Cabrera Capital Daily Game Plan

Friday December 9, 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; 10:00ET UMich consumer sentiment, Wholesale inventories revision;  

US PPI Final Demand (M/M) Nov: 0.3% (est 0.2%; prior 0.2%) : US PPI Core (M/M) Nov: 0.4% (est 0.2%; prior 0.0%)

TODAY’S HIGHLIGHTS:  

• Arizona Sen. Kyrsten Sinema is changing her party affiliation to
  independent
• PUTIN: RUSSIA MAY CUT ITS OUTPUT AS PART OF OIL-CAP RESPONSE

Global shares rose on expectations China’s economy would strengthen as COVID-19 curbs ease, but stocks were heading for
a 2% weekly loss in nervous markets ahead of several policy meetings next week.   China’s Premier said on Thursday the country’s shift in COVID-19 policy would allow the economy to pick up pace, a day after a top-level party meeting pledged to focus on stabilizing
growth                           

EQUITIES:  futures slide after the PPI, erasing earlier gains

US equity futures rose ahead of reports on US producer prices and UMichigan sentiment that will be two of the final pieces of data, along with
CPI on Tuesday, before a rate decision by the Federal Reserve next week.  S&P 500 added 0.3% following its first advance this month yesterday. Strategists have lined up to warn investors against piling back into risk on hopes the Fed is getting close to pivoting
to easier policy. Today’s PPI for November will offer a progress report on how effective the Fed’s campaign to quell inflation has been.  The producer price index for final demand is forecast to show a rise of 7.2% in the 12 months through October, down from
8% last month.                        

Futures ahead of the PPI: E-mini S&P +0.5%, Nasdaq +0.6%, Russell 2000 +0.4%, Dow +0.3%. 

In pre-market trading, Activision Blizzard fell, set to extend losses for a fourth consecutive session, as the US Federal
Trade Commission seeks to block Microsoft’s $69 billion acquisition of the videogame publisher. Meanwhile, DocuSign (DOCU) surged 13% and Broadcom (AVGO) rallied 4% after reporting quarterly reports. Netflix (NFLX) rises 2.8% after the streaming company is
upgraded to overweight from equal-weight at Wells Fargo.

Lululemon (LULU) slides 7% on light volumes after full-year sales forecast disappointed analysts.  Carvana (CVNA) slumps
6% after Needham cut its recommendation on the stock to hold from buy. Erasca (ERAS) is 6.5% lower after its stock offering priced via JPMorgan and Goldman Sachs. Costco Wholesale shares nudged lower as analysts cut price targets on the stock after earnings
were mostly in line.

European equities gained after five days of losses as traders took advantage of enticing valuations ahead of a slew of central
bank decisions next week. Economists predict the European Central Bank will raise interest rates twice more in its struggle with unprecedented inflation, including a smaller half-point hike next week.  Meanwhile, Citigroup strategists said they expect the
Stoxx 600 to end 2023 at 475 points, nearly 9% higher from current levels. European stocks stand a better chance of decoupling from falling earnings later in the year when inflation peaks and central banks stop hiking, Citi said in a note.  The Stoxx Europe
600 gained 0.75% with construction, technology, as well as travel and leisure leading gains while energy shares fell.  European chip stocks are in focus after TSMC reported sales rose by 50% in November.  Adidas and Puma move higher even after Lululemon’s
lower-than-expected profitability raised concerns about a pileup of inventory. DAX +0.8%, CAC +0.45%, FTSE 100 is flat. Construction +1.7%, Tech +1.1%, Travel +1%. Energy -0.8%.     

Shares in Asia gained as most regional markets followed US shares higher, while reopening moves in China kept overall sentiment
upbeat.  Asian equities finished with their sixth weekly gain, the longest such stretch in two years.  The MSCI Asia Pacific Index rose as much as 1.4%, heading for a sixth-straight week of gains, lifted by technology shares. Hong Kong’s Hang Seng Index climbed
more than 2.3%, leading gains in the region, with developer stocks driving the advance after a report that Chinese authorities may further soften their stance on property policies at its key economic meeting next week.  Chinese blue chips CSI300 rose 1% to
their highest in nearly three months.  Asian gaming stocks advanced as the US Federal Trade Commission seeks to block Microsoft’s acquisition of Activision. Nikkei 225 +1.2%, Taiwan +1%, Philippines +0.8%, Kospi +0.75%, ASX 200 +0.5%. India’s Sensex -0.6%,
Indonesia -1.3%.              

FIXED INCOME: 
                                        

Treasuries curve is near steepest levels of the day heading into early US session with 2s10s, 5s30s spreads wider by ~3bp
as the long-end underperforms. Bigger losses across long-end of the German curve weighs. 10-year yield is little changed around 3.485%, 30 year yield +2bps at 3.45%, 2 year yield -3.5bps at ~4.28%. Futures have priced in a near-certain possibility that the
Fed will slow down its rate hike to 50 basis points next week.      

METALS: 
                               

Gold is higher for a fourth straight day. Spot gold is +0.6% as traders await the release of key US producer inflation data
that could influence policy at next week’s Federal Reserve meeting.  Today’s fresh PPI data, which reflects wholesale inflation, will show whether the rate hikes implemented so far this year have been effective in pushing back against rising prices.  Traders
are looking for the report to show that monthly PPI and monthly Core PPI rose 0.2% in November. A weaker-than-expected reading could trigger a breakout to the upside. Silver +0.45%.    

ENERGY:      

Crude oil is slightly higher, while heading for a weekly drop of around 10% after a volatile session on Thursday on concerns
over economic outlook. WTI rose 0.75% following the shutdown of the Keystone pipeline system that roiled the flow of crude supplies across the US. Stockpiles at the nation’s storage hub are already at their lowest since July. Canada’s TC Energy shut its Keystone
pipeline in the United States Wednesday night after more than 14,000 barrels of crude oil spilled into a creek in Kansas, making it one of the largest crude spills in the US in nearly a decade.  The cause of the leak is unknown. There have been no effects
on drinking water wells, the U.S Environmental Protection Agency said in a statement. Meanwhile, Russia is reportedly selling ESPO crude oil to Asia above the $60 level set by the G7 price cap. Brent is up 0.35%          

CURRENCIES:  
                     

Currencies trade in narrow ranges with the US$ Index down 0.1% as geopolitics-driven appetite for haven investments faded
and an index of implied currency volatility dropped to its lowest level since August. The Australian dollar and the Swedish krona led gains among G-10 peers as attention shifts toward next week’s US inflation report and Fed meeting.  GBPUSD +0.4%, AUDUSD +0.4%,
USDJPY -0.7%, EURUSD +0.05%.                                   

Bitcoin +0.2%;  Ethereum +0.3%.       

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:

• DocuSign (DOCU) raised to neutral at Piper Sandler; PT $50
• Hello Group ADRs (MOMO) raised to overweight at Morgan Stanley; PT $9
• Jazz Pharma (JAZZ) raised to buy at Goldman; PT $190
• National Health Investors (NHI) raised to neutral at Credit Suisse
• Netflix (NFLX) raised to overweight at Wells Fargo; PT $400
• Phreesia (PHR) raised to outperform at SVB
• Pinduoduo ADRs (PDD) raised to outperform at KGI Securities; PT $110
• Vale ADRs (VALE3 BZ) raised to overweight at Morgan Stanley; PT $20
• Vintage Wine Estates (VWE) raised to outperform at Telsey; PT $3.50

DOWNGRADES:

• Alcoa (AA) cut to equal-weight at Morgan Stanley; PT $56
• Apple (AAPL) cut to sell at Aletheia Capital; PT $118
• CIBC (CM CN) cut to neutral at Credit Suisse; PT C$63
• Carvana (CVNA) cut to hold at Needham
• Coinbase (COIN) cut to underperform at Mizuho Securities
• Costco (COST) cut to neutral at Fubon; PT $546
• Equitable Holdings (EQH) cut to hold at Jefferies; PT $34
• Fidelity National (FIS) cut to hold at Jefferies; PT $75
• GMS (GMS) cut to hold at Loop Capital; PT $60
• Gilead (GILD) cut to hold at DZ Bank; PT $90
• Iovance Biotherapeutics (IOVA) cut to neutral at Goldman; PT $6
• Lundin Mining (LUN CN) cut to market perform at BMO; PT C$8
• MAG Silver (MAG CN) cut to neutral at PI Financial; PT C$21.15
• Maverix Metals (MMX CN) cut to neutral at PI Financial; PT C$5.75
• MetLife (MET) cut to hold at Jefferies; PT $82
• NRG Energy (NRG) cut to equal-weight at Morgan Stanley; PT $37
• PacWest (PACW) cut to hold at Truist Secs; PT $26
• Pebblebrook (PEB) cut to market perform at Raymond James
• Pembina Pipeline (PPL CN) cut to neutral at Credit Suisse; PT C$51
• Sunstone Hotel (SHO) cut to underperform at Raymond James
• Torrid (CURV) cut to market perform at William Blair
• Xenia Hotels (XHR) cut to market perform at Raymond James

INITIATIONS:

• AgileThought (AGIL) rated new buy at Canaccord; PT $7
• Agilon Health (AGL) rated new buy at Stifel; PT $23
• Blue Water Vaccines (BWV) rated new buy at HC Wainwright; PT $7
• CleanSpark (CLSK) rated new overweight at Cantor; PT $5
• Crestwood Equity (CEQP) reinstated buy at Citi; PT $32
• DMC Global (BOOM) reinstated sector weight at KeyBanc
• DT Midstream (DTM) rated new sell at Citi; PT $54
• Delek Logistics Partners (DKL) rated new neutral at Citi; PT $48
• Enanta (ENTA) rated new buy at HC Wainwright; PT $56
• Equitrans (ETRN) rated new neutral at Citi; PT $8
• Evotec SE ADRs (EVT GR) rated new buy at HC Wainwright; PT $12
• Holly Energy Partners (HEP) rated new neutral at Citi; PT $19
• Insmed (INSM) rated new buy at Mizuho Securities; PT $28
• InterDigital (IDCC) rated new buy at Jefferies; PT $80
• Ovintiv (OVV) rated new buy at SWS; PT $75
• Presto Automation (PRST) rated new neutral at Chardan Capital Markets
• Privia Health (PRVA) rated new buy at Stifel; PT $28
• Rallybio (RLYB) rated new overweight at JPMorgan; PT $21
• Rxo (RXO) rated new equal-weight at Morgan Stanley; PT $20
• SLN US (SLN LN) rated new equal-weight at Morgan Stanley; PT $18
• Take-Two (TTWO) rated new neutral at Citi; PT $105
• Zeta Global (ZETA) rated new buy at B Riley; PT $13

David Wienke

Cabrera Capital Markets, LLC