Cabrera Capital Daily Game Plan

Tuesday November 22, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
11:00ET Fed’s Mester speaks; 1:00ET 7 year note auction; 2:15ET Fed’s George speaks; 2:45ET Fed’s Bullard speaks

TODAY’S HIGHLIGHTS:  

• Fitch Ratings: Significant Job Loss Expected in 2023 as US Labor
  Market Rebalances
• Could See Ukraine Gas Transit Cut From Next Week – Gazprom Statement
• In a stunning World Cup shock, Argentina lost its opening match
  to Saudi Arabia 2-1
• China is developing new nuclear system to power moon base expected
  to be up and running by 2028

Global shares edged higher, recovering some of the previous day’s losses, as improved risk appetite drove flows into equities
and commodities, although concern over more COVID infections in China tempered gains.  The Chinese capital said on Monday it was facing its most severe test of the pandemic, raising the prospect that the government may have to reimpose strict curbs on mobility
and issue stay-at-home orders across other cities. The global economy should avoid a recession next year but the worst energy crisis since the 1970s will trigger a sharp slowdown with Europe hit hardest, the OECD said today, urging central banks to keep hiking
interest rates. It sees world economic growth set to slow from 3.1% this year to 2.2% next year and forecast the euro zone economy would slow from 3.3% growth this year to 0.5% in 2023.                            

EQUITIES: 

US equity futures fluctuated as investors parsed comments from Federal Reserve officials for clues on the pace of interest rate hikes and assessed
the impact of China’s widening Covid lockdowns. The Federal Reserve will release the minutes from its most recent meeting on Wednesday, and investors will scour that for insight into policymakers’ views on the outlook for inflation and economic growth.  Fed
officials have broadly maintained their stance to fight against inflation. Yet Fed President Mary Daly also said that officials need to be mindful of the lags in the transmission of policy changes, while her Cleveland counterpart Loretta Mester said she’s
open to slowing the tempo of rate hikes.              

Futures ahead of the bell: E-mini S&P +0.35%, Nasdaq +0.3%, Russell 2000 +0.45%, Dow +0.35%. 

In US premarket trading, Zoom Video Communications fell 9% after reporting its slowest quarterly sales growth on record
and trimmed full-year revenue forecasts. Morgan Stanley cut price targets across software stocks, including Workday and Coupa Software, saying that estimates for 2023 are likely too high while customer IT budgets are set to fall.  Analog Devices (ADI +3.5%),
one of the largest makers of semiconductors used in industrial equipment and cars, gave a bullish forecast for the current period, indicating that demand in those two markets is holding up better than the broader chip industry. Best Buy (BBY) rose 8% after
a beat on enterprise comp sales and profit. The retailer maintained its dividend and raised its guidance. Dell Technologies (DELL) stock slipped 2% in post-market trading on Monday as the computer company’s revenue forecasts for the current quarter missed
estimates. Medtronic (MDT) falls 2.4% after cutting its adjusted earnings per share forecast for the full year.

Microsoft replaced Amazon as the most popular hedge fund long position, Goldman said. Others in its top five are Alphabet,
Uber and Netflix, with Meta falling out of the top rankings for first time since 2014.
 Earnings include Medtronic, Analog Devices, VMWare, Autodesk, Dollar
Tree, Baidu, HP Inc., Best Buy, Warner Music, Dick’s Sporting Goods.

European equities were led higher by a recovery in commodity shares, while traders considered potential monetary policy
softening and risks to China’s economic reopening. The eventual easing by China of its curbs to counter the virus are likely to mean that European profits will hold up relatively well because of the benefits to luxury and mining companies, according to strategists
at Goldman Sachs. The Stoxx Europe 600 Index climbed 0.4% with energy and miners outperforming. BP Plc (+6%) led the gains in oil stocks after Citigroup upgraded it to buy. Vodafone Group slipped after being double-downgraded at Credit Suisse.  In other news,
Societe Generale and AllianceBernstein agreed on a partnership that merges large parts of their equities trading units. Spain outperforming (IBEX +1.3%), DAX +0.1%, FTSE 100 +0.6%, CAC is flat. Energy +4.5%, Basic Resources +2.25%, Travel +1.1%, Banks +0.7%.
Technology lags, down 0.6%.

