Cabrera Capital Daily Game Plan

Friday November 18, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:40ET Fed’s Collins speaks on labor market; 10:00ET Existing Home Sales, Leading Indicators; 1:30ET  Biden, Yellen meet with business and labor leaders

TODAY’S HIGHLIGHTS:  

• After Elon Musk’s ultimatum, hundreds of Twitter employees start
  exiting
• Some Meta staff were accused of accepting thousands of dollars in
  return for giving hackers access to user accounts – WSJ
• Amazon CEO Andy Jassy said job cuts will continue into 2023
  
• Venture capitalist Mike Rothenberg, the subject of HBO’s Silicon
  Valley, had his criminal case declared a mistrial
• China’s Regulatory Crackdown Key Event Is Discontinued
  

World markets are higher after two days of losses triggered by hawkish central bank chatter. Nevertheless, global stocks
had their biggest inflows in 35 weeks, with the US the number 1 attraction, according to data from BofA. But Bank of America strategists warn the rally will fizzle out due to earnings risks and staunchly hawkish central banks.  Japanese inflation accelerated
to 3.6% in October, the fastest clip in 40 years and putting the BOJ in an awkward position as it defends its stimulus.  North Korea test-fired an intercontinental ballistic missile on Friday that Japanese officials said had sufficient range to reach the mainland
of the United States and that landed just 130 miles off Japan.  The European Central Bank is set to begin today the biggest withdrawal of cash from the euro zone’s banking system in its history, as it gives banks a first chance to repay hundreds of billions
of euros in ECB loans. ECB policymakers will look at how the market digests this sudden drop in cash to gauge how fast they can proceed with reversing the ECB’s 3.3-trillion-euro Asset Purchase Program, which they will discuss at their Dec. 15 meeting.                       

EQUITIES: 

US equity futures advanced after two days of losses ahead of OpEx. Trading volumes in the US stock-derivatives market are breaking records heading
into today’s $2.1 trillion options expiration that may stoke volatility as traders and dealers rebalance big exposures. About 46 million options contracts have changed hands each day in November, poised for the busiest month on record.               

Futures ahead of the bell: E-mini S&P +0.9%, Nasdaq  +1.1%, Russell 2000 +1.15%, Dow +0.7%.  The
200 day mvg avg
is key resistance in ES and other indices.

In pre-market trading, chip equipment maker Applied Materials rose 4% after issuing a forecast-topping sales forecast on
supply-chain improvements. A host of tech names, including Nvidia, Meta Platforms and Amazon.com also gained. The Gap (GPS) jumped 9% post-market after sales and profit beat. Foot Locker (FL) shares jumped 15% after the athletic retailer posted third-quarter
results that show high shopper demand despite inflation pressure. Palo Alto Networks (PANW) gained over 8% after it reported quarterly results and full year forecasts that topped estimates. DraftKings (DKNG) shares rise 3.5% as Piper Sandler starts coverage
of the online gambling company with an overweight rating. Ross Stores (ROST) surges as much as 17% after the off-price retailer beat 3Q estimates and raised its full-year EPS forecast. Iveric bio (ISEE) jumped 24% after the FDA granted breakthrough therapy
designation for avacincaptad pegol.

Farfetch (FTCH) shares drop 12% after the online clothing retailer reported third-quarter revenue that missed estimates.
Williams-Sonoma (WSM) fell 8% in extended trading after saying it isn’t reiterating or updating its guidance through fiscal 2024 due to macro uncertainty.

European stocks are adding to opening gains, with banks rising nearly 1.5% as the European Central Bank gears up to start
the biggest withdrawal of cash from the euro zone’s banking system in its history. Banks are expected to repay about 500 bln euros in Targeted Longer-Term Refinancing Operations (TLTRO) loans. Britain’s FTSE 100 gained 0.9%, a day after finance minister Jeremy
Hunt announced tax rises and spending cuts in an effort to reassure markets that the government was serious about fighting inflation.  London stocks were lifted by official data showing UK retail sales rose 0.6 percent in October, rebounding from a 1.5-percent
slump in September. Stoxx 600 +1.1%, DAX +1%, CAC +1.1%, FTSE 100 +0.8%. Retail +1.8%, Autos +1.7%, Travel +1.5%. All sectors are in the green.

Shares in Asia were mixed after early gains eased in afternoon trading.  Early advances were driven by announcements of
share buybacks and gaming approvals for some major industry players. Chinese blue chips dropped 0.45% amid reports that Beijing had asked banks to check liquidity in the bond market after soaring yields caused losses for some investors.  Japan’s Nikkei 225
slipped 0.1% as data showed inflation running at a 40-year high as a weak yen stoked import costs. Still, the Bank of Japan argues that inflation is mostly driven by energy costs outside of its control and that the economy needs continued super-easy policies.
The Hang Seng Tech Index touched a two-month high (+0.55%), led by Alibaba, which missed second-quarter revenues but upsized share buybacks.  Philippines +0.5%, ASX 200 +0.25%, Kospi +0.05%,  Sensex -0.15%, Taiwan -0.2%, Hang Seng -0.3%, Shanghai Composite
-0.6%

FIXED INCOME: 
                                        

Treasuries are off session lows, although yield remain cheaper across the curve with losses led by belly. Core European
rates weigh on Treasuries after ECB’s Lagarde said rates may need to be lifted to levels that restrict economic expansion to tame inflation.  US Treasury yields extended their rise in the wake of comments from St. Louis Fed President James Bullard, who said
interest rates needed to rise at least to 5%-5.25% to curb inflation. US two-year yields crept back above 4.5%, retracing a little of last week’s sharp inflation-driven drop of 33 basis points to a low of 4.29%. That left them 69 basis points above 10-year
yields , the largest inversion since 1981 and an indicator of impending recession. 10-year yields are around 3.8%, 2 year yield ~4.49%.     

METALS: 
                               

Gold fluctuated after hitting a three-month high of $1,786 early in the week. Gold headed for its first weekly decline this
month after Fed officials pushed back against the prospect of a pause in monetary tightening. Commodity markets are broadly mixed, with nickel leading a decline for base metals and silver climbing for the first time in four days. Spot gold is flat while silver
+0.9%.      

ENERGY:      

Oil is lower, headed for a weekly loss of almost 8% as concerns over a softer demand outlook filtered through the market.
Demand for winter-delivery cargoes has slipped from Singapore to Houston, while the forward curve for both major crude benchmarks has weakened in a sign of ample supply.  Brent crude hit four-week lows on concerns about weakening demand in China and further
interest rate rises by the Fed.  Meanwhile, investigators have found traces of explosives at the site of the damaged Nord Stream pipelines, confirming that gross sabotage had taken place, a Swedish prosecutor said.  WTI -1.2%, Brent -1.7%. US Natural Gas is
down 3.3%.  

CURRENCIES:  
                     

The dollar is marginally lower, though still within Thursday’s range.  The euro fluctuated versus the dollar, as it flirts
with key resistance at its 200 day moving average of 1.0415.  Japanese yen rose, even as Bank of Japan Governor Haruhiko Kuroda vowed to maintain an accommodative stance. The yen is getting some additional impetus from data showing inflation at 40-year highs.
The pound advanced against the dollar and the euro, recouping Thursday’s losses as investors assessed the fallout from the government budget on an economy that’s already in recession. The Australian and New Zealand dollars led an advance against the greenback
as traders wagered that a brightening outlook for China’s economy will boost global trade.  The Brazilian Real rose sharply after Brazil’s Vice President-elect  said the government of the president-elect Lula da Silva will have fiscal responsibility, easing
investors’ fear of excessive public spending. US$ Index -0.1%, GBPUSD +0.35%, USDJPY -0.15%, EURGBP -0.35%, AUDUSD +0.4%, NZDUSD +0.9%, EURUSD -0.05%, USDBRL -1.6%.           

Bitcoin %;  Ethereum %.  Bitcoin is on course for a weekly gain even as the collapse of Sam Bankman-Fried’s FTX empire continues
to rattle the crypto market.  Democratic lawmakers, some of whom got campaign donations from Sam Bankman-Fried, said they’ll be ready to grill the former CEO. The Bahamas Securities Commission directed the transfer of all digital assets of FTX Digital Markets
to a wallet it controls.  

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:

• Applied Materials (AMAT) raised to buy at Summit Insights
• Domino’s Pizza (DPZ) raised to buy at Northcoast; PT $460
• Pinnacle West Capital (PNW) raised to neutral at Guggenheim
• Ross Stores (ROST) raised to buy at Gordon Haskett; PT $130
• Walgreens Boots (WBA) raised to overweight at JPMorgan; PT $42

DOWNGRADES:

• Chart Industries (GTLS) cut to neutral at Piper Sandler; PT $133
• Coinbase (COIN) cut to neutral at BofA
• Editas (EDIT) cut to market perform at Oppenheimer; PT $12
• Editas (EDIT) cut to neutral at Credit Suisse; PT $13
• Grupo Aval ADRs (AVAL CB) cut to hold at Credicorp Capital; PT $6.90
• HP Inc (HPQ) cut to neutral at Credit Suisse; PT $33
• Oncocyte (OCX) cut to neutral at Piper Sandler
• RH (RH) cut to neutral at Wedbush; PT $270
• Rent the Runway (RENT) cut to equal-weight at Morgan Stanley; PT $2.50
• Surrozen (SRZN) cut to neutral at Guggenheim

INITIATIONS:

• 4D Molecular (FDMT) rated new buy at HC Wainwright; PT $36
• AbbVie (ABBV) reinstated outperform at Credit Suisse; PT $170
• Amgen (AMGN) reinstated underperform at Credit Suisse; PT $240
• Bristol-Myers (BMY) reinstated neutral at Credit Suisse; PT $78
• DraftKings (DKNG) rated new overweight at Piper Sandler; PT $21
• Dragonfly Energy (DFLI) rated new buy at Chardan Capital Markets
• Eli Lilly (LLY) reinstated outperform at Credit Suisse; PT $395
• Fulgent Genetics (FLGT) rated new outperform at Raymond James; PT $45
• J&J (JNJ) reinstated neutral at Credit Suisse; PT $170
• Merck & Co (MRK) reinstated outperform at Credit Suisse; PT $120
• Pfizer (PFE) reinstated outperform at Credit Suisse; PT $55
• Precigen (PGEN) rated new overweight at Cantor; PT $7
• Q4/Canada (QFOR CN) rated new sector perform at RBC; PT C$3.50

David Wienke

Cabrera Capital Markets, LLC