Cabrera Capital Daily Game Plan

Tuesday March 14, 2023                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES 
  8:30ET CPI data*, Canada Jan. Manufacturing Sales;  5:20ET Fed’s Bowman speaks

Economists surveyed by Reuters forecast consumer prices increased by 0.4% in February, which would lower the year-on-year increase in the CPI
to 6.0%. US FEB. CONSUMER PRICES RISE 6.0% Y/Y; EST. 6.0%.  US FEB. CORE CONSUMER PRICES RISE 5.5% Y/Y%; EST. 5.5%

TODAY’S HIGHLIGHTS:  

• A wave of customers have applied to shift their accounts to large
  banks from smaller lenders – FT
• SVB’s customers were given access to all their deposits on Monday
  
• Moody’s placed First Republic and five other US lenders on review
  for downgrade
• China will resume issuing visas to tourists and other foreigners
  from tomorrow

Global shares slid as a brewing US banking crisis prompted investors to lower their expectations for interest rate hikes,
even ahead of key inflation data.  Silicon Valley Bank’s collapse continued to pound global bank stocks on Tuesday as investors worried over the financial health of smaller global banks and the prospect of tighter regulation to protect depositors at the expense
of shareholders.  SVB’s seizure, the biggest US bank failure since the financial crisis, followed Signature Bank failure and news last week that Silvergate Capital would wind down. Biden’s efforts to reassure markets failed to relieve investor worries about
potential contagion to other lenders worldwide. Canada’s banking regulator took steps to begin daily check-ins with banks to monitor their liquidity. Meanwhile, consumer inflation in China slowed to the lowest rate in a year in February. Focus this morning
will be on US CPI data.                             

EQUITIES: 

US equity futures rose, halting the selloff sparked by the collapse of Silicon Valley Bank, as investors braced for inflation data that will
impact the Federal Reserve’s upcoming rate decision.  Goldman Sachs economists as well as analysts from the world’s largest actively managed bond fund, PIMCO, said the Fed could take a breather on the policy rate following the collapse of SVB. Nomura economists
took it one step further, saying the Fed could cut its target rate next week.  SVB turmoil may elicit a slowdown in the hiking cycle, but robust CPI data will support a continuation. Futures on the S&P 500 and Nasdaq 100 rose over 0.5% as regional banking
stocks rallied in premarket trading. First Republic Bank, whose shares tumbled by a record 62% on Monday, jumped more than 50%.  After the back-to-back collapse of three smaller banks, their biggest US counterparts are seeing a rush of depositors fearful the
crisis will spread.  JPMorgan Chase alone received billions of dollars in recent days, and Bank of America, Citigroup and Wells Fargo also saw higher-than-usual volume. Apollo and Blackstone expressed interest in snapping up SVB’s loan book.  

Futures ahead of the CPI DATA: E-mini S&P +0.8%, Nasdaq +0.7%, Russell 2000 +1.5%, Dow +0.7%.  Nasdaq is still holding on above its key 200 day
moving average. **

In pre-market trading, US regional bank stocks jumped following several sessions of heavy losses as investors assess the
government’s response to the collapse of Silicon Valley Bank. KeyCorp (KEY) +14.2%, Comerica (CMA) +10.5%, Fifth Third (FITB) +10.4%, Schwab (SCHW) +8.3%, Truist Financial (TFC) +7.3%, State Street (STT) +5.4%. United Airlines slumped 6% after forecasting
a surprise loss on labor costs. Uber (UBER) and Lyft (LYFT) advanced over 5% after a California appeals court upheld the current law classifying gig workers as independent contractors instead of employees. Cryptocurrency-exposed stocks rose after Bitcoin extends
its gains. Bitfarms (BITF) +8.5%, Stronghold Digital (SDIG) +8.5%. Momentive Global (MNTV) rose 18% after the SurveyMonkey owner said it had agreed to be acquired by Symphony Technology Group for $9.46/share cash.  Gitlab (GTLB) fell 33% after the software
company gave a full-year revenue forecast that was weaker than expected. Amylyx Pharmaceuticals (AMLX), the maker of a drug for amyotrophic lateral sclerosis, rose 20% in after-market after posting 4Q revenue that easily topped estimates. Bunge shares climb
as much as 9.4% after the S&P Dow Jones Indices announced that BG will replace Signature Bank in the S&P 500 effective prior to the opening of trading on Wednesday.

European stocks rose, snapping three days of losses, as concern eased over wider market repercussions from Silicon Valley
Bank’s collapse. Banking shares were slightly lower amid continued scrutiny of the sector after the demise of three US lenders. Credit Suisse Group AG dropped after saying it had identified “material weaknesses” in its reporting procedures for the past two
years.  Later,  Credit Suisse CEO Ulrich Koerner said the bank had seen inflows of client funds on Monday. Elsewhere, Volkswagen AG fell as it boosted its five-year investment plan, intensifying a push to challenge Tesla Inc.’s leadership on electric vehicles. 
European real estate shares jump the most in a month on bets central banks will slow the pace of interest-rate hikes. Stoxx 600 +0.5%, CAC +0.6%, DAX +0.9%, FTSE 100 is flat. REITs +2.6%, Utilities +1.5%, Tech +1.1%, Travel +1%. Autos lag, down 0.2%.      

Asia’s benchmark stock index erased all of its gains for the year as financials extended the rout triggered by the implosion
of Silicon Valley Bank.  The MSCI Asia Pacific Index dropped 2.3%, with Japanese banks among the biggest drags on the gauge as anxiety about systemic risk sparked a wider rout in markets. Japanese financial institutions have sufficient capital buffers to absorb
any losses caused by external risks, the Bank of Japan said on Tuesday. The Topix slumped 2.7%, its biggest daily decline in more than five months. Asian aviation shares retreated after United Airlines said it expects to lose money this quarter as the carrier
grapples with higher labor costs. Thailand -3.1%, Hang Seng Tech -2.6%, Kospi -2.5%, Philippines -2.3%, Hang Seng -2.3%, ASX 200 -1.4%, Taiwan -1.3%, Shanghai Composite -0.7%. 

FIXED INCOME: 
 

Treasuries are sharply cheaper across front-end and belly of the curve, unwinding a portion of Monday’s aggressive bull-steepening
rally. Short-end Treasury yields climbed after epic declines, with the US 2 year yield climbing as much as 30 basis points. Long-end yields slightly richer on the day, re-flattening 2s10s and 5s30s spreads ahead of February inflation data.  Plunging rates
gripped Wall Street’s attention yesterday, when the yields dropped more than a half-percentage point in the biggest move since the 1980s. Treasuries have been whipsawed in recent days — with a measure of volatility climbing to the highest since 2009.  During
the Tokyo session US 10yr yields plunged to 3.45% on a negative news story on Credit Suisse’s financial condition. The 10-year yield recovered to rise three basis points to 3.60%.  In Europe, Italy BTP auctions had mixed results, while UK 10yr Gilt auction
saw solid demand. Traders now no longer expect a 50-basis points rate hike next week, with a current projection of a 25 bps rise, even ahead of the release of US consumer price data today.      

METALS: 

Gold slid following a jump of more than 5% in the last three sessions as traders turned to haven assets. Traders are looking
to the US CPI report for cues that may trigger further shifts in the outlook for monetary policy. Economists surveyed by Reuters forecast consumer prices increased by 0.4% in February, which would lower the year-on-year increase in the CPI to 6.0%. Spot gold
-0.3%, silver -1.2%.                     

ENERGY:      

Oil prices fell, extending the previous day’s decline, as the collapse of SVB rattled equities markets and sparked fear
about a fresh financial crisis. On Monday, Brent and WTI fell to their lowest since early January and December, respectively. A stronger-than-expected US consumer inflation number would likely put further downward pressure on oil prices. The monthly oil market
report by OPEC is due later today ahead of one by the International Energy Agency on Wednesday.  WTI -1.6%, Brent -1.3%.         

CURRENCIES:               

The dollar edged higher against all of its G-10 peers as Treasury yields rose before the release of US inflation data. USD/JPY
rose as much as 0.8%, tracking a rebound in the two-year Treasury yield. US$ Index +0.1%, USDCAD -0.3%, EURUSD -0.05%, GBPUSD and AUDUSD are relatively flat ahead of this mornings inflation data.       

Bitcoin +2.3%, Ethereum +1%.  The DOJ is probing last year’s collapse of the TerraUSD stablecoin, raising the risk of criminal
charges against its fugitive creator Do Kwon, the WSJ reported. Separately, US prosecutors are looking at Telegram chats among employees at Jump, Jane Street and the now-bankrupt Alameda about a potential bailout of the TerraUSD project, and whether market
manipulation was involved.  

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:

• Argenx ADRs (ARGX BB) raised to outperform at Baird; PT $460
• Avid Bioservices (CDMO) raised to overweight at KeyBanc; PT $20
• Dell Technologies (DELL) raised to outperform at KGI Securities
• Intellia Therapeutics (NTLA) raised to outperform at BMO; PT $57
• MPLX (MPLX) raised to overweight at JPMorgan; PT $41
• Match Group (MTCH) raised to overweight at Barclays; PT $52
• Pinnacle West Capital (PNW) raised to outperform at Credit Suisse
• Roku (ROKU) raised to peerperform at Wolfe
• Tricon (TCN CN) raised to outperform at Wolfe
• Unum (UNM) raised to outperform at KBW; PT $52
• Vermilion Energy (VET CN) raised to overweight at JPMorgan; PT C$29

DOWNGRADES:

• Crestwood Equity (CEQP) cut to neutral at JPMorgan; PT $28
• Hancock Whitney (HWC) cut to market perform at KBW; PT $50
• Lightning eMotors (ZEV) cut to market perform at Oppenheimer
• Lufax ADRs (LU) cut to underperform at Macquarie; PT $1.50
• Oportun (OPRT) cut to market perform at KBW; PT $4
• Ovintiv (OVV) cut to neutral at JPMorgan; PT $53
• Precision BioSciences (DTIL) cut to market perform at BMO; PT $4
• Provention Bio (PRVB) cut to hold at Jefferies; PT $25
• Provention Bio (PRVB) cut to neutral at SMBC Nikko; PT $25
• Qualtrics (XM) cut to market perform at JMP
• Qualtrics (XM) cut to market perform at Raymond James
• Qualtrics (XM) cut to neutral at Piper Sandler; PT $18.15
• RH (RH) cut to hold at Jefferies; PT $298
• Seagen (SGEN) cut to market perform at BMO; PT $229
• Seagen (SGEN) cut to market perform at JMP
• Tidewater Midstream (TWM CN) cut to hold at Stifel Canada; PT C$1.15
• Tidewater Renewables (LCFS CN) cut to hold at Stifel Canada; PT C$11.50
• nCino (NCNO) cut to neutral at Piper Sandler; PT $22

INITIATIONS:

• Academy Sports & Outdoors (ASO) rated new buy at Jefferies; PT $73
• Arcellx (ACLX) rated new buy at Stifel; PT $43
• Cipher Mining (CIFR) rated new overweight at Cantor; PT $3
• Dick’s Sporting (DKS) rated new hold at Jefferies; PT $155
• Durect (DRRX) rated new buy at JonesTrading; PT $37
• Estee Lauder (EL) rated new outperform at Cowen; PT $280
• Hibbett Inc (HIBB) rated new hold at Jefferies; PT $69
• LSB Industries (LXU) rated new buy at Deutsche Bank; PT $16
• Lilium (LILM) rated new neutral at Citi; PT $1
• Trevi Therapeutics (TRVI) rated new buy at JonesTrading; PT $7

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC