Cabrera Capital Daily Game Plan

Friday April 28, 2023                                                       Trading Desk: (312) 236-8907

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

DATA/HEADLINES    8:30ET Employment Cost Index, Personal Income/Spending, PCE Deflator*; 9:45ET MNI Chicago PMI;
10:00ET U of Michigan Consumer Sentiment; 11:00ET Fed releases Barr report on SVB

TODAY’S HIGHLIGHTS:  

• China will cut the retail prices of gasoline and diesel from Saturday 
  
• First Republic’s stock rises on rescue talks  

Global stocks surrendered earlier gains, as data showing economic resilience and persistent inflationary pressures cemented expectations of further interest rate
hikes in the US and Europe. Today is an incredibly busy day for euro area data, with a slew of GDP and HICP releases. The euro zone expanded by 0.1% in Q1, dodging a winter recession but falling short of the 0.2% median estimate. France and Italy bounced back
from negative readings in the final months of last year, while Spain gathered momentum and Germany stagnated. Inflation risks persisted, with consumer-price gains accelerating this month in France and Spain. The growth rebound in France and a forecast-beating
expansion in Spain have fanned hopes Europe can avert a recession, but an uptick in consumer-price gains cements the case for further European Central Bank rate increases.  The BoJ left rates and policy unchanged despite Japan’s CPI printing at 3.5%, which
was higher than the 3.1% estimate. Taiwan’s GDP fell 3% last quarter, worse than estimated and the sharpest decline since 2009.           

EQUITIES: 

US equity futures are lower after Amazon.com warned that growth in its cloud computing business is continuing to cool, dashing hopes that the company’s most profitable division was weathering
a lackluster environment for technology spending. Amazon shares, which had jumped as much as 12% in extended trading, gave up those gains after the comments. On Thursday, US equities enjoyed the biggest daily gain since January, thanks to solid earnings from
technology firms. That was before the Amazon warning and disappointing results from Snap and Pinterest. Investors will be focusing today on the Federal Reserve’s preferred inflation gauge, the core PCE deflator. The PCE core deflator probably stuck at 4.6%
in March, with the month-on-month pace staying at 0.3%, though the headline reading may have eased to 4.1% from 5%. The report is expected to show consumer spending fell and personal income slowed.             

Futures ahead of the data: E-Mini S&P -0.4%, Nasdaq -0.3%, Russell 2000 -0.5%, Dow -0.3%  

In pre-market trading, Snap fell over 18%, set for its biggest intraday share drop in more than six months after reporting a decline in quarterly revenue. Pinterest (PINS) falls as much
as 14% after the social-media company gave a forecast. Pinterest’s rising costs overshadowed a revenue beat. Meanwhile, Intel jumped 6% after the chipmaker promised a recovery in the second-half of the year. Cloudflare (NET) fell 24% after the cybersecurity-focused
software company issued a weaker-than-expected revenue forecast for the current period and lowered its full-year revenue outlook. Exxon had its strongest-ever start to a year. Net income more than doubled from a year earlier to $11.4 billion, the highest first-quarter
profit in its 140-year history. Chevron posted better-than-expected results as refining profits rebounded. First Republic is higher ahead of the bell as the FDIC, Treasury and Fed are coordinating talks with banks and PE firms about tossing the troubled lender
a lifeline. NatWest (NWG) fell 6% after softer guidance on deposit growth. First Solar (FSLR) shares plunge 9% after the solar module manufacturer’s first quarter net sales disappointed. Alteryx (AYX) slides 15% after the software company gave a second-quarter
forecast that was weaker than expected. ImmunoGen (IMGN) shares are up 9.7%, after the biotech company reported first-quarter results that beat expectations.  

European stocks declined, set for their first weekly loss in six, as investors considered some disappointing earnings reports and inflation data fueled concerns about
further interest rate hikes. The Stoxx 600 Index was 0.2% lower, with banks and utilities underperforming, while financial services and real estate advanced. Mercedes-Benz AG dropped as the German carmaker’s rosy margin outlook was overshadowed by its comments
on slowing global economy. Prudential Plc shares climbed as analysts said the insurer’s new business update looks solid. Numis Corp. surged the most on record after Deutsche Bank AG agreed to buy one of the best-known UK boutiques.  DAX -0.2%, CAC -0.8%, FTSE
100-0.1%. REITs +2%, Fin Services +0.8%, Insurance +0.5%. Banks -2.4%, Utilities -0.6%.

Asian stocks advanced, helping pare their month-to-date loss, as strong corporate earnings boosted optimism for a global economic recovery. Markets were mostly higher
in the region with benchmarks in Japan, Hong Kong and Taiwan among the biggest winners. Japanese equities extended gains after the results of the Bank of Japan policy meeting showed a decision to double down on its commitment to stimulus. The MSCI Asia Pacific
Index climbed as much as 0.8% before paring gains to finish +0.2%. Shares in China advanced as the nation’s top leaders reiterated support for the economy, while warning that domestic demand is still insufficient. Nikkei 225 +1.4%, Shanghai Composite +1.15%,
Taiwan +1.1%, Hang Seng Tech +1%, Vietnam +0.9%, Sensex +0.8%, Hang Seng +0.25%, Kospi +0.2%, ASX 200 +0.2%, Indonesia -0.4%.          

FIXED INCOME: 
 

US Treasury yields traded in a tight range during the Asia session and then plunged lower as German and French CPI and GDP data were weaker than expected. European
traders priced out some ECB rate-hike premium after a raft of growth and inflation figures from the region. US Treasuries recouped some of Thursday’s losses, with the 10-year benchmark yield falling about five basis points. The policy-sensitive two-year rate
remained above 4%.  In a further sign that financial stress persists, banks increased emergency borrowings from the Fed for a second week.                 

METALS: 

Gold edged lower ahead of US inflation and wages data that may impact the outlook for the Federal Reserve’s monetary policy. Bullion is on track for a small monthly
gain, having failed to make a sustained break above the $2,000-an-ounce. In focus this morning is the PCE deflator, which is forecast to show price pressures cooling in the US in March. Gold -0.3%, silver -0.5%.       

ENERGY:  

Oil prices nudged higher but are headed for a sixth straight monthly decline, its longest run of such losses in more than eight years. Russian oil is still powering
Europe — just with the help of India. The Asian country is on track to become Europe’s largest supplier of refined fuels this month while simultaneously buying record amounts of Russian crude, according to Kpler data. The EPA will issue an emergency waiver
to allow widespread sales of higher-ethanol E15 gasoline this summer, following a strategy used last year to help tamp down high pump prices. In other news, US authorities ordered a tanker of Iranian crude oil to redirect towards the US in recent days, in
a move officials believe was the trigger for Iran’s decision to capture a US-bound tanker on Thursday. WTI +0.3%, Brent +0.5%. US Nat Gas -2.4%.    

CURRENCIES:         

The yen slumped to its lowest in seven weeks after the BOJ left rates unchanged and said it would patiently continue with monetary easing while it was waiting for
a broad-ranging policy review. In the first meeting under new governor Kazuo Ueda, the BoJ maintained its 0.5% ceiling for 10-year bond yields and launched a policy review that may take one-and-a-half years.  That drove the yen 1.5% lower versus the dollar.
EUR/USD is down 0.5%, flat on a weekly basis. Traders trimmed wagers on the size of next week’s interest-rate increase from the ECB, assigning now a 12% chance for a half-point hike. USD/NOK rallies as much as 1.5%; GBP/USD down 0.3% amid real money selling.
US$ Index +0.5%, AUDUSD -0.7%.                                 

Bitcoin -1.3%, Ethereum -1%.   

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:

• Fidelity National (FIS) raised to overweight at Stephens; PT $75
• FirstService (FSV CN) raised to buy at TD; PT C$231.47
• Fortune Brands (FBIN) raised to buy at Jefferies; PT $84
• Hasbro (HAS) raised to neutral at BofA; PT $63
• Healthpeak Properties (PEAK) raised to buy at Mizuho Securities; PT $25
• Intel (INTC) raised to buy at Benchmark; PT $39
• Intel (INTC) raised to neutral at Fubon; PT $30
• International Paper (IP) raised to outperform at RBC; PT $39
• Live Oak Banc (LOB) raised to neutral at JPMorgan; PT $26.50
• Masco (MAS) raised to buy at Jefferies; PT $65
• Mobileye (MBLY) raised to outperform at Wolfe; PT $46
• Old Dominion (ODFL) raised to buy at Deutsche Bank; PT $350
• ServiceNow (NOW) raised to neutral at Exane; PT $410
• Suncor Energy (SU CN) raised to outperform at National Bank; PT C$61
• Waste Management (WM) raised to buy at Stifel; PT $177

DOWNGRADES:

• Reliance Steel (RS) cut to peerperform at Wolfe

INITIATIONS:

• Amyris (AMRS) rated new buy at Canaccord; PT $1.50
• Bluebird Bio (BLUE) rated new overweight at JPMorgan; PT $7
• Carnival (CCL) rated new neutral at JPMorgan; PT $11
• Cogent Biosciences Inc (COGT) rated new outperform at Baird; PT $20
• Disc Medicine Inc (IRON) rated new overweight at Cantor; PT $45
• Getty Images (GETY) rated new inline at Imperial; PT $6.25
• MicroStrategy (MSTR) rated new buy at Berenberg; PT $430
• Norwegian Cruise (NCLH) rated new neutral at JPMorgan; PT $15
• Oculis Holding (OCS) rated new outperform at Wedbush; PT $27
• Opthea ADRs (OPT AU) rated new buy at JonesTrading; PT $15
• Royal Caribbean (RCL) rated new overweight at JPMorgan; PT $94
• iQIYI ADRs (IQ) rated new overweight at Guotai Junan Sec; PT $9.74

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC