Cabrera Capital Daily Game Plan

Tuesday February 28, 2023                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES 
 8:30ET Advanced US Trade Balance, Inventories; 9:00ET FHFA House Price Index, Case Shiller Home Price Index; 9:45ET Chicago PMI; 10:00ET Consumer Confidence; 10:30ET Dallas Fed; 2:30ET Fed’s Goolsbee speaks

US home prices probably cooled for a sixth consecutive month in December, falling 0.4% month on month.

TODAY’S HIGHLIGHTS:  

• Beijing’s ‘Reunification’ Plan For Taiwan ‘On Fast Development Track’,
  NPC Deputy Says – SCMP  
• Elon Musk regained his spot as the world’s richest person
  
• All-cash US home sales are at their highest in almost a decade
  

Global equities slipped and bond yields hit multi-year highs after consumer prices hit a record in France and accelerated
in Spain, adding to expectations that major central banks will need to continue tightening policy. France’s European Union-harmonized consumer prices rose to a record 7.2% in February while Spain’s EU-harmonized 12-month inflation was 6.1%, up from 5.9% in
January and above the 5.5% expectation from analysts. Chief Economist Philip Lane said in remarks to Reuters published today that officials may hold borrowing costs at a high level for some time once they hit the peak.                       

EQUITIES: 

US equity futures climbed on the back of strong corporate results after Target beat expectations and Chevron expanded its stock buyback plans. 
Investor sentiment toward stocks is becoming more pessimistic as they build short bets in both US and European equity futures, according to Citigroup strategists. In a “markedly more bearish” swing last week, traders added nearly $3 billion of new shorts to
S&P 500 futures positioning and pulled a net $5.1 billion from exchange-traded funds. Meanwhile, JPMorgan strategists led by Marko Kolanovic said equities are overvalued and at risk of further losses as a divergence with bonds is yet to close.   

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

In pre-market trading, Target shares rose 2%, reversing earlier declines, after a big profit beat and surprise revenue growth
offset a downbeat profit outlook. The muted outlook echoes the message from Walmart’s earnings report last week. Zoom gained 7% after cost cuts helped boost its profit outlook. Tesla gained 2%, extending a rally that’s helped the electric-car marker double
in value since January. Chevron rose 1.2% after boosting share buybacks. Hims & Hers Health (HIMS) gains 10% after the health care software solutions provider posted 4Q results that beat.  Workday (WDAY) shares decline 2.7%, with analysts noting the payroll
software company’s cautious outlook for subscription growth. Clarus (CLAR) dropped 17% in extended trading on Monday after the sporting-goods company’s projections for sales fell short. Progyny (PGNY) jumped 16% in post-market trading after forecasting revenue
for the first quarter that beat. Dish Network Corp. (DISH) shares are down 4.5% after BofA downgraded the satellite television company by two notches. Norwegian Cruise (NCLH) fell about 6% after earnings disappointed. Olaplex (OLPX) falls 15% after the maker
of hair-care products issued weaker-than-expected forecasts.

European indices are recovering from early losses after bond yields surged, as hot inflation reports ramped up the stakes
for the region’s central bank to battle price pressures. The Stoxx 600 reversed and early loss of 0.4% to trade flat.  Healthcare stocks fell 0.7%, while several sectors swung to gains, including banks, which rose 2.65%. Santander was up 4.7% after announcing
plans to raise its return on tangible equity ratio in the coming years. The UK’s FTSE 100 index and the pound will be closely watched today after British Prime Minister Rishi Sunak on Monday signed a new trade deal with the European Union designed to remedy
problems caused by the Northern Ireland Protocol. German healthcare and agricultural product giant Bayer AG dropped 5% after issuing 2023 guidance that fell short of analyst expectations. Ocado Group shares slumped 7% after the e-commerce group said its UK
grocery arm is still feeling the effects of the worst inflation on record. DAX +0.3%, CAC +0.2%, FTSE 100 -0.4%. Insurance +1.2%, Retail +0.7%, Basic Resources +0.5%. Media -0.6%, Technology -0.45%.

Asian stocks were mixed as investors digested key economic data across the region. The MSCI Asia Pacific Index fell 0.4%,
driven by consumer discretionary and communication shares. Hong Kong stocks declined the most even as the city said it will end its mask mandate starting March 1. A late afternoon surge helped Chinese shares close in the green, outperforming in the region.
China investors await a key meeting of the nation’s political leaders starting this weekend for further clues on policy.  Australia’s ASX 200 gained roughly half a percent as retail sales for January came in higher than expected at 1.9%.  The Topix ended marginally
higher even though Japan saw its worst decline in factory output in eight months, recording a 4.6% drop in January compared to December. Japanese stocks tied to tourism rose after the government said it will ease Covid testing requirements for travelers from
China starting March 1. Hang Seng index -0.8%, Sensex -0.55%, Thailand -0.3%, Singapore was flat, Topix +0.03%, Vietnam +0.3%, Kospi +0.4%, CSI 300 +0.6%. 

FIXED INCOME: 
 

Treasuries are slightly cheaper across the curve, following wider losses across core European rates after French and Spanish
inflation data surprised to the upside, causing a new wave of hawkish repricing for ECB policy rate. The yield on two-year German government bonds jumped as much as 9 basis points to 3.17%, the highest since 2008.  Germany’s 10-year yield rose 7 basis points
to 2.66%, its highest since July 2011. Benchmark 10-year yields in France and Spain both hit multi-year highs.  Focal points of US session include potential for month-end flows and a packed economic data slate. US 10-year yields around 3.95%, cheaper by ~3bp
vs Monday’s close.         

METALS: 
                       

Gold declined and is set for its worst month since mid-2021, while copper and aluminum headed for their biggest monthly
declines since June. Spot gold is down 0.5%  after a slew of data saw traders pricing a higher peak for US and EU interest rates this year. The metal is down about 6% in February, after rallying for the previous three months on signs the Federal Reserve would
be able to dial back on its hawkishness. Instead strong inflation, home sales and jobs data have increased expectations for monetary tightening. Spot silver -0.4%.

ENERGY:      

Crude oil rose as expectations of demand recovery in China underpinned gains, with the market awaiting key data over the
next two days. Still, oil is set for a fourth straight monthly decline as concerns about tighter monetary policy and swelling stockpiles in the US eclipsed optimism about rising demand in China. Indian buyers of Russian oil, a crucial lifeline for the Kremlin
in recent months, are struggling under the weight of increasingly onerous demands from financiers wary of breaching Western sanctions. Russian oil is heading to West Africa for the first time since 2018 as Western sanctions leave Moscow scrambling to find
buyers. WTI +1.7%, Brent +1.5%.  US Nat Gas -0.9%.

CURRENCIES:  
                    

The US dollar index is flat and set to snap a four month losing streak, having risen 2.5% in February. Euro erased an earlier
drop against the dollar after data showed French and Spanish inflation unexpectedly accelerated to an all-time high in February. Sterling continued its advance on this week’s breakthrough in Brexit talks between Britain and the European Union. Australian dollar
erases Monday’s gain as broad greenback strength outweighed strong local economic data. Australian retail sales rebound, rising 7.5% from a year ago in sign of consumer resilience and keeping pressure on RBA.  US$ Index +0.02% GBPUSD +0.4%, USDJPY +0.3%, EURUSD
+0.1%, AUDUSD -0.05%, EURJPY +0.45%.               

Bitcoin +0.2%, Ethereum +0.5%.  Coinbase will suspend trading of Binance USD (BUSD) starting March 13 because the stablecoin
doesn’t meet its listing standards, the U.S. cryptocurrency exchange announced in a tweet Monday. Users will still be able to access their BUSD funds and withdraw them at any time, Coinbase 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:

• Broadmark Realty (BRMK) raised to neutral at Piper Sandler; PT $6
• Celsius Holdings (CELH) raised to outperform at Credit Suisse; PT $120
• HomeTrust Bancshares (HTBI) raised to overweight at Piper Sandler; PT $32
• Krystal Biotech (KRYS) raised to buy at Goldman; PT $124
• Lundin Mining (LUN CN) raised to buy at Pareto Securities; PT C$12.18
• Revolution Medicines (RVMD) raised to overweight at JPMorgan; PT $38
• SoftBank ADRs (9984 JP) raised to hold at Jefferies; PT $19.18

DOWNGRADES:

• Anywhere Real Estate Inc (HOUS) cut to market perform at KBW; PT $7
• Arconic (ARNC) cut to sell at Goldman; PT $21
• Argo Group (ARGO) cut to underperform at Raymond James
• Dish (DISH) cut to underperform at BofA; PT $10
• Eli Lilly (LLY) cut to sell at SocGen; PT $278
• Focus Financial (FOCS) cut to market perform at William Blair
• Fulcrum Therapeutics (FULC) cut to equal-weight at Morgan Stanley
• Holley (HLLY) cut to neutral at DA Davidson; PT $2
• LendingTree (TREE) cut to neutral at Susquehanna; PT $36
• Thomson Reuters (TRI CN) cut to sector perform at National Bank; PT C$170
• fuboTV (FUBO) cut to inline at Evercore ISI; PT $3

INITIATIONS:

• AbCellera Biologics (ABCL) rated new outperform at Cowen
• Aemetis (AMTX) rated new underweight at Piper Sandler; PT $3
• Axcelis Technologies (ACLS) rated new buy at Loop Capital; PT $150
• Clean Energy Fuels (CLNE) rated new overweight at Piper Sandler; PT $8
• Disc Medicine Inc (IRON) rated new outperform at SVB; PT $36
• Ideaya Biosciences (IDYA) rated new outperform at RBC; PT $25
• Magenta Therapeutics (MGTA) rated new neutral at HC Wainwright
• Nurix (NRIX) rated new outperform at Oppenheimer; PT $25
• Opal Fuels (OPAL) rated new overweight at Piper Sandler; PT $12
• Structure Therapeutics ADRs (GPCR) rated new buy at Guggenheim; PT $50
• Structure Therapeutics ADRs (GPCR) rated new buy at Jefferies; PT $34
• Structure Therapeutics ADRs (GPCR) rated new outperform at BMO; PT $40
• Structure Therapeutics ADRs (GPCR) rated new outperform at SVB; PT $33
• Trip.com ADRs (TCOM) rated new buy at BOC Intl; PT $42.80

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC