Cabrera Capital Daily Game Plan

Friday March 10, 2023                                                        Trading Desk: (312) 236-8907

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

DATA/HEADLINES   8:30ET Employment Report*; 2:00ET Federal Budget

TODAY’S HIGHLIGHTS:  

• Energy has been fully restored to residents in Kyiv and Odesa oblasts following Russia’s missile strike
• A Mexican drug cartel has apologized and turned over the men they claim are responsible for the kidnapping
  of four Americans

Global stocks tumbled and bonds rallied amid mounting concerns that troubles in parts of the US banking system could ripple across the wider economy.  The global
rout in bank stocks was prompted by Silicon Valley Bank, a major banking partner for the US tech sector, being forced to raise fresh capital after losing $1.8 billion selling a package of bonds to meet depositor demands for cash. Although many analysts did
not see a systemic threat to the global banking system, the negative effects for lenders of higher central bank interest rates were now being felt. Goldman Sachs credit strategists said the risk of a major US bank experiencing a capital or liquidity event
is remote. Data showed the UK economy grew more strongly than forecast in January. GDP rose 0.3%, recouping some of a 0.5% drop in December, when strikes halted activity.                          

EQUITIES: 

US equity futures reversed earlier losses to trade little changed ahead of a key jobs report this morning with banks shares continuing their decline after hasty fundraising by SVB Financial
and the collapse of crypto-friendly bank Silvergate.  SVB Financial, which sparked the turmoil with a share sale to shore up losses, extended a slump, tumbling as much as 62%.  VC firms including Peter Thiel’s Founders Fund urged investors to pull their money
out.  US job growth likely slowed to a still-solid pace in February, with the unemployment rate expected to hold at a more than five- decade low, which could see the Federal Reserve raising interest rates for longer. The closely watched employment report is
expected to show wage gains maintaining their upward trend, underscoring a persistently tight jobs market. Clothing retailers are in focus today after Gap’s results missed estimates and it issued a downbeat forecast, sending its shares lower in extended trading.
Oracle also fell in post-market trading as its cloud-revenue growth disappointed.       

Futures ahead of the bell: E-mini S&P -0.15%, Nasdaq is flat, Russell 2000 -0.35%, Dow -0.2%. 

In pre-market trading, Oracle (ORCL) fell 4.5% after the software company reported cloud license and on-premise license revenue that was weaker than expected. Overall
revenue was essentially in line. Allbirds (BIRD) tumbles 22% after the sneaker brand reported fourth-quarter net revenue that missed estimates. DocuSign (DOCU) fell 13% after the e-signature company gave a first-quarter billings forecast that is weaker than
expected.  Roblox (RBLX) gains 2% as Jefferies raises the online games designer to buy from hold. Caterpillar (CAT) shares fall 2% as UBS cuts the construction-machinery maker to sell from neutral.
Stratasys (SSYS) shares rise 12% after receiving a formal, non-binding offer from Nano Dimension to buy the stock it doesn’t already own for $18 per share in cash. First Republic
Bank falls 19%, extending yesterday’s 16% decline.

European stocks slumped the most since mid-December, following a rout in US stocks amid liquidity concerns in the banking sector as investors also braced for payrolls
data later today. Europe’s STOXX banking index fell more than 4% and was set for its biggest one-day slide since early June, with declines for most major lenders, including HSBC, down 4.5%, and Deutsche Bank, down over 7%. Banks have been at the forefront
of Europe’s stock market outperformance in 2023 as rising interest rates boost margins and lenders announce large returns to investors through buybacks and dividends. Listed private equity firm EQT AB was the biggest laggard on the Stoxx 600 today, down as
much as 9%.  Stoxx 600 -1.2%, DAX -1.25%, CAC -1.1%, FTSE 100 -1.7%. Banks -3.8%, Autos -2.2%, Financial Services -2.1%, Travel -1.8%, Retail -1.8%, REITS -1.8%, Technology -1.3%. Food & Bev +0.3%.       

Asian stocks slumped, with financials leading a region-wide selloff, while continued losses in Chinese equities added to the weakness. The MSCI Asia Pacific Index
slid nearly 2% while the Hong Kong Tech Index fell 3.8%, sliding more than 10% this week. Stocks in Japan also declined as markets got little reprieve from the Bank of Japan’s decision to maintain its easing stance at Governor Haruhiko Kuroda’s final meeting.
Asian financial stocks tumbled the most in a year, Japanese banks shares falling by the most in three years. A key gauge of Chinese stocks erased all its gains for 2023.  EV makers dropped in China amid growing concerns of a price war as BMW become the latest
to slash electric-car prices. Hang Seng -3%, ASX 200 -2.3%, Topix -1.9%, Taiwan -1.5%, CSI 33 -1.3%, Sensex -1.1%, Kospi -1%, Vietnam -0.3%.

FIXED INCOME: 
 

Treasuries are richer across the curve, extending Thursday’s sharp rally, while off session highs reached during European morning as stock futures pare losses. 10-year
yields fell by as much as 11 basis points to a three-week low. As investors dashed for safety, the two-year yield slipped to 4.75% and heading for its biggest two-day slide since last June. Yields are richer by 3bp-6bp across the curve led by intermediates,
steepening 5s30s spread by 3bp on the day and adding to Thursday’s aggressive bull-steepening move; 10-year yields currently around 3.85%, richer by 5bps. Median estimate for February change in nonfarm payrolls is 225k after 517k gain in January. Fed swaps
still give more than 50% odds to a 50bp rate hike this month, down from a high near 75% earlier this week. 2 year yield ~4.8%.

METALS: 

Gold was little changed ahead of crucial US jobs data that may impact the size of the Federal Reserve’s next rate hike. The metal is on track for a weekly decline
after plunging Tuesday as Fed Chair Jerome Powell emphasized the central bank would speed up monetary tightening if inflation and jobs data stayed strong. He emphasized no decision has been made on the size of the next rate hike, making nonfarm payrolls later
on Friday crucial to the outlook. Inflation is set to stick around, research from the New York Fed shows. Revisions to PCE gauges showed gains in the fourth quarter that were stronger and more broad-based than previously thought. Those adjustments, combined
with another hot reading for January, point to more persistent pressures. The analysis is based on a model known as the Multivariate Core Trend. Spot gold +0.2%, +0.1%.                    

ENERGY:      

Oil headed for the biggest weekly loss since early February as the prospect of further and potentially faster interest-rate hikes from the Federal Reserve weighed
on the outlook for energy demand. WTI demand may disappoint in 1H23 as US refining capacity undergoes maintenance and price competition for crude escalates in Asia. China’s reopening may have a delayed impact on demand as the country works through all-time
high oil inventories, reducing import volumes. High fuel prices and high interest rates may limit recovery in US demand. Meanwhile, Saudi Arabia and Iran agreed to resume ties and open embassies. Saudi Arabia is asking the US to provide security guarantees
and help to develop its civilian nuclear program as Washington tries to broker diplomatic relations between the kingdom and Israel. The Biden administration is deeply involved in the complex negotiations, and any deal would reshape the Middle East’s political
landscape. WTI -0.6%, Brent -0.4%.       

CURRENCIES:               

The Swiss franc rose broadly, outperforming most G-10 currencies, as rising concerns about the falling values of bond portfolios held in the US banking system stoked
safe-haven demand. The yen weakened after the Bank of Japan maintained its easing stance. The dollar was mixed in volatile trade as investors awaited US jobs data due later in the day for more steer into whether the Federal Reserve will be able to keep raising
interest rates aggressively, given rising pressure on the country’s banking system. US$ Index -0.15%, GBPUSD +0.6%, USDJPY +0.4%, EURUSD +0.1%, AUDUSD is flat, USDCHF -0.65%. 

Bitcoin -1.5%, Ethereum -2.5%. The switch-off in risk sentiment and the wind-down of crypto-friendly Silvergate put bitcoin on track for its worst week since November.
 

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:

• Alaska Air (ALK) raised to overweight at Barclays; PT $62
• Ameresco (AMRC) raised to overweight at Piper Sandler; PT $64
• CES Energy (CEU CN) raised to sector outperform at Peters & Co; PT C$4
• Harvard Bioscience (HBIO) raised to buy at Benchmark; PT $4
• KeyCorp (KEY) raised to neutral at Piper Sandler; PT $16.50
• KeyCorp (KEY) raised to outperform at Baird; PT $20
• Marathon Petroleum (MPC) raised to buy at Mizuho Securities; PT $160
• Riskified (RSKD) raised to overweight at Piper Sandler; PT $8
• Roblox (RBLX) raised to buy at Jefferies; PT $48
• Silk Road Medical (SILK) raised to neutral at Citi; PT $50
• Transat AT (TRZ CN) raised to hold at TD; PT C$4
• United Airlines (UAL) raised to overweight at Barclays; PT $80
• Zimmer Biomet (ZBH) raised to overweight at Piper Sandler; PT $145

DOWNGRADES:

• Allbirds (BIRD) cut to market perform at Telsey; PT $2.25
• Allbirds (BIRD) cut to neutral at Baird; PT $2
• Allbirds (BIRD) cut to neutral at Guggenheim
• Allegiant Travel (ALGT) cut to equal-weight at Barclays; PT $105
• Apple (AAPL) cut to sell at LightShed Partners; PT $120
• Bioxcel Therapeutics (BTAI) cut to hold at Jefferies; PT $22
• Caterpillar (CAT) cut to sell at UBS; PT $225
• DocuSign (DOCU) cut to underweight at JPMorgan; PT $48
• Fulcrum Therapeutics (FULC) cut to neutral at Credit Suisse; PT $8
• Generac (GNRC) cut to neutral at Citi; PT $140
• Greenlane Renewables (GRN CN) cut to hold at Paradigm Capital
• Greenlane Renewables (GRN CN) cut to sector perform at Peters & Co
• Inseego (INSG) cut to market perform at Cowen; PT $1
• JD.com ADRs (JD) cut to neutral at BOCOM Intl; PT $43
• SVB Financial (SIVB) cut to hold at Truist Secs; PT $100
• SVB Financial (SIVB) cut to market perform at Raymond James
• SVB Financial (SIVB) cut to peerperform at Wolfe
• Shawcor Ltd (SCL CN) cut to market perform at BMO; PT C$13
• Southwest Air (LUV) cut to equal-weight at Barclays; PT $38
• Stride (LRN) cut to equal-weight at Morgan Stanley; PT $46
• Tidewater Midstream (TWM CN) cut to sector perform at National Bank
• a.k.a. Brands (AKA) cut to market perform at Telsey; PT $2
• a.k.a. Brands (AKA) cut to neutral at Piper Sandler; PT $2

INITIATIONS:

• Array (ARRY) rated new neutral at Citi; PT $24
• Ballard Power Systems (BLDP CN) rated new sector perform at Scotiabank
• Chewy (CHWY) rated new buy at Roth MKM; PT $52
• Cross Country Health (CCRN) rated new buy at Loop Capital; PT $30
• Intuitive Machines (LUNR) rated new buy at Roth MKM; PT $20
• Kosmos Energy (KOS) rated new add at Peel Hunt; PT $8.94
• Omega Therapeutics (OMGA) rated new buy at JonesTrading; PT $11
• Pool Corp (POOL) rated new outperform at Oppenheimer; PT $408
• Privia Health (PRVA) rated new outperform at RBC; PT $36
• Rivian (RIVN) resumed buy at BofA; PT $40
• Shoals (SHLS) rated new buy at Citi; PT $34
• Vertex Energy (VTNR) rated new market perform at Cowen; PT $8
• Voyager Therapeutics (VYGR) rated new outperform at Oppenheimer; PT $14

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC