Cabrera Capital Daily Game Plan

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

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

DATA/HEADLINES 
 8:00ET BoE Interest rate decision;  8:30ET Weekly Jobless Claims; 10:00ET New Home Sales

TODAY’S HIGHLIGHTS:  

• BoE Votes 7 To 2 To Hike Bank Rate By 25 Bps To 4.25%, As Expected
• Yellen testifies to a House Appropriations subcommittee
• APPLE TO SPLASH $1 BILLION A YEAR ON FILMS TO BREAK INTO CINEMA
  

Global markets are mixed a day after the Federal Reserve raised rates by an expected 25 basis points, but its policy statement
no longer said “ongoing increases” would likely be appropriate. Attention now shifts to the Bank of England, with investors expecting a quarter-percentage-point increase in its main rate after a surprise jump in inflation squashed hopes of it pausing its tightening
campaign. The BOE is likely to continue the quickest series of interest-rate increases in three decades, with its focus on combating inflation outweighing calls for a pause given recent turmoil in the banking system. The Swiss and Norwegian central banks both
raised rates Thursday, as forecast, and flagged more hikes to come in their campaigns to tame rising consumer prices.  In other news, China’s military said it had driven away a US destroyer that illegally entered waters around the Paracel Islands in the South
China Sea.                                              

EQUITIES: 

US equity futures climbed, signaling a partial recovery following a tumultuous day of losses after comments from Janet Yellen and J. Powell.
Fed Chair Jerome Powell pushed back against bets for rate cuts this year, following the Fed’s expected 25-basis-point hike yesterday, and said he was prepared to keep raising borrowing costs until inflation showed signs of cooling. Treasury Secretary Janet
Yellen told lawmakers on Wednesday that the government wasn’t considering “blanket” deposit insurance to stabilize US lenders, sending stocks in the sector rapidly lower.  Citigroup’s CEO said “this is not a credit crisis. This is a situation where it’s a
few banks that have some problems, and it’s better to make sure that we nip that in the bud.” Surprisingly, the Fear & Greed Index rose to the most bullish in four months. Megacap technology stocks like Amazon.com, Microsoft and Apple have outperformed the
broader market by the widest margin in years following the collapse of Silicon Valley Bank and two other US lenders. FANG+ Index has risen 6% during the week through Tuesday, compared with a gain of 1.9% for the S&P 500, according to FactSet data.         

Futures ahead of the bell: E-mini S&P +0.5%, Nasdaq +0.9%, Russell 2000 +0.7%, Dow +0.2%. 

In premarket trading, Coinbase Global slumped 12% after the largest US crypto exchange said it received a notice from the
SEC formally declaring the securities regulator’s plans to bring an enforcement action against it. First Republic Bank (FRC) shares rose 9% along with banking peers. Cryptocurrency-exposed stocks rise as Bitcoin rebounds after snapping a six-session winning
streak on Wednesday. Marathon Digital (MARA) +5.1%, Riot Platforms (RIOT) +4.7%. Chewy (CHWY) falls as much as 6.6% after the online pet supplies retailer issued softer-than-expected FY23 guidance. Phreesia Inc. (PHR US) shares dropped 3.3% in post-market
trading, after the application software company reported fourth-quarter results that beat expectations but gave a revenue outlook that analysts saw as light. Shares of Regeneron Pharmaceuticals rose sharply (REGN +7.7%) after the biotechnology company and
partner Sanofi SA (SNY +6.5%) reported positive late-stage study data for their blockbuster anti-inflammatory drug Dupixent. Accenture (ACN) gains 4.3% after fiscal 2Q results top estimates. Carvana (CVNA) increases 5% as analysts continue to digest the online-auto
seller’s restructuring plan. Generation Bio (GBIO) surges 17% after announcing a collaboration deal with Moderna

European stocks fell, led by banks, as investors assessed policy moves by key central banks in the region.  The Stoxx Europe
600 Index slid 0.9% before a policy announcement from the Bank of England. Banking stocks were the biggest losers, following weakness in their US peers and as Citigroup slashed its outlook for the sector. Citi lifted tech to overweight.  Technology shares
outperformed, in line with the sector rotation seen over the past weeks amid the turmoil in the banking sector.  Sanofi surged after releasing positive data from a phase 3 trial for its key drug Dupixent. Stoxx -0.6%, DAX -0.4%, CAC -0.3%, FTSE 100 -0.8%.
Technology +0.65%, Healthcare is flat. Banks -1.6%, Construction -1.4%, Autos -1.1%, Energy -1%.  

Shares in Asia rose as the region’s currencies strengthened against the dollar despite the Federal Reserve’s decision to
raise US interest rates on Wednesday.  The MSCI Asia Pacific Index climbed as much as 1.2%. Hang Seng Indices were among the top performers, boosted by gains in Tencent after the firm reported better-than-expected revenue. Stock indexes in Japan and India
underperformed. China semiconductor stocks gained, with renewed interest in AI-related shares, after Nvidia’s annual developer conference introduced new chips and supercomputing services. Given expected slower US growth and the stresses in its banking system,
it makes more sense to lean into the stronger growth recovery in China as well as Hong Kong and Thailand, Goldman Sachs strategists said. Hang Seng Tech Index +4.7%, Hang Seng Index +2.3%, CSI 300 +1%, Taiwan +0.65%, Vietnam +0.4%, Kospi +0.3%. Nikkei 225
-0.15%, Sensex -0.5%, ASX 200 -0.65%.

FIXED INCOME: 
 

Treasuries are cheaper across the curve, although futures remain near The top of Wednesday’s range, a bull-steepening rally
following Fed’s rate decision. Yields are cheaper by 3bp-6bp across the curve with 10-year around 3.49%. Two-year Treasury yields rose ~6bps after closing 23 basis points lower on the day Wednesday. 2s10s spread is roughly flat.  Fed-dated OIS contracts price
in around 13bp of rate hike premium for the May policy decision and then ~75bp of cuts by year-end.      

METALS: 

Gold rose for second day as the dollar steadied following the Federal Reserve’s latest policy meeting and bets that its
aggressive monetary-tightening cycle is nearing an end. After increasing rates by another 25 basis points on Wednesday, Fed Chair Jerome Powell said policy makers considered pausing their hiking campaign because of recent banking turmoil.  However, Powell
made clear that inflation remains a top concern, and that it will raise rates higher than expected if needed. Spot gold rose 0.4%, silver -0.4%.            

ENERGY:      

Oil fell as investors weighed the developments at the Fed and digested a mixed snapshot of US supply and demand. Labor strikes
in the French refining sector are causing ripple effects across the global oil market as the resulting lost demand adds to weakness caused by turmoil in the banking sector. Meanwhile, Brazil is snapping up deeply discounted Russian diesel in a blow to US fuel
makers.  The Energy Information Administration announced changes to the way it calculates crude oil supply and disposition after its 2022 estimates proved to be overstating demand and understating production. WTI -0.7%, Brent -0.6%, US Nat Gas +1.6%, RBOB
-0.2%.  

CURRENCIES:               

The US$ Index fluctuated after falling to the lowest level in more than a month as traders boosted bets for US interest-rate
cuts, even after the Fed said more tightening may be needed. The Swiss franc and Norwegian krone strengthened after the rates decisions.  EURUSD pared gains after rallying as much as 0.7%, following a rise of 0.8% on Wednesday. The franc narrowed a drop against
the euro after the Swiss National Bank raised its interest rate by 50 basis points and signaled more to come. US$ Index +0.05%, GBPUSD +0.2%, USDJPY -0.1%, AUDUSD +0.5%, USDCAD -0.4%, NZDUSD +0.8%, USDNOK -0.9%, EURUSD +0.2%.       

Bitcoin +0.7%, Ethereum +0.8%.

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:

• Accolade (ACCD) raised to buy at Guggenheim; PT $16
• Americold Realty Trust I (COLD) raised to equal-weight at Barclays
• BellRing Brands (BRBR) raised to buy at Truist Secs; PT $40
• Boyd Group Services (BYD CN) raised to outperform at National Bank
• Inozyme (INZY) raised to buy at Jefferies; PT $6
• Marathon Oil (MRO) raised to buy at Citi; PT $27
• ORIC Pharma (ORIC) raised to buy at HC Wainwright; PT $16
• Pioneer Natural (PXD) raised to buy at Citi; PT $210
• Regency Centers (REG) raised to overweight at Barclays; PT $70

DOWNGRADES:

• American Well (AMWL) cut to market perform at Cowen
• Coinbase (COIN) cut to market perform at Oppenheimer
• Context Therapeutics (CNTX) cut to neutral at HC Wainwright
• M&T Bank (MTB) cut to peerperform at Wolfe
• Ovintiv (OVV) cut to neutral at Citi; PT $38
• Roper (ROP) cut to neutral at Mizuho Securities; PT $475
• Samsara (IOT) cut to equal-weight at Morgan Stanley; PT $19
• nCino (NCNO) cut to sector weight at KeyBanc

INITIATIONS:

• Align Technology (ALGN) rated new market perform at CICC; PT $340
• Ambarella (AMBA) rated new buy at WestPark Capital; PT $110
• Andlauer Healthcare Group (AND CN) reinstated buy at Stifel Canada
• Boyd Group Services (BYD CN) rated new outperform at BMO; PT C$240
• Disc Medicine Inc (IRON) rated new outperform at BMO; PT $40
• Dynatrace (DT) rated new buy at Stifel; PT $45
• Hammerhead Energy (HHRS CN) rated new outperform at ATB Capital; PT C$16
• Mobileye (MBLY) rated new hold at WestPark Capital
• Netflix (NFLX) rated new neutral at Fubon; PT $322
• Nvidia (NVDA) reinstated hold at WestPark Capital
• Qualcomm (QCOM) rated new hold at WestPark Capital
• Select Energy Services (WTTR) rated new strong buy at Raymond James
• Western Alliance (WAL) rated new outperform at Hovde Group

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC