Cabrera Capital Daily Game Plan

Thursday August 4, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:30ET Weekly Jobless Claims, Trade Deficit; 12:00ET Fed’s Mester speaks

TODAY’S HIGHLIGHTS:   

• BIDEN will sign CHIPS PLUS next Tuesday
• US Has No DNA Confirmation Of Ayman al-Zawahiri’s Death
  
• State Department approves $3 billion missile sale to Saudi Arabia
  
• Five missiles fired by China landed with Japan’s exclusive economic
  zone

Focus today will be on the Bank of England’s policy meeting, where the central bank pushed through the biggest interest-rate
increase in 27 years, joining some 70 other institutions around the world moving rates up. The 50bps hike was as expected. The BOE warned the UK is heading for more than a year of recession under the weight of soaring inflation. Officials predicted a UK recession
will begin in the fourth quarter. Policy makers also kept up a pledge to act forcefully again in the future if needed, potentially putting similar hikes on the table for coming meetings. The BOE also boosted its forecast for the peak of inflation to 13.3%
in October amid a surge in gas prices, and warned that price gains will remain elevated throughout 2023. That will sharpen a cost of living crisis that will see real disposable incomes fall more than at any time in around 60 years.                                                                                               

EQUITIES: 

US equity futures extended yesterday’s gains but are well off the overnight highs after the BOE announcement. Equities are proving resilient
to heightened bond market anxiety and an inverted Treasury yield curve flashing warnings on economic risks, as the S&P 500 climbs back toward the highest level in two months. Corporate America is turning to a favorite old method for juicing the market, buying
back billions of dollars of their own stock.  At least $21 billion in fresh share repurchase programs have been announced this week alone, with PayPal, Moderna, Airbnb and Marriott International unveiling new programs.  PayPal and Moderna saw outsize share
price jumps following their buyback announcements, adding 9.3% and 16% respectively on Wednesday.     

E-mini S&P futures +0.05%, Nasdaq +0.1%, Russell 2000 futures +0.15%, Dow futures +0.05%. 

In pre-market trading, Alibaba and EBay shares rose after the e-commerce giants posted positive quarterly results. US-listed
Chinese tech stocks including JD.com, Pinduoduo and Baidu climbed on the back of Alibaba reporting better-than-expected revenue in the first quarter. Altice USA (ATUS) shares jumped 9% after the cable television provider reported second-quarter results and
announced it received inquiries for its Suddenlink assets. Eli Lilly fell 2% after cutting its adjusted earnings per share forecast for the full year. Meta kicks off a four part offering in its debut bond sale today. Fastly Inc. (FSLY) shares are down 7% after
the infrastructure software company reported an earnings beat but analysts note weak margin trends.  Gannett (GCI) shares plunge 5% after the company lowered its full-year revenue and Ebitda outlook. Revolve Group Inc. (RVLV) shares are down 13% after the
e-commerce fashion company’s earnings fell short of analysts’ expectations. Skillz (SKLZ) shares tumble 11.6% after the mobile games platform operator cut its full-year guidance for revenue.

Shares in Europe gained as investors continued to weigh the path of corporate earnings, while attention turned to the Bank
of England’s policy decision. The BOE rate hike of 50bps was the minimum action required at this stage.  Strong earnings at Credit Agricole and Lufthansa lifted stocks as tension over Nancy Pelosi’s visit to Taiwan eased.  The Stoxx Europe 600 Index gained
as much as 0.8% with travel, and autos leading gains, while media underperforms. Among notable individual movers, Rolls-Royce Holdings fell as much as 12% after an earnings miss. Hikma Pharmaceuticals fell after slashing  its Generics revenue forecast for
the full year.
Ubisoft surged as much as 21% as Tencent expresses interest in increasing its stake.  Stoxx 600 +0.4%, CAC +0.9%, DAX +1.1%, FTSE 100
+0.3%. Travel +2%, Autos +1.6%, Retail +1.4%, Tech +1.3%.  Media -1.1%.

Asian stocks rebounded as easing tensions over Taiwan and overnight gains on the Nasdaq fueled a rally in Chinese tech shares
ahead of key earnings reports. The MSCI Asia Pacific Index had its first gain in three days, climbing 0.5%. Alibaba gained over 5% ahead of its earnings report. Alibaba Group logged better-than-projected quarterly revenue even though growth was flat for the
first time ever due to the impact of COVID-19 lockdown. In Japan, the Nikkei 225 opened higher on Wall Street cues and held positive territory, finishing up 0.7% as traders bought into tech issues and weighed a softer yen, considered a positive for export
companies. Hang Seng Index opened higher and held ground, finishing up 2.1% as concerns regarding Taiwan ebbed, and traders bargain-hunted tech shares. The Hang Seng Tech Index gained 3.2%, the most in a month. China’s CSI 300 gained 0.85%. Strategists at
Goldman Sachs are staying with their bullish call on Chinese equities even as they warn that geopolitical risks may fuel more volatility in the near term.   

FIXED INCOME: 
                                        

Treasuries are moderately cheaper across the curve, which continues to flatten. Front-end- and belly-led losses drop 2s10s
spread to as low as -38.5bp as rate hike premium continues to increase for this year and next. Treasuries offer little initial reaction to Bank of England decision to hike rates 50bp. Ten Year yield is roughly flat around 2.7%.

METALS: 
                               

Gold extended gains as geopolitical tensions between the US and China persisted, boosting haven demand. Bullion is hovering
near a four-week high as the fallout from US House Speaker Nancy Pelosi’s visit to Taiwan keeps markets on edge. While anxiety eased somewhat after the trip ended, China has now started military drills in areas surrounding the island. Spot gold gains 1.2%,
silver +1.5%.                                

ENERGY:     

Oil futures steadied after closing at the lowest level in almost six months. Traders are weighing tight supply against demand
fears, after a build in US crude and gasoline stocks sent prices near multi-month lows in the previous session. The move followed an unexpected surge in US crude inventories last week. Gasoline stocks, the proxy for demand, also showed a surprise build as
demand slowed, the EIA said. Limited spare capacity, which OPEC+ highlighted in a statement on Wednesday, is providing a floor to oil prices. Additional price support came from the Caspian Pipeline Consortium, which connects Kazakh oil fields with the Russian
Black Sea port of Novorossiisk. CPC said on Wednesday that supplies were significantly down, without providing figures. WTI +0.3%, Brent -0.1%.

4.7 million drain from Strategic Midterm Reserve – 1mm per day – brings total down to 470 million barrels, lowest since
May 1985.

CURRENCIES:                      

The US$ Index consolidated as traders awaited US payrolls data due Friday for clues on the pace of future Federal Reserve
rate hikes. The dollar was underpinned by US Federal Reserve officials pushing back against suggestions they will slow the pace of interest rate hikes, with one saying a 50 basis point hike would be “reasonable”. Sterling struggled in the absence of a hawkish
surprise, with GBPUSD falling 1% from the day’s high after the BOE hiked rates by 50bps, as expected. AUD/USD advanced 0.25% after Australia’s June trade surplus climbed to A$17.67 billion, above economists’ estimates. GBPUSD -0.5%, USDJPY -0.25%, EURGBP +0.6%.
              

Bitcoin -2.2%;  Ethereum -1.9%. CME Group to Launch Euro-denominated Bitcoin and Ether Futures on August 29.

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:

• America Movil ADRs (AMXL MM) raised to buy at Citi; PT $23
• Autohome ADRs (ATHM) raised to outperform at CCB Intl; PT $44
• Horizon Therapeutics (HZNP) raised to outperform at SVB
• Miniso Group Holding ADRs (MNSO) raised to buy at Soochow Securities

DOWNGRADES:

• Boston Properties (BXP) cut to neutral at SMBC Nikko; PT $93
• Charles River (CRL) cut to equal-weight at Morgan Stanley; PT $250
• Cowen (COWN) cut to neutral at Piper Sandler; PT $39
• Duluth (DLTH) cut to neutral at Baird; PT $11
• Kohl’s (KSS) cut to market perform at Cowen; PT $35
• Levi Strauss (LEVI) cut to equal-weight at Morgan Stanley; PT $19
• Medifast (MED) cut to hold at Jefferies; PT $150
• Ping Identity (PING) cut to neutral at BTIG
• Skillz Inc (SKLZ) cut to hold at Canaccord; PT $1.50
• Trupanion (TRUP) cut to neutral at Piper Sandler; PT $69
• Under Armour (UAA) cut to neutral at Baird; PT $10
• Vapotherm (VAPO) cut to market perform at William Blair
• Vapotherm (VAPO) cut to neutral at BTIG
• Warrior Met (HCC) cut to market perform at BMO; PT $37

INITIATIONS:

• 8×8 (EGHT) rated new neutral at MKM; PT $5.50
• Ciena (CIEN) rated new buy at MKM; PT $62
• Eagle Bulk (EGLE) rated new buy at Alliance Global Partners; PT $85
• Five9 (FIVN) rated new buy at MKM; PT $135
• Fortress Biotech (FBIO) rated new buy at Ladenburg Thalmann; PT $6
• Genco Shipping (GNK) rated new buy at Alliance Global Partners; PT $29
• Grindrod Shipping (GRIN) rated new buy at Alliance Global Partners
• Infinera (INFN) rated new buy at MKM; PT $9
• RingCentral (RNG) rated new buy at MKM; PT $80
• Silvergate Capital (SI) rated new buy at BTIG; PT $135
• Zoom Video (ZM) rated new buy at MKM; PT $135

David Wienke

Cabrera Capital Markets, LLC