Indices in Asia were mixed, while Hong Kong stocks slid as China’s daily virus infections climbed to near the highest on
record.  Chinese equities came under pressure after Beijing shut parks, shopping malls and museums today, while more cities resumed mass testing for COVID-19 as cases spiked. Covid-control restrictions now affect a fifth of China’s economy.  Japan led gains
in the region as the yen’s recent weakness boosted Japanese exporters. The MSCI Asia Pacific Index gained as much as 0.7%, with Japanese firms Toyota, Sony and Mitsubishi helping lift the gauge.  Among sectors, energy and industrials advanced the most, while
communication services and consumer discretionary shares slipped. Stocks in Malaysia fell for a second day after Saturday’s election produced the country’s first-ever hung parliament. Australia’s equity benchmark rose to a five-month high buoyed by miners.
Japan’s Topix +1.1%, Taiwan +0.6%, ASX 200 +0.6%, Sensex +0.45%, China’s CSI 300  was flat. Hang Seng -1.3%, Vietnam -0.9%, Kospi -0.6%.

FIXED INCOME: 
                                        

US Treasury yields eased across most maturities ahead of Wednesday’s FOMC minutes. US session focus is on Fed speakers and
conclusion of this week’s auctions with a 7-year sale at 1:00ET. 10-year is around 3.79%, 2 year yield ~4.5%.     

METALS: 
                               

Gold gained as the dollar edged lower and traders awaited Federal Reserve minutes due Wednesday for hints on the central
bank’s monetary-policy tightening path.  On Monday, signs that China may implement further Covid Zero restrictions buoyed the dollar and pushed gold lower.  Spot gold climbed 0.5%, silver gains 1.8%.       

ENERGY:      

Oil prices rose after Saudi Arabia said OPEC+ was sticking with output cuts and could take further steps to balance the
market.  Saudi Arabia, the UAE, Kuwait and Iraq all denied a Wall Street Journal report that said OPEC was considering boosting output and sent prices plunging by more than 5% yesterday. OPEC+ meets on Dec. 4, a day before the start of European and G7 measures
in retaliation for Russia’s invasion of Ukraine.   On Dec. 5, a European Union ban on Russian crude imports is set to start, as is a G7 plan that will allow shipping services providers to help export Russian oil, but only at enforced low prices. In focus later
will be the latest weekly snapshots of supply in the United States, which are expected to show crude inventories fell by 2.2 million barrels. WTI +1.5%, Brent +1.5%, US Nat Gas -2.6%.     

CURRENCIES:  
                     

The dollar pulled back from yesterday’s strong gains and is lower for the first time in four days after some US policy makers
struck a cautious note about further aggressive tightening moves. Most Group-of-10 currencies held in narrow ranges before holidays in Japan and the US later this week. NZD/USD led gains among G-10 currencies, rising 0.9% as its central bank is set to deliver
a sixth straight 50bp rate hike tomorrow.  USD/JPY fell 0.6% after rallying 1.3% on Monday.  EUR/USD climbed 0.4% after the ECB’s Robert Holzmann said he backs a third straight 75bp rate hike at next meeting. GBP/USD rose 0.5%. US$ Index -0.3%, AUDUSD +0.5%.
              

Bitcoin +0.8%;  Ethereum -0.25%.  Cryptocurrency prices were mixed, with investors braced for more disruptions as further
digital-asset sector bankruptcies loom following the demise of Sam Bankman-Fried’s FTX empire.  Digital-asset brokerage Genesis has spent the last few days seeking at least $1 billion in fresh capital, and is warning that it may need to file for bankruptcy if
its fundraising efforts fail. Meanwhile, Tampa Bay Buccaneers quarterback Tom Brady and the Golden State Warriors’ Steph Curry are among the celebrities that a Texas regulator is investigating for potential securities-law violations tied to their promotions
of FTX.  Sam Bankman-Fried’s FTX, his parents and senior executives of the failed cryptocurrency exchange bought at least 19 properties worth nearly $121 million in the Bahamas over the past two years, official property records show.
An FTX Group bankruptcy filing showed that the firm and a number of affiliates had a combined cash balance of $1.24 billion.    

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 outperform at Baird; PT $95
• Fennec Pharmaceuticals (FRX CN) raised to overweight at Cantor
• Green Brick (GRBK) raised to neutral at JPMorgan; PT $26.50
• Neogen (NEOG) raised to outperform at William Blair
• Sensata (ST) raised to buy at Jefferies; PT $54
• Toll Brothers (TOL) raised to overweight at JPMorgan; PT $58
• Walgreens Boots (WBA) raised to outperform at Cowen; PT $54

DOWNGRADES:

• AdTheorent Holding (ADTH) cut to market perform at Cowen; PT $2.50
• Airbnb (ABNB) cut to neutral at Baird; PT $100
• Amphenol (APH) cut to hold at Jefferies; PT $88
• Blackstone Inc (BX) cut to underperform at Credit Suisse; PT $67.50
• Boralex (BLX CN) cut to sector perform at Peters & Co; PT C$40
• BuzzFeed (BZFD) cut to market perform at Cowen; PT $2
• Carvana (CVNA) cut to market perform at Cowen; PT $10
• Carvana (CVNA) cut to neutral at Baird; PT $7
• Century Communities (CCS) cut to underweight at JPMorgan; PT $48
• Chart Industries (GTLS) cut to neutral at Goldman; PT $150
• Cognex (CGNX) cut to market perform at Cowen; PT $50
• DouYu ADRs (DOYU) cut to sell at Citi
• Expeditors (EXPD) cut to underweight at Wells Fargo; PT $95
• Imago (IMGO) cut to hold at Jefferies; PT $36
• Imago (IMGO) cut to market perform at Cowen
• Imago (IMGO) cut to neutral at HC Wainwright
• Iris Energy (IREN) cut to neutral at HC Wainwright; PT $3
• Lyft (LYFT) cut to market perform at Cowen; PT $14
• MDC Holdings (MDC) cut to underweight at JPMorgan; PT $28
• MacroGenics (MGNX) cut to market perform at Cowen
• Peloton (PTON) cut to market perform at Cowen; PT $12
• Petrobras ADRs (PETR4 BZ) cut to sell at UBS
• Sea Ltd ADRs (SE) cut to market perform at Cowen; PT $60
• Stag Industrial (STAG) cut to equal-weight at Wells Fargo; PT $34
• Vroom (VRM) cut to neutral at Baird; PT $2
• Wayfair (W) cut to market perform at Cowen; PT $38
• Western New England (WNEB) cut to neutral at Piper Sandler

INITIATIONS:

• 2U (TWOU) reinstated neutral at Credit Suisse; PT $8
• Belden (BDC) reinstated hold at Jefferies; PT $86
• Box (BOX) reinstated outperform at Credit Suisse; PT $36
• CSG Systems (CSGS) reinstated outperform at Oppenheimer; PT $75
• CTS (CTS) rated new hold at Jefferies; PT $44
• Colgate-Palmolive (CL) rated new peerperform at Wolfe
• DigitalOcean (DOCN) rated new neutral at Credit Suisse; PT $31
• Dropbox (DBX) rated new underperform at Credit Suisse; PT $20
• Fastly (FSLY) reinstated neutral at Credit Suisse; PT $9.50
• Forge Global (FRGE) rated new neutral at Piper Sandler; PT $1.75
• Freshworks (FRSH) rated new neutral at Credit Suisse; PT $14
• HubSpot (HUBS) rated new outperform at Credit Suisse; PT $400
• Intel (INTC) resumed neutral at Mizuho Securities; PT $32
• Intuit (INTU) reinstated outperform at Credit Suisse; PT $500
• Live Nation (LYV) rated new neutral at Redburn
• Methode Electronics (MEI) rated new buy at Jefferies; PT $52
• National Instruments (NATI) rated new buy at Jefferies; PT $50
• P&G (PG) rated new outperform at Wolfe; PT $156
• PowerSchool (PWSC) rated new outperform at Credit Suisse; PT $23
• Rxo (RXO) rated new neutral at Goldman; PT $20
• Silver Mountain Resources (AGMR CN) rated new buy at Eight Capital
• Trevi Therapeutics (TRVI) rated new outperform at SVB; PT $6
• Upland Software (UPLD) reinstated neutral at Credit Suisse; PT $8
• Wag! Group (PET) rated new outperform at Oppenheimer; PT $5

David Wienke

Cabrera Capital Markets, LLC