Cabrera Capital Daily Game Plan

Friday July 2, 2021                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:30ET Unemployment Report*; 10:00ET Factory Orders; 2:00 US Bond Market Close

The U.S. economy is expected to have added 720,000 positions in June (whisper number is 785k); unemployment rate is seen ticking lower to 5.6%.

TODAY’S HIGHLIGHTS:  Happy Fourth of July    

• MLB announces starters for All-Star Game
• Robinhood said it plans to set aside 20% to 35% of its IPO shares for its own users
  
• Israeli aircraft bombed a Hamas site in the Gaza Strip overnight in response to incendiary balloons launched from the Palestinian enclave
  
• California Governor Gavin Newsom’s recall election was set for Sept. 14
  

Global equities are relatively quiet ahead of US jobs data. 130 countries representing more than 90% of global GDP, said they are backing the
minimum corporate tax agreement. The Paris-based OECD said a global minimum corporate income tax of at least 15% could yield around $150 billion in additional global tax revenues annually. Weighing on sentiment was as speech from President Xi Jinping when
he said, “the Chinese people will never allow any foreign forces to bully, coerce and enslave us.”                                                

EQUITIES: 
 

US equity futures were little changed as investors awaited key employment data. S&P 500 fluctuated ahead of today’s monthly
payrolls report, which will be closely watched for hints on when the Federal Reserve might start withdrawing support. News that Johnson & Johnson’s vaccine neutralizes the fast-spreading delta variant and provides durable protection against infection helped
boost sentiment.             

E-mini S&P futures +0.15%, Nasdaq +0.4%, Russell 2000 futures -0.1%, Dow futures are flat.

Virgin Galactic (SPCE) shares jump 26% on news that founder Richard Branson will fly into space on the 11th of July, beating Jeff Bezos by nine
days. Packaged-food maker Conagra and agricultural giant Archer Daniels Midland were both ticking higher premarket, by 2.3% and 1.6% respectively. Didi Global shares are falling as China launches a cybersecurity review. The China Cyberspace Administration
says it is asking Didi to stop new user registration during the investigation. GlaxoSmithKline will pay US biotech Alector up to $2.2 billion to develop therapies targeting Parkinson’s and Alzheimer’s. ALEC is up 23% pre-market.
Cerence shares (CRNC) jumps 9% after S&P Dow Jones Indices said the software company will join the S&P Midcap 400 Index.

Europe’s financial markets are making a solid start to the second half of the year, with stocks brushing off a rapid re-acceleration
in the region’s coronavirus cases. Euro zone producer prices accelerated a 9.6% year-on-year increase in May, driven by a surge in energy prices, data from Eurostat showed today. The Stoxx 600 Index is trading 0.3% higher as tech, +1%, and travel firms +1.8%
lead gains. Shares in Denmark’s Ambu tumbled as much as 14%, the worst performer in the STOXX 600 after cutting its profit outlook. The DAX is rising for the second day, climbing 0.4% with Delivery Hero leading gains, +1.7%. Bank sector is down 0.7%, Energy
-0.3%, Basic Resources +0.95%. CAC is flat, FTSEE 100 +0.15%.

In Asia, Chinese and Hong Kong equities slid though most of the region was able to at least eke out gains. Japan’s Topix
outperformed, up 0.9%. Alibaba, Meituan and Tencent were the largest drags on the MSCI Asia Pacific Index. China’s CSI 300 Index slid as much as 3%, the most since March 19, amid signs of profit-taking following gains in the run-up to the Communist Party’s
100th anniversary celebrations. The Shanghai Composite fell 1.95% after Morgan Stanley lowered its forecast for China’s second-quarter economic growth due to broad-based macro weakness.  Chinese property stocks drew attention as Morgan Stanley downgraded the
sector.  Hong Kong’s Hang Seng Index dropped as much as 2.1% as trading resumed after Thursday’s holiday, weighed down by fears of policy tightening by Beijing. Australian shares closed 0.6% higher, boosted by the country’s four-phase plan to reopen the economy. 
Investors remain cautious on the outlook for Southeast Asia, with data showing foreign funds leaving the region’s stock markets as vaccination levels stay low.   

FIXED INCOME: 
                                       

Treasuries beyond the 5-year are higher this morning, with light activity ahead of the employment report.  One of the key
pieces of data to watch today will be the participation rate which has remained well below pre-pandemic levels. The International Monetary Fund said the Fed will likely begin to scale back asset purchases in the first half of 2022, and probably needs to raise
interest rates later that year or early 2023. Yields are richer by 1bp-2bp from the 7-year to the 30-year.  The yield on 10-year Treasuries declined one basis point to 1.45%. The bond market closes early (2:00ET) due to the Independence Day weekend.   

METALS: 
                  

Gold gained for a third straight session as concerns over the Delta variant of COVID-19 boosted bullion’s safe-haven appeal.
The highly contagious Delta variant has made countries in Asia and Europe walk back on reopening plans, while White House said it would send out special teams to hot spots around the country to combat the contagion. The US non-farm payrolls data is significant
amid Fed Chair Powell putting focus on a strong labor market and holding on to a transient inflation view.  A sharper-than-expected rise in employment figures could put renewed pressure on gold.    

ENERGY:                            

WTI crude oil traded around $75 a barrel, near the highest since 2018, after the OPEC+ meeting took an unexpected turn late
on Thursday. Infighting cast doubt on an agreement that could ease a surge in prices. OPEC+ entered a phase of tense internal diplomacy as it sought to resolve a dispute that’s blocking measures to ease rising oil prices. If today’s efforts fail, the world
may not get the extra crude supplies it was expecting. That could squeeze an already tight market, risking a further inflationary price spike. Several delegates said the issue was so serious that it could only be resolved by talks at the highest level of government.
WTI and Brent are currently down 0.5%.      

CURRENCIES:  

The US dollar index hit a fresh three-month high, as traders bet that strong US labor data could see further gains in the
currency. A higher number in the employment report could fuel concerns of tighter Fed policy, analysts said.  The Canadian dollar advanced before domestic data on trade and manufacturing. Crypto was relatively unchanged with Bitcoin around $33,000 and Ethereum
under $2,100.   

TECHNICAL LEVELS: 
(futures)    

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:

• PNC Financial (PNC) raised to outperform at Wolfe; PT $252

DOWNGRADES:

• Keysight (KEYS) cut to equal-weight at Barclays; PT $162
• Welbilt (WBT) cut to neutral at CL King
• Wish (WISH) cut to inline at Evercore ISI; PT $13

INITIATIONS:

• AbbVie (ABBV) rated new outperform at Daiwa; PT $126
• Arcturus Therapeutics (ARCT) rated new overweight at Cantor; PT $71
• BRP Inc (DOO CN) rated new strong buy at Raymond James; PT C$122
• Camping World (CWH) rated new outperform at Raymond James; PT $45
• CloudMD Software & Services (DOC CN) rated new overweight at Stephens
• Connect Biopharma ADRs (CNTB) rated new outperform at CICC; PT $27
• Harrow Health (HROW) rated new buy at Ladenburg Thalmann; PT $14.25
• HealthEquity (HQY) rated new overweight at Stephens; PT $100
• Innovative Industrial (IIPR) rated new outperform at Wolfe; PT $249
• National Storage (NSA) reinstated outperform at Baird; PT $54
• Renalytix ADRs (RENX LN) rated new buy at Berenberg; PT $38
• Thor Industries (THO) rated new underperform at Raymond James

David Wienke

Cabrera Capital Markets, LLC