Cabrera Capital Daily Game Plan

Wednesday March 29, 2023                                                       Trading Desk: (312) 236-8907

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

DATA/HEADLINES   10:00ET Pending Home Sales, Fed’s Barr testifies before the House Financial Services Committee;
1:00ET 7 Year Auction

TODAY’S HIGHLIGHTS:  

• Jamie Dimon will be deposed over JPMorgan’s ties to Jeffrey Epstein  
• Healthy children and adolescents may no longer need Covid shots, the WHO said
  
• Alibaba’s market value soars $30 billion after a shakeup
  

Global stocks gained as a rally in Chinese tech shares boosted sentiment and concern about contagion from banking turmoil continued to wane. Meanwhile, China warned
that it will respond to any meeting between House Speaker McCarthy and Taiwan’s president, saying it would amount to a serious provocation. In Europe, the ECB’s Kazimir says the ECB should not back down on rate hikes but may want to slow pace. Chief Economist
Philip Lane said the central bank will need to increase interest rates further if recent tensions in the financial system stay contained.                                       

EQUITIES: 

US equity futures are higher as the Alibaba revamp buoyed China tech companies and Micron’s better-than-expected sales forecast raised hopes the worst of the chip slump may be over. Shares
of semiconductor companies are rising pre-market after Micron’s improved forecast for the current quarter and Infineon raised its revenue outlook. Lululemon gave an annual outlook that surpassed analysts’ expectations, driven by high demand for activewear,
even as it deals with nagging inventory issues that ate into margins.

Futures ahead of the bell: E-Mini S&P +0.8%, Nasdaq +0.9%, Russell 2000 +1%, Dow +0.7%. 

In premarket trading, Lululemon (LULU) shares jump 15% after the athletic-apparel brand reported fourth-quarter adjusted earnings that beat analyst estimates and issued guidance that
topped expectations. Micron (MU) rises 2.7%, Qualcomm (QCOM) gains 1%. US-listed Chinese internet stocks are poised for a pullback after their shares surged on Tuesday following Alibaba’s plan to split into six units and seek separate listings. Cryptocurrency-related
stocks rally as Bitcoin extends gains into a second day to breach the $28,000 level. Cipher Mining (CIFR) rises 15%, Riot Platforms (RIOT) +7.4%, Marathon Digital (MARA) +6.3%, Coinbase (COIN) +4%. Arcturus Therapeutics (ARCT) shares jump 27% after the biotech
beat analysts’ earnings estimates. Lucid (LCID) rose 1.9% after the electric vehicle-maker said it would cut 18% of its workforce.
First Citizens Bancshares slip 1%, after rocketing 57% the past 2 days.

European equities advanced as fears around the health of the banking sector continued to subside and investors rotated into technology shares.  Tech stocks outperformed
after Alibaba announced plans to split into six units that will individually raise funds and explore listings, and after upbeat forecasts from Infineon Technologies AG and Micron Technology. Real estate stocks are at the top of the leaderboard after underperforming
all other sectors this month on recession and high leverage fears. The retail sector underperforms as British high street retailer Next Plc tumbled after its 2024 pretax profit forecast fell short of expectations. Aroundtown SA fell after the German real estate
company’s 2023 guidance missed estimates and it announced a suspension of 2022 dividend payouts. Mercedes-Benz Group AG dropped after the Kuwait Investment Authority launched a sale of about 20 million shares in the car maker. Meanwhile, Atos SE shares fell
more than 15% after Airbus SE said it’s no longer pursuing a stake in the French digital services company’s Evidian unit. UBS Group AG rose after the Swiss lender brought back a former CEO to oversee the acquisition of Credit Suisse Group. Stoxx 600 +0.9%,
DAX +0.9%, CAC +1.2%, FTSE 100 +0.8%. REITs +1.9%, Tech +1.8%, Banks +1.3%, Media +1.1%, Retail -0.1%.   

Shares in Asia advanced as Chinese tech shares rallied on optimism Alibaba’s overhaul will pave the way for other tech giants to potentially unlock billions of dollars
in shareholder value. The MSCI Asia Pacific Index rose 0.7%, led by Chinese technology stocks which climbed 2.5% to a five-week high. Alibaba jumped 12%, while its biggest shareholder Softbank Group gained more than 6%. Mainland China and South Korea eked
out small gains as investors braced for a slew of data on the US economy this week. Shares connected to China’s electric vehicle sector jumped after BYD’s profit more than quintupled last year, supported by record EV sales.
 Australia’s inflation rate decelerated more than expected to 6.8% versus 7.4% in the prior month.  Hang Seng Index +2%, Topix +1.5%, Indonesia +1.2%, Sensex +0.6%, Taiwan +0.4%,
Kospi +0.4%, CSI 300 +0.2%, Shanghai Composite -0.15%.

FIXED INCOME: 
 

Treasuries rose after a two-day selloff as investors awaited remarks from Federal Reserve officials and economic releases this week for clues on monetary policy.
In particular focus will be data on the central bank’s preferred measure of inflation — the core PCE deflator — which is likely to factor into the Fed’s next policy decision. Swaps traders have priced in about a 50% probability the Fed will raise rates by
a quarter point at its next meeting, with plans to ease thereafter. However, several strategists have joined BlackRock Investment Institute in saying markets are wrong in expecting imminent rate cuts. Dovish comments by ECB’s Philip Lane on inflation supported
bunds over the London session, helping drive declines for front-end Treasury yields. The US session includes 7-year note auction, following good demand for Tuesday’s 5-year.  10 year yield ~3.55%, 2 year yield 4.05%. 2s10s spread steeper by ~3bps.  

METALS: 

Gold slipped as the buoyant mood in equity markets continued to undermine the haven asset. Broader risk sentiment is recovering after the collapse of three US banks
and the takeover of Credit Suisse Group, which helped push gold over $2,000 an ounce last week. Spot gold fell 0.5%, silver -0.6%.            

ENERGY:      

Crude oil is higher after an industry report signaled a big draw in US crude stockpiles as an ongoing dispute halts exports from Turkey. US crude stockpiles slumped
by 6.1 million barrels last week, API data showed, in what would be the biggest drop this year if confirmed by the EIA. Gasoline supplies also sank. In the Middle East, one of the top producers in Iraq’s Kurdistan region started cutting production as a spat
that has halted 400,000 barrels a day of exports drags on. RBC noted the pace of China’s reopening continues to exceed expectations and predicted oil prices will bounce. S&P cut its forecast for global oil consumption growth, citing slowing economies in the
US and Europe. Russia says it’s close to fully implementing the output cut threatened in response to Western sanctions and price caps on its oil exports. WTI +0.9%, Brent +0.7%.     

CURRENCIES:               

The dollar is steady after ending Tuesday near the lowest level in eight weeks. Despite the improved risk sentiment amid a rally in the equity space, higher-beta
FX like the Aussie and the Swedish krona are under pressure. The Australian dollar weakened after slower-than-forecast inflation data bolstered the case for the central bank to pause its run of interest-rate increases. US$ Index is flat, GBPUSD +0.15%, USDJPY
+0.85%, AUDUSD -0.5%, EURJPY +1%, EURUSD +0.2%.                

Bitcoin +3.5%, Ethereum +2%.

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:

• Carnival (CCL) raised to positive at Susquehanna; PT $11
• Enbridge (ENB CN) raised to neutral at Credit Suisse
• Hartford Financial (HIG) raised to buy at Goldman; PT $84
• Hershey (HSY) raised to equal-weight at Wells Fargo; PT $255
• Invesco (IVZ) raised to neutral at Credit Suisse; PT $15
• Lululemon (LULU) raised to buy at Citi; PT $440
• Lululemon (LULU) raised to outperform at KGI Securities; PT $394
• Marathon Petroleum (MPC) raised to buy at Goldman; PT $150
• NEXTracker (NXT) raised to buy at BofA; PT $40
• Omnicom (OMC) raised to neutral at Exane; PT $96

DOWNGRADES:

• Bath & Body Works (BBWI) cut to neutral at UBS; PT $35
• Burlington Stores (BURL) cut to sell at UBS; PT $120
• Ciena (CIEN) cut to equal-weight at Morgan Stanley; PT $57
• Delek US Holdings (DK) cut to neutral at Goldman; PT $24
• Foot Locker (FL) cut to sell at UBS; PT $30
• Interpublic (IPG) cut to neutral at Exane; PT $40
• Medtronic (MDT) cut to sell at UBS
• Penumbra (PEN) cut to hold at Needham
• Ross Stores (ROST) cut to sell at UBS; PT $77
• Urban Outfitters (URBN) cut to sell at UBS; PT $19

INITIATIONS:

• American Homes (AMH) reinstated equal-weight at Wells Fargo; PT $31
• AvalonBay (AVB) reinstated overweight at Wells Fargo; PT $184
• Camden Property (CPT) reinstated underweight at Wells Fargo; PT $102
• Coca-Cola Femsa ADRs (KOFUBL MM) rated new buy at William O’Neil
• Confluent (CFLT) rated new buy at Mizuho Securities; PT $28
• Coveo Solutions (CVO CN) rated new buy at Stifel Canada; PT C$12
• Deere (DE) rated new outperform at Daiwa; PT $440
• Enliven Therapeutics (ELVN) rated new buy at Jefferies; PT $27
• Equity LifeStyle (ELS) reinstated overweight at Wells Fargo; PT $75.50
• Equity Residential (EQR) reinstated equal-weight at Wells Fargo
• Essex Property (ESS) reinstated underweight at Wells Fargo; PT $208
• Gitlab (GTLB) rated new neutral at Mizuho Securities; PT $38
• Invitation Homes (INVH) rated new overweight at Wells Fargo; PT $33.50
• Legend Biotech ADRs (LEGN) rated new buy at HC Wainwright; PT $66
• Mid-America (MAA) rated new equal-weight at Wells Fargo; PT $156.50
• Roper (ROP) rated new hold at Baptista Research; PT $471
• SEI (SEIC) rated new neutral at Piper Sandler; PT $60
• Sun Communities (SUI) reinstated equal-weight at Wells Fargo; PT $151
• UDR (UDR) reinstated overweight at Wells Fargo; PT $44.50

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC