Cabrera Capital Daily Game Plan

Wednesday November 2, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:15ET ADP employment; 10:00ET Rental Vacancy Rate; 2:00ET FOMC announcement;  2:30ET Fed Chair Powell press conference

ADP private payrolls 239K, Exp. 185K, Last 208K. ADP Report: Seeing Early Signs of Fed-Driven Demand Destruction, But Only in Certain Sectors. 
Annual Pay Up 7.7% in October; October Number ‘Really Strong’ Given Maturity of Economic Recovery.

TODAY’S HIGHLIGHTS:  

• US Capitol Police are conducting a casualty evacuation exercise
  on the US Capitol Grounds this am
• Euro zone factory downturn deepened in October as demand slumped
• German manufacturing slumps in October as new orders drop – PMI

World equity markets firmed with investors appearing to look past another likely rise in US interest rates and hoping for
a slowdown in the pace of aggressive monetary tightening. The Bank of England is due to lift its benchmark on Thursday.  On the economic front, the decline in euro zone manufacturing activity was deeper than initially estimated last month, indicating that
the sector is in recession, as the cost of living crisis put a big dent in demand, a survey showed today. North Korea fired at least 17 missiles into the sea on Wednesday, including one that landed less than 40 miles off South Korea’s coast, which South Korea’s
President described as “territorial encroachment”.  South Korea issued rare air raid warnings and launched its own missiles in response.                                                                              

EQUITIES: 

US stock index futures fluctuated ahead of a key policy decision. Stocks closed lower on Tuesday after a jump in US monthly job openings pointed
to strong labor demand, indicating that the effect of the rapid rate hikes are yet to be felt.  The Federal Reserve is expected to raise interest rates by three-quarters of a percentage point for the fourth straight time today, but open the door to a future
slowdown in its policy tightening. The Fed will not release new quarterly economic projections, leaving Fed Chair Powell to finesse what may be a tricky update on inflation and rates ahead of next week’s congressional elections. Some members of Congress have
cautioned against pushing rate hikes too far. Of the 300+ S&P 500 companies that have reported so far, 72% have topped analysts’ profit estimates, according to Refinitiv IBES data. In a typical quarter, about 66% beat estimates.                  

Futures ahead of the bell: E-mini S&P +0.05%, Nasdaq +0.1%, Russell 2000 -0.1%, Dow -0.05%.  

In premarket trading, Advanced Micro Devices (AMD) rose 4.2% after it forecast some strength in its data center business and said it would be
careful with spending. US-listed shares of Chinese firms rose, looking to extend their gains for a second session on rising expectations about easing of strict COVID-19 measures in China. Apple shares slipped after China ordered a seven-day lockdown of the
area around the world’s largest iPhone factory. Estée Lauder (EL) shares fell 11% after the company slashed its sales and earnings forecasts due to weakness in China, tightening of inventory by American retailers and the stronger US dollar. Qualcomm is set
to report its fourth-quarter earnings this afternoon. In other news, CVS, Walgreens and Walmart have tentatively agreed to pay more than $12 billion to resolve thousands of state and local government lawsuits accusing the chains of mishandling opioid painkillers.
CVS (+1%)  boosted its adjusted EPS forecast for the full year. Airbnb (ABNB) declines over 6% after giving a downbeat outlook for 4Q bookings. Bandwidth (BAND) jumped 16% after raising full year outlook.  ZoomInfo Technologies (ZI) shares plunge as much as
23% despite a beat-and-raise on comments from the software company that the operating environment is becoming more challenging.   

Exxon Mobil is up ~83% on the year.

European stock markets opened mostly firmer before paring gains as euro-area manufacturing activity sank to the lowest level
since 2020 and Moody’s cut the outlook for European banks on credit woes.  Credit Suisse was cut to on level above junk status by S&P after it laid out a radical restructuring plan last week. AP Moller-Maersk, a bellwether for global trade, fell 7% after cutting
its forecast for the global container market, saying demand will shrink as much as 4% this year and price pressures will remain. Healthcare stocks outperformed in Europe after Novo Nordisk raised its operating profit and sales forecasts for the year.  The
Stoxx Europe 600 and DAX are little changed, while the CAC and FTSE 100 lag, down 0.3%. Healthcare +1.1%, Energy +0.6%, Telecom +0.4%. Real Estate is the worst performing sector, down 1.5%.

Asian stocks were mostly higher as growing speculation over China’s reopening lifted sentiment. Despite geo-political tensions
in Asia, the Hang Seng rallied 2.4% and the CSI 300 was up 1.2%.  Trading in Hong Kong closed earlier than usual due to a tropical storm.  The MSCI Asia Pacific Index rose as much as 0.9%, led by the consumer discretionary sector. Chinese pharma stocks gained
on expectations of a reopening boost to vaccinations and as more cities in China prepare to adopt inhaled vaccines. Most other markets posted modest gains or declines as investors opted to wait and assess the US Fed’s policy signals.  Philippines +0.85%, Taiwan
+0.5%, Singapore +0.35%, ASX 200 +0.15%. Vietnam lagged, -1%. Sensex -0.35%, Topix -0.1%. 

