Cabrera Capital Daily Game Plan

Thursday December 1, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES   
8:30ET Weekly Jobless Claims, PCE report, Disposable Income/spending; 9:15ET NY Fed’s Dobbeck speaks; 9:20ET Fed’s Logan speaks; 9:30ET Fed’s Bowman speaks; 9:45ET Manufacturing PMI final; 10:00ET ISM Manufacturing, Construction Spending; 3:00ET Fed’s Barr
speaks

US PCE Deflator (M/M) Oct: 0.3% (est 0.4%; prior 0.3%).

TODAY’S HIGHLIGHTS:  

• Eli Lilly presented promising results on another experimental Alzheimer’s
  drug  
• The White House hosts its first state dinner since 2019 this evening
  
• Elon Musk’s Neuralink aims to start putting its coin-sized computing
  brain implant into human patients within six months

Global markets rose and foreign funds piled into emerging markets after sentiment was lifted by comments from the US Fed
Chair Powell yesterday suggesting the Fed could scale back the pace of rate hikes. Rallying bond markets sent borrowing costs lower almost everywhere too, while higher oil and metals prices suggested even commodities markets now hope a less aggressive Federal
Reserve will help the stumbling world economy.  Sentiment was also buoyed by news that major Chinese cities have started to lift COVID lockdowns and ease restrictions following widespread protests over stringent zero-COVID policies. Meanwhile, euro-area factory
PMI was revised down for November, though output expectations picked up slightly on improved supply-chain and energy-market signals. South Korea’s exports fell 14% year on year in November and China’s factory activity shrank in November as widespread curbs
disrupted manufacturers’ output, a private sector survey showed. The Caixin/S&P Global manufacturing purchasing managers’ index rose slightly to 49.4 from 49.2 the previous month, beating expectations of 48.9, but the reading marks the fourth monthly contraction
in a row.                              

EQUITIES: 

US equity futures were muted after yesterday’s rampant optimism from Fed Chair Powell’s assertion that policymakers did not want to “overtighten”
policy.  S&P 500 contracts are steady, a day after Powell’s comments helped the underlying benchmark close out November with a second month of gains for the first time in more than a year.  Yesterday’s 3.1% move in SPX was its biggest gain on the last day
of a month since November 2011. Investor focus now turns to the latest US core PCE print — one of the Fed’s favored inflation gauges. Futures move higher after the PCE data.                   

Futures ahead of the bell: E-mini S&P +0.3%, Nasdaq +0.2%, Russell 2000 +0.4%, Dow +0.1%.  The weekly trend line at 4114 in ES is pivotal resistance
with upside momentum above likely to test the .618 retracement.

Tech shares led losses in US premarket trading, with Salesforce (CRM -7%) and Snowflake (SNOW -4%) falling after issuing
weak outlooks weighed down by economic headwinds and a slowing economy. Meanwhile, Okta shares rallied 17% after the software company gave a fourth-quarter forecast that was stronger than expected. Splunk (SPLK) jumped as much as 8% after the software company
boosted its revenue guidance. Nutanix rose more than 5% on news that HP Enterprise is weighing a takeover of the cloud firm. Kroger gained 3% after lifting its annual profit outlook for the year, underscoring the robust demand that’s fueling the grocer’s ambitions
to bulk up by buying rival Albertsons. Five Below jumps 9% after the discount retailer reported third-quarter net sales that beat, and boosted full-year EPS guidance. G-III Apparel (GIII) sank as much as 30%, after the DKNY brand owner cut guidance for the
full year. PVH Corp. (PVH) gained 9% in extended trading after the parent company of Calvin Klein and Tommy Hilfiger increased its adjusted earnings per share view for the year.

European stocks rose on Thursday, catching up with last night’s rally in US stocks. European indices opened higher before
paring gains but indices remain in positive territory. European markets largely brushed off German data showing ongoing weak demand in its manufacturing sector.  The Stoxx 600 added 1% with rates-sensitive sectors like technology and real estate outperforming,
while energy and miners lag. The French CAC 40 is up nearly 20% from its September low and on the cusp of entering a bull market. Optimism over the relaxation of Covid restrictions in China and the nation’s move toward an economic reopening, along with robust
earnings, have fueled the rally. CAC +0.4%, DAX +0.9%, FTSE 100 +0.15%.

Shares in Asia extended gains after their best monthly rally in 24 years, as concerns eased over China’s Covid measures
and the Federal Reserve’s tightening.  After capping a 15% gain November, the MSCI Asia Pacific Index jumped as much as 2.5%. China’s blue chips led gains as a top Chinese official said efforts to combat the virus are entering a new phase with the omicron
variant weakening and vaccination rates rising. Korean construction stocks rallied as Powell’s speech fueled bets that a slowdown in rate hikes will aid the country’s battered real-estate market. Japanese property stocks fell as Mizuho Securities lowered ratings
and cut price targets for Mitsubishi Estate and Sumitomo Realty. XPeng jumped 13% in Hong Kong after the EV maker’s third-quarter margins beat expectations.  MSCI Asia Pacific Index +1.7%, China’s CSI 300 +1.1%, ASX 200 +1%, Nikkei 225 +0.9%, Taiwan +0.9%,
Hang Seng Index +0.75%, Kospi +0.3%, Sensex +0.3%, Philippines -0.7%, Vietnam -1.2%.

FIXED INCOME: 
                                        

Treasuries are mixed with the curve flatter, unwinding a portion of Wednesday’s sharp bull-steepening move sparked by Fed
Chair Powell’s signal that a slower pace of rate hikes is in the offing. 10 year yield is lower ~3.59% while 5 year yield is higher by 2bps at 3.76%. Wednesday’s price action was exacerbated by month-end-related buying. Treasuries returned nearly 2.7% in November,
their third monthly advance of 2022 and the biggest since March 2020.      

METALS: 
                               

Gold extended an advance after Federal Reserve Chair Jerome Powell signaled the pace of tightening would slow at the next
meeting, ahead of economic data that could bear on the central bank’s future rate hikes.  Powell was optimistic inflation could be contained without the US economy tipping into recession, but said borrowing costs would still need to keep rising and remain
restrictive for some time. Spot gold is nearly 1% higher as the dollar keeps dropping. Silver is flat.          

ENERGY:      

Oil is extending its three-day rally as investors assessed the latest signals that China may be softening its Covid Zero
policy and looked ahead to an OPEC+ meeting that will set supply levels for 2023. China is set to announce in coming days an easing of its COVID-19 quarantine protocols and a reduction in mass testing, sources said, a marked shift in policy after anger over
the world’s toughest curbs fueled widespread protests. Cases nationwide remain near record highs but the changes come as some cities have been lifting their lockdowns in recent days, and a top official said the ability of the virus to cause disease was weakening.
Meanwhile, Europe’s sanctions on Russian crude and fuels may send tanker rates soaring until the third quarter as the region seeks alternative sources, upending global trade flows, Vantage Shipbrokers said. WTI +1.1%, Brent +1%.        

CURRENCIES:  
                     

The positive mood knocked the dollar lower against its Group-of-10 counterparts for the third straight day. US$ Index is
flirting with its 200 day moving average for the first time since climbing above it in June 2021.  Japan’s yen and Korea’s won spearheaded a surge in Asian currencies as prospects for a slower pace of Federal Reserve rate hikes triggered broad weakness in
the dollar. The yen strengthened 1.4% vs the dollar while the risk-sensitive won rose 1.5%. US$ Index -0.5%, GBPUSD +1.2%, AUDUSD +0.3%, NZDUSD +1.1%, EURUSD +0.55%.                         

Bitcoin +0.2%;  Ethereum -0.7%.     

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:

• Bioxcel Therapeutics (BTAI) raised to neutral at Goldman; PT $16
• Lennox (LII) raised to overweight at Wells Fargo; PT $300
• Navient (NAVI) raised to equal-weight at Morgan Stanley; PT $16
• Pentair (PNR) raised to overweight at Barclays; PT $55
• RBC (RY CN) raised to market perform at KBW; PT C$138
• Regions Financial (RF) raised to outperform at Wolfe; PT $24
• StoneCo (STNE) raised to neutral at Goldman; PT $11
• Vertiv Holdings (VRT) raised to outperform at Wolfe; PT $18

DOWNGRADES:

• Ally Financial (ALLY) cut to underweight at Morgan Stanley
• B&G Foods (BGS) cut to underweight at Consumer Edge Research; PT $9
• Capital One (COF) cut to underweight at Morgan Stanley; PT $90
• CrowdStrike (CRWD) cut to peerperform at Wolfe
• G-III Apparel (GIII) cut to neutral at Piper Sandler; PT $22
• Hubbell (HUBB) cut to underperform at Wolfe; PT $235
• Khiron Life Sciences (KHRN CN) cut to hold at Mackie Research Capital
• Khiron Life Sciences (KHRN CN) cut to sector perform at ATB Capital
• Leslie’s (LESL) cut to hold at Stifel; PT $15
• Liberty Global (LBTYA) cut to neutral at JPMorgan; PT $23
• Oncorus (ONCR) cut to neutral at Chardan Capital Markets
• Oncorus (ONCR) cut to neutral at Piper Sandler
• Otis Worldwide (OTIS) cut to equal-weight at Barclays; PT $80
• PagSeguro (PAGS) cut to sell at Goldman; PT $9
• Regal Rexnord Corp (RRX) cut to peerperform at Wolfe
• Satsuma Pharmaceuticals (STSA) cut to neutral at Mizuho Securities
• Sirius XM (SIRI) cut to sell at Citi; PT $6
• Synchrony Financial (SYF) cut to underweight at Morgan Stanley
• Thomson Reuters (TRI CN) cut to underperform at Exane
• U.S. Bancorp (USB) cut to peerperform at Wolfe
• Victoria’s Secret (VSCO) cut to neutral at JPMorgan; PT $43
• Vontier Corp (VNT) cut to peerperform at Wolfe
• Zebra Tech (ZBRA) cut to underperform at Wolfe; PT $266

INITIATIONS:

• Aclaris (ACRS) rated new buy at Goldman; PT $25
• Altimmune (ALT) rated new buy at Goldman; PT $20
• CrowdStrike (CRWD) rated new buy at Redburn
• Dare Bioscience (DARE) rated new buy at JonesTrading; PT $6
• Duck Creek (DCT) reinstated neutral at JPMorgan; PT $13
• Expeditors (EXPD) rated new neutral at Exane; PT $107
• Full Truck Alliance ADRs (YMM) rated new buy at Jefferies; PT $11
• Fusion Pharmaceuticals (FUSN) reinstated buy at B Riley; PT $10
• GXO Logistics (GXO) rated new neutral at Exane; PT $40
• GoodRx Holdings (GDRX) rated new buy at Citi; PT $7
• Guidewire (GWRE) reinstated overweight at JPMorgan; PT $78
• NeoGames (NGMS) rated new buy at Deutsche Bank; PT $17
• PMET CN (PMET CN) rated new speculative buy at Stifel Canada; PT C$8.25
• Palo Alto Networks (PANW) rated new buy at Redburn
• RAPT Therapeutics (RAPT) rated new buy at Goldman; PT $27
• Sapiens (SPNS) reinstated underweight at JPMorgan; PT $20
• SentinelOne (S) rated new neutral at Redburn
• Sunnova Energy (NOVA) rated new buy at Janney Montgomery; PT $33
• Sunrun (RUN) rated new neutral at Janney Montgomery; PT $30
• Viridian Therapeutics Inc (VRDN) rated new buy at HC Wainwright; PT $35
• Vizio Holding (VZIO) rated new equal-weight at Morgan Stanley; PT $13
• WSFS Financial (WSFS) rated new buy at Janney Montgomery; PT $57
• Zscaler (ZS) rated new neutral at Redburn
• scPharma (SCPH) rated new outperform at Cowen; PT $25

David Wienke

Cabrera Capital Markets, LLC