Cabrera Capital Daily Game Plan

Tuesday May 16, 2023                                                                      Trading Desk:
(312) 236-8907

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

DATA/HEADLINES   8:30ET Retail Sales; 9:00ET Janet Yellen speaks; 9:15ET Industrial Production, Capacity Utilization,
Manufacturing Production; 10:00ET Business Inventories, NAHB Housing Market Index; 3:00ET Debt Ceiling Talks

Fed speakers include Cleveland’s Loretta Mester, New York’s John Williams, Atlanta’s Raphael Bostic and Chicago’s Austan Goolsbee.

TODAY’S HIGHLIGHTS:  

• British Physicians and Scientists Group Recommended Ivermectin for Preventions and Treatment of COVID-19
• Taiwan’s legislative speaker arrived in US to meet a congressional committee on competition with China
• Martha Stewart made history as the oldest cover model of the Sports Illustrated Swimsuit Issue
  

Global shares edged up, while the dollar eased back from five-week highs as US lawmakers prepared for another round of talks to resolve the deadlock over the government’s
borrowing limit. Data out of China saw industrial output rise 5.6% in April, which was far less than the 10.9% increase economists expected. Retail sales jumped 18.4%, for their fastest increase since March 2021. Analysts had expected 21.0% growth. Euro zone
economic growth was 0.1% quarter-on-quarter in the first three months of the year, the EU’s statistics agency said. German investor confidence weakened for a third month. The ZEW expectations gauge fell to -10.7 in May from 4.1.  Global investors are the most
bearish they’ve been all year, according to BofA’s latest fund manager survey.    

EQUITIES: 

US equity futures traded in a tight range ahead of debt-ceiling talks later today between President Biden and House Speaker McCarthy, a day before the president heads
off on a foreign trip.  A standoff over whether to raise the federal debt limit is sidelining many investors as they wait for a breakthrough. Treasury Secretary Janet Yellen warned that the US is already paying a price for its failure to raise the federal
debt limit and reiterated her department may run out of cash as soon as June 1. In corporate news, Pfizer is said to be planning a mammoth deal of up to $30 billion today to help fund its $43 billion Seagen purchase.

Futures ahead of the bell: E-Mini S&P -0.15%, Nasdaq -0.05%, Russell 2000 -0.5%, Dow -0.3%  

In US premarket trading, Home Depot drops 2.5% after reporting fiscal first-quarter profit that topped expectations, but sales fell short, and it cut the full-year outlook on further
softening of demand.  Horizon Therapeutics (HZNP) plunges 18% on a report that federal regulators are preparing a lawsuit to block the company’s sale to biotech firm Amgen. Capital One (COF) rises over 6% on news that Warren Buffett’s Berkshire Hathaway added
the stock to its portfolio in the first quarter. Nubank (NU) shares rise as much as 8.4% after the Brazilian digital bank reported total revenue for Q1 beat estimates.  Rumble (RUM) dropped 3% in post-market trading after the video-platform company saw quarterly
losses balloon. Beam Global (BEEM) shares soared 16% after reporting a revenue beat.
Futu (FUTU) and Up Fintech (TIGR) decline after the two firms said in separate statements that their trading platforms will be removed from app stores in mainland China. Futu shares
fall 8.9%, Up Fintech drops 6%.

European equities are steady following two days of gains as investors monitor US debt ceiling developments and as data suggested a further softening of economies in Europe and Asia. The
number of UK payrolled employees fell in April, the first drop since February 2021. And concerns that Germany is headed for a recession have re-emerged, according to the ZEW institute’s gauge of expectations. Among individual movers, Vodafone Group shares
sank 7% on weak earnings and Telecom Italia SpA fell after a report that Italy’s state lender will drop its offer for the carrier’s landline network. Stoxx 600 -0.1%, DAX +0.1%, CAC and FTSE 100 are roughly flat. Retail -0.9%, Autos -0.8%, Basic Resources
-0.6%. Utilities +0.5%, Technology +0.4%.

Asian stocks rose as Japan’s Topix benchmark climbed to the highest in more than three decades, even as worse-than-estimated economic data from China dragged on its
mainland shares. Japan’s Topix closed at the highest level since 1990 as a renewed push by Japan’s corporates to increase buybacks and focus on returns is helping boost sentiment. Japan utility shares jumped following the government’s new policy to allow the
nation’s major power companies to raise household electricity prices from June. Chinese stocks fell after official data showed industrial output, retail sales and fixed investment all missed estimates in April. The MSCI Asia Pacific Index gained 0.4%, with
technology names TSMC, Samsung Electronics and Tencent among the top contributors. Taiwan (+1.3%) and Philippine markets were among the best performers.  Philippines +1%, Topix +0.6%, Kospi +0.05%. Sensex -0.6%, CSI 300 -0.6%, ASX 200 -0.4%.

FIXED INCOME: 
 

Treasuries advance across the curve with gains led by the belly as 5s30s spread steeper by 2bp on the day; 10-year yields around 3.465%. Gilts outperform following
an unexpected drop in UK payrolls data that prompted traders to pare bets for further BOE interest-rate hikes.
European government bonds gained following remarks by European Central Bank’s Governing Council member Yannis Stournaras that rate hikes are close to the end. In US session, focal
points include retail sales data, several Fed speakers and potential announcement of a Pfizer jumbo bond offering.     

METALS: 

Gold slipped as several Federal Reserve officials issue warnings regarding the potential for further interest rate increases. During separate addresses, four regional
Fed presidents highlighted that although the central bank has made some progress in combatting high inflation over the past year, more work is needed to meet the target of 2% annual inflation. While the Fed previously signaled the possibility of a pause in
its rate hike cycle, officials now express uncertainty about whether such a pause will occur in June. Spot gold -0.5%, silver -1.25%.         

ENERGY:  

Crude oil prices fluctuated as lingering concerns over China’s economic rebound offset bullishness around a US plan to start refilling its depleted strategic reserves.
The International Energy Agency said oil demand will climb more than expected this year as China’s intake hits an all-time high. Consumption may climb by 2.2 million barrels a day — about 200,000 a day more than previously forecast, the IEA said. China’s apparent
crude demand jumped 25% to more than 15 million barrels a day in April. Russia hasn’t implemented its pledged cuts, with exports hitting a postwar high as Moscow seeks to boost energy revenue to fund military spending, according to the IEA.  Oil refiners in
Europe and the US won’t run as hard as previously expected in the third quarter after a drop in margins, the IEA said in its monthly report. WTI -0.1%, Brent -0.15%.

CURRENCIES:         

The pound lagged gains in most of its Group-of-10 peers after data showed the number of payrolled employees in the UK unexpectedly fell in April, leading traders
to trim bets on further interest-rate hikes. The Australian dollar led losses after economic data from China, its largest trading partner, missed estimates.  GBP/USD fell as much as 0.5% following the jobs data release before paring the move to trade little
changed on the day. US$ Index -0.15%, GBPUSD is flat, USDJPY -0.2%, AUDUSD -0.4%, EURUSD +0.1%, USDNOK +0.6%.                

Bitcoin -1%, Ethereum -0.5%.   

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:

• Amazon (AMZN) raised to buy at President Capital Management; PT $129
• Amdocs (DOX) raised to overweight at Barclays; PT $115
• America Movil ADRs (AMXB MM) raised to buy at New Street Research; PT $27
• Gilead (GILD) raised to outperform at BMO; PT $100
• Novocure (NVCR) raised to overweight at Wells Fargo; PT $104
• Palomar (PLMR) raised to outperform at KBW; PT $64
• Veris Residential Inc (VRE) raised to buy at Deutsche Bank; PT $19
• Western Digital (WDC) raised to buy at CFRA
• Williams Cos (WMB) raised to buy at Citi; PT $36

DOWNGRADES:

• CTI BioPharma (CTIC) cut to market perform at SVB; PT $9.10
• Commerce Bancshares (CBSH) cut to underweight at Morgan Stanley; PT $48
• Cullen/Frost (CFR) cut to equal-weight at Morgan Stanley; PT $121
• NeoGenomics (NEO) cut to market perform at Raymond James
• Prosperity Banc (PB) cut to underweight at Morgan Stanley; PT $60
• RBC (RY CN) cut to neutral at CIBC; PT C$142
• Xenetic Biosciences (XBIO) cut to neutral at HC Wainwright

INITIATIONS:

• Ardagh Metal Packaging (AMBP) rated new hold at Truist Secs; PT $4
• Carvana (CVNA) reinstated equal-weight at Morgan Stanley
• Data I/O Corp (DAIO) rated new buy at WestPark Capital; PT $7
• GE Healthcare (GEHC) rated new outperform at Oppenheimer; PT $97
• Rayonier (RYN) rated new hold at Truist Secs; PT $33
• Vor BioPharma (VOR) rated new buy at JonesTrading; PT $18

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC