Cabrera Capital Daily Game Plan

Thursday September 22, 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; 10:00ET Leading economic indicators 

TODAY’S HIGHLIGHTS:  

• Yen strengthens after Japan intervenes for first time since 1998
• SEC Poised to Let Wall Street Keep Payment-for-Order-Flow Deals
  
• Russia says nuclear weapons can be used to defend annexed regions
  

World stocks were close to a 2-year low overnight after another hefty rate hike by the US Fed and GDP forecast cuts triggered
a brutal finish on Wall Street. The 75bp hike was fully priced in, but the new dots imply another 125bp of interest rate hikes by year-end.  Switzerland exited the era of negative interest rates today when its central bank joined others around the world in
tightening monetary policy more aggressively to combat resurgent inflation. The SNB raised its policy interest rate by 0.75 of a percentage point, its first rate hike in 15 years. Meanwhile, Japan intervened in the foreign exchange market to buy yen for the
first time since 1998, in an attempt to shore up its battered currency after the Bank of Japan stuck with ultra-low interest rates. Norway and the Bank of England both raised rates by 50 bps.                              

EQUITIES: 

US equity futures swung between losses and gains after the benchmark’s tumble Wednesday when the Fed unleashed a third consecutive 75 basis-point
hike and indicated another of the same magnitude could be in store for November. The Fed gave its clearest signal yet that its willing to tolerate a recession as the necessary trade-off for regaining control of inflation. A wave of global central bank tightening
followed the Federal Reserve’s hawkish rate hike, with Switzerland, Norway and Britain lifting their own borrowing costs as officials rush to get to grips with inflation spiraling out of control. Futures ahead of the bell: E-mini S&P +0.25%, Nasdaq +0.1%,
Russell 2000 +0.3%, Dow +0.35%.       

Futures ahead of the bell: E-mini S&P +0.25%, Nasdaq +0.1%, Russell 2000 +0.3%, Dow +0.35%.

In pre-market trading, Darden Restaurants (DRI) declines 2.5% in light trading after reporting comparable sales for the
quarter that missed estimates, driven by weakness at its Olive Garden chain. Novavax (NVAX) shares decline 6% after J.P. Morgan cut the recommendation on Novavax Inc. to underweight from neutral. Talos Energy (TALO) rises 4.4% after entering a pact to buy
EnVen Energy. Block (SQ) slips 2% after Mizuho Securities downgraded the stock. KB Home (KBH) edged lower in post-market trading after the homebuilder reported deliveries for the third quarter that missed the average analyst estimates. The company pointed
to ongoing supply chain issues that could extend into the fourth quarter for the shortfall.

European equity indices are lower but well off their early lows as bank shares outperform. The Bank of England raised its
key interest rate by a half-percentage point in its longest cycle of increases since the late 1990s. Even so, the move to 2.25% wasn’t as big as some were expecting. Traders are betting the European Central Bank will raise its key interest rate to 3% by June,
double the level that was expected at the start of the month. The Stoxx 600 was down 0.9%, with real estate and technology stocks leading the declines. FTSE 100 outperforms but still down 0.3%. CAC -1%, DAX -0.85%. Banks +1.75%, Basic Resources +0.6%. Real
Estate -3%, Construction -2.3%, Technology -2.25%.  

Asian shares fell but recovered some of their losses as Japan’s intervention to support the yen sent the dollar lower. The
MSCI Asia Pacific Index declined 0.6%, trimming an earlier slump of as much as 1.6%. Tech stocks were the biggest drag, with TSMC, Alibaba and Samsung Electronics weighing. Hong Kong stocks slid the most in the region to close at its lowest level in over a
decade. Stock indexes in Indonesia, Thailand and Vietnam were in the green amid Thursday’s global rout, underscoring Southeast Asia’s resilience. A host of regional central banks followed in the Fed’s footsteps, with policy makers in Indonesia, Taiwan and
the Philippines raising rates today. The Bank of Japan was an outlier, opting to maintain its ultra-loose stance. Hang Seng -1.6%, Taiwan -1%, China’s CSI 300 -0.9%, Kospi -0.6%, Sensex -0.55%, Topix -0.25%.  

FIXED INCOME: 
                                        

Treasuries are mixed with curve flatter and under some pressure from gilts after Bank of England’s 50bp rate hike to 2.25%. 
2 year yield hit a 15-year high of 4.13% in Asia before dipping to 4.08%. 10 year yield around 3.55%, five year yield at 3.8%.                   

METALS: 
                               

Gold pared a loss after Japan said it had intervened in the foreign exchange market, causing the dollar to give up its gains. 
Gold fell to near a two-year low yesterday after Federal Reserve Chair Jerome Powell pledged to crush inflation.  Spot gold is down 0.1%, silver +0.3%.                                                                           

ENERGY:      

Oil rose as investors weighed the demand outlook following another interest-rate hike from the Federal Reserve. Britain
formally lifted a moratorium on fracking for shale gas that has been in place since 2019, saying strengthening the country’s energy supply was an “absolute priority”.  Energy Secretary Jacob Rees-Mogg said all sources of energy needed to be explored to increase
domestic production. Crude remains on track for its first quarterly decline in more than two years on concerns that demand may be crimped by an economic slowdown, but for most of September prices have been largely rangebound. WTI +1.3%, Brent +1.2%      

CURRENCIES:  
                     

The Japanese yen strengthened after authorities intervened to shore up the battered currency for the first time since 1998.  
Confirmation of the intervention came hours after the BOJ decided to maintain low interest rates to support the country’s fragile economic recovery. BOJ Governor Haruhiko Kuroda told reporters the central bank could hold off on hiking rates or changing its
dovish policy guidance for years. The move sent the dollar plunging over 2% after being up over 1% on the day. Separately the Swiss franc tumbled after the central bank raised rates by 75 basis points to bring borrowing costs above zero for the first time
in almost eight years. Sterling rose from a 1985 low after the Bank of England policy decision.  The Turkish lira hit a record low after Turkey’s central bank shockingly cuts rates by another 100bps despite inflation at a 24 year high.

USDJPY -1.8%, EURJPY -1.5%, USDCHF +1.6%.     

Bitcoin +0.6%;  Ethereum -1.7%.   

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:

• Aurora Cannabis (ACB CN) raised to sector perform at ATB Capital; PT C$2
• Intercorp Finl (IFS) raised to buy at Credicorp Capital; PT $30
• Santander Chile ADRs (BSAN CI) raised to buy at Credicorp Capital

DOWNGRADES:

• Alcoa (AA) cut to peerperform at Wolfe
• Block Inc (SQ) cut to neutral at Mizuho Securities; PT $57
• Canacol Energy (CNE CN) cut to hold at Credicorp Capital; PT C$2.90
• Novavax (NVAX) cut to underweight at JPMorgan; PT $27

INITIATIONS:

• 23andMe Holding (ME) rated new outperform at Cowen; PT $6
• Cathedral Energy Services (CET CN) rated new buy at Stifel Canada
• DocuSign (DOCU) rated new underperform at MoffettNathanson LLC
• EverQuote (EVER) reinstated neutral at B Riley; PT $9
• Fusion Fuel Green (HTOO) rated new sector perform at RBC; PT $7
• Globe Life (GL) rated new strong buy at Raymond James
• Gracell Biotech ADRs (GRCL) reinstated buy at Citi; PT $12
• Littelfuse (LFUS) rated new hold at Benchmark
• MCAN Mortgage (MKP CN) rated new buy at Canaccord; PT C$18.25
• Magnet Forensics (MAGT CN) rated new buy at Eight Capital; PT C$35
• Marqeta (MQ) rated new neutral at Wedbush; PT $8
• MetLife (MET) rated new market perform at Raymond James; PT $73
• Netstreit (NTST) rated new outperform at Baird; PT $23
• Nike (NKE) rated new outperform at RBC; PT $125
• Principal Financial (PFG) rated new market perform at Raymond James
• Prudential Financial (PRU) rated new strong buy at Raymond James
• Red Rock Resorts (RRR) rated new market outperform at JMP; PT $50
• Revance Therapeutics (RVNC) reinstated buy at Goldman; PT $33
• Sangoma Technologies (STC CN) rated new outperform at William Blair
• Stem Inc (STEM) rated new outperform at Cowen; PT $22
• TGS ADRs (TGSU2 AR) rated new buy at Invertir en Bolsa; PT $9.50
• Unum (UNM) rated new market perform at Raymond James
• Voya Financial (VOYA) rated new strong buy at Raymond James; PT $84
• Westrock Coffee (WEST) rated new overweight at Stephens; PT $13

David Wienke

Cabrera Capital Markets, LLC