Cabrera Capital Daily Game Plan

Wednesday May 17, 2023                                                                      Trading Desk:
(312) 236-8907

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

DATA/HEADLINES   8:30ET Housing Starts, Building Permits; 1:00ET 20 Year Auction

TODAY’S HIGHLIGHTS:  

• US Now Spends More Servicing Its Debt Than On National Defense
• The San Antonio Spurs won the right to select first in the June 22 NBA draft
  

Global shares dipped while the dollar traded at six-week highs, reflecting risk aversion among investors. Euro zone inflation accelerated last month, Eurostat said,
confirming preliminary data pointing to increasingly stubborn price growth in the region. Meanwhile, data today showed Japan’s economy emerged from recession and grew faster than expected in the first quarter. Japan’s GDP came in better than expected at 1.6%,
above the 0.8% consensus.    

EQUITIES: 

US equity futures edged higher as Debt-ceiling talks took on a cautiously optimistic tone. Negotiators are seeking a framework agreement to review upon President
Biden’s return from a curtailed trip to Asia. Joe Biden and Kevin McCarthy said the two sides remain far apart but agreed on a new system for staff-level negotiations.
Regional banks stocks have rallied in the premarket in a move seemingly led by Western Alliance after they reported another increase in deposits.

Futures ahead of the bell: E-Mini S&P +0.3%, Nasdaq +0.2%, Russell 2000 +0.5%, Dow +0.4%  

In pre-market trading, Tesla (TSLA) rises as much as 1.7%, after CEO Elon Musk said they will “try a little advertising and see how it goes.” This is a major shift for the company that’s
largely avoided traditional marketing to sell its vehicles. Western Alliance (WAL) shares rise as much as 12% after the regional lender reported growth in deposits this quarter. Manchester United (MANU) gains over 6% after Sheikh Jassim Bin Hamad J.J. Al-Thani
submitted an improved offer for the football club. Doximity (DOCS) drops 10% after  the health-care software company gave a weaker-than-expected 1Q forecast due to delayed product launches. Container Store (TCS) tumbled 17% in post-market trading Tuesday after
its full-year net sales forecast fell short of estimates. Target (TGT) fluctuates between gains and losses after issuing a weaker-than-expected profit forecast for the current period and projecting a decline in comparable sales. Wix.com (WIX) shares are up
7.4%, after the web platform company reported first-quarter results that beat expectations. 

European stocks are mixed as risk sentiment struggles to gain any real traction with US debt ceiling negotiations making only limited progress. The Stoxx 600 is down 0.1% with real estate,
financial services and retail the worst performing sectors while miners and travel stocks rise.  London Stock Exchange Group Plc was among the biggest laggards after a consortium of investors including Blackstone and Thomson Reuters Corp. sold shares in the
group. Siemens AG gained after it raised its outlook for a second time in fiscal 2023 as revenue and orders jumped.  DAX +0.4%, CAC is flat, FTSE 100 -0.1%. Travel & Leisure +0.5%, Technology +0.3%, Autos +0.3%. Financial Services -1.2%, REITs -1.1%.

Asian stocks were mostly lower as weaker-than-expected data from China continued to weigh on sentiment concerning the country’s economic growth outlook. The MSCI
Asia Pacific Index fell 0.4%, with AIA Group, Meituan and Ping An Insurance Group the biggest drags. Shares in Hong Kong were the region’s worst performers after disappointing factory output and jobless data yesterday. Key gauges in Japan, Taiwan and South
Korea rose. Japan’s benchmarks extended gains, with the Topix reaching its highest level in three decades, after a better-than-expected quarterly economic growth report.  The Hang Seng Index declined 2.1%, dragged lower by property and technology stocks. Tencent,
which ended down 0.6%, saw large fund net outflow before its earnings report came after the market closed. Thailand -1.1%, Sensex -0.6%, Vietnam -0.5%, ASX 200 -0.5%, CSI 300 -0.45%. Taiwan +1.6%, Nikkei 225 +0.8%, Kospi +0.6%.  

FIXED INCOME: 
 

Treasuries are slightly richer across the curve with spreads broadly within 1bp of Tuesday’s close. Bigger gains remain in core European rates after a strong 10-year
German bond auction. There were also solid French and UK auctions. Treasury 10-year yields are around 3.525%, richer by ~1bp on the day. The US session will feature a 20 year bond auction.  Yields on short-term Treasury money-market instruments have shot up
on concern that the X date, when the Treasury will have exhausted all its special accounting maneuvers, is drawing closer. So much so that money-market assets have risen to a record at more than $5 trillion.           

METALS: 

Gold held near a two-week low as traders tracked talks to resolve the US debt-ceiling impasse and dissected comments from a slew of Federal Reserve officials on the
outlook for interest rates. With many investors betting the Fed will hold fire at its June 13-14 meeting, four policy makers on Tuesday stressed the need to watch for the impact of tightening so far, signaling a potential pause. Still, a fifth, Cleveland Fed
President Loretta Mester, suggested further hikes may still be in order.  Spot gold -0.1%, silver -0.2%.          

ENERGY:  

Oil futures edged higher, steadying as investors weighed concerns over the outlook for crude demand while awaiting official weekly US supply data from the EIA.  US
crude stockpiles rose by 3.7 million barrels last week, led by a 2.9 million surge at Cushing, API reported. Goldman forecast global crude demand will rise by 1.6 million barrels a day this year, supported by growth in services. UBS cut its year-end outlook
for Brent to $95 from $105, citing greater-than-expected supply. WTI +0.25%, Brent +0.25% 

CURRENCIES:         

The dollar extended gains for a second day, aided by recent US economic data that came in stronger than expected and speeches by Federal Reserve speakers on the hawkish
side. Atlanta Fed President Raphael Bostic said yesterday that the Fed would need to stay “super strong” in fighting inflation even if the unemployment rate starts to rise later in the year, while Chicago Federal Reserve President Austan Goolsbee said it was
premature to be discussing interest rate cuts.  The euro dropped to a six-week low due to broad greenback strength. USD/JPY climbed for a fifth straight day and hitting its highest in two weeks, while testing its key 200 day moving average. US$ Index +0.3%,
GBPUSD -0.15%, USDJPY +0.4%, AUDUSD +0.1%, USDNOK +0.6%, EURUSD -0.2%.               

Bitcoin -1.2%, Ethereum -1.7%.   

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:

• APi Group (APG) raised to outperform at Baird; PT $29
• Aecon Group (ARE CN) raised to outperform at BMO; PT C$15
• Airbnb (ABNB) raised to buy at Phillip Secs; PT $143
• BioNTech ADRs (BNTX) raised to buy at Redburn
• Gibson Energy (GEI CN) raised to buy at Stifel Canada; PT C$26
• Gibson Energy (GEI CN) raised to outperform at Credit Suisse; PT C$25.50
• Norfolk Southern (NSC) raised to outperform at Evercore ISI
• Old Dominion (ODFL) raised to outperform at Evercore ISI
• Power of Canada (POW CN) raised to buy at TD; PT C$41
• Tencent Music ADRs (TME) raised to buy at China Renaissance; PT $10.60
• Tencent Music ADRs (TME) raised to buy at Citi; PT $9.70
• Tencent Music ADRs (TME) raised to neutral at Macquarie; PT $7.40
• Visteon (VC) raised to buy at Guggenheim; PT $161
• Wynn Resorts (WYNN) raised to overweight at Barclays; PT $135
• iQIYI ADRs (IQ) raised to outperform at Credit Suisse; PT $8

DOWNGRADES:

• Consolidated Water (CWCO) cut to neutral at Janney Montgomery
• Knight-Swift (KNX) cut to neutral at Credit Suisse
• Magellan Midstream (MMP) cut to neutral at Citi; PT $63
• Magellan Midstream (MMP) cut to sector perform at RBC; PT $66
• NeoGames (NGMS) cut to hold at Jefferies
• Nutrien (NTR CN) cut to hold at Berenberg; PT $49
• On Holding (ONON) cut to sell at Williams Trading; PT $26
• Werner Enterprises (WERN) cut to neutral at Credit Suisse; PT $48

INITIATIONS:

• Blue Foundry Bancorp (BLFY) rated new neutral at Piper Sandler
• CompoSecure (CMPO) rated new buy at B Riley; PT $16
• Disc Medicine Inc (IRON) rated new outperform at Raymond James; PT $50
• EVgo (EVGO) rated new buy at Stifel; PT $9
• Kura Oncology (KURA) rated new buy at BTIG; PT $31
• Madison Square Garden Entertainment (MSGE) rated new buy at Guggenheim
• NorthWestern (NWE) reinstated neutral at Ladenburg Thalmann; PT $57.50
• Old Republic (ORI) rated new neutral at Piper Sandler; PT $27
• Usio Inc (USIO) rated new buy at HC Wainwright; PT $3.50

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC