Cabrera Capital Daily Game Plan

Monday May 15, 2023                                                                      Trading Desk:
(312) 236-8907

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

DATA/HEADLINES   8:30ET Empire Manufacturing, Fed’s Goolsbee speaks; 9:15ET Fed’s Kashkari speaks; 5:00ET Fed’s
Cook speaks

Fed’s Bostic speaks (7:30am, 8:45am, 2pm, 3pm)

TODAY’S HIGHLIGHTS:  

•  President Biden to meet Tuesday with House Leader McCarthy on the debt ceiling
  
• The White House has not ruled out the annual spending caps that Republicans want
  

World stocks rose on cautious optimism ahead of this week’s deliberations over the US debt ceiling and a raft of economic data.  President Biden expects to meet Congressional
leaders on Tuesday for talks to raise the nation’s debt limit and avoid a catastrophic default, saying on Saturday that the talks are moving along. China’s central bank held rates steady, although expectations are building that monetary policy easing may be
inevitable in coming months to support an economic recovery. Investors will be keenly watching the latest China figures on industrial output, retail sales and fixed-asset investment Tuesday to gauge the momentum of the nation’s economic recovery.  

EQUITIES: 

US equity futures climbed as investors bet that politicians will be able to negotiate a solution to the debt-ceiling standoff, with President Biden voicing optimism
over the weekend that a deal could be reached.  The S&P 500’s decline of 0.3% last week marked the sixth straight week without a 1% move. Oneok agreed to buy Magellan Midstream Partners in a $18.8 billion cash-and-stock transaction that would create one of
the US’s largest oil and natural gas pipeline operators. Newmont sealed its $19.2 billion acquisition of Newcrest in the gold mining industry’s largest transaction. And Microsoft’s $69 billion purchase of Activision Blizzard is expected to win EU approval
today.

Futures ahead of the bell: E-Mini S&P +0.35%, Nasdaq +0.3%, Russell 2000 +0.55%, Dow +0.35%  

In pre-market trading, Aligos Therapeutics (ALGS) gains 30% after the company announced a research collaboration and development agreement with Xiamen Amoytop Biotech. C3.ai (AI) rises
about 2% after the company posted preliminary 4Q revenue that beat estimates. H&R Block (HRB) slips 9% and TurboTax owner Intuit (INTU) falls 4% after the Wall Street Journal reports that the IRS is considering creating a government-run alternative to the
two tax-prep firms. NeoGames (NGMS) shares more than double after Aristocrat Leisure announced a proposed acquisition for $29.50 a share in cash. Oneok (OKE) drops 5% as analysts assess the logic of the pipeline operator’s $18.8 billion deal to buy Magellan
Midstream Partners. Sarepta Therapeutics (SRPT) shares are up 29% after independent advisers to the FDA ruled that the company’s experimental gene therapy for a debilitating muscle disease should be approved. SoFi Technologies (SOFI) slips 5% after Wedbush
downgraded the finance company to underperform.

European shares gained as earnings results continue to impress. About 70% of the MSCI Europe companies that reported results so far have beat estimates this season.  The European Commission
raised its euro-zone inflation outlook and warned of “persistent challenges.”   EU officials lifted their projections for consumer-price growth to 5.8% this year and 2.8% in 2024 from 5.6% and 2.5% respectively. Forecasts for economic expansion were also increased.
The euro area only grew 0.1% in the first quarter, data showed, and industrial production slumped by 4.1% from the previous month. That’s the biggest decline since April 2020. Among individual movers, Siemens Energy AG rose over 3% as it upgraded its revenue
expectation for the year after strong orders for energy transition technologies. Meanwhile, Axa SA climbed more than 2% after it provided a new profitability target for the year as the insurer’s first-quarter sales rose. Stoxx 600 +0.35%, DAX +0.15%, CAC +0.3%,
FTSE 100 +0.5%.  REITS +1.3%, Basic Resources +1%, Travel & Leisure +1%. Banks underperform, -0.3%.

Asian indices were mostly higher, with a late rally in Chinese stocks putting the regional benchmark in positive territory for the first time in five days.  The MSCI
Asia Pacific Index rose 0.5%, led by financials and communication services shares. In Japan, the Topix inched closer to reaching its highest level since 1990, with the nation’s biggest banks predicting their highest profits in years. Goldman Sachs is predicting
more upside for Japanese stocks, which extended their recent outperformance versus global peers amid strong earnings and renewed weakness in the yen.  Thailand’s benchmark was the worst performer in Asia following elections on Sunday, owing to uncertainty
over talks between opposition parties to form a coalition government. The Hang Seng Index was at the top of the leader board, gaining 1.75%, with Tencent being a key contributor ahead of its earnings scheduled for Wednesday. CSI 300 +1.55%, Topix +0.9%, Sensex
+0.5%, Kospi +0.15%. Thailand -1.3%, Philippines -0.8%, Taiwan -0.2%.

FIXED INCOME: 
 

Treasuries are cheaper across the curve, following wider losses in bunds. Risk-on sentiment helped after President Joe Biden seemed optimistic that a debt-ceiling
deal could be reached, with the issue continuing to be a focus for investors this week.  Yields are cheaper by roughly 3bps across the curve with 10-year yields around 3.50%.    

METALS: 

Gold edged higher after a three-day drop, as nervousness over the US debt-ceiling impasse offset signs the Federal Reserve may have to keep hiking rates to cool sticky
inflation. President Biden said he expects to meet House Speaker McCarthy on Tuesday to discuss budget negotiations to avoid a default.  Spot gold +0.1%, silver is flat.         

ENERGY:  

Crude oil is higher, snapping three straight day of losses. Oil prices rose 0.5% due to positive market sentiment resulting from reduced oil supplies due to OPEC+
cuts and the US resuming purchases for strategic reserves. However, concerns about fuel demand from the United States and China persist. Russian crude oil flows to international markets continue to rise, even as the country insists it is slashing production.
With almost all of Russia’s crude going to China and India, volumes to Asia reached a new peak. Observed European crude imports from the US Gulf this month are set to reach a record, according to tanker-tracking data. Energy Secretary Jennifer Granholm mentioned
the US’s consideration of repurchasing oil for the Strategic Petroleum Reserve after completing a mandated sale. WTI +0.6%, Brent +0.6%, US Nat Gas +2%.

CURRENCIES:         

The dollar is slightly lower, paring a two day rally. Most Group-of-10 currencies advanced against the dollar as risk appetite improved. The Australian dollar led
gains as higher iron ore prices boosted prospects for the nation’s trade surplus. Sterling rose with focus on comments due from the Bank of England’s Chief Economist Huw Pill later today. In emerging markets, the Turkish lira touched a two-month low after
weekend elections looked headed for a runoff, while the Thai baht rallied almost 1% after Thailand’s opposition routed military-allied parties also in weekend polls. South Africa’s rand jumped on signs that a diplomatic row with the US is softening.  US$ Index
-0.2% GBPUSD +0.5%, USDJPY +0.3% ,  EURUSD +0.3%, AUDUSD +0.7%, NZDUSD +0.4%.          

Bitcoin +1.5%, Ethereum +1.5%.   

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:

• Alaunos Therapeutics Inc (TCRT) raised to buy at HC Wainwright
• Albemarle (ALB) raised to outperform at Baird; PT $288
• BorgWarner (BWA) raised to overweight at Morgan Stanley; PT $50
• DuPont de Nemours (DD) raised to buy at Deutsche Bank; PT $80
• Ellington Financial Inc (EFC) raised to outperform at KBW; PT $13.75
• LXP Industrial Trust (LXP) raised to overweight at KeyBanc; PT $12
• Nevro (NVRO) raised to outperform at Oppenheimer; PT $40
• PlayAGS (AGS) raised to buy at Jefferies; PT $10
• Sabre (SABR) raised to market perform at Bernstein
• Schwab (SCHW) raised to outperform at Raymond James; PT $63
• Sun Life Financial (SLF CN) raised to outperform at RBC; PT C$79
• TransAlta Renewables (RNW CN) raised to outperform at Credit Suisse
• Washington Trust (WASH) raised to neutral at Piper Sandler; PT $26

DOWNGRADES:

• AgileThought (AGIL) cut to neutral at Cantor; PT $2
• Air Canada (AC CN) cut to reduce at Veritas Investment Research Co
• Alphabet (GOOGL) cut to hold at Loop Capital; PT $125
• CTI BioPharma (CTIC) cut to hold at Stifel; PT $9.10
• CTI BioPharma (CTIC) cut to market perform at Cowen; PT $9.10
• Camden Property (CPT) cut to peerperform at Wolfe
• Catalent (CTLT) cut to hold at Deutsche Bank; PT $29
• Essex Property (ESS) cut to underperform at Wolfe; PT $204
• European Residential REIT (ERE-U CN) cut to hold at Desjardins; PT C$3.75
• First Solar (FSLR) cut to peerperform at Wolfe
• Invitae (NVTA) cut to underperform at Raymond James
• LifeStance Health (LFST) cut to market perform at Cowen; PT $9
• Mid-America (MAA) cut to underperform at Wolfe; PT $137
• Neo Performance Mats (NEO CN) cut to hold at Stifel Canada; PT C$8.25
• Park National (PRK) cut to underweight at Piper Sandler; PT $103
• Silk Road Medical (SILK) cut to underperform at Wolfe; PT $27
• SoFi Technologies (SOFI) cut to underperform at Wedbush; PT $2.50
• Spectrum Pharma (SPPI) cut to hold at Jefferies; PT $1.50
• UDR (UDR) cut to peerperform at Wolfe

INITIATIONS:

• AerCap Holdings (AER) rated new buy at Citi; PT $71
• Air Lease (AL) rated new neutral at Citi; PT $41
• FactSet (FDS) rated new market perform at BMO; PT $424
• Galecto (GLTO) rated new buy at HC Wainwright; PT $12
• SolarEdge (SEDG) rated new outperform at Haitong Intl; PT $373
• WisdomTree Inc (WT) rated new outperform at Oppenheimer; PT $9

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC