Cabrera Capital Daily Game Plan

Tuesday May 30, 2023                                                                      Trading Desk:
(312) 236-8907

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

DATA/HEADLINES   9:00ET FHFA House Price Index MoM; 10:00 Conf. Board Consumer Confidence; 10:30ET Dallas Fed Manufacturing
Activity; 1:00ET Fed’s Barkin speaks

TODAY’S HIGHLIGHTS:  

• Elon Musk arrived in China to discuss automated-driving technology that Tesla wants to introduce in the country
• Russia said it downed eight drones aimed at Moscow
  

Global markets nudged higher on news that the US had reached a debt ceiling deal over the weekend, although concerns remain that the deal could face a rocky path
through Congress. Sentiment also got a boost from data showing inflation in Spain slowed more than expected in May. Spain May harmonized inflation came at 2.9%, the least since July 2021, versus estimate for a 3.3% advance.  The country was the first in the
region to report consumer price data this week and will be followed by France, Italy, Portugal, and Germany on Wednesday. Prices in UK stores rose a record 9% year on year in May, according to the British Retail Consortium. Japan’s jobless rate dropped to
2.6% in April from 2.8% in March. Thai exports fell more than expected. Meanwhile, investors remain pessimistic about China against a backdrop of disappointing economic data.                      

EQUITIES: 

US equity futures advanced on hopes that Congress will pass a debt accord as White House and Republican congressional leaders stepped up lobbying in support of the
deal. President Biden says he “feels good” about the debt ceiling and budget deal negotiated with House Speaker McCarthy over the weekend as the White House and congressional leaders work to ensure its passage this week in time to lift the nation’s borrowing
limit and prevent a disastrous US default. A number of conservatives are criticizing the deal as falling short of the deep spending cuts they wanted. Republicans don’t believe the PAYGO provisions go far enough. Plus, they wanted a more significant claw back
of IRS money. There are a lot of disappointed Democrats over work requirements.  A key test will come this afternoon when the House Rules Committee is scheduled to consider the package and vote on sending it to the full House for a vote expected Wednesday.
     

Futures ahead of the bell: E-Mini S&P +0.7%, Nasdaq +1.6%, Russell 2000 +0.3%, Dow +0.02%  

In premarket trading, Nvidia rose over 3% after CEO Jensen Huang unveiled several AI-related products and services. Other AI-related stocks also gained, including Advanced Micro Devices,
Intel, Qualcomm, and Meta Platforms. C3.ai (AI) +9%, SoundHound AI (SOUN) +5%. Stocks linked to cryptocurrencies rally after Bitcoin climbed amid a boost to investor sentiment from a provisional deal on raising the US debt limit. Bit Digital (BTBT) +12%; Riot
Platforms (RIOT) +7%. Ford (F) shares rise 3% as it is raised to buy from hold at Jefferies. Acelyrin (SLRN) rises 5% as coverage is started with an overweight rating by Piper Sandler. Equitrans (ETRN) jumps 28% as RBC raises its recommendation on the midstream
oil and gas company to outperform from sector perform. Tesla (TSLA) is up 3.5% after the electric vehicle maker said it opposes “decoupling” and is willing to expand business in China.   

European gauges fluctuated, with tech stocks outperforming while healthcare and food & beverage sectors weigh.  The FTSE 100 underperforms after data showed prices in UK stores are rising
at a record pace. Among individual names, Nestle SA and Unilever declined after both announced the appointment of new chief financial officers. Messer SE has sealed an investment from GIC Pte that values the industrial gas maker at more than €12 billion ($12.9
billion) including debt, marking the second mega deal in as many months for a century-old, family-owned company in Germany. Singaporean sovereign wealth fund GIC is set to pay around €2 billion for a roughly 25% stake in Bad Soden-based Messer. Stoxx 600 is
flat, DAX +0.5%, CAC -0.4%, FTSE 100 -0.5%. Technology +1.7%, Retail +0.9%, Autos +0.7%. Food & Bev -1.8%, Healthcare -1%, Banks -0.9%.

Shares in Asia were mixed as Chinese benchmarks briefly entered bear-market territory, keeping a lid on sentiment, while other markets were poised to hit new milestones. 
South Korea was the best performer in the region after the market returned from a holiday, with the Kospi Index nearing a bull market.  Chipmakers were the among the biggest gainers, fueled by AI mania. India benchmarks also traded near all-time highs. Hong
Kong’s Hang Seng Index and China’s CSI300 managed nominal gains after tumbling to their lowest level since November, with investors cautious ahead of China’s May manufacturing data due on Wednesday. Chinese education stocks jumped after President Xi Jinping
called on top officials to boost a “high quality” education system that strengthens China’s development. The MSCI Asia Pacific Index was up 0.1%. Kospi +1%, Nikkei 225 +0.3%, Vietnam +0.3%, Hang Seng Index +0.25%, Sensex +0.2%, CSI 300 +0.1%, Taiwan -0.1%,
ASX 200 -0.1%, Philippines -1.25%.           

FIXED INCOME: 
 

Treasury yields fell across the curve as traders welcomed the deal to suspend Washington’s borrowing limit until January 2025 in exchange for caps on spending and
cuts in government programs. Assuming Congress approves the debt deal, the Treasury Department may sell more than $1 trillion of bills through the end of the third quarter to bolster its cash balances, according to some estimates. The US cash stockpile currently
sits around $39 billion; a six-year low. New budget caps may reduce spending by 0.1%-0.2% of GDP in 2024 and 2025, Goldman Sachs said. This week also brings a month-end rebalancing of the US Treasury bond index to incorporate large quarterly new issues of
10- and 30-year debt, which may drive demand for those sectors of the market. US 10-year yields around 3.72%, richer by ~8bp vs Friday’s close.        

METALS: 

Gold prices bounced back after touching its lowest level since March overnight. Gold prices have retreated for most of May as the dollar has strengthened and Treasury
yields have risen partly driven by the lack of progress on a US debt ceiling deal in Congress, though the agreement announced Saturday night allowed yields to ease Tuesday. However, expectations for another interest rate rise from the Federal Reserve in June
have risen after Friday’s US inflation data. Spot gold +0.9%, silver +0.6%.   

ENERGY:  

Oil declined amid concern about demand from Asia and amid growing doubts that OPEC+ will cut production at its meeting next month.  Russia’s Deputy PM Alexander Novak
plans to discuss the domestic fuel market at a meeting today. Investors are on the lookout for further signals about supply from OPEC+ before the group meets June 3-4 to set its output policy.  Russia aims to boost its daily diesel exports from key western
ports next month by nearly a third compared with this month’s plan, with some plants resuming full-scale operations after maintenance. WTI -1%, Brent -1.3%. US Nat Gas -2.2%.     

CURRENCIES:         

The US dollar slipped after climbing to a two-month high. There are two main narratives supporting the latest rebound: the market pricing in a US debt-ceiling deal
and the prospect of a further interest rate hike by the Fed in July. The yen rebounds after a report of an emergency meeting of Japanese regulators. Japan’s Ministry of Finance, the BOJ and Financial Services Agency held an unscheduled meeting after the yen
softened beyond 140 per dollar. Japan intervened in both September and October last year to prop up the currency, after a slump that at one point took it past the 150 level.  Japan’s top currency official warned that the government would take action if needed
in comments that follow a weakening of the yen to its lowest levels since last November. Turkey’s lira weakened to a record low while the Chinese the yuan hit its lowest level since November. US$ Index -0.25%, GBPUSD +0.7%, USDJPY -0.6%, EURUSD +0.35%, USDTRY
+1.5%, AUDUSD +0.25%.     

Bitcoin +1%, Ethereum +1%.  Mounting market, legal and regulatory challenges in the US are clouding the future of Gemini, the Winklevoss twins’ crypto exchange. After
losing money and staff, the firm is seeking an overseas reset.    

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:

• Alliant Energy (LNT) raised to outperform at BMO; PT $56
• Boston Beer (SAM) raised to buy at Roth MKM; PT $386
• Canadian Western Bank (CWB CN) raised to outperform at RBC; PT C$34
• ChargePoint (CHPT) raised to buy at BofA; PT $14
• Coinbase (COIN) raised to overweight at Atlantic Equities; PT $70
• Constellation Brands (STZ) raised to buy at Roth MKM; PT $270
• Elevation Oncology (ELEV) raised to outperform at SVB; PT $8
• Equitrans (ETRN) raised to outperform at RBC; PT $10
• Ford (F) raised to buy at Jefferies; PT $16
• Heico (HEI) raised to buy at Vertical Research; PT $191
• Netease ADRs (NTES) raised to buy at UOB Kay Hian; PT $94
• Paramount Global (PARA) raised to peerperform at Wolfe
• Universal Health (UHS) raised to outperform at SVB; PT $170

DOWNGRADES:

• Datadog (DDOG) cut to neutral at President Capital Management; PT $104
• Fire & Flower (FAF CN) cut to sector perform at ATB Capital; PT C$1.50
• NeoGames (NGMS) cut to neutral at Macquarie; PT $29.50
• Nvidia (NVDA) cut to accumulate at Phillip Secs; PT $440

INITIATIONS:

• Acelyrin (SLRN) rated new buy at Jefferies; PT $31
• Acelyrin (SLRN) rated new outperform at Cowen
• Acelyrin (SLRN) rated new overweight at Piper Sandler; PT $68
• Confluent (CFLT) rated new buy at Needham; PT $35
• Cooper Cos (COO) rated new equal-weight at Morgan Stanley; PT $410
• Crispr Therapeutics (CRSP) resumed outperform at William Blair
• J&J (JNJ) resumed buy at Citi; PT $185
• Kenvue (KVUE) rated new hold at Deutsche Bank; PT $27
• Kenvue (KVUE) rated new neutral at BNPP Exane; PT $28
• Kenvue (KVUE) rated new neutral at Citi; PT $28
• Kenvue (KVUE) rated new neutral at Goldman; PT $29
• Kenvue (KVUE) rated new outperform at RBC; PT $29
• Kenvue (KVUE) rated new overweight at JPMorgan; PT $29
• Oculis Holding (OCS) rated new buy at Kempen & Co; PT $25
• Paylocity (PCTY) rated new equal-weight at Barclays; PT $199
• Steris (STE) rated new equal-weight at Morgan Stanley; PT $206
• Vertex Pharmaceuticals (VRTX) reinstated outperform at William Blair
• Viridian Therapeutics Inc (VRDN) rated new outperform at RBC; PT $44

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC