Cabrera Capital Daily Game Plan

Monday December 5, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES   
9:45ET S&P Global Services PMI final;  10:00ET Factory Orders, Durable Goods Orders, ISM Services Index

TODAY’S HIGHLIGHTS:  

• Russia launches new missile attacks, Ukrainians head for shelters
  
• Apple fully resumed advertising on Twitter, Elon Musk said
  
• McCarthy Says Defense Bill Won’t Move Forward Unless Military Vaccine
  Mandate Dropped

Global markets are mixed as investors were cautious about the extent of the reopening in China, with the MSCI world equity
index up just 0.3%. China’s services activity shrank to six-month lows in November as widening COVID containment measures weighed on demand and operations, a private-sector business survey showed.  The Caixin/S&P Global services purchasing managers’ index
fell to 46.7 from 48.4, marking the third monthly contraction in a row.  China may announce 10 additional Covid measures as early as Wednesday, Reuters reported. The country may downgrade its management of Covid-19 as a top-level Category A infectious disease
to Category B as early as January. EU services PMI was revised modestly lower in November, while retail sales fell sharply in October, data released overnight showed.  Meanwhile, Russia unleashed a new barrage of missiles on Ukraine, causing people to head
to shelters across the country as air defenses went into action.                              

EQUITIES: 

US futures slipped as Treasury yields rose on inflation risks and uncertainty about the path of American rate policy.  A hotter-than-expected
US jobs report last week along with a jump in average hourly earnings point to fresh inflation risks and more bond volatility. Morgan Stanley strategist Michael Wilson, one of the US stock market’s most vocal skeptics, said investors are better off booking
profits. Futures ahead of the employment data:                  

Futures ahead of the employment data: E-mini S&P -0.5%, Nasdaq -0.5%, Russell 2000 -0.4%, Dow -0.5%. The trend line from all-time highs remains
key resistance in ES around 4102 area.  

In premarket trading, Tesla fell 4% on news the electric vehicle maker plans to lower production at its Shanghai factory
by about 20% this month on sluggish China demand.  Activision Blizzard (ATVI) rises 2.8% after Bloomberg News reported that Microsoft is ready to fight for its $69 billion acquisition of the video gaming company. Chinese stocks listed in the US jump as authorities
hasten the pivot away from the Covid Zero strategy. Iovance Biotherapeutics Inc. (IOVA) soars as much as 24% after a board member bought $65 million worth of the company’s shares on Friday. Starbucks (SBUX) falls 1.5% after it was downgraded to hold from buy
at Deutsche Bank, which cited the stock’s valuation.

European stock indexes fluctuated, finding little support from an easing of China’s domestic pandemic restrictions, after
market sentiment was dampened by US jobs data on Friday that raised fears of persistent inflation. Euro zone business activity contracted for a fifth month in November, suggesting the economy was sliding into a mild recession as consumers cut spending amid
surging inflation, a survey showed. However, investor morale in the euro zone rose this month to its highest level since June on hopes that mild winter weather and sufficient gas in storage may lessen the chances of a recession. Credit Suisse shares climb
over 5% after a report that Saudi Arabia’s Crown Prince is preparing to invest in the Swiss lender’s investment-bank unit.  FlatexDEGIRO falls as much as 38% after the online brokerage firm cut its revenue forecast.  German catering equipment company Rational
is the worst performer in the Stoxx 600, sinking as much as 9%, after Bank of America initiated coverage on the stock with an underperform. European mining stocks outperform, up 1.7%. Real Estate +1%, Insurance +0.5%, Energy +0.3%, Banks +0.25%.  Food & Beverage
-1.7%, Telecom -0.8%, Healthcare -0.6%.  Stoxx 600 -0.3%, DAX -0.5%, CAC -0.6%, FTSE 100 +0.25%.

Asian stocks rebounded as Chinese equities resumed their rally on further relaxation of Covid rules. The MSCI Asia Pacific
Index climbed 1.1%, led by communication services and consumer discretionary shares. Benchmarks in Hong Kong led gains in the region with the Hang Seng Tech Index soaring more than 9% as authorities in China eased Covid testing requirements across major cities
over the weekend.  The gains coincided with growing bullish calls from Wall Street banks on Chinese equities as Morgan Stanley upgraded China stocks to overweight.  Shares connected to Macau casino operators rallied as JPMorgan said it expects 2023 to be a
“year of Macau” with casino operators benefiting from license renewals, reopening and cheap valuations. Chinese solar and energy storage shares dropped after reports that Sungrow Power Supply lowered guidance for this year, dampening sentiment for the sector.
Hang Seng Index +4.5%, CSI 300 +2%, Vietnam +1.25%, ASX 200 +0.3%, Taiwan +0.1%, Sensex -0.05%, Topix -0.3%, Kospi -0.6%, Philippines -0.7%.      

FIXED INCOME: 
                                        

Treasuries are mixed with the curve flatter as US trading day begins, extending the flattening move on Friday due to stronger-than-estimated
November employment data. Yields remain inside Friday’s ranges, though inverted 2s10s reached -81.4bp, a new low for the cycle. The 10-year Treasury yield climbed about three basis points, holding above 3.50%.

METALS: 
                               

Gold steadied after earlier touching the highest level since July as traders weighed more US economic data and China’s relaxation
of its strict Covid-Zero policies. Spot gold is down 0.1%, silver -0.4%.            

ENERGY:      

Oil prices rose as the first strong measures to limit Russia’s oil profits over the war in Ukraine took effect. The new
EU sanctions bring uncertainty about how much crude could be lost to the global economy through Russian retaliation. Russia said it won’t accept the $60 price cap and is preparing a workaround. JPMorgan expects its output will fall by a modest 500,000 barrels
a day in the first quarter. JPMorgan cut its 2023 Brent forecast to $90 from $98. Saudi Arabia lowered most oil prices for Asia, in a sign the outlook for demand in the region remains fragile. Kuwait on Friday said that oil customers were reluctant to boost
imports next year. WTI +2.8%, Brent +2.8%.          

CURRENCIES:  
                     

The US$ Index is slightly lower after hitting its lowest level since June on Friday, following a dovish interpretation of
Fed Chair Jerome Powell’s speech and stronger-than-expected non-farm payrolls data.   The dollar has erased more than half of this year’s gains amid growing expectations the Federal Reserve will temper its aggressive rate hikes, and as optimism grows over
China’s reopening plans.  China’s yuan strengthened past the 7-per-dollar level, as authorities accelerated a shift toward reopening the economy. Commodity currencies were also supported by a surge in crude prices after OPEC+ kept output steady and sanctions
on Russian crude from the EU and Group-of-Seven nations kicked in.  US$ Index -0.3%, GBPUSD is flat, USDJPY +0.6%, EURJPY +1%, AUDUSD +0.25%, USDCAD -0.5%, EURUSD +0.4%.                        

Bitcoin +0.8%;  Ethereum +1%.  FTX’s collapse should be a wakeup call for Congress, but Republicans and some Democrats still
believe crypto should be a significant part of the economy, Senate banking panel head Sherrod Brown said.    

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:

• Callon Petroleum (CPE) raised to neutral at JPMorgan; PT $57
• Comcast (CMCSA) raised to equal-weight at Wells Fargo; PT $38
• Diversified Royalty (DIV CN) raised to outperform at CIBC; PT C$3.50
• Domino’s Pizza (DPZ) raised to buy at BTIG; PT $460
• Huntington Bancshares (HBAN) raised to overweight at Morgan Stanley
• MEG Energy (MEG CN) raised to overweight at JPMorgan; PT C$23
• MGM Resorts (MGM) raised to buy at Truist Secs; PT $50
• Murphy Oil (MUR) raised to overweight at JPMorgan; PT $56

DOWNGRADES:

• Allegiant Travel (ALGT) cut to equal-weight at Morgan Stanley; PT $115
• Asana (ASAN) cut to peerperform at Wolfe
• Daqo New Energy ADRs (DQ) cut to neutral at Goldman; PT $70
• First Republic (FRC) cut to underweight at Morgan Stanley; PT $102
• Goodfood Market (FOOD CN) cut to underperform at RBC; PT 35 Canadian cents
• Imperial Oil (IMO CN) cut to underweight at JPMorgan; PT C$76
• Laredo Petroleum (LPI) cut to underweight at JPMorgan; PT $69
• Liberty Global (LBTYA) cut to neutral at BofA
• NetApp (NTAP) cut to hold at Loop Capital; PT $67
• North West Co (NWC CN) cut to hold at TD; PT C$39
• SVB Financial (SIVB) cut to underweight at Morgan Stanley; PT $186
• Signature Bank (SBNY) cut to equal-weight at Morgan Stanley; PT $152
• Silvergate Capital (SI) cut to underweight at Morgan Stanley; PT $24
• Spire (SR) cut to neutral at JPMorgan; PT $69
• Starbucks (SBUX) cut to hold at Deutsche Bank; PT $106
• Terex (TEX) cut to hold at Deutsche Bank; PT $46
• Wabash National (WNC) cut to hold at Vertical Research; PT $27

INITIATIONS:

• Akari Therapeutics ADRs (AKTX) rated new buy at HC Wainwright; PT $1.50
• Alaska Air (ALK) rated new buy at Citi; PT $55
• Ameris Bancorp (ABCB) resumed overweight at piper Sandler
• Atlantic Union (AUB) resumed overweight at piper Sandler
• Bank OZK (OZK) reinstated equal-weight at Morgan Stanley; PT $48
• Cadence Bank (CADE) reinstated equal-weight at Morgan Stanley; PT $32
• Carter Bankshares (CARE) resumed neutral at piper Sandler
• Chinook Therapeutics (KDNY) rated new overweight at Wells Fargo; PT $30
• Choice Hotels (CHH) rated new equal-weight at Morgan Stanley; PT $137
• Comerica (CMA) reinstated equal-weight at Morgan Stanley; PT $89
• Commerce Bancshares (CBSH) reinstated equal-weight at Morgan Stanley
• Community Financial (TCFC) resumed overweight at piper Sandler
• Cullen/Frost (CFR) reinstated overweight at Morgan Stanley; PT $178
• Day One Biopharma (DAWN) rated new buy at Goldman; PT $45
• Denali Therapeutics (DNLI) rated new outperform at Cowen
• DiamondRock Hospitality (DRH) rated new equal-weight at Morgan Stanley
• ERO Copper (ERO CN) rated new buy at Paradigm Capital; PT C$22
• Eagle Bancorp (EGBN) resumed neutral at piper Sandler
• East West Bancorp (EWBC) reinstated equal-weight at Morgan Stanley
• Expeditors (EXPD) rated new hold at Baptista Research; PT $120
• F&G Annuities & Life (FG) rated new neutral at Credit Suisse; PT $22
• FVCBankcorp (FVCB) resumed overweight at piper Sandler
• First Community Bankshares (FCBC) resumed underweight at piper Sandler
• FleetCor (FLT) rated new buy at Baptista Research; PT $238.80
• Frontier Lithium (FL CN) rated new outperform at RBC; PT C$3.25
• Hilton Worldwide (HLT) rated new overweight at Morgan Stanley; PT $171
• Host Hotels (HST) rated new equal-weight at Morgan Stanley; PT $20
• Hyatt (H) rated new overweight at Morgan Stanley; PT $136
• JetBlue (JBLU) rated new neutral at Citi; PT $9
• Marriott Intl (MAR) rated new overweight at Morgan Stanley; PT $190
• NYCB US (NYCB) reinstated equal-weight at Morgan Stanley; PT $10
• Palo Alto Networks (PANW) rated new hold at Baptista Research; PT $190
• Park Hotels (PK) rated new equal-weight at Morgan Stanley; PT $15
• Pebblebrook (PEB) rated new underweight at Morgan Stanley; PT $15
• Primis Financial Corp (FRST) resumed neutral at piper Sandler
• Prosperity Banc (PB) reinstated equal-weight at Morgan Stanley
• Rxo (RXO) rated new market perform at Raymond James
• Sandy Spring (SASR) resumed neutral at piper Sandler
• Shore Bancshares (SHBI) resumed overweight at piper Sandler
• Southern First Bancshares (SFST) resumed neutral at piper Sandler
• Sunstone Hotel (SHO) rated new underweight at Morgan Stanley; PT $10
• Synovus (SNV) reinstated equal-weight at Morgan Stanley; PT $44
• Teleflex (TFX) rated new hold at Baptista Research; PT $253
• Travere Therapeutics Inc (TVTX) rated new overweight at Wells Fargo
• United Bankshares (UBSI) resumed neutral at piper Sandler
• United Therapeutics (UTHR) reinstated sell at Goldman; PT $230
• Valley National (VLY) reinstated equal-weight at Morgan Stanley
• Vivani Medical Inc (VANI) rated new buy at ThinkEquity; PT $7
• Warner Music (WMG) rated new hold at Baptista Research; PT $37
• Webster Financial (WBS) reinstated overweight at Morgan Stanley
• WesBanco (WSBC) resumed neutral at piper Sandler
• Wyndham Hotels (WH) rated new overweight at Morgan Stanley; PT $87
• Xenia Hotels (XHR) rated new underweight at Morgan Stanley; PT $13
• Zions (ZION) reinstated equal-weight at Morgan Stanley; PT $65

David Wienke

Cabrera Capital Markets, LLC