Cabrera Capital Daily Game Plan

Monday September 26, 2022 Trading
Desk: (312) 236-8907

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

DATA/HEADLINES
8:30ET Chicago Fed national activity index; 10:00ET Boston Fed’s Susan Collins Speaks; 12:00ET Fed’s Bostic speaks; 12:30ET Fed’s Logan speaks; 1:00ET $44B 2-year note auction; 4:00ET Fed’s Mester speaks

TODAY’S HIGHLIGHTS:

The OECD cut almost all growth forecasts for the Group of 20 next
year
BANK OF ENGLAND STILL TO DECIDE IF IT WILL COMMENT ON POUND

Markets around the world slid as concerns about high interest rates continued to put pressure on the global financial system.
Britain’s gamble to spur growth with unfunded tax cuts into an inflation surge has morphed into a bona fide crisis for sterling and UK government bonds. Economists said Prime Minister Liz Truss’s government, in power for less than three weeks, was losing financial
credibility in unveiling such a plan. Reaction to Italy’s election result was muted however, after Giorgia Meloni won a clear majority in Sunday’s Italian general election and will lead its most right-wing government since World War Two. Geopolitical risks
from the war in Ukraine to escalating tensions over Taiwan and unrest in Iran also weighed on sentiment. The United States warned Moscow of “catastrophic consequences” if it uses nuclear weapons in Ukraine after Russia promised protection to Ukrainian regions
it is trying to annex. Citizens in four regions of Ukraine were voting for a fourth day on Monday in the Russian-organized referendums that Kyiv and the West have branded a sham. They say the outcomes are pre-determined and they will not recognize the results.

EQUITIES:

US equity futures dropped and the US dollar continued its rise on fears that Federal Reserve rate hikes to combat persistently elevated inflation
will hurt the economy. The dollar’s rally is “untenable” for risk assets, according to a note by Morgan Stanley strategists. No other market has been as battered by the Fed’s rate hikes as housing, with mortgage rates surging past 6.2% over the past week.

Futures ahead of the bell: E-mini S&P -0.7%, Nasdaq -0.3%, Russell 2000 -0.5%, Dow -0.35%.

In pre-market trading, shares of US-listed Macau casinos jump after Macau government said tour groups from mainland China
could resume as early as November. Wynn Resorts (WYNN US) jumps 5.4%; Las Vegas Sands (LVS US) +6.9%. Atlas (ATCO) shares are up 7% after the SPAC Poseidon said they have increased their bid price. Chegg (CHGG +2.5%) looks primed to report upside to conservative
expectations, Needham says in note upgrading to buy and establishing a $28 target. Farfetch (FTCH) falls 5.8% in premarket trading, after Citi begins coverage of the luxury online retailer with a sell rating.

European equities extended declines after sliding into a bear market on Friday, with Real Estate and Utilities underperforming.
UK markets were in focus as the pound crashed to an all-time low and bond yields surged to the highest in more than a decade, sparking talk of emergency action by the Bank of England. The market mayhem unleashed by the government’s fiscal plan on Friday went
into overdrive after the government pledged further tax cuts. In Italy, the FTSE MIB edged 0.6% higher after Giorgia Meloni won a clear majority in Sunday’s Italian election. Stoxx 600 -0.5%, DAX -0.1%, FTSE 100 -0.6%, CAC -0.15%. Real Estate -3%, Utilities
-2.1%, Basic Resources and Energy -1.6%. Technology is up 1.25%, Travel +1%, Autos +0.7%.

Asian stocks extended their decline as rising concerns about a global recession and weak demand hit the region’s exporters.
The MSCI Asia Pacific Index declined as much as 2.3% to the lowest since April 2020, dragged lower by TSMC, BHP and Toyota Motor. South Korean stocks fell the most in the region, with the Kospi tumbling 3%. Gauges in Hong Kong and China reversed earlier gains
as the region’s selloff intensified. Japan stocks declined more than 2% as the nation resumed trading after a holiday on Friday. The Philippine stock market was closed today as Super Typhoon Noru barreled into the main Luzon island. Topix -2.7%, Taiwan -2.4%,
Vietnam -2.4%, Sensex -1.65%, ASX 200 -1.6%, Shanghai Composite -1.2%, Hang Seng -0.45%.

FIXED INCOME:

Treasuries extended their worst slide in decades in a bear flattening move with yields cheaper by up to 10bp across the
belly of the curve. The move comes amid a gilt-led selloff, with two year gilts 60bp cheaper heading into early US session. US 10-year yields are around 3.77%, cheaper by 6bp on the day with 5s30s spread flatter by 5bp, dropping as low as -45.4bp in the European
session. US auctions resume with $43b 2-year note sale at 1pm, followed by 5- and 7-year sales Tuesday and Wednesday.

METALS:

Gold was under pressure again due to the surging US dollar, hitting a 2-1/2 year low. Spot gold -0.15%, silver -0.7%.

ENERGY:

Oil dropped again, with WTI falling below $78 as the dollar’s surge and mounting recessionary concerns threatened global
demand. Most other commodity markets from copper to wheat were also lower as risk assets began the week softly. Vitol says navigating a proposed price cap on Russian oil is a “minefield” as the major crude trader seeks guidance from governments to plot its
approach to the measure scheduled to take effect in December. With the risk of recession and relatively weaker fundamentals going into 4Q, supply-demand balances have caught up and that’s caused inventories to expand. WTI and Brent are down 1.25%.

CURRENCIES:

The British Pound crashed to a record low and a renewed selloff in British gilts pushed euro zone yields higher as the fallout
from last week’s fiscal statement in Britain roiled markets for a second session. The pound plunged nearly 5% at one point in Asia trade to break below the 1985 lows on mounting concern that the new government’s economic plan will stretch Britain’s finances
to the limit. Sterling is quickly paring its losses after Sky News reports that the Bank of England is expected to make a statement today. The euro hit a fresh two-decade low against the greenback before paring
some losses as investors weighed the prospects of Italy under the most right-wing government since World War II. In Japan, authorities reiterated that they stood ready to respond as needed to speculative currency moves. BOJ Governor Haruhiko Kuroda said
on Monday the central bank was likely to retain its ultra-loose monetary policy for the time being, but added that its commitment to keep interest rates at lower levels may not stay unchanged for years, retracting his comments from last week. The yuan fell
for a sixth day in the longest losing streak in three years, even as China said it would raise the risk-reserve requirement to increase the cost for shorting the currency. GBPUSD -0.7%, US$ Index +0.35%, EURUSD -0.5%, USDJPY +0.6%, AUDUSD -0.6%, USDCHF +0.9%.