Cabrera Capital Daily Game Plan

Tuesday June 6, 2023                                                                      Trading Desk:
(312) 236-8907

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

DATA/HEADLINES   

US session has no economic data releases or Fed speakers scheduled, amid quiet period ahead of June FOMC meeting.  

TODAY’S HIGHLIGHTS:  

• NEW CATO SURVEY: Nearly a third of Gen Z support the government installing surveillance cameras in every household 
  
• Jamie Dimon will meet with a group of House Democrats today to discuss banking and the economy
• Facial recognition – Digital ID now required for entering and leaving China’s schools
  

World stock markets treaded water overnight while Australia dampened hopes that central banks were set to pause the interest rate rise cycle. The Reserve Bank of
Australia surprised with a rate rise of 25bps and warned further tightening may be required to ensure that inflation returns to target. Some focus will be on the Bank of Canada’s latest policy decision tomorrow, with many forecasting it will resume tightening
interest rates after a four-month pause. The RBA’s move sets the stage for a slew of monetary policy decisions from major central banks across the globe, with the Fed, the European Central Bank and the Bank of Japan due to hold policy meetings next week. Meanwhile,
Chinese authorities asked the nation’s biggest banks to lower their deposit rates by as much as 100bps in an escalated effort to boost the world’s second-largest economy                        

EQUITIES: 

US equity futures fluctuated, with Apple poised to extend losses, while a drop in oil prices weighed on energy stocks. Apple slipped on concern the steep price of
its much-anticipated mixed-reality headset will crimp shipments. With the S&P 500 on the edge of a new bull market, there’s a sense among traders that markets have run up too fast on the hype for artificial intelligence. Yesterday’s soft US economic data reinforced
expectations the Federal Reserve may skip an interest rate hike when it meets next week.   

Futures ahead of the data: E-Mini S&P -0.05%, Nasdaq -0.05%, Russell 2000 +0.01%, Dow -0.05%   S&P 500 futures are testing key resistance at the .618 Fibonacci retracement.

In pre-market trading, Unity Software (U) shares jump as much as 5.7%, extending Monday’s 17% gain, after Apple said it’s working with the video-game engine maker for its new Vision Pro
headset. Thor Industries (THO) climbs as much as 11% after the RV maker reported earnings per share for the third quarter that was more than double the consensus estimate. Mobileye (MBLY) shares declined 5.2% after chipmaker Intel said it will sell part of
its holdings in the Israeli automated driving technology maker. Ciena (CIEN) climbs 3.6% after the communications equipment company reported second-quarter results that beat expectations. Zura Bio (ZURA) rallies 35% after an SEC filing showed director Amit
Munshi purchased shares in the clinical-stage biotechnology company. BrainStorm Cell Therapeutics (BCLI) gains 7% after the biotech company said the FDA has scheduled an advisory committee to review its biologics license application for the treatment of ALS.
Epam Systems (EPAM) dips 2.5% after the stock was downgraded by multiple analysts. ImmunityBio (IBRX) rises 4% on news of insider buying. Lumen Technologies (LUMN) climbs 2% after the wireline telecommunications company hosted an investor day event where it
outlined a new strategy.

European stocks are mixed, as investors digested fresh data signaling a slowdown in the eurozone economy.  German shares weakened following the latest downbeat data for the manufacturing
and construction sectors in Europe’s largest economy. Factory orders in Germany were down 0.4% month over month in April, after a revised 10.9% decrease in March. For the entire eurozone, construction activity levels marked a 13-month slump in May, reflecting
weak demand for new projects. Consumer expectations for euro-zone inflation eased significantly in April, to 4.1% from 5% in March, the ECB said in its monthly survey. European energy stocks underperform as oil weakens.  Semiconductor stocks fell as TSMC,
the main chipmaker to Apple, tempered its forecast for 2023 capital spending. Stoxx 600 +0.05%, DAX -0.2%, CAC -0.2%, FTSE 100 -0.2%. Healthcare +1.3%, Media +0.6%. Energy -1.8%, Telecom -1.1%.   

Shares in Asia were mixed to higher, with the MSCI Asia Pacific Index rising 0.3%, with Japanese trading houses among the biggest contributors. Japan led the region
higher, while stocks extended declines in Australia after its central bank unexpectedly raised its key interest rate. Chinese stocks in Hong Kong ended little changed though developers rallied amid hopes of more policy support from the central government to
prop up growth. There are signs that Beijing is taking steps to bolster the economy, with authorities asking some of the biggest banks to lower their deposit rates. South Korea was closed for holidays. Vietnam +1%, Nikkei 225 +0.9%, Taiwan +0.3%, Sensex was
flat. ASX 200 -1.2%, Shanghai Composite -1.1%, Hang Seng -0.05%.

FIXED INCOME: 
 

Treasuries are slightly richer across the curve, following wider gains in bunds after an ECB survey shows consumers’ inflation expectations fell significantly in
April. Yields are richer by 1bp-2bp across the curve with intermediates outperforming slightly, steepening 5s30s slightly; 10-year yields around 3.67%; 2 year yield ~4.46%.              

METALS: 

Gold was steady after rising 0.7% on Monday as data showed weaknesses in the US economy, increasing speculation that the Federal Reserve is set to pause its rate-hike
cycle. Treasury yields and the dollar fell on Monday after figures showed the US service sector almost stalled in May as orders dried up, while a measure of prices paid slid to a three-year low. Gold +0.1%, silver +0.8%.         

ENERGY:  

Oil futures fell, more than erasing the jump that followed Saudi Arabia’s weekend announcement of a 1 million-barrel-a-day July output cut, with analysts citing concerns
about global demand.  Saudi Arabia will raise oil prices in July after the surprise plan to unilaterally slash output takes more barrels from the largest crude exporter out of circulation. Saudi Arabia’s attempt to shock oil markets and push oil prices higher
appears to have backfired, with prices falling and Saudi Arabia’s market share in Asia now under threat.  Some Asian refiners are considering buying more crude from Russia and Africa after the announcement. WTI -2.4%, Brent -2.3%, US Nat Gas -1.3%.

CURRENCIES:         

In currency markets, Australia’s dollar leads gains in G-10 after the central bank unexpectedly raised its key policy rate by 25bps to combat inflation and kept the
door open to further increases. The Canadian dollar hits its strongest level versus the greenback since May 11, a day ahead of the Bank of Canada policy decision. Meanwhile, the euro weakened after the European Central Bank said euro-area consumer inflation
expectations eased significantly in April. Inflation expectations for the next 12 months fell to 4.1% from 5% in March, the ECB said in its monthly survey. US$ Index +0.2%, EURUSD -0.3%, GBPUSD -0.25%, USDJPY is flat, AUDUSD +0.7%, USDCAD -0.15%.

Bitcoin +0.3%, Ethereum 0.2%.  Bitcoin is trying to stabilize after a 5% drop to three-month lows on Monday. US regulators sued Binance and its CEO Changpeng Zhao
yesterday for allegedly operating a “web of deception.”  The Securities and Exchange Commission has accused Binance, the world’s largest cryptocurrency exchange, of mishandling customer funds as well as lying to regulators and investors about its operations
in a sweeping case filed in federal court on Monday.     

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:

• AT&T (T) raised to market perform at MoffettNathanson LLC; PT $17
• CMS Energy (CMS) raised to buy at UBS
• Canaccord Genuity (CF CN) raised to buy at TD; PT C$11
• Cenovus Energy (CVE CN) raised to buy at Goldman; PT C$29.51
• Cigna (CI) raised to buy at BofA
• Community Bank System (CBU) raised to outperform at Raymond James
• DTE Energy (DTE) raised to buy at UBS
• Lennox (LII) raised to overweight at KeyBanc; PT $355
• Lumen Technologies (LUMN) raised to market perform at Raymond James
• McCormick (MKC) raised to buy at BofA; PT $100
• Molson Coors (TAP) raised to neutral at BofA
• NiSource (NI) raised to buy at UBS
• Oscar Health (OSCR) raised to neutral at BofA
• SiteOne Landscape (SITE) raised to buy at Truist Secs; PT $177
• TDCX ADRs (TDCX) raised to buy at Phillip Secs; PT $12.10
• Ultragenyx (RARE) raised to outperform at Evercore ISI; PT $80
• Vale ADRs (VALE3 BZ) raised to outperform at RBC

DOWNGRADES:

• AMC Networks (AMCX) cut to underweight at Morgan Stanley; PT $12
• American Electric Power (AEP) cut to neutral at UBS
• Apple (AAPL) cut to neutral at DA Davidson; PT $185
• Bellerophon Therapeutics (BLPH) cut to hold at Laidlaw
• Cabot Corp (CBT) cut to neutral at JPMorgan; PT $80
• CenterPoint Energy (CNP) cut to neutral at UBS
• Dollar General (DG) cut to equal-weight at Wells Fargo; PT $165
• Dollar General (DG) cut to neutral at Daiwa; PT $172
• Epam Systems (EPAM) cut to equal-weight at Barclays; PT $220
• Epam Systems (EPAM) cut to neutral at Citi; PT $220
• Epam Systems (EPAM) cut to sector weight at KeyBanc
• Nice Ltd ADRs (NICE IT) cut to hold at Bank Leumi; PT $220
• SJW (SJW) cut to neutral at UBS

INITIATIONS:

• Agenus (AGEN) rated new outperform at Baird; PT $8
• Airbnb (ABNB) reinstated neutral at Wedbush; PT $130
• Appian (APPN) rated new neutral at DA Davidson; PT $40
• Bitfarms/Canada (BITF CN) rated new buy at Compass Point; PT C$4.03
• Booking (BKNG) reinstated outperform at Wedbush; PT $3,060
• Cipher Mining (CIFR) rated new buy at Compass Point; PT $4
• Clear Secure (YOU) rated new neutral at Wedbush; PT $27
• DoorDash (DASH) rated new neutral at Wedbush; PT $75
• Dynatrace (DT) reinstated neutral at DA Davidson; PT $50
• Eaton Corp (ETN) rated new neutral at JPMorgan; PT $178
• Expedia (EXPE) reinstated neutral at Wedbush; PT $116
• FedEx (FDX) rated new overweight at Atlantic Equities; PT $265
• Gaotu Techedu ADRs (GOTU) rated new buy at China Renaissance; PT $6.60
• Kolibri Global Energy In (KEI CN) rated new buy at Roth MKM; PT C$10
• Marvell Technology (MRVL) reinstated buy at William O’Neil
• New Oriental Education ADRs (EDU) reinstated buy at China Renaissance
• Nvidia (NVDA) rated new overweight at Guotai Junan Sec
• Pegasystems (PEGA) reinstated neutral at DA Davidson; PT $48
• Stem Inc (STEM) rated new buy at Janney Montgomery; PT $12
• Tal Education ADRs (TAL) reinstated buy at China Renaissance; PT $7.30
• Turning Point Brands (TPB) rated new buy at Benchmark; PT $28
• UPS (UPS) rated new neutral at Atlantic Equities; PT $162

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC