Cabrera Capital Daily Game Plan

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

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

DATA/HEADLINES   8:30ET Wholesale Inventories MoM, Advance Goods Trade Balance, Retail Inventories; 9:00ET FHFA
House Price Index; 10:00ET Consumer Confidence, Richmond Fed Mfg Index; Fed’s Barr testifies before Senate Banking Panel, 1:00ET 5 Year Note Auction

TODAY’S HIGHLIGHTS:  

• OPEC+ shows not sign of changing oil output at next week’s meeting 
• Alibaba’s Massive Overhaul Plan Sends Shares Higher
  

Global stocks nudged higher, and the dollar eased after a deal backed by the US regulator for First Citizens BancShares to buy up Silicon Valley Bank soothed some
of the recent concern about the health of the banking sector. With a little more stability returning to the banking sector, investors felt confident enough to ditch some of their recent safe-haven purchases. But concerns remained after Federal Reserve Governor
Philip Jefferson said on Monday that stress among small banks could hit small businesses hardest. The European Central Bank’s supervisory chief saying recent sector volatility underscored the need to step up regulatory scrutiny. Prices in UK stores soared
to another record high with grocery price inflation reaching 17.5%. French unions are holding another day of nationwide strikes, calling for Emmanuel Macron to return to negotiations on pension reforms. North Korea is ready to use nuclear weapons “anytime
and anywhere,” Kim Jong Un said before the arrival of a US aircraft carrier group in South Korea today.                                        

EQUITIES: 

US equity futures fluctuated ahead of top regulatory officials for the Federal Reserve, FDIC and Treasury Department testimony before congressional committees today. Top US banking regulators
said on Monday they planned to tell Congress that the overall financial system remains on a solid footing after recent bank failures but will comprehensively review their policies in a bid to prevent future collapses. Strategists at JPMorgan Asset Management
don’t foresee rate cuts anytime soon, even if hikes pause, and cautions against stock-market optimism on it. DoubleLine Capital’s Jeffrey Gundlach said on CNBC that he expects a US recession to start in a few months, and that the Federal Reserve will need
to respond “very dramatically.” Futures ahead of the bell: E-Mini S&P -0.05%, Nasdaq flat, Russell 2000 -0.15%, Dow -0.1%.

Futures ahead of the bell: E-Mini S&P -0.05%, Nasdaq flat, Russell 2000 -0.15%, Dow -0.1%. 

In premarket trading, First Republic Bank climbed over 2%, set to extend Monday’s advance. Alibaba Group climbed more than 9% as the e-commerce firm plans to split into six units that
will individually raise funds and explore initial public offerings. PVH (PVH) shares surge 12% after the parent company of Calvin Klein and Tommy Hilfiger issued stronger-than-expected results and guidance. Lyft (LYFT) rises 5% after appointing David Risher
as CEO and reaffirmed 1Q guidance. Virgin Orbit (VORB) falls 14% after the launch provider placed workers on furlough as it seeks rescue financing or bankruptcy. Viking Therapeutics (VKTX) said it plans to initiate a Phase 2 study of VK2735 in patients with
obesity in mid-2023 based on Phase 1 trial results. Shares gain 50%. Occidental Petroleum (OXY) advances as much as 2.2% after being upgraded to outperform from market perform at Cowen.

European indices wiped earlier gains after France’s financial prosecutor raided some of France’s biggest banks, including Societe Generale SA and BNP Paribas SA,
as part of a probe into tax fraud and money laundering related to dividend payments. HSBC Holdings, Natixis SA and BNP’s Exane unit are also being searched as part of the investigation. The Stoxx 600 index was flat, paring an earlier advance of as much as
0.8%. DAX +0.2%, CAC +0.2%, FTSE 100 +0.1%. Energy +1.3%, Basic Resources +1%, Autos +0.7%, Banks +0.3%. REITs -3%, Tech -0.7%.

Asian shares rose as traders caught up with overnight gains on Wall Street. The MSCI Asia Pacific Index rose 0.6%, halting a two-day losing streak as financial shares
led the move. “Asia still remains relatively well insulated from the latest round of US/European bank turmoil,” Citigroup analysts said in a note. Hong Kong’s Hang Seng Index was at the top of the leader board while China’s mainland indexes fluctuated.  Asian
energy shares gained while oil held its biggest daily rally since October as a disruption to supply from Turkey adds to easing concerns over the banking crisis.  Hang Seng Index up 1.1%, Kospi +1%, ASX 200 +1%, Indonesia +0.8%, Topix +0.25%, Vietnam +0.2%,
Sensex -0.1%, CSI 300 -0.3%, Taiwan -0.8%.

FIXED INCOME: 
 

Treasuries extend Monday’s selloff in a continued bear flattening move as 5s30s tightens an additional 5bp on the day.  The US two-year Treasury yield fluctuated
after surging above 4% on Monday. US 10-year yields around 3.54%, cheaper by 1bp.  Meanwhile, swaps traders priced in more than a 50% probability that the Federal Reserve will lift rates by a quarter point at its next gathering. They continue to expect sharp
easing thereafter.  US auction cycle resumes with $43b 5-year note sale at 1pm, follows Monday’s poor 2-year result.                      

METALS: 

Gold prices edged higher on Tuesday as worries about the banking sector eased following back-to-back losses.  The metal held a two-day decline as easing concerns
over the strength of the banking sector reduced demand for havens. Spot gold +0.15%, silver is flat.           

ENERGY:      

Crude oil reversed gains after climbing as much as 1% overnight.  Oil prices rose more than $3 on Monday after a halt to some exports from Iraq’s Kurdistan region
added to worries about oil supplies. The OPEC+ coalition is showing no signs of adjusting oil production next week, staying the course amid turbulence in financial markets. Group leader Saudi Arabia has said publicly that the 23-nation alliance should keep
supplies steady for the whole of 2023 as it navigates a fragile recovery in global oil demand. Delegates from the group say privately that an online meeting of key ministers on Monday is set to maintain this position.  With turmoil in the banking sector affecting
the economic outlook and sanctions on Russia creating uncertainty about supply, there’s no need to deviate from the current plan, the delegates said. WTI -0.2%, Brent -0.3%. US Nat Gas -1%.      

CURRENCIES:               

The US Dollar was weaker against a majority of G-10 peers except for the Japanese yen. The yen strengthened after Japan’s cabinet approved the use of some funds from
the fiscal 2022 budget for measures to cushion the impact of inflation.  AUD/USD climbed as much as 0.7% earlier, boosted by data showing retail sales meeting estimates.  The pound rose after Bank of England Governor Andrew Bailey’s speech. He warned that
interest rate-setters would focus on battling inflation and not be swayed by fears about the banking system.  Sterling could depreciate as the Bank of England’s expectations for inflation to ease significantly over the course of the year might be too optimistic,
Commerzbank says.  US$ Index -0.3% GBPUSD +0.3%, USDJPY -0.6%, EURUSD +0.3%, AUDUSD +0.5%, NZDUSD +0.6%.           

Bitcoin +0.4%, Ethereum +2.4%. Bitcoin fluctuated after dropping Monday as the US Commodity Futures Trading Commission sued Binance Holdings for allegedly breaking
trading and derivatives rules.

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:

• Array (ARRY) raised to buy at Truist Secs; PT $26
• Carnival (CCL) raised to equal-weight at Wells Fargo; PT $9
• Easterly Government (DEA) raised to buy at Compass Point; PT $17
• Elevance (ELV) raised to outperform at RBC; PT $572
• Encore Capital (ECPG) raised to buy at Janney Montgomery
• FactSet (FDS) raised to neutral at Redburn
• Genesco (GCO) raised to buy at Seaport Global Securities; PT $50
• Occidental (OXY) raised to outperform at Cowen; PT $70
• PagSeguro (PAGS) raised to buy at Citi; PT $12
• Paramount Global (PARA) raised to buy at BofA; PT $32
• Parsons (PSN) raised to outperform at William Blair

DOWNGRADES:

• Marathon Petroleum (MPC) cut to neutral at JPMorgan; PT $149
• Williams Cos (WMB) cut to hold at Truist Secs; PT $31

INITIATIONS:

• Astria Therapeutics Inc (ATXS) rated new outperform at Evercore ISI
• Blink Charging (BLNK) rated new equal-weight at Barclays; PT $11
• Bowlero (BOWL) rated new buy at Stifel; PT $26
• Canadian Solar (CSIQ) rated new outperform at Industrial Securities
• Carrier Global (CARR) rated new outperform at Oppenheimer; PT $51
• Geron (GERN) rated new neutral at Goldman; PT $3
• Gritstone (GRTS) rated new buy at B Riley; PT $8
• Lennox (LII) rated new market perform at Oppenheimer
• Repligen (RGEN) rated new buy at Benchmark; PT $230
• Restaurant Brands (QSR CN) reinstated sector outperform at Scotiabank
• Trane Technologies (TT) rated new market perform at Oppenheimer
• Ulta Beauty (ULTA) rated new buy at Canaccord; PT $622

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC