Cabrera Capital Daily Game Plan

Thursday February 23, 2023                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES 
 8:30ET Weekly Jobless Claims, GDP, Personal Consumption, Chicago Fed Index; 10:50ET Fed’s non-voting Bostic speaks; 11:00ET Kansas City Fed Mfg Index; 1:00ET
$35B 7yr note auction; 2:00ET Fed’s non-voting Daly speaks

TODAY’S HIGHLIGHTS:  

• More Talks Among EU Countries on a 10th Package Of Russia Sanctions
  this Afternoon
• Putin said Russia will maintain increased attention on boosting
  its nuclear forces
• The Chinese city of Hangzhou plans to give families with a second
  or third baby a one-off cash subsidy in a bid to boost birth rates

Global shares eked out slim gains as strong earnings in the semiconductor sector slightly outweighed  news that the Federal
Reserve would continue on its path of raising rates to quell inflation. Nvidia Corp.’s bullish outlook sparked gains in global technology shares. A Reuters poll showed that a majority of global equity analysts and fund managers expect their local markets to
fall in the next three months as investors digest the fact that interest rates are likely to stay higher for longer. In other news, the US will increase its troop presence in Taiwan for training, the largest increase in decades. The contingent of US troops
will more than quadruple, to 100-200 from 30 officials say. The expanded training is part of the US push to bolster Taiwan defenses against China, according to the Wall Street Journal. Meanwhile, the US is watching closely to see if China provides Russia with
weapons, State Department spokesman Ned Price said. Brazil, the world’s biggest beef exporter, is halting exports of red meat to China starting today after confirming a case of mad cow disease.                       

EQUITIES: 

US equity-index futures rose as investors grew more confident following the release of the Fed minutes that the peak rate would be within levels
already priced in by markets, reducing the risk of hawkish shocks.  While the minutes and comments by Fed officials reiterated a continuing preference for rate hikes, they didn’t say anything that wasn’t factored in by the market’s aggressive repricing of
Fed bets in recent weeks. US Jobless claims data due today may help shine a light on the strength of the labor market, which has remained stubbornly robust through the rate-hiking cycle. S&P earnings are falling and further downgrades are on the way, UBS said.
The firm sees a recession in the second to fourth quarters this year. Bank of America is turning more constructive on discretionary stocks.                         

Futures ahead of the bell: E-mini S&P +0.5%, Nasdaq +1.1%, Russell 2000 +0.4%, Dow +0.3%. . 

In pre-market trading, NVidia jumped `11% after the chipmaker presented a bullish revenue outlook for the current quarter, suggesting that a
push into artificial intelligence processors is helping offset sluggish demand for personal computer chips. Bath & Body Works fell 3% after the retailer forecast EPS for the full year that missed estimates and announced a $200m target of annual cost savings.
EBay fell over 5% after suggesting sales will continue to decline in the second half. Alibaba rose more than 6% after reporting a surge in profit. Etsy was the best performer in the S&P in post-market trading after reporting record revenue. Liberty Global
missed forecasts, hurt by rising energy and labor costs. Lucid tumbled over 11% after missing estimates. Bumble’s sales beat (BMBL +5%).  Enovix (ENVX) shares rise ~19% after the electronic-components maker reported revenue for the fourth quarter that beat. 
Teladoc (TDOC) as much as 7% after the online health services firm guided to a slowdown in revenue growth. Unity Software (U) slipped as much as 8.9% after the software maker’s first-quarter and full-year revenue forecasts trailed consensus estimates.

European stocks posted enough strong results on the last big earnings day to eke out small gains, led by autos and tech. Earnings have outpaced
the US, helping the Stoxx 600 to continue outperforming the S&P 500.  Underlying inflation in the euro area hit a record in January, revised data showed, likely cementing the European Central Bank’s plan to raise interest rates by another half-point next month.
Rolls-Royce shares surged 23%, topping the Stoxx 600 with the CEO’s strategic review and earnings that beat. Household-appliances maker SEB is also rallying on an earnings beat. AXA gained after saying it will buy back as much as €1.1 billion of its shares
and Stellantis gained for a second day after its strong earnings and buyback. Munich Re slumped as disappointing underwriting overshadowed stronger full-year profit.  Stoxx 600 +0.25%, DAX +0.5%, CAC +0.4%, FTSE 100 -0.2%. Autos +1.4%, Tech +1.35%, Banks +1.25%,
Retail +0.75%. Healthcare -0.6%, Basic Resources -0.5%.

Shares in Asia were mixed as traders focused on US economic data due today. South Korean shares were among the biggest advancers
in the region as the Bank of Korea paused rate hikes for the first time in a year. Major Asian semiconductor-related stocks advanced after Nvidia gave a bullish revenue outlook for the current quarter.  Shares of metal-based miners tumbled in Asia on concern
further hikes in US interest rates will slow demand. Meanwhile, the rally in Chinese artificial intelligence stocks is showing further signs of cooling amid media reports of authorities banning access to OpenAI’s ChatGPT service.  Taiwan +1.3%, Kospi +0.9%,
Indonesia +0.4%, , Vietnam -0.05%, CSI 300 -0.1%, Sensex -0.2%, Hang Seng -0.35%, ASX 200 -0.4%, Singapore -1%. Japan was closed for a holiday. 

FIXED INCOME: 
 

Treasuries are under pressure as US trading day begins, with yields still inside Wednesday’s ranges. yields are higher by
as much as 2.4bp in 10-year sector; Wednesday’s ranges included YTD highs for most tenors. Minutes of the latest Federal Reserve meeting showed that officials continued to anticipate further increases in borrowing costs, although most were in favor of smaller
rate increases.  Traders are now pricing in a Fed peak rate of 5.55% by July, compared with 4.90% they were betting on at the start of year.  Auction cycle concludes with 7-year note sale at 1:00ET.       

METALS: 
                       

Gold is little changed, getting some support from a slightly weaker dollar. The price action seems to suggest that traders
are still assessing the impact of the Fed minutes while dealing with the fact that interest rates are going to stay higher for longer than previously anticipated, which should keep a lid on prices.  Policymakers agreed rates would need to move higher, but
that the shift to smaller-sized hikes would let them calibrate more closely with incoming data. Today’s GDP data is expected to show growth of about 2.9%, which will give the Fed room to raise rates slowly without triggering a recession. Spot gold +0.02%,
silver +0.2%.                          

ENERGY:      

Oil edged higher after a six day losing streak, the longest run of losses this year. The US oil buildup continued. Inventories
bumped up by just under 10 million barrels last week for a ninth weekly increase, according to API. That would take total holdings to the highest in 21 months if confirmed by the EIA today. Millions of barrels of Russian crude and fuels have been switched
between tankers just a few miles off the coast of Greece, one of a series of workarounds that traders have used to overcome EU sanctions against Moscow. India’s demand for refined-oil products is expected to hit a record in the 12 months from April, government
projections show. WTI +1%, Brent +0.85%. US Natural Gas -2%.

CURRENCIES:  
                    

Currency markets traded in tight ranges with the dollar drifting lower after closing 0.3% higher on Wednesday following
the release of minutes of the FOMC’s last rate decision.  The Australian dollar showed one of the biggest gains against the greenback on stronger-than-expected business investment data and dip-buying by local exporters.  The euro fluctuated after euro-area
core inflation was revised higher to a record 5.3% in January.  Japanese yen traders will look to the first questioning of Bank of Japan governor nominee Kazuo Ueda in parliament on Friday.  US$ Index -0.1%, GBPUSD is flat, USDJPY +0.05%, AUDUSD +0.35%, NZDUSD
+0.3%, EURUSD +0.1%.             

Bitcoin +0.05%, Ethereum +1.4%.     

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:

• Altice USA (ATUS) raised to buy at ROE Equity
• Charles River (CRL) raised to buy at Guggenheim; PT $255
• Cinemark (CNK) raised to neutral at Credit Suisse; PT $12
• Cognex (CGNX) raised to neutral at Credit Suisse; PT $44
• DT Midstream (DTM) raised to neutral at Citi; PT $54
• DocuSign (DOCU) raised to peerperform at Wolfe
• Dun & Bradstreet (DNB) raised to buy at Deutsche Bank; PT $17
• Intel (INTC) raised to equal-weight at Morgan Stanley; PT $28
• Palantir (PLTR) raised to buy at President Capital Management; PT $12
• Roper (ROP) raised to outperform at Wolfe; PT $480
• Stantec (STN CN) raised to outperform at RBC; PT C$84
• Teladoc (TDOC) raised to outperform at SVB; PT $34
• Wix.com (WIX) raised to neutral at Piper Sandler; PT $99

DOWNGRADES:

• Alignment Healthcare (ALHC) cut to neutral at JPMorgan; PT $12
• America Movil ADRs (AMXL MM) cut to underweight at JPMorgan; PT $19
• Ametek (AME) cut to peerperform at Wolfe
• Centene (CNC) cut to neutral at JPMorgan; PT $90
• Cerevel Therapeutics (CERE) cut to equal-weight at Wells Fargo; PT $30
• Commercial Metals (CMC) cut to sector weight at KeyBanc
• CyberArk (CYBR) cut to neutral at President Capital Management; PT $150
• Gear Energy (GXE CN) cut to sector perform at Peters & Co; PT C$1.50
• Graphite Bio (GRPH) cut to market perform at Cowen
• Indus Realty (INDT) cut to market perform at JMP
• Jounce Therapeutics (JNCE) cut to market perform at Raymond James
• Lucid (LCID) cut to neutral at BofA
• Oak Street Health (OSH) cut to neutral at JPMorgan; PT $39
• Veeva (VEEV) cut to neutral at Guggenheim
• Wingstop (WING) cut to neutral at BTIG

INITIATIONS:

• Aris Mining Corp (ARIS CN) rated new outperform at BMO; PT C$6.50
• CMC Metals (CMB CN) rated new buy at Fundamental Research
• CarMax (KMX) reinstated hold at Truist Secs; PT $66
• Clear Secure (YOU) rated new buy at Needham; PT $40
• Permian Resources (PR) reinstated buy at Roth MKM; PT $12
• Walgreens Boots (WBA) rated new buy at Loop Capital; PT $45

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC