Cabrera Capital Daily Game Plan

Thursday May 18, 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, Philly Fed; 9:05et Fed’s Jefferson speaks; 9:30ET Fed’s Barr testifies
before Senate Banking Committee; 10:00ET Existing Home Sales, Leading Index, Fed’s Logan speaks

TODAY’S HIGHLIGHTS:  

• Joe Biden arrived in Japan for the G-7 Summit
• FBI whistleblowers will testify at Jim Jordan’s hearing today
  

Global markets turned higher after days of anxiety that an impasse on the debt ceiling would push the US into an unprecedented default. Cautious risk appetite resurfaced
on optimism about an eventual breakthrough for the talks following President Biden’s show of confidence. Biden and other Group of Seven leaders began arriving in the Japanese city of Hiroshima today for an annual summit, with concerns around China and Russia
— both uninvited — set to dominate discussions. The meeting, which runs through Sunday, comes as Russia launched fresh aerial assaults on Ukraine and Chinese President Xi Jinping attended a separate summit seeking to deepen Beijing’s influence in Central Asia.
The seven countries — Japan, Canada, France, Germany, Italy, the UK and US — are set to target what they see as economic coercion by Xi’s government while also introducing measures to reach out to developing nations in the Global South.         

EQUITIES: 

US equity futures are slightly higher as hopes build for an eventual breakthrough in talks to raise the debt limit.  President Biden expressed confidence there will
be no US default, and House Speaker McCarthy said reaching an agreement this week is “doable.” The positive mood reflects both the debt ceiling progress and some good news out of embattled US regional lenders. Bank stocks have rebounded this week after Western
Alliance reported an increase in deposits, easing concern that the industry will succumb to losses on bond investments and a flight by depositors. US regional lenders kept up their momentum in premarket trading, with Western Alliance Bancorp adding 2% and
PacWest Bancorp up 6%.

Futures ahead of the bell: E-Mini S&P +0.1%, Nasdaq +0.2%, Russell 2000 +0.1%, Dow -0.05%  

In pre-market trading, Walmart gained ~2% after lifting its annual profit forecast while its discount model powered new market-share gains among US consumers. Strong demand spurred higher-than-expected
earnings in the first quarter, fueling the increase in the company’s outlook.  Cisco dropped ~4% after orders fell 23% in the past quarter. Take Two (TTWO) soared 13% after beating on sales and hinting at a release date for a new version of Grand Theft Auto.
Micron (MU) rises as much as 2.4% following news that Japan is poised to provide about $1.5 billion in incentives to help the semiconductor company make next-generation memory chips in the country. WeWork (WE) shares rise as much as 10% before paring some
gains following a record plunge on Wednesday after the sudden departure of its CEO. Boot Barn (BOOT) tumbled 16% after reporting fourth-quarter net sales that missed estimates. Snowflake (SNOW) gained as much as 3% after a report from the Information said
it has been in advanced talks to acquire search startup Neeva.

European stocks rose, following a rally on Wall Street, as investors were optimistic about a breakthrough in US debt-ceiling talks. Automakers, technology and banks outperformed, while
utilities and real estate were laggards. Germany’s DAX Index outperformed and was less than 1% away from a record high. Markets are closed in the Nordics and Switzerland today for a holiday. Among individual stock moves, Burberry Group shares fell 7% after
a slowdown in the Americas overshadowed a rebound in China. BT Group, Britain’s biggest broadband and mobile provider, slid over 8% after saying it will cut up to 55,000 jobs by 2030 as it completes its fiber roll-out and adapts to new technologies such as
AI. Aston Martin Lagonda’s shares surged after it said China’s Geely Automobile will double its stake. Stoxx 600 +0.6%, DAX +1.6%, CAC +0.9%, FTSE 100 +0.5%. Autos +2.2%, Technology +1.6%, Banks +1.5%. Utilities -0.7%, REITs -0.7%.

Asian stocks gained with the MSCI Asia Pacific Index rising as much as 1%, lifted by tech names such as TSMC and Alibaba. Sony was also a top contributor to the gain
as the firm weighs a spinoff and separate listing for its financial unit in two to three years. Most markets in the region were up, with Japan, Hong Kong and Taiwan among the best performers. Gains in Alibaba Group ahead of its earnings release spurred tech
stocks higher in both Hong Kong and Japan. Chipmakers were among best performers on the Nikkei 225 on government plans to boost the country’s domestic semiconductor sector. Japan’s Topix index climbed around 1% to set a fresh 33-year high. Foreign fund flows,
cheap yen, low valuation and structural changes continue to attract more investors into the world’s third-largest economy. Nikkei 225 +1.6%, Taiwan +1.1%, Hang Seng +0.85%, Kospi +0.8%, Vietnam +0.75%, Shanghai Composite +0.4%. Sensex -0.2%.   

FIXED INCOME: 
 

Treasuries are extending Wednesday’s losses, with yields cheaper by 1.5bp to 3bp across the curve. Losses are being led by long-end of the curve; 2s10s, 5s30s spreads
unwind a portion of Wednesday’s flattening move, widening 1.5bp and 0.5bp on the day; 10-year yields sit around 3.6%, cheaper by 3bps. IG issuance slate empty so far; ten companies priced almost $9b yesterday, taking the weekly total above $57b, on pace to
be the second busiest week of the year. US session highlights include jobless claims and a $15B 10-year TIPS reopening.   

METALS: 

Gold extended a three-day decline to the lowest level in almost four weeks as optimism the US would be able to resolve its debt-ceiling standoff damped demand for
safe havens.  The metal has dropped more than 2% since Monday’s close, under pressure from the rising dollar and Treasury yields. President Joe Biden expressed confidence that negotiators would reach an agreement to avoid a default, while House Speaker Kevin
McCarthy said he remained hopeful of a deal. Spot gold -0.4%, silver -1%.          

ENERGY:  

Oil futures edged lower as investors kept tabs on debt-ceiling negotiations, a day after crude bounced to its highest finish in a week. Rising demand in China and
the United States sent global oil demand surging by 3 million barrels per day in March compared to February and hitting the highest level on record, data from the Joint Organizations Data Initiative (JODI) showed on Thursday.  Oil refiners in South Korea and
Taiwan have stepped into the market after a pause to snap up US crude, offering relief for challenged physical markets and a potential lift for prices. The market for actual barrels used by refiners has looked less healthy in recent weeks because of abundant
supply — especially for low-sulfur, light barrels that now dominate US exports. WTI -0.2%, Brent -0.4%. US Nat Gas +1.4%.

CURRENCIES:         

The dollar strengthened against all Group-of-10 currencies, extending its recent gains, as money markets turned less convinced on bets the Federal Reserve will cut
interest rates this year. The Australian dollar slipped after data showed unemployment in the nation rose, weakening the case for further tightening. Sterling fell as much as 0.5% versus the dollar.  The pace at which the Bank of England shrinks its balance
sheet is likely to accelerate, the deputy governor for markets told UK lawmakers.  US$ Index +0.2%, GBPUSD -0.35%, USDJPY +0.1%, EURUSD -0.2%, USDNOK +0.7%, AUDUSD -0.3%.                

Bitcoin +0.2%, Ethereum -0.1%. The Bitcoin 2023 conference kicks off in Miami. Bit Digital may announce a plan to expand its operations to Iceland to hedge its regulatory
risk in the US, the WSJ reported. Binance Australia lost access to some Aussie dollar deposit services and warned of disruption to bank transfer withdrawals.   

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:

• Dynatrace (DT) raised to buy at BTIG; PT $57
• Plymouth (PLYM) raised to outperform at BNPP Exane; PT $25
• Rambus (RMBS) raised to buy at Jefferies; PT $65
• Ritchie Bros (RBA CN) raised to outperform at National Bank; PT C$82.03
• Snap-On (SNA) raised to buy at Roth MKM; PT $298
• WEC Energy (WEC) raised to buy at Mizuho Securities; PT $98

DOWNGRADES:

• Amyris (AMRS) cut to hold at Jefferies; PT 65 cents
• Essential Utilities (WTRG) cut to neutral at Northcoast
• Futu Holdings ADRs (FUTU) cut to neutral at JPMorgan; PT $46
• Futu Holdings ADRs (FUTU) cut to underweight at Morgan Stanley; PT $34
• Goodyear (GT) cut to neutral at Northcoast
• Magellan Midstream (MMP) cut to hold at Stifel; PT $64
• NeoGames (NGMS) cut to hold at Stifel; PT $29.50
• Nubank (NU) cut to neutral at Citi
• P&G (PG) cut to hold at Truist Secs; PT $155

INITIATIONS:

• Acumen Pharma (ABOS) rated new overweight at Cantor; PT $13
• AnaptysBio (ANAB) rated new outperform at Cowen
• Arcellx (ACLX) rated new buy at Truist Secs; PT $60
• Array (ARRY) rated new buy at Seaport Global Securities; PT $30
• Braze (BRZE) rated new sector perform at Scotiabank; PT $34
• Coya Therapeutics (COYA) rated new buy at BTIG; PT $15
• Ecarx Holdings (ECX) rated new outperform at CICC; PT $6.60
• Genelux (GNLX) rated new hold at Brookline Capital; PT $25
• Lantern Pharma (LTRN) rated new neutral at HC Wainwright
• Playstudios (MYPS) rated new neutral at JPMorgan; PT $5
• Pliant Therapeutics (PLRX) rated new buy at Canaccord; PT $48
• Tarsus Pharma (TARS) rated new buy at Guggenheim; PT $40
• Varonis Systems (VRNS) reinstated buy at DA Davidson; PT $30
• Wolfspeed Inc (WOLF) rated new hold at Jefferies; PT $46

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC