Cabrera Capital Daily Game Plan

Tuesday November 15, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:30ET Producer price index final demand, Empire state manufacturing; 
9:00ET Fed’s Cook speaks, Harker speaks on the economic outlook; 10:00ET Fed’s Barr testifies on regulation at Senate Banking Committee; 11:00ET Household debt; 1:00ET 20 year auction

TODAY’S HIGHLIGHTS:  

• Credit Suisse will sell a big chunk of its securitized products
  group to Apollo
• Donald Trump, the most effective motivator of Democratic voter turnout
  in history, is set to launch his third presidential bid today
• Only 14% of Americans say they are likely to move in the coming
  year due to soaring mortgage rates

Global markets rose as sentiment was lifted by some easing of bilateral tensions after Monday’s meeting between Joe Biden
and Xi Jinping generated hopes of warmer ties between the two superpowers. Data showing Japan’s economy unexpectedly shrank in the third quarter, as well as softer- than-expected Chinese retail sales figures, highlighted risks for global growth.  Investor
sentiment is still “uber-bearish,” with 92% expecting stagflation in 2023, BofA’s Global Fund Manager survey for November shows. Investors are more than two standard deviations underweight stocks and overweight cash by the same amount, with long dollar the
most crowded trade. Zero percent of investors see a “goldilocks” scenario, and 77% expect a global recession. The survey also showed that allocation to tech is at its lowest since 2006.                                                                                            

EQUITIES: 

US equity index futures rose with the Nasdaq 100 jumping more than 1%, boosted also by hefty gains earlier across Asian technology companies. 
US consumer health and the holiday shopping season are in the spotlight as Walmart reports premarket. Walmart gains 6% after raising full year outlook on strong results for Q3 and a $20B buyback plan.  Home Depot beat on comparable sales and reaffirmed its
guidance. Estée Lauder is close to buying Tom Ford, and the transaction will include licensing agreements for eyewear and apparel. JPMorgan’s Marko Kolanovic again retreated from the bullish stocks call he kept through much of the market rout, reducing his
overweight equities position on recession risks.                                 

Futures ahead of the bell: E-mini S&P +1.1%, Nasdaq +1.7%, Russell 2000 +1%, Dow +0.6%.    

In pre-market trading, Walmart gained over 6% after reporting adjusted earnings of $1.50 a share compared with the average
analyst estimate of $1.32. The company raised its profit forecast for the year, suggesting it expects a healthy holiday season. Amazon.com (AMZN) rises 3.3% after Walmart’s report.  Chinese stocks listed in the US such as Alibaba (BABA +11%) are higher after
strong gains in Asia. Nubank (NU) shares jump 15% after the Brazilian digital bank’s third-quarter results. Shoals Technologies (SHLS) soar as much as 22% after the solar energy products supplier narrowed its revenue forecast for the full year. Other gainers
include Albemarle (ALB) +6.0%, Mobileye (MBLY) +3%, Paramount Global (PARA) +6.0%, UiPath (PATH) +8%, Azenta (AZTA) surged 35.0% after revenue forecast tops estimates and announced a $1.5 billion share repurchase plan.

Home Depot (HD) falls as much as 2.8% premarket after the company said merchandise inventories climbed 25% year-over-year,
while customer transactions fell 4.3%. Getty Images (GETY) falls 14% after the media company reported third quarter earnings that missed. Corsair Gaming (CRSR) -7% after announcing 4.5mm share offering. PlayAGS (AGS) falls 14% after holder Apollo Global offers
8.2m shares. AMMO (POWW) -16% after the company posted a fiscal second-quarter loss and cut its full-year guidance.

Walmart is trading 148.40 pre-market, now up on the year and could see upside momentum shift above the .618 retracement.

European indices eke out small gains, being dragged higher by US futures as earnings reports are mostly better than expected. 
Europe’s Stoxx 600 index swung between losses and gains, though the market is close to a three-month high and Germany’s Dax index is on the cusp of a technical bull-market. German investor expectations recovered markedly in November on hope that record euro-area
inflation may be peaking. The ZEW gauge rose to -36.7 from -59.2, while consensus was for -51. French unemployment declined slightly in the same period to 7.3%. In other data, UK real wages shrank 2.6% last quarter, while unemployment rose to 3.6%. Swedish
underlying inflation accelerated more than expected to 7.9% in October from 7.4%. Polish GDP rose 0.9% last quarter, consensus was for zero growth.  Vodafone fell in London after adjusting its outlook to the low end of a previous range and launching a €1 billion
cost-savings plan to confront high energy prices and inflation.  Stoxx 600 +0.3%, DAX +0.01%, CAC +0.5%, FTSE 100 +0.05%. Technology leads sector gains, up 0.8%. Media +0.75%, Utilities +0.6%. Retail underperforms, down 3%. Telecom -0.9%, Real Estate -0.6%.

Asian stocks rallied as China led the region higher, buoyed by more property easing measures and signs of reduced US-China
tensions. China’s economic activity weakened in October, putting pressure on Beijing to ramp up support.  Retail sales contracted 0.5%, the first decline since May and worse than economists’ expectations for 0.7% growth. Industrial output growth weakened,
property investment continued to contract and the jobless rate remained high.  The MSCI Asia Pacific Index rose 1.9% to a two-month high, lifted by technology shares. Chinese stocks in the sector helped pace the benchmark’s gain as investors bet the worst
may be over for some of the major players. Meanwhile, Taiwan’s TSMC surged 7.9% after a filing showed Warren Buffett recently bought a stake of about $5 billion in the chipmaker. Tencent started a new round of job cuts; shares rose over 10%. The Hang Seng
Index entered a bull market, gaining 4.1% on the day and up over 25% from the late October low. Japan’s economy shrank an annualized 1.2% in the third quarter, slipping into reverse for the first time since last year.  South Korea’s import prices rose 20%
last month, while export prices increased 14%. Hang Seng Tech +7.3%, Taiwan +2.6%, China’s CSI 300 +1.9%, Philippine +1%, Sensex +0.4%, Topix +0.37%, Kospi +0.25%, ASX 200 -0.07%, Vietnam -3.1%.

FIXED INCOME: 
                                        

Treasury futures top Monday’s highs in early US trading, led by bunds after ECB’s Villeroy said a slower pace of hikes is
likely after next month’s meeting. Federal Reserve Vice Chair Lael Brainard said on Monday that the US central bank should soon moderate the size of its interest-rate increases, signaling she favors slowing to a half-point hike as early as next month. The
belly leads Treasuries advance, with 5-year yields richer by nearly 6bp on the day, steepening 5s30s spread by ~3bp; 10-year, lower by 5bp at ~3.81%. US auctions resume today with $15b 20-year bonds, followed by $15b 10-year TIPS Thursday.   

METALS: 
                               

Gold edged higher as the dollar weakened, while investors considered what the latest comments from a senior Federal Reserve
official may mean for the trajectory of interest rates. Gold erased losses of as much as 1% in the previous session after Fed Vice Chair Lael Brainard said it would be appropriate for the central bank to slow its monetary-tightening pace “soon.”   The US producer
price index due today will provide latest gauge of inflationary pressures. Spot gold +0.35%, silver -0.1%.    

ENERGY:      

Oil extended losses as concerns over the near-term demand outlook offset tightening supply.  Crude inventories in developed
nations sunk to less than 4 billion barrels, the lowest in 18 years, leaving global markets vulnerable, the IEA said. A potential EU ban on Russian imports will add further pressure. OPEC cut its forecasts for global demand in the fourth quarter again, and
global demand is poised to contract 240,000 b/d this quarter compared with a year ago, according to IEA.  Diesel supplies are exceptionally tight and prices may need to climb further to rein in demand.  European natural gas prices rose amid the first signs
of cold weather and as Freeport flagged a possible extension of an outage at its US export facility that began in June. WTI -0.6%, Brent -0.45%. US Nat Gas +1.3%.     

CURRENCIES:  
                     

The breakdown in the Dollar’s uptrend continues today, hitting a three-month low against a currency basket as a surge in
optimism on China dimmed the safe-haven appeal of the US currency and stoked appetite for riskier assets. USDJPY is holding below its 100 day moving average for the first time since September 2021.  US$ Index -0.5%, USDJPY -0.5%, GBPUSD +1.2%, AUDUSD +0.7%,
EURUSD +0.75%.

Bitcoin +2.7%;  Ethereum +3.5%.  Crypto mining firms foresee more turmoil and a lingering crisis of confidence in digital
assets after the collapse of FTX. There are many more bankruptcies still to come, said Frank Holmes at Hive Blockchain Technologies.  FTX named a slate of new independent directors to oversee its bankruptcy and is speaking with the US Attorney’s Office and
dozens of US and international regulators. Cryptos edged higher as talk of CZ Zhao’s recovery fund calmed nerves.

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:

• Activision Blizzard (ATVI) raised to buy at MKM; PT $95
• Chubb (CB) raised to overweight at Atlantic Equities; PT $240
• Equifax (EFX) raised to overweight at Atlantic Equities; PT $230
• FMC Corp (FMC) raised to buy at Loop Capital
• Itau ADRs (ITUB4 BZ) raised to overweight at Barclays; PT $7
• LexinFintech ADRs (LX) raised to accumulate at CLSA; PT $1.80
• Lufax ADRs (LU) raised to buy at CLSA; PT $3.40
• Tandem Diabetes (TNDM) raised to equal-weight at Wells Fargo; PT $43

DOWNGRADES:

• Bradesco ADRs (BBDC4 BZ) cut to equal-weight at Barclays; PT $3.50
• Calithera Biosciences (CALA) cut to market perform at SVB; PT $2
• Calithera Biosciences (CALA) cut to neutral at Ladenburg Thalmann
• Carvana (CVNA) cut to perform at Oppenheimer
• Corteva (CTVA) cut to hold at Loop Capital; PT $71
• Giyani Gold (EMM CN) cut to speculative buy at Beacon Securities
• Haynes (HAYN) cut to sector weight at KeyBanc
• Impel Pharmaceuticals In (IMPL) cut to neutral at Wedbush; PT $5
• Leslie’s (LESL) cut to neutral at Baird; PT $16
• Madison Square Garden (MSGE) cut to hold at Jefferies; PT $49
• Neoleukin (NLTX) cut to hold at Canaccord; PT $1
• Neoleukin (NLTX) cut to hold at Stifel; PT 90 cents
• Neoleukin (NLTX) cut to neutral at Mizuho Securities; PT $2
• NexImmune (NEXI) cut to market perform at Raymond James
• Roche ADRs (ROG SW) cut to market perform at Cowen; PT $48
• Santander Brasil ADRs (SAN SM) cut to underweight at Barclays; PT $5
• Sotera (SHC) cut to underweight at Barclays; PT $6
• Unity Software (U) cut to neutral at Goldman; PT $36
• Viasat (VSAT) cut to market perform at Raymond James
• WW Grainger (GWW) cut to neutral at Atlantic Equities; PT $630
• Westlake Corp (WLK) cut to neutral at JPMorgan; PT $109

INITIATIONS:

• DICE Therapeutics (DICE) rated new buy at Guggenheim; PT $65
• Enphase Energy (ENPH) rated new buy at Deutsche Bank; PT $330
• First Solar (FSLR) rated new buy at Deutsche Bank; PT $180
• Fulcrum Therapeutics (FULC) rated new buy at Goldman; PT $11
• Harley-Davidson (HOG) rated new underperform at Jefferies; PT $39
• Netflix (NFLX) reinstated buy at BofA; PT $370
• SolarEdge (SEDG) rated new hold at Deutsche Bank; PT $260
• Stagwell (STGW) rated new buy at B Riley; PT $13
• SunPower (SPWR) rated new hold at Deutsche Bank; PT $16
• Sunnova Energy (NOVA) rated new buy at Deutsche Bank; PT $36
• Sunrun (RUN) rated new buy at Deutsche Bank; PT $36

David Wienke

Cabrera Capital Markets, LLC