Cabrera Capital Daily Game Plan

Tuesday March 7, 2023                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES 
 10:00ET Wholesale Trade, Fed Chair Powell testifies to Senate; 1:00ET $40B 3yr note auction; 3:00ET Consumer Credit

TODAY’S HIGHLIGHTS:  

• President Biden is set to unveil a plan to raise taxes on those
  earning more than $400K per year

Global stocks edged higher as US Treasury bond yields held below the key 4% mark and investors waited to see what policy
message Federal Reserve Chair Jerome Powell would deliver at his Congressional testimony later in the day. The testimony of the Fed Chair will set the tone for markets this week, perhaps telegraphing how much more policy tightening he thinks is needed. Data
showed China’s exports and imports both fell sharply in January-February, reflecting a slowdown in the global economy and weak domestic demand.  A number of major central banks deliver policy decisions this week. The Reserve Bank of Australia raised interest
rates today, as expected, but tempered its hawkish outlook.                        

EQUITIES: 

US equity futures edged higher as investors waited to hear from Jerome Powell.  Meanwhile, President Biden’s budget will propose hiking payroll
taxes on Americans making over $400,000 per year and allowing the government new power to negotiate drug prices. The president’s budget, which will be released Thursday, proposes raising Medicare taxes from 3.8% to 5% on annual income above $400,000, and eliminating
a loophole business owners and higher-earners can exploit to avoid additional taxes.  

Futures ahead of the bell: E-mini S&P +0.15%, Nasdaq +0.25%, Russell 2000 +0.25%, Dow +0.05%. 

In premarket trading, Meta Platforms gains 1.5%, with the Facebook-owner seen cutting thousands more employees as soon as
this week.  Cara Therapeutics (CARA) plunges 29% after the biotech company’s fourth-quarter revenue missed estimates.  Dick’s Sporting Goods  (DKS) gains 7% after beating analysts’ estimates for the fourth quarter and gave a full-year profit outlook ahead
of projections. Enlight Renewable Energy (ENLT +2.5%) is initiated at Barclays and JPMorgan at overweight, and at Roth at buy. KeyCorp (KEY) falls 2.7% after the bank gave weak guidance. Squarespace (SQSP) jumps 14% after the web-hosting company reported fourth-quarter
results and issued revenue outlooks that topped estimates. Trip.com (TCOM) climbs 3% after the Chinese firm says domestic travel demand has recovered strongly.

European shares gained slightly, reversing early declines, after a surprise increase in German factory data reinforced the
picture of a resilient euro zone economy. Gains were tempered as investors await monetary policy outlook from Jerome Powell’s testimony today. German factory orders surprised with a 1% rise in January, compared with predictions for a 0.7% drop.  UK retail
sales in February also saw a boost, climbing 4.9% from a year ago. BlackRock Investment Institute strategists said the outperformance of European equities won’t last, as improving euro-area activity signals more rate hikes to come. The Stoxx 600 is slightly
lower with some profit-taking in some of this year’s biggest winners, such as banks. In individual company news, German online food service company HelloFresh SE slumped after issuing a profit outlook that missed expectations. Airport retailer Dufry AG gained
after sales beat on travel recovery. Online fashion retailer Zalando SE jumped after the German online fashion retailer’s profit outlook came in slightly ahead of expectations. Stoxx 600 -0.05%, DAX +0.05%, CAC is flat, FTSE 100 +0.03%. Utilities +0.5%, Healthcare
+0.5%, Media +0.4%, Banks -0.8%, REITs -0.6%, Basic Resources -0.6%.

Stocks in Asia were mostly higher with the exception of China and Hong Kong. The MSCI Asia Pacific Index reversed early
gains to settle marginally lower with energy shares the biggest gainers. Shares in China fell on weak export data and policy uncertainty during the National People’s Congress. China’s exports fell 6.8% year on year in January-February. Australian stocks climbed
after the RBA hiked rates by 25bps, expected, and said it expects goods inflation to moderate in coming months. Japanese food companies rose after reports the agriculture ministry plans to take measures to keep the rise in imported wheat prices at ~5%. Vietnam
outperformed in the region, up over 1%. Thailand +0.7%, Taiwan +0.6%, Philippines +0.5%, ASX 200 +0.5%, Topix +0.4%, Singapore +0.2%, Kospi +0.03%. Hang Seng -0.3%, CSI 300 -1.1%. India was closed for a holiday.

FIXED INCOME: 
 

Treasuries richer across the curve, unwinding Monday’s losses and following wider gains across bunds and gilts during the
European morning. Bunds rally extended after an ECB consumer survey found inflation expectations declined “significantly” to 2.5% for three years ahead. Focal points of the US session include Fed Chair Powell’s appearance before the Senate banking panel and
a 3-year note auction. Futures traders are pricing in a 76% probability the Fed will raise rates by 25 basis points at its March 21-22 meeting and a 24% likelihood of a 50 bp increase. Yields are richer by 2bp-3bp with spreads little changed on the day; 10-year
around 3.94%, 2 year yield ~4.87%.                  

METALS: 

Gold nudged lower as traders awaited comments from Federal Reserve Chair Jerome Powell for clues on the outlook for US interest
rates.  Powell will testify before a Senate panel later today and a US House of Representatives committee on Wednesday, at which he is expected to underscore that rates will go higher than policy makers had anticipated just a few weeks ago. Countering the
pressure from rising rates, strong demand from central banks helped to underpin prices in recent months. Data on Tuesday showed China increased its gold reserves for a fourth month in February, joining other Asian nations in raising holdings as the dollar’s
strength waned. Turkey has also been a key buyer lately. Spot gold -0.4%, silver -1%.         

ENERGY:      

Crude lost ground after data showed China’s imports fell 10.2% during the first two months of the year, compared with a
7.5% decline in December and the 5.1% drop expected by the economists. Meanwhile, crude shipments into China fell 1.3% in January and February, stirring concern about demand in the world’s largest importer. The data showed that crude-oil imports remained weak
as refiners eased up on purchases ahead of the Lunar New Year holiday.  Despite concerns of a tight market, higher supplies and lower demand is likely to remain for now, Citigroup analysts said.  WTI –0.6%, Brent -0.5%.     

CURRENCIES:               

The US$ is slightly higher ahead of Fed Chair Powell’s testimony. Aussie $ fell after the RBA delivered a dovish hike of
25 bps to 3.6%, while signaling a pause in its 10-month tightening cycle.  The Aussie and other commodity currencies also face pressure from China’s decision to set a lower-than-expected economic growth target, and its latest data showing a continued decline
in exports and imports. Bank of England policy maker Catherine Mann said the pound could weaken further in the coming months as investors absorb the implication of the US Federal Reserve and European Central Bank’s plans to raise interest rates.  US$ Index
+0.1%, GBPUSD -0.3%, EURUSD -0.2%, USDJPY +0.2%, AUDUSD -1%.                     

Bitcoin -0.1%, Ethereum ~flat.  The risks of creating an easier way for retail investors to invest in crypto are at the
heart of a court fight today between Grayscale and the SEC. In June, the regulator rejected Grayscale’s plan to convert its $14 billion Bitcoin Trust into an ETF, saying crypto markets are too ripe for fraud and manipulation. Grayscale is asking an appeals
court to overturn it.

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:

• Costco (COST) raised to buy at Northcoast; PT $560
• Esperion Therapeutics (ESPR) raised to neutral at Credit Suisse; PT $7
• Haivision Systems (HAI CN) raised to buy at Canaccord; PT C$5
• Kimbell Royalty Partners (KRP) raised to overweight at KeyBanc; PT $21
• Mercantile Bank (MBWM) raised to overweight at Piper Sandler; PT $40
• NuStar Energy (NS) raised to buy at Stifel; PT $19.50
• United Airlines (UAL) raised to outperform at Exane; PT $70

DOWNGRADES:

• Aptinyx (APTX) cut to neutral at HC Wainwright
• Artisan (APAM) cut to sell at Goldman
• Black Stone Minerals (BSM) cut to sector weight at KeyBanc
• Embark Technology (EMBK) cut to neutral at Baird; PT $3
• Gossamer Bio (GOSS) cut to market perform at Raymond James
• Joby Aviation (JOBY) cut to sell at Deutsche Bank; PT $4
• Office Properties Income (OPI) cut to underperform at RBC; PT $14
• Ovintiv (OVV) cut to market perform at BMO; PT $51
• Qualtrics (XM) cut to market perform at William Blair
• Radius Global (RADI) cut to hold at Jefferies; PT $15
• Secure Energy Services (SES CN) cut to sector perform at RBC; PT C$8
• TCR2 (TCRR) cut to neutral at HC Wainwright
• Trimble (TRMB) cut to sell at Northcoast

INITIATIONS:

• Allakos (ALLK) rated new overweight at Piper Sandler; PT $22
• Bluebird Bio (BLUE) rated new outperform at Baird; PT $10
• Crispr Therapeutics (CRSP) rated new neutral at Baird; PT $46
• Enlight Renewable Energy (ENLT IT) rated new overweight at Barclays
• Hesai Group ADRs (HSAI) rated new overweight at Morgan Stanley
• Lexicon Pharma (LXRX) rated new hold at Jefferies; PT $3
• Mineralys Therapeutics (MLYS) rated new buy at Guggenheim; PT $32
• Mineralys Therapeutics (MLYS) rated new buy at Stifel; PT $45
• Mineralys Therapeutics (MLYS) rated new overweight at Wells Fargo
• Perrigo (PRGO) rated new buy at Canaccord; PT $49
• Tenax Therapeutics (TENX) rated new buy at Roth MKM; PT $6
• Upstart (UPST) rated new sell at Compass Point; PT $6

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC