Cabrera Capital Daily Game Plan

Friday May 19, 2023                                                                      Trading Desk:
(312) 236-8907

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

DATA/HEADLINES    8:45ET Fed’s Williams speaks; 9:00ET Fed’s Bowman speaks; 11:00ET Jerome Powell, Ben Bernanke
speak

TODAY’S HIGHLIGHTS:  

• China, US commerce and trade chiefs to meet next week
  
• US and Taiwan reached agreement on the first part of their “21st Century” trade initiative
• Disney will pull shows from its streaming service starting next week
  

Global shares rose to a one-month high as markets reflected increased hopes for a deal over the U.S. debt ceiling.  MSCI’s broadest index of global shares was inching
up to its strongest level since April 19 and on course for its best weekly gain in over a month. Japan’s inflation re-accelerated in April after cooling earlier in the year, likely supporting views that the central bank may have to revise its price outlook,
bringing the Bank of Japan a step closer to policy normalization. Consumer prices excluding fresh food rose 3.4% from a year ago. Chinese President Xi Jinping on Friday unveiled a grand plan for Central Asia’s development, from building infrastructure to boosting
trade, taking on a new leadership role in a region that has traditionally been a Russian sphere of influence. Meanwhile, several key central bankers, including Fed Chair Jerome Powell, appear at a variety of events today. G7 leaders kicked off a three-day
summit in Hiroshima today, and the focus there is on fresh sanctions against Russia and what they say about China. G-7 leaders will impose more sanctions on Russia and add restrictions on goods it uses on the battlefield, a US official said.         

EQUITIES: 

US stock benchmarks are set to hold on to this week’s advance, as traders await developments on the debt-ceiling talks while assessing the outlook for interest rates.
President Biden on Friday urged his negotiators to keep pushing for a resolution after House Speaker Kevin McCarthy indicated that both sides may reach agreement as soon as this weekend to avoid a catastrophic US default. However, stock volatility could be
higher than usual today as about $1.7 trillion of derivatives contracts tied to shares and indexes are scheduled to expire, according to data compiled by Goldman Sachs. 

Futures ahead of the bell: E-Mini S&P +0.1%, Nasdaq is flat, Russell 2000 +0.15%, Dow +0.05%  

In premarket trading, Foot Locker plunged 20% after reporting comparable-store sales were down 9.1% and cut its sales forecast. Deere shares jump over 6% after the farm equipment maker
boosted its net income guidance for the full year.  Applied Materials (AMAT) shares edge lower, down 1.7%, after the semiconductor- equipment company said sales will drop in the third quarter as the memory-chip slump weighs on its business. PacWest (PACW)
shares rose 3.8%, set for a third day of gains amid an ongoing relief rally. Farfetch (FTCH) shares surge as much as 21% after the specialty online retailer’s first-quarter results beat expectations on the back of growing sales volumes in the US and China.

European stocks rallied following gains on Wall Street as optimism kicked in from progress in US debt-ceiling negotiations. The Stoxx Europe 600 Index was up 0.7%. Almost all sectors
rose, with tech stocks and financial services among the best performers. Germany’s DAX Index was set for a record closing high, following similar milestones reached by France’s CAC 40 and UK’s FTSE 100 earlier this year.   European equity investors aren’t
showing much optimism about the rest of 2023 as strategists are struggling to see a positive risk-reward setup from here.  Even the most bullish strategists think all the positive catalysts are priced in. DAX +0.6%, FTSE 100 +0.4%, CAC +0.7%. Fin Services
+2.3%, Basic Resources +1.5%, Autos +1.1% , Technology +1%. Telecom only sector in the red, -0.05%.

Asian equities were steady, as Japan’s rally continued and Korean chipmakers climbed, offsetting declines in Chinese tech stocks listed in Hong Kong. The MSCI Asia
Pacific Index rose 0.3%. Samsung was the largest contributor to gains, tracking US semiconductor peers higher. Japan’s Nikkei 225 headed for its highest close since 1990, while benchmarks in South Korea and Taiwan also climbed.  Japan’s benchmarks completed
their sixth straight week of gains.  Stocks fell in Hong Kong, dragged by major Chinese online companies.  Alibaba dropped 5.4% in Hong Kong after the Chinese e-commerce firm reported quarterly sales that missed estimates due to a shrinking domestic commerce
business. Panasonic rose 2.8%, after it held a briefing highlighting the priority on its EV battery business. Hanall Biopharma fell as much as 18%, before paring losses in Seoul after disappointing results for its dry eye treatment. Nikkei 225 +0.7%, Taiwan
+0.4%, Kospi +0.9%, Sensex +0.3%. Hang Seng -1.4%, Shanghai Composite -0.4%.      

FIXED INCOME: 
 

Treasuries recouped some losses from a selloff on mounting doubts the Federal Reserve will pause its credit tightening campaign next month. OIS pricing shows a 38%
probability of a 25-bp hike in June and a 34% chance in July. 2 year yield ~4.24%, 10 year yield ~3.65%. Yield curve steepens slightly 

METALS: 

Gold prices edged higher, after falling on Thursday as House Speaker Kevin McCarthy said that negotiators on the federal debt limit may reach an agreement in principle
as soon as this weekend, reducing the chance of a punishing default. Speculation that the Federal Reserve may raise rates again also weighed on gold yesterday. Bullion is headed for the biggest weekly slump since February as progress toward a resolution of
the US debt-ceiling dispute eroded demand for the haven. Elsewhere, Copper is headed for a fifth weekly loss, the longest streak of declines since July. Gold +0.4%, silver +0.9% as of 5:30ET.    

ENERGY:  

Oil prices climbed and are headed for its first weekly advance in more than a month on optimism that the US will avert a catastrophic debt default. West Texas Intermediate
futures climbed above $72 a barrel and are around 3% higher for the week. Crude oil buying by some Asian refiners also added to the bullish sentiment for the market. WTI +1.3%, Brent +1.3%, US Nat Gas -0.2%  

CURRENCIES:         

The Dollar index inched lower, still near its highest level in almost two months as traders increased bets on a June hike this week, paring those for cuts later this
year, after officials including Dallas Fed chief Lorie Logan suggested the hiking cycle hasn’t ended. Investors now await Powell and former chairman Ben Bernanke’s panel discussion on monetary policy later Friday for more clues on the rate path. The yen is
up on “slight risk aversion” amid hawkish Fed comments and strong US data. The Australian dollar strengthened as leveraged funds trimmed short positions before the weekend, given the chance of a debt-ceiling deal. China’s yuan recovered from an earlier loss
after China’s central bank vowed to curb speculation in the yuan and called for more stability in the foreign exchange market. The offshore yuan fell to the weakest level to the dollar in six months this week.  At 6:00am EST: US$ Index -0.3%, GBPUSD +0.2%,
USDJPY -0.5%, USDNOK -0.8%, EURUSD +0.25%, NZDUSD +0.8%.                

Bitcoin +0.4%, Ethereum +0.6%.    

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:

• Bloom Energy (BE) raised to overweight at JPMorgan; PT $20
• Despegar.com (DESP) raised to outperform at Itau BBA; PT $9
• EOG Resources (EOG) raised to buy at Mizuho Securities
• Gap (GPS) raised to neutral at Citi; PT $8
• Grab Holdings (GRAB) raised to buy at CLSA; PT $3.80
• Gulfport Energy (GPOR) raised to buy at Mizuho Securities
• Range Resources (RRC) raised to buy at Mizuho Securities
• Shake Shack (SHAK) raised to equal-weight at Morgan Stanley; PT $63
• TE Connectivity (TEL) raised to outperform at Credit Suisse; PT $138
• Target (TGT) raised to buy at Punto Casa de Bolsa; PT $180

DOWNGRADES:

• Amphenol (APH) cut to neutral at Credit Suisse; PT $77
• Canada Goose (GOOS CN) cut to hold at CFRA; PT $23
• Curaleaf (CURA CN) cut to hold at Benchmark
• Noodles & Co (NDLS) cut to equal-weight at Stephens; PT $5
• PBF Energy (PBF) cut to neutral at Mizuho Securities
• Sciplay (SCPL) cut to hold at Deutsche Bank; PT $20
• Urstadt Biddle (UBA) cut to neutral at Piper Sandler; PT $20

INITIATIONS:

• ACNB (ACNB) rated new neutral at Piper Sandler; PT $31
• Ambrx Biopharma ADRs (AMAM) rated new overweight at Cantor; PT $25
• Apollo Global (APO) rated new buy at Citi; PT $80
• Bitfarms/Canada (BITF CN) rated new overweight at Cantor; PT C$2.70
• BlackRock (BLK) rated new buy at Citi; PT $750
• Blackstone (BX) rated new buy at Citi; PT $98
• Blue Owl Capital (OWL) rated new buy at Citi; PT $14
• Calix (CALX) rated new neutral at JPMorgan; PT $49
• Capstone Copper (CS CN) reinstated buy at Stifel Canada; PT C$8.70
• Carlyle Group (CG) rated new buy at Citi; PT $40
• Digi International (DGII) rated new buy at WestPark Capital; PT $45
• ERO Copper (ERO CN) reinstated hold at Stifel Canada; PT C$30
• First Quantum Minerals (FM CN) reinstated buy at Stifel Canada; PT C$40
• Hudbay Minerals (HBM CN) reinstated buy at Stifel Canada; PT C$10.70
• Intuitive Machines (LUNR) rated new overweight at Cantor; PT $11
• Invesco (IVZ) rated new neutral at Citi; PT $16
• KKR & Co. (KKR) rated new buy at Citi; PT $69
• Lundin Mining (LUN CN) reinstated buy at Stifel Canada; PT C$13
• Netflix (NFLX) rated new buy at William O’Neil
• NewtekOne Inc (NEWT) rated new buy at B Riley; PT $15
• Nike (NKE) rated new outperform at CICC; PT $151.87
• Planet Fitness (PLNT) rated new outperform at RBC; PT $86
• T. Rowe (TROW) rated new sell at Citi; PT $98
• TPG (TPG) rated new buy at Citi; PT $32
• TransDigm (TDG) rated new buy at William O’Neil

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC