Cabrera Capital Daily Game Plan

Monday September 12, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES    
No Major Economic Data  11:30ET 3 Year Note Auction; 1:00ET 10 Year Auction 

Fed speakers now on black-out period ahead of Sept. 21 policy decision 

TODAY’S HIGHLIGHTS:  

• Queen Elizabeth II funeral set for September 19
• EU DRAFT ENERGY PLAN INCLUDES MANDATORY POWER DEMAND CUT
  
• Twitter says Elon Musk’s latest termination letter is also ‘invalid’
• A Russian-installed official in Ukraine’s Kharkiv region says that
  Ukrainian forces outnumbered Russian forces by eight times during a counteroffensive in the region last week.

Global markets are broadly higher while news of Ukrainian gains in the war against Russia also boosted sentiment.  Investors
are digesting the implications of Ukraine’s counter-offensive, after its forces continued their rapid advance in the Kharkiv region, exploiting a retreat of Russian defenses. On Saturday, Moscow abandoned its main bastion in northeastern Ukraine, in a sudden
collapse of one of the war’s principal front lines. Meanwhile, the Group of Seven countries is working to cap the price of Russian oil in an attempt to limit Moscow’s ability to fund its invasion          

EQUITIES:  December is active contract

US futures extended last week’s gains helped by a sinking dollar as investors braced for the final inflation print before the Federal Reserve’s
September policy decision.  Stocks bounce from oversold levels as Bank of America’s bull-and-bear indicator slid to the “maximum bearish” level, often seen as a contrarian buy signal.  Investor focus is on August US inflation data due Tuesday, with headline
CPI expected to cool to an 8% a year pace. Core CPI, which excludes food and energy is seen accelerating. Chipmakers will be in focus after news the Biden administration plans next month to broaden curbs on US semiconductor shipments to China used for artificial
intelligence and chipmaking tools.        

E-mini S&P futures +0.4%, Nasdaq +0.3%, Russell 2000 futures +0.2%, Dow futures +0.1%. Rolling actively traded contract shown.

In US premarket trading, cryptocurrency-exposed stocks including Riot Blockchain and Coinbase Global edged higher as Bitcoin
added to last week’s gains. Apple (AAPL +1%) analysts are positive on the company as pre-order data for the latest versions of its iPhone point to strong interest and demand.  Bristol-Myers Squibb (BMY) rises 6% after deucravatinib received approval from the
FDA. Carvana (CVNA) shares rise 6% after the online used car company received an upgrade at Piper Sandler, which says shares can more than double from their current level.  

European shares jumped after Ukrainian forces made a rapid advance in Kharkiv province in Russia’s worst setback since its
Kyiv push was abandoned in March.  The Stoxx Europe 600 index climbed for a third day, with retailers and miners leading the advance and all sub-indexes in the green except for healthcare. Britain’s economy grew by less than expected in July, raising the risk
that it is already in a recession. GDP rose by 0.2% from June, below expectations of +0.4%. Among individual movers, Orpea SA 20% after the retirement-home operator warned earnings would miss expectations. Thule Group sank to its lowest since July 2020 after
the Swedish bike, car and outdoor equipment manufacturer issued a profit warning. HelloFresh SE fell after the USDA warned of possible E. coli contamination for some ground beef packages in meal kits.  Outperformers: Marks & Spencer +5.7%, Sainsbury +4.5%,
Kingfisher +4.4%. Stoxx 600 +1.15%, DAX +1.7%, CAC +1.3%, FTSE 100 +1.3%. Retail +3.75%, Basic Resources +2.8%, Autos +2.6%, Banks +2.4%, Travel +1.5%, Energy and Technology +1%.

Asian shares rallied in slow trading with China, Hong Kong and South Korea on holiday.  The MSCI Asia Pacific Index climbed
as much as 0.8% as tech and materials shares rallied. TSMC rose 2.4%, boosting Taiwan’s gauge, after the firm said August sales rose 59% from a year ago and Reuters reported that the US plans to broaden curbs on chip shipments to China. Japan’s Nikkei 225
added another 1.2%, after rallying 2% last week.  Japan is looking to scrap most of its Covid-related restrictions on foreign tourists.  Benchmarks in the Philippines, Taiwan, Japan and Australia were all up. India’s Sensex Index also rose ahead of the nation’s
retail inflation data. Philippines +1.65%, Taiwan +1.55%, ASX 200 +1%, Sensex +0.55%, Vietnam +0.05%.   

FIXED INCOME: 
                                        

Treasuries edge higher with gains led by front-end of the curve, steepening spreads slightly. Today’s focus will be on a
double auction of 3- and 10-year notes ahead of 30 year supply tomorrow. US yields richer by up to 2.5bp across front-end of the curve with 2s10s, 5s30s spreads steeper by 0.5bp and 1.5bp on the day; 10-year yields around 3.29%. Economists forecast the August
inflation figure would slow for the second month in a row to 8.1%, potentially easing pressure on the US central bank to keep aggressively hiking rates. Still, officials last week seemed to point to another super-sized increase in September.  Traders almost
fully expect another jumbo-sized Fed hike next week, following two 75-basis-point increases.               

METALS: 
                               

The weaker dollar helped lift gold to $1,732 an ounce ahead of tomorrow’s inflation data. Bullion has found a floor near
$1,700 an ounce this month after slumping in August on the dollar’s rally. Spot gold rose 0.9%, silver +3.2%.                                                                       

ENERGY:      

Oil reversed an earlier decline as a slump in the dollar offset mounting concerns that global demand is weakening.  Oil
prices have been trending lower amid concerns about a global economic slowdown, though cuts to supply did prompt a 4% bounce on Friday.  France, Britain and Germany on Saturday said they had “serious doubts” about Iran’s intentions to revive a nuclear deal,
in a development which might keep Iranian oil off the market and keep global supply tight. The G7 will implement a price cap on Russian oil to limit Russia’s lucrative oil export revenue and is planning steps to ensure oil will still flow to emerging nations. 
Natural gas flows from Russia to Europe along key routes were steady this morning, while the Nord Stream 1 pipeline remained shut. WTI +0.5%, Brent +0.75%.          

CURRENCIES:                      

The US dollar fell for a second day, on track for its biggest two-day drop in almost three months, as all G-10 peers surged. 
The euro jumped the most in six months after Bundesbank President Joachim Nagel signaled support for further interest-rate hikes in Europe. The news of Ukrainian advances also helped lift the euro. An anticipated slowdown in US inflation cooled the rampant
demand for dollars, with some positioning ahead of Tuesday’s US CPI report.  Sweden’s krona soared 1.7% as a coalition of right-wing parties looks set to secure a narrow victory in a general election. US$ Index -0.9%, GBPUSD +0.9%, EURUSD +1%, USDJPY, AUDUSD
0.5%, USDBRL -0.7%.                 

Bitcoin +3%;  Ethereum -0.4%.  

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:

• APA Corp (APA) raised to buy at Citi; PT $58
• Argo Group (ARGO) raised to buy at Compass Point; PT $28.50
• B2Gold (BTO CN) raised to action list buy at TD; PT C$9
• Canadian National (CNR CN) raised to buy at BofA; PT $135
• Canadian Pacific (CP CN) raised to buy at BofA
• Carpenter Tech (CRS) raised to outperform at Cowen
• Carvana (CVNA) raised to overweight at Piper Sandler; PT $73
• Cineplex (CGX CN) raised to outperform at RBC; PT C$14
• Enbridge (ENB CN) raised to outperform at Raymond James; PT C$60
• Equinox Gold (EQX CN) raised to neutral at CIBC; PT C$4.90
• Telos (TLS) raised to outperform at Wedbush; PT $15
• Transocean (RIG) raised to buy at SpareBank; PT $5
• Union Pacific (UNP) raised to buy at BofA; PT $260

DOWNGRADES:

• Adobe (ADBE) cut to neutral at Mizuho Securities; PT $440
• Allakos (ALLK) cut to underperform at SMBC Nikko; PT $2
• Cable One (CABO) cut to equal-weight at Wells Fargo; PT $1,200
• Corus Entertainment (CJR/B CN) cut to neutral at CIBC; PT C$3.75
• Corus Entertainment (CJR/B CN) cut to sector perform at RBC; PT C$4
• CubicFarm Systems (CUB CN) cut to hold at Canaccord; PT 25 Canadian cents
• CubicFarm Systems (CUB CN) cut to sell at Stifel Canada
• Enghouse (ENGH CN) cut to hold at TD; PT C$32
• Oak Street Health (OSH) cut to neutral at Goldman; PT $29
• Occidental (OXY) cut to neutral at Citi

INITIATIONS:

• Agilon Health (AGL) reinstated buy at Goldman
• Alphatec (ATEC) rated new overweight at Morgan Stanley; PT $13
• Barrick Gold (ABX CN) reinstated neutral at Goldman; PT C$24
• Bausch + Lomb (BLCO CN) rated new buy at HC Wainwright; PT $21
• Bill.com (BILL) rated new overweight at Morgan Stanley; PT $220
• Bravo Mining (BRVO CN) rated new speculative buy at Canaccord; PT C$2.15
• Bridgewater Bancshares (BWB) rated new outperform at Hovde Group
• Broadcom (AVGO) rated new hold at CTBC Securities; PT $550
• CoStar (CSGP) rated new market perform at BMO; PT $83
• Dakota Gold (DC) rated new speculative buy at Canaccord; PT $5.25
• Darling Ingredients (DAR) rated new buy at Stifel; PT $101
• Enovis Corp (ENOV) rated new buy at Canaccord; PT $67
• Enovis Corp (ENOV) rated new outperform at Evercore ISI; PT $68
• Franco-Nevada (FNV CN) reinstated neutral at Goldman; PT C$177
• Monday.com (MNDY) rated new buy at Loop Capital; PT $175
• NV Gold (NVX CN) rated new buy at Fundamental Research
• Newmont Corp (NEM) reinstated buy at Goldman
• PTC Therapeutics (PTCT) rated new buy at Jefferies; PT $62
• Rain Therapeutics (RAIN) rated new buy at HC Wainwright; PT $10
• Rezolute (RZLT) rated new buy at Jefferies; PT $11
• Roblox (RBLX) rated new underperform at Cowen; PT $31
• Terns Pharma (TERN) rated new neutral at HC Wainwright; PT $6
• TerrAscend (TER CN) rated new buy at Canaccord; PT C$4.25
• Terran Orbital Corp (LLAP) rated new buy at B Riley; PT $10

David Wienke

Cabrera Capital Markets, LLC