support around $1,700. Investors are awaiting the Federal Reserve’s meeting on July 26-27 for a steer on how aggressive the central bank will be in raising interest rates to tackle
searing inflation. Spot gold +0.4%, silver +0.9%.                      

ENERGY:     

Oil slipped after posting the biggest one-day advance since May. WTI falls over 2% after jumping more than 5% on Monday
as a disruption along the Keystone pipeline cut shipments of some Canadian oil to US refiners. There’s no lack of oil across global markets, but the issue is a lack of refining capacity to make enough fuel to meet demand, the Saudi Foreign Minister said. 
Nearby Brent futures are trading in excess of $4.50 higher than the second month, a huge premium indicating that refiners are willing to pay up for barrels. Record temperatures are expected in the UK while low river levels and reduced nuclear capacity in France
and Germany means alternatives to Russian gas are becoming scarce.  Natural gas prices in the region rose this morning as concerns remain high over the restoration of supplies from Gazprom.  WTI -2.3%, Brent -1.9%.    

CURRENCIES:                      

The euro jumped over 1% against the dollar on suggestions that the European Central Bank may consider raising interest rates
by 50 basis points this week because of the worsening inflation backdrop. The euro and sterling extended yesterday’s gains as traders trimmed bets on the pace of Federal Reserve interest-rate hikes after a US report Friday showed inflation expectations eased.
India’s rupee fell to another record of around 80 per dollar before reversing losses. Traders said the RBI may have intervened.
The US$ Index is lower for a third straight day, down 0.85%.  EURUSD +1.15%, GBPUSD +0.6%, USDJPY -0.45%, AUDUSD +1.25%, NZDUSD -1.28%, USDNOK -1.7%.    

Bitcoin +2.5%; Ethereum +5%.

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:

• Cboe (CBOE) raised to overweight at Morgan Stanley; PT $140
• Cinemark (CNK) raised to overweight at Morgan Stanley; PT $22
• Conoco (COP) raised to buy at BofA
• Credicorp (BAP) raised to outperform at Credit Suisse; PT $142
• EOG Resources (EOG) raised to buy at BofA
• Exxon (XOM) raised to overweight at Piper Sandler; PT $109
• FTC Solar (FTCI) raised to neutral at Piper Sandler; PT $3.50
• First Quantum Minerals (FM CN) raised to equal-weight at Barclays
• Hudbay Minerals (HBM CN) raised to overweight at Barclays; PT C$6
• Ovintiv (OVV) raised to buy at BofA
• PrairieSky Royalty (PSK CN) raised to sector outperform at Peters & Co
• Southwestern Energy (SWN) raised to buy at BofA; PT $13
• Takeda ADRs (4502 JP) raised to outperform at Cowen; PT $24

DOWNGRADES:

• Apollo Global (APO) cut to equal-weight at Morgan Stanley; PT $60
• Asana (ASAN) cut to underperform at RBC; PT $13
• Beacon Roofing (BECN) cut to market perform at William Blair
• California Resources (CRC) cut to underperform at BofA
• Copper Mountain Mining (CMMC CN) cut to sector perform at National Bank
• Denbury Inc (DEN) cut to underperform at BofA
• Duck Creek (DCT) cut to sector perform at RBC; PT $14
• Fastly (FSLY) cut to underperform at RBC; PT $9
• Franco-Nevada (FNV CN) cut to underweight at Barclays; PT C$145.07
• Hudbay Minerals (HBM CN) cut to sector perform at National Bank
• IBI Group (IBG CN) cut to market perform at Raymond James; PT C$19.50
• IBI Group (IBG CN) cut to tender at TD; PT C$19.50
• Invitae (NVTA) cut to hold at Benchmark
• Invitae (NVTA) cut to market perform at SVB
• Pioneer Natural (PXD) cut to underperform at BofA
• StepStone (STEP) cut to equal-weight at Morgan Stanley; PT $30
• Sunnova Energy (NOVA) cut to neutral at Piper Sandler; PT $23
• Sunrun (RUN) cut to neutral at Piper Sandler; PT $29

INITIATIONS:

• American Homes (AMH) rated new market perform at Oppenheimer; PT $35
• Apellis Pharma (APLS) rated new buy at HC Wainwright; PT $75
• Arqit Quantum (ARQQ) rated new hold at Deutsche Bank; PT $7
• Aura Biosciences (AURA) rated new market outperform at JMP; PT $26
• Casey’s (CASY) rated new buy at Benchmark; PT $230
• Fathom Holdings (FTHM) rated new overweight at Stephens; PT $14
• HEPS US (6963025ZTI) rated new neutral at Citi; PT 90 cents
• Idexx Labs (IDXX) rated new buy at President Capital Management
• Invitation Homes (INVH) rated new market perform at Oppenheimer; PT $39
• Novan (NOVN) rated new outperform at Oppenheimer; PT $12
• Plaza Retail REIT (PLZ-U CN) reinstated hold at Industrial Alliance
• Pluribus Technologies (PLRB CN) rated new buy at Canaccord; PT C$5
• Shake Shack (SHAK) rated new buy at Gordon Haskett; PT $50
• TaskUS (TASK) rated new buy at Citi; PT $28
• Waldencast Acquisition (WALDU) rated new outperform at Telsey; PT $13

David Wienke

Cabrera Capital Markets, LLC