FIXED INCOME: 
                                        

Treasuries are narrowly mixed ahead of FOMC rate decision, with long-end yields slightly cheaper on the day and front-end
yields richer by ~3bp.  Quarterly refunding announcement at 8:30am is viewed as having limited potential for auction size changes and may signal progress toward a buyback program. US 10-year little changed around 4.04% as the curve steepens around the sector;
2s10s, 5s30s spreads are wider by ~2bp and ~3bp on the day vs UK 2s10s, 5s30s spreads wider by ~9bp and ~13bp. Focus on the Fed rate decision may limit price action over early US session. Latest pricing in swaps shows approximately full 75bp rate hike priced
into today’s decision.                      

METALS: 
                               

Gold gained as the dollar weakened while traders focused on the Federal Reserve meeting later today for clues on when the
US central bank will start scaling back jumbo-sized interest-rate hikes.  The greenback fell for a second day Wednesday, providing some relief for gold. Spot gold rose 0.6%, silver is up ~1%.                                                                                                      

ENERGY:      

Oil futures struggled for direction ahead of the Fed decision and as investors awaited data on US inventories, after industry
data showed a large drop in crude supplies late Tuesday.  Analysts surveyed by S&P Global Commodity Insights, on average, expect crude supplies to fall 1.6 million barrels, with gasoline stocks seen down by 1.9 million barrels and distillate inventories off
by 1 million barrels.                          

CURRENCIES:  
                     

In currency markets, the US dollar index eased 0.25% and fell 0.9% against the Japanese yen amid fears of intervention from
authorities and thin liquidity. Bank of Japan Governor Haruhiko Kuroda said a tweak to the central bank’s yield curve control policy, which has contributed to the weakness in the yen, could become a future option.  Most G-10 currencies were in a holding pattern
ahead of the Fed. GBPUSD +0.2%, EURUSD +0.25%, AUDUSD +0.4%, NZDUSD +0.6%.                                  

Bitcoin -0.2%;  Ethereum -1%. Zipmex Pte, the embattled Asian cryptocurrency exchange, is in advanced talks to receive a
financial lifeline from V Ventures, one of its investors.

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:

• Abiomed (ABMD) raised to equal-weight at Morgan Stanley; PT $380
• Denali Therapeutics (DNLI) raised to buy at BTIG; PT $38
• Premier (PINC) raised to outperform at Baird; PT $41

DOWNGRADES:

• Abiomed (ABMD) cut to hold at Deutsche Bank; PT $388
• Avista (AVA) cut to neutral at Mizuho Securities; PT $40
• Bally’s (BALY) cut to hold at Stifel; PT $25
• Blueprint Medicines (BPMC) cut to market perform at Oppenheimer
• Cleveland-Cliffs (CLF) cut to underperform at Wolfe; PT $12
• DCP Midstream (DCP) cut to neutral at JPMorgan; PT $45
• ERO Copper (ERO CN) cut to neutral at CIBC; PT C$18
• Ecolab (ECL) cut to hold at Deutsche Bank; PT $135
• Electronic Arts (EA) cut to buy at CFRA
• SeaSpine (SPNE) cut to hold at Truist Secs; PT $6.75
• Semler Scientific (SMLR) cut to neutral at B Riley; PT $45
• Universal Logistics (ULH) cut to hold at Stifel; PT $36

INITIATIONS:

• AEye (LIDR) rated new hold at WestPark Capital; PT $1
• Aeva Technologies (AEVA) rated new hold at WestPark Capital; PT $3
• Canopy Growth (WEED CN) rated new underperform at Bernstein; PT $1.50
• Check Point Software (CHKP) reinstated neutral at Macquarie; PT $129
• Cloudflare (NET) rated new neutral at Macquarie; PT $60
• Cronos Group (CRON CN) rated new market perform at Bernstein; PT $3
• CrowdStrike (CRWD) reinstated outperform at Macquarie; PT $220
• Datadog (DDOG) rated new neutral at Macquarie; PT $85
• Dynatrace (DT) reinstated neutral at Macquarie; PT $38
• Frequency Therapeutics (FREQ) rated new outperform at Baird; PT $10
• HubSpot (HUBS) rated new outperform at Macquarie; PT $355
• Innoviz Technologies (INVZ) rated new buy at WestPark Capital; PT $12
• Legend Biotech ADRs (LEGN) rated new outperform at Evercore ISI
• Lineage Cell Therapeutics (LCTX) rated new outperform at Baird; PT $5
• Luminar (LAZR) rated new buy at WestPark Capital; PT $14
• Microsoft (MSFT) reinstated neutral at Macquarie; PT $234
• Okta (OKTA) rated new neutral at Macquarie; PT $60
• OneSpaWorld (OSW) rated new buy at Truist Secs; PT $12
• Ouster (OUST) rated new buy at WestPark Capital; PT $4
• Palo Alto Networks (PANW) reinstated neutral at Macquarie; PT $185
• Snowflake (SNOW) rated new neutral at Macquarie; PT $173
• Sorrento Therapeutics (SRNE) rated new overweight at Cantor; PT $5
• Tilray Brands Inc (TLRY) rated new market perform at Bernstein
• Velodyne Lidar (VLDR) rated new underperform at WestPark Capital
• Workday (WDAY) reinstated neutral at Macquarie; PT $170
• Zscaler (ZS) rated new neutral at Macquarie; PT $155

David Wienke

Cabrera Capital Markets, LLC