Cabrera Capital Daily Game Plan

Thursday October 28, 2021                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES   
7:45ET ECB policy decision; 8:30ET Weekly Jobless Claims, Gross Domestic Product, ECB President Lagarde’s presser;  10:00ET Pending home sales index; 11:30  Biden to address the nation

ECB leaves rates unchanged

“Things work out best for those who make the best of the way things work out” – John Wooden                        Fun Fact – A shrimp’s heart
is in its head  

TODAY’S HIGHLIGHTS:   

• Bill Murray Says He’s Appearing in ‘Ant-Man 3

Global stocks are still near all-time peaks, supported by a robust corporate earnings season so far, with profit margins widening on average
despite cost pressures. The risk is sentiment could weaken if investors lose confidence in the ability of policy makers to contain inflation.  President Biden and G20 leaders at a weekend summit are expected to endorse the tax deal agreed to by 136 countries.
Treasury Secretary Janet Yellen will use her third trip to Europe over the next week to push a slew of White House global economic priorities on corporate taxes, climate financing, preventing new pandemics and easing inflationary supply chain disruptions.
On Sunday and Monday, Yellen will meet with government and business leaders in Dublin to discuss the tax deal, which will affect many US technology companies that were drawn to invest there by Ireland’s low 12.5% tax rate. On the virus front, cases continue
to escalate in a number of countries. Singapore said it’s investigating an “unusual surge” of infections.           

EQUITIES: 
 

US equity indices are edging higher, retracing some of yesterday’s late decline as investors concentrate on today’s earnings where nearly 400
companies report. Tech mega-caps dominate today’s earnings schedule with both Amazon.com and Apple reporting where results will be closely watched for supply and demand issues, ahead of the holiday season.  The GDP data is in focus today and the economy’s
performance last quarter was probably the weakest since the second quarter of 2020. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, is forecast to have stalled after a robust 12% growth pace in Q2.  

Biden is set to announce today new social spending framework that is expected to win support of all Democrats. Aiming for ways to fund the bill’s
now-shaved down plans focus turned to a surtax on people earning more than $10 million. The IRS provision and paid family leave seem to be dead. President Biden wants an agreement before he travels to Europe later today.            

E-mini S&P futures +0.3%, Nasdaq +0.6%, Russell 2000 futures +0.4%, Dow futures +0.2%.

In premarket trading, Ford jumped 10% on a surprisingly good earnings report and resuming dividends. STMicroelectronics (STM) +4.5% after reassuring
results and raising guidance. KLA Corp (KLAC) +4% on an earnings beat. Align Technology (ALGN) jumps 10% in Wednesday post-market trading after third quarter revenue beat and issues stock repurchase of $100 million. Caterpillar raised its guidance after beating
on sales and profit. Merck & Co. topped estimates and boosted outlook. T. Rowe Price will buy Oak Hill Advisors for up to $4.2 billion to enter private-debt investing. Comcast posted beats on sales and adjusted EPS.

eBay falls more than 5% after reporting disappointing results late Wednesday. Up Fintech (TIGR) falls 21%, Futu (FUTU) -27% after a PBOC official
called cross-border online brokers illegal.  Twilio (TWLO) -12% on slower growth forecast and saying its COO is leaving. Teladoc (TDOC) -4% Q4 forecast misses.

Amazon, Apple, Starbucks, Merck, Caterpillar, Yum! Brands, ICE, Bombardier, Comcast, Moody’s, Newmont, Hershey, Mastercard, Carlyle, Keurig Dr
Pepper, Shopify, Terex, U.S. Steel and Gilead are among the many other companies reporting earnings today.         

European shares are steady and were in a cautious mood ahead of the ECB its policy decision, with traders expecting the central bank to push
back against expectations for a rate hike next year. Now we wait for Lagarde’s press conference. Earnings beats from majors such as ANHEUSER-BUSCH (+7%), NOKIA (+3%), WPP (+6%), STM (+5%) and CAP GEMINI (+4%) were offset by misses from SHELL (-3%), REPSOL
(-4%), TELECOM ITALIA (-5%) and VOLKSWAGEN (-3%).  Anheuser-Busch InBev, the world’s largest brewer, gained 7.2% on lifting its full-year forecast.  Volkswagen dropped after cutting its outlook for deliveries.  Energy names lag (-1.3%) with crude oil down
over 2% as earnings weigh on the group, followed by Travel (-1.3%) and Banks (-0.8%). Stoxx 600 -0.05%, DAX -0.25%, FTSE 100 -0.35&. The CAC outperforms +0.4%.

Asian equities dipped for a second day tracking the late sell off in the US as risk-off sentiment prevailed amid global concerns that the prolonged
pandemic and elevated inflation will hurt economic recoveries. Japanese tech firms Fanuc (-8.6%) and Fujitsu (-8.1%) among the biggest drags on the MSCI Asia Pacific Index after disappointing earnings reports. Benchmarks fell at least 1% in India, Indonesia
and the Philippines, while Chinese and Japanese stocks were also among the day’s biggest losers. Vietnam’s key gauge rose more than 1%, extending Wednesday’s rally. The Bank of Japan stood pat on policy today, signaling more delays in the economy’s post-pandemic
recovery. India’s Sensex Index fell 1.9% dragged down by metals stocks, while Adani Ports slumped 7% after saying it would exit its Myanmar investment. Benchmarks in China dropped for a third day as traders continued to weigh a resurgence in U.S.-China tensions.
Taiwanese President Tsai Ing-wen confirmed the presence of US. troops on the island as Beijing warned that American support for Taiwan poses “huge risks”.  

FIXED INCOME: 
                                       

The Treasuries curve continued its flattening move overnight.  The 10-year Treasury yield is at 1.54%, with the spread to
the two-year yield dropping briefly below 1 percentage point. The auction cycle concludes with $62b 7-year note sale at 1pm; Wednesday’s well-bid 5-year auction has since lost value. The US economy likely grew at its slowest pace in more than a year in Q3
as COVID-19 infections flared up, further straining global supply chains and causing shortages of goods. Today’s GDP report is also expected to show strong inflation, fueled by economy-wide shortages and pandemic relief money from the government, cutting into
growth.

METALS: 

Spot gold is hovering above the $1,800 mark as softer U.S. Treasury yields lifted its appeal, while investors await the
ECB’s remarks on inflation and policy outlook today. The ECB is expected to keep policy unchanged and push back against growing expectations for an interest rate hike next year. Analysts say the US Federal Reserve’s meeting on Nov. 2-3 would be more crucial
for gold after Fed Chair Jerome Powell’s recent comments on tapering asset purchases. Focus today will be on the US Gross Domestic Product report. Spot gold is +0.3% while silver gains 0.1%.                                    

ENERGY:     

Oil declined (WTI -1.5%) as US. crude stockpiles expanded and investors weighed the possibility that Iran may revive official
exports. Iran said it had agreed with the European Union to restart big-power talks to revive the 2015 nuclear deal before the end of November and a precise date for the negotiations would be announced in the next week. Later today, House Democrats will probe
top Shell, Exxon, Chevron and BP execs over claims they misled the public on the role of fossil fuels in global warming.       

CURRENCIES:   

The euro underperformed most of its Group-of-10 peers ahead of the European Central Bank rate decision and cautious ahead
of Lagarde’s press conference.   GBP/USD is little changed and the Yen is slightly higher. The Bank of Japan kept its 10-year bond yield target and short-term policy rate unchanged after concluding its two-day meeting today. The US Dollar Index is marginally
higher ahead of the GDP report.

Bitcoin is up over 3%, recovering from yesterday’s drop and is now trading over $61,000. According to Bybt data, over $700
million worth of long cryptocurrency positions was liquidated on Wednesday, the highest since September 20. Analysts are warning that this volatility is unlikely to fade off in the near future. The
Wharton School at the University of Pennsylvania, one of the nation’s premier business schools,
plan to accept cryptocurrency as tuition for its online blockchain and digital assets program. The Ivy League institution’s new executive education program will accept coins such as Bitcoin as one method of payment,
due to start in January.

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:

• Antero Resources (AR) raised to sector perform at Peters & Co; PT $25
• Community Financial (TCFC) raised to outperform at KBW; PT $45
• First Commonwealth (FCF) raised to outperform at RBC; PT $19
• InflaRx (IFRX) raised to strong buy at Raymond James; PT $14
• Teradyne (TER) raised to outperform at Cowen; PT $150

DOWNGRADES:

• AGNC Investment (AGNC) cut to market perform at JMP
• Aurinia Pharmaceuticals (AUPH) cut to market perform at Oppenheimer
• Boeing (BA) cut to sell at Nord/LB; PT $180
• CVR Energy (CVI) cut to underperform at Credit Suisse; PT $20
• Elanco Animal Health (ELAN) cut to hold at Stifel; PT $34
• Phillips 66 Partners (PSXP) cut to neutral at Credit Suisse; PT $41
• Stock Yards Bancorp (SYBT) cut to market perform at KBW; PT $67
• Terminix Global Holdings (TMX) cut to neutral at Baird; PT $44
• Teva ADRs (TEVA IT) cut to market perform at Raymond James

INITIATIONS:

• Capital Power (CPX CN) reinstated sector perform at ATB Capital; PT C$44
• Conoco (COP) rated new buy at Mirae Asset Daewoo; PT $97
• Enjoy Technology (ENJY) rated new neutral at Baird; PT $11
• I-Mab ADRs (IMAB) rated new outperform at Credit Suisse; PT $90
• Martin Marietta (MLM) rated new peer perform at Wolfe; PT $432
• SeaSpine (SPNE) rated new buy at Loop Capital; PT $100
• Summit Materials (SUM) rated new outperform at Wolfe; PT $45
• Vulcan Materials (VMC) rated new outperform at Wolfe; PT $243
• Xenon Pharmaceuticals (XENE) rated new outperform at RBC; PT $43

David Wienke

Cabrera Capital Markets, LLC