Cabrera Capital Daily Game Plan

Friday June 2, 2023                                                                      Trading Desk:
(312) 236-8907

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

DATA/HEADLINES   8:30ET Employment Report*

TODAY’S HIGHLIGHTS:  

• The Senate passed the debt-limit deal with a 63-36 majority
• Several regions in western Russia have been hit by shelling and drones in attacks from Ukraine, local officials
  say

Global stock markets climbed after the US debt-ceiling deal passed its last Congressional hurdle, with traders now looking to US jobs data that may clarify the Federal
Reserve’s policy path.  A report that China is considering new stimulus measures to boost its ailing economy also aided sentiment. China is working on a new basket of measures to support the property market after existing policies failed to sustain a rebound
in the ailing sector. An index of emerging-market stocks soared the most since January.  UBS Global Wealth strategists said in a note today that they recommend diversifying beyond US and growth stocks into emerging markets and some sectors in Europe. The MSCI
world equity index gained over 1%.                         

EQUITIES: 

US equity futures advanced, looking to add to Thursday’s gains, with the tech-heavy Nasdaq set for a sixth straight weekly advance. Tech giants are still driving
most of the stock market’s advance, with Apple nearing a record and Nvidia climbing more than 5% Thursday. The sector accounted for more than half the $14.8 billion of inflows into US equity funds last week, according to EPFR data. Traders are betting that
today’s monthly US jobs report will show enough moderation in the pace of hiring to allow the Fed to pause its tightening cycle.    

Futures ahead of the data: E-Mini S&P +0.5%, Nasdaq +0.6%, Russell 2000 +0.7%, Dow +0.5%  

The buzz around AI has investors pouring a record amount of money into tech stocks, with the Nasdaq 100 Index now at an all-time high relative to the Russell 2000 small-cap index.

In pre-market trading, Broadcom (AVGO) slipped 2% after it said sales tied to AI will double this year but will be overshadowed by a wider slowdown and its total revenue is expected to
rise less than 5% this quarter, its slowest in years. Dell declined over 3% after it gave a lukewarm sales outlook as it continues to struggle to sell PCs. Lululemon jumped ~15% after earnings beat, and it gave an optimistic full-year guidance.  MongoDB (MDB)
shares soared 27%, with analysts positive on the database software company after it reported first-quarter results that beat expectations and raised its full-year forecast. SentinelOne (S) shares plunged 37% after the software company cut its year revenue
guidance. Asana (ASAN) is up 5.7% after the software company reported first-quarter revenue that was slightly better than expected. Samsara (IOT) shares are up 16% after the software company boosted its total revenue guidance for the full year.

European indices followed Asian benchmarks higher, with luxury-goods makers LVMH and Richemont among the leading gainers. Miners and energy companies soared as crude oil and industrial
metals rebounded. The Stoxx 600 is up 1% with miners, real estate and autos the strongest performing sectors while utility stocks fall.  Among individual movers, sportswear makers Puma SE and Adidas AG rose more than 4% each after Lululemon Athletica’s robust
results. Dechra Pharmaceuticals jumped after EQT AB made a firm offer for the UK veterinary drugmaker. REITs are near the top of the leader board, buoyed by a report that beleaguered Swedish landlord SBB has attracted interest from several suitors, including
Brookfield. Addnode shares gain as much as 11% after the Swedish IT services group announced it would acquire US firm Team D3. DAX +1.1%, CAC +1.3%, FTSE 100 +0.9%, FTSE MIB +1.1%. Basic Resources +4.5%, REITs +3.2%, Autos +2.4%, Retail +1.6%, Energy +1.6%.
Utilities -0.4%.        

Asian stocks climbed to cap their best week since January, helped by surges in Chinese tech shares amid bets that the Federal Reserve won’t raise interest rates this
month. The MSCI Asia-Pacific Index rose nearly 2%, with Tencent, Alibaba and TSMC the biggest drivers. Hong Kong led gains among regional benchmarks with the Hang Seng tech index surging 5.3%. Shares in Japan, Australia, China advanced while South Korea’s
Kospi index was headed for bull market territory following a gain of more than 20% from a low in September. Hong Kong’s Hang Seng index rose more than 3%, pulling the benchmark back from the brink of a bear market following concerns about Chinese growth. Hang
Seng Index +4%, Topix +1.5%, CSI 300 +1.5%, Philippines +1.3%, Kospi +1.25%, Taiwan +1.2%, Vietnam +1.1%, Sensex +0.2%.  Singapore and Indonesia were closed for holidays.

FIXED INCOME: 
 

Treasuries are slightly cheaper across the curve after confirmation the debt-ceiling deal passed its last Congressional hurdle. Treasury yields cheaper by 0.5bp to
2bp across the curve with 2s10s, 5s30s spreads steeper by 1bp and 0.5bp as front-end slightly outperforms; 10-year yields around 3.6%. US session focus switches to data, with the May jobs report due this morning. Headline May jobs number estimated at 195k
with the whisper number higher at 225k.  Swaps currently indicate just a one-in-three chance of a 25bp hike in June.           

METALS: 

Gold is slightly higher, on track for its best week since early April as investors look to US jobs data that could sway Federal Reserve policymakers to pause interest
rate hikes. Traders have pared bets on further tightening by the Fed this month, following a flurry of data that showed some progress on getting inflation under control. US manufacturing figures Thursday unveiled a drop in prices and new orders, and forecasters
project a moderation in the pace of US hiring when non-farm payrolls figures are released. Copper is up 1.5% and on course for its first weekly gain in seven. Spot gold +0.1%, silver +0.2%.     

ENERGY:  

Oil prices rose while attention turned to a meeting of OPEC ministers and their allies at the weekend. WTI futures rose above $71 a barrel, trimming the weekly loss
to almost 3% ahead of an OPEC+ June 4 meeting. Most market watchers expect the cartel to keep output levels unchanged. Global oil flows slumped last month as key OPEC members implemented voluntary production curbs amid a tepid economic outlook for some of
the world’s top consumers.  Crude exports fell by about 1.2 million barrels a day in May, with major declines from Saudi Arabia and Kuwait.  European natural gas prices are heading toward their longest run of weekly declines since 2007 due to persistently
weak demand and ample supplies. Benchmark Dutch futures are on track to fall about 4% this week, a ninth consecutive drop. The contract is trading almost 70% lower since the start of the year. WTI +1.5%, Brent +1.4%. US Nat Gas +0.1%, RBOB +1.6%.  

CURRENCIES:         

The US$ Index is slightly lower and set to snap a three-week advance before the release of the US payrolls report, while the pound heads for its longest winning streak
this year.  The dollar slumped yesterday after data showed sluggishness in the manufacturing sector, fueling bets the Federal Reserve would pause its interest rate increases. Traders will be looking to today’s payrolls data to gauge the Fed’s next move. The
Australian, New Zealand and Canadian dollars rose the most against the greenback among the Group-of-10 currencies.  US$ Index -0.1%, GBPUSD 0.05%, USDJPY +0.1%, AUDUSD +0.8%, USDNOK -0.6%, USDSEK -0.8%, EURUSD +0.05%.

Bitcoin +0.9%, Ethereum +1.2%.     

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:

• Banco de Chile ADRs (CHILE CI) raised to outperform at Itau BBA; PT $24
• EPR Properties (EPR) raised to overweight at KeyBanc; PT $47
• FibroGen (FGEN) raised to buy at Stifel; PT $32
• Kinsale Capital (KNSL) raised to outperform at BMO; PT $389
• Lundin Mining (LUN CN) raised to buy at TD; PT C$11.50
• Trade Desk (TTD) raised to overweight at Morgan Stanley

DOWNGRADES:

• Asana (ASAN) cut to neutral at DA Davidson; PT $21
• BRP Inc. (DOO CN) cut to hold at TD; PT C$110
• Cue Health (HLTH) cut to neutral at Goldman; PT 75 cents
• Dollar General (DG) cut to neutral at Atlantic Equities; PT $170
• Dollar General (DG) cut to neutral at Piper Sandler; PT $178
• Ginkgo Bioworks (DNA) cut to sell at Goldman; PT $1.25
• SentinelOne (S) cut to hold at Canaccord; PT $14
• SentinelOne (S) cut to hold at WestPark Capital
• SentinelOne (S) cut to neutral at BTIG
• SentinelOne (S) cut to neutral at DA Davidson; PT $13.50
• Valvoline (VVV) cut to neutral at JPMorgan; PT $39
• Warner Music (WMG) cut to neutral at Atlantic Equities; PT $26
• Xcel Energy (XEL) cut to neutral at JPMorgan; PT $68
• Xcel Energy (XEL) cut to peerperform at Wolfe

INITIATIONS:

• Acrivon Therapeutics (ACRV) rated new outperform at Oppenheimer; PT $25
• Ambrx Biopharma ADRs (AMAM) rated new outperform at Oppenheimer; PT $30
• Arbor Realty Trust (ABR) rated new outperform at Wedbush; PT $15
• Ascent Industries Co (ACNT) rated new buy at Stifel; PT $20
• Bowlero (BOWL) rated new buy at B Riley; PT $18
• Eos Energy (EOSE) rated new market perform at Cowen; PT $2.50
• Fluence Energy (FLNC) rated new buy at Janney Montgomery; PT $30
• Kinaxis (KXS CN) rated new buy at Loop Capital; PT C$241.92
• Kopin (KOPN) rated new buy at Stifel; PT $3
• Kura Sushi (KRUS) rated new neutral at Citi; PT $88
• Movella (MVLA) rated new buy at Needham; PT $4
• Orla Mining (OLA CN) reinstated buy at Stifel Canada; PT C$7.25
• Peakstone Realty Trust (GRTA) rated new hold at Truist Secs; PT $24
• Praxis Precision (PRAX) rated new buy at Jefferies; PT $4
• Quaker Houghton (KWR) rated new buy at Stifel; PT $250
• Regenxbio (RGNX) rated new outperform at Baird; PT $42

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC