Cabrera Capital Daily Game Plan

Thursday May 11, 2023                                                                      Trading Desk:
(312) 236-8907

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

DATA/HEADLINES   8:30ET Weekly Jobless Claims, PPI; 8:45ET Fed’s Kashkari speaks; 10:15ET: Fed’s Waller speaks;
1:00ET 30 Year Bond Auction

BOE raises benchmark lending rate 25bps, as expected. US APRIL PRODUCER PRICES RISE 2.3% Y/Y; EST. 2.5%

TODAY’S HIGHLIGHTS:  

• BOE: INFLATION PERSISTENCE WOULD REQUIRE FURTHER TIGHTENING
• China’s inflation at over a 2-year low
• 29,000 immigrants are currently in CBP custody
  

Global stocks fluctuated in lackluster trading as G7 finance chiefs meet to discuss ways to strengthen the global financial system. Simmering US-China tensions are
clouding the outlook for the global economy that is already under pressure from signs of weakness in the world’s second-largest economy China. Markets are watching the start of three days of G7 finance leaders meetings in Japan that will seek to draw supply
chains away from China – but also try to get its cooperation in solving global debt problems. Meanwhile, Bloomberg is reporting that the Biden administration is pursuing all out diplomatic talks with China’s Xi and calls have not been answered.  US Treasury
Secretary Janet Yellen told a news conference that Washington had been considering the chance of imposing restrictions on outbound investment to China to counter its “economic coercion” against other countries.  

EQUITIES: 

US equity futures reverse earlier gains as investors weighed the prospect that the Federal Reserve will pause on interest-rates hikes and disappointing results from
Walt Disney.  Sentiment seems fragile with investors still worried about the US debt-ceiling and stability of the banking industry. Past US debt ceiling fights have typically ended with a hastily arranged agreement in the final hours of negotiations, avoiding
an unprecedented default. Regional banks looked headed for more losses, after PacWest Bancorp said deposits fell 9.5% last week. Shares of the lender plunged 21% overnight.

Futures ahead of the data: E-Mini S&P -0.01%, Nasdaq +0.02%, Russell 2000 -0.2%, Dow -0.2%  

In pre-market trading, Disney fell over 5% after its streaming subscriber numbers missed and it forecast a wider loss in that business this quarter. Google (GOOGL) extended gains after
it unveiled its latest artificial intelligence tools and launched new hardware at its annual developer conference. Analysts were optimistic about the speed with which Google was incorporating AI into its products and services. Robinhood Markets (HOOD) shares
rise 3% as the trading platform’s quarterly results came in better than expected. Beyond Meat (BYND) shares slump 3% after saying they plan to raise up to $200 million via an equity offering. Analysts said its quarterly results were slightly better than expected
but that its outlook is clouded by demand uncertainty. Purple Innovation (PRPL) jumps 18% after the mattress firm reported net revenue for the first quarter that beat the average analyst estimate, amid anticipation over the launch of new products. Twilio (TWLO)
drops 1.5% following a 13% slump in the stock on Wednesday. Unity Software (U) shares gain 9% after the graphic-tools provider’s quarterly sales topped expectations. AppLovin (APP) jumps 16% after the gaming-software company reported first-quarter results.
ImmunityBio (IBRX) tumbles 59% after failing to win an FDA nod for its cancer therapy product candidate. Sonos (SONO) drops 22% after the wireless speaker maker cut its revenue guidance.

European gauges opened higher before losing gains as traders weighed the outlook for interest rates while parsing economic data from China. The Bank of England raised
its benchmark lending rate to the highest level since 2008, saying further increases may be needed if inflationary pressures persist.  The UK central bank lifted its key rate a quarter point as expected to 4.5%, and also delivered the biggest upgrade to growth
projections since the BOE gained independence in 1997. The Stoxx 600 advanced with Travel & Leisure outperforming while Basic Resources and Energy fell.   Among individual movers, ING Groep NV gained more than 3% after announcing plans to buy back €1.5 billion
($1.65 billion) worth of shares after higher interest rates helped lift first-quarter profit past analysts’ expectations. Meanwhile, Bayer AG slid more than 5% after saying profit this year will probably be at the lower end of its forecast. Stoxx 600 +0.2%,
DAX -0.2, CAC +0.25%, FTSE 100 -0.3%.

Asian stocks trickled lower as traders weighed inflation numbers from the world’s two largest economies as well as global corporate earnings. The MSCI Asia Pacific
Index slipped 0.3%, erasing an early gain after China reported slower-than-expected inflation amid weak consumer demand. China’s April consumer prices data rose at a slower pace and missed expectations, while factory gate deflation deepened, suggesting more
stimulus may be needed to boost a patchy economic recovery.  The consumer price index in April rose 0.1% year-on-year, the lowest rate since February 2021, while the producer price index fell at the fastest clip since May 2020, declining 3.6% year-on-year.
TSMC and Tencent dragged on the gauge, while Li Auto was among the biggest boosts after robust results. The Hang Seng Index and China’s CSI 300 gauge ended the day lower after the inflation report. The Hang Seng Tech Index gained 1.3%, Philippines +0.25%,
Nikkei 225 was flat. Taiwan -0.8%, Singapore -0.3%, Kospi -0.2%, CSI 300 -0.15%, Sensex -0.05%.

FIXED INCOME: 
 

Treasuries are near session highs as US trading gets under way, after a brief setback following Bank of England policy statement. Yields across the curve are richer
by 3bp-5bp; new 10-year around 3.40%. Focal points of the US session include PPI data and the Treasury auction cycle concludes with $21b 30-year bond sale.

METALS: 

Gold reversed earlier losses as the dollar strengthened, with traders eyeing hawkish commentary from Federal Reserve officials ahead of another gauge of inflation
today. Bullion is within reach of a record high and has been trading above $2,000 an ounce for most of this month on bets for rate cuts by the Fed this year. Still, rhetoric from officials has tended on the hawkish side, with Richmond Fed President Thomas
Barkin saying Wednesday’s data release showed inflation remains stubbornly high. He followed New York Fed chief John Williams, who pushed back against expectations for easing soon. Spot gold +0.1%, silver -2%, Copper -3%        

ENERGY:  

Oil futures edged lower, after snapping a string of winning sessions following data that showed a rise in US crude inventories. WTI snapped a three-day winning streak
and Brent broke a four-day string of wins on Wednesday, after the Energy Information Administration said U.S. commercial crude inventories rose by 3 million barrels for the week ending May 5. WTI -0.3% Brent -0.2%.  

CURRENCIES:         

All Group-of-10 currencies fell against the greenback. The Swedish krona and Aussie dollar were the worst performers, dropping as much as 0.7% and 0.8%. EUR/USD fell,
as consumer expectations for euro-zone inflation for the next 12 months increased to 5% in March from 4.6% in February, the ECB said Thursday in its monthly survey. Japanese investors bought more than ¥4 trillion of US sovereign bonds for a second month in
March, according to the nation’s latest balance-of-payments data released Thursday.  US$ Index +0.3% GBPUSD -0.35%, USDJPY -0.2%, EURUSD -0.5%, AUDUSD -0.7%, NZDUSD -0.4%.                        

Bitcoin -1.5%, Ethereum -2%.  Bitcoin retreated and is down about 6% in May due to congestion on its blockchain and concern about ebbing liquidity.  

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:

• Albemarle (ALB) raised to overweight at KeyBanc; PT $270
• Alcoa (AA) raised to outperform at Credit Suisse; PT $50
• Arcturus Therapeutics (ARCT) raised to buy at HC Wainwright; PT $51
• Autoliv (ALV) raised to buy at Kepler Cheuvreux; PT $105
• Axon (AXON) raised to overweight at JPMorgan; PT $236
• BCSF US (BCSF) raised to equal-weight at Wells Fargo; PT $12
• Birchcliff Energy (BIR CN) raised to outperform at Raymond James; PT C$11
• Innergex Renewable Energy (INE CN) raised to buy at Desjardins; PT C$18
• International Game (IGT) raised to positive at Susquehanna; PT $31
• JB Hunt (JBHT) raised to overweight at JPMorgan; PT $204
• Livent (LTHM) raised to overweight at KeyBanc; PT $30
• Norfolk Southern (NSC) raised to overweight at JPMorgan; PT $250
• Orezone Gold (ORE CN) raised to buy at Paradigm Capital; PT C$2.10
• Pipestone Energy (PIPE CN) raised to outperform at RBC; PT C$3.75
• Rayonier Advanced (RYAM) raised to outperform at RBC; PT $7
• Roblox (RBLX) raised to buy at Benchmark; PT $45
• Roblox (RBLX) raised to buy at Roth MKM; PT $48
• Schneider National (SNDR) raised to neutral at JPMorgan; PT $29
• Superior Plus (SPB CN) raised to outperform at ATB Capital; PT C$13
• Syneos Health (SYNH) raised to equal-weight at Barclays; PT $43

DOWNGRADES:

• AFC Gamma (AFCG) cut to market perform at JMP
• Babylon Holdings/Jersey (BBLN) cut to sell at BTIG
• Bentley Systems (BSY) cut to neutral at Goldman; PT $47
• Birchcliff Energy (BIR CN) cut to sector underperform at Peters & Co
• Block Inc (SQ) cut to reduce at CLSA; PT $63
• Boyd Group Services (BYD CN) cut to hold at Desjardins; PT C$275
• CF Industries (CF) cut to neutral at Piper Sandler; PT $80
• CTI BioPharma (CTIC) cut to market perform at JMP
• CareDx (CDNA) cut to neutral at BTIG
• Converge Technology (CTS CN) cut to speculative buy at Canaccord; PT C$5
• Cutera (CUTR) cut to underperform at William Blair
• Franchise Group (FRG) cut to neutral at DA Davidson; PT $30
• LSB Industries (LXU) cut to neutral at Piper Sandler; PT $12
• Mosaic (MOS) cut to neutral at Piper Sandler; PT $42
• Northrop Grumman (NOC) cut to equal-weight at Barclays; PT $450
• PLBY Group (PLBY) cut to neutral at Roth MKM; PT $2
• Parex Resources (PXT CN) cut to sector perform at RBC; PT C$30
• Pfizer (PFE) cut to neutral at Daiwa; PT $38
• ProFrac Holding (ACDC) cut to neutral at JPMorgan; PT $15
• RingCentral (RNG) cut to neutral at Goldman; PT $37
• Secure Energy Services (SES CN) cut to outperform at Raymond James
• Syneos Health (SYNH) cut to hold at Deutsche Bank; PT $43
• Syneos Health (SYNH) cut to neutral at Baird; PT $43
• TechTarget (TTGT) cut to sell at Goldman; PT $27
• Twilio (TWLO) cut to neutral at Goldman; PT $53
• ViewRay (VRAY) cut to neutral at B Riley; PT $1

INITIATIONS:

• Agilent (A) rated new equal-weight at Barclays; PT $140
• Dlocal (DLO) rated new underweight at Barclays; PT $10
• Integer (ITGR) rated new neutral at Citi; PT $88
• PagSeguro (PAGS) rated new overweight at Barclays; PT $16
• StoneCo (STNE) rated new equal-weight at Barclays; PT $13

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC