Friday December 17, 2021 Trading
Desk: (312) 236-8907
TODAY’S GAME PLAN: from
the trading desk, this is not research
DATA/HEADLINES
1:00ET Fed’s Waller speaks on economic outlook
S&P Dow Jones Indices quarterly rebalance effective after markets close
TODAY’S HIGHLIGHTS:
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CDC vaccine advisers have voted 15-0 to change recommendations for Covid-19 vaccines to make clear that shots made by Moderna and Pfizer/BioNTech are preferred
over Johnson & Johnson’s vax
World markets are lower, weighed on by a drop in global technology shares as investors worry about the impact of higher interest rates, US/China
relations and the fast-spreading omicron virus. Central banks globally are prioritizing the fight against elevated inflation, while also keeping an eye on omicron. While the Federal Reserve and the Bank of England took aggressive steps to pull back from stimulus
this week, the Bank of Japan extended assistance to smaller businesses for another six months and paring back help for bigger firms from April. The Biden administration increased pressure on Beijing over its treatment of ethnic and religious minorities, as
US lawmakers passed a bill targeting companies that rely on forced labor from the Xinjiang region.
US EQUITIES:
US equity futures are under pressure as investors braced for a quarterly rebalancing of the S&P 500 Index after the market close and the quadruple
witching expiration. Yesterday, the tech heavy Nasdaq led a market reversal with a 4% drop from the early morning high, and it is underperforming overnight as tech continues to lead the broader unwind. Major technology and internet stocks are lower in premarket
trading, as investors continue to worry about the impact of higher interest rates. Apple, Microsoft, Alphabet, Tesla and Nvidia have contributed half of the S&P 500’s gains since April.
E-mini S&P futures -0.6%, Nasdaq -1.1%, Russell 2000 futures -0.5%, Dow futures -0.4%
In pre-market trading, Tesla shares fell as Elon Musk sold another chunk of his shares. Rivian Automotive (RIVN) is down over 7% after the electric
pickup maker reported results. The European Union’s drugs regulator issued a negative opinion on Biogen’s (BIIB -1.5%) controversial Alzheimer’s treatment, diminishing its chances for marketing the drug in the region. U.S. Steel Corp. (X) shares declined 5%
after it warned fourth-quarter results will be lower than analysts are expecting. FedEx (FDX) rose over 5% after boosting guidance. Spruce Biosciences (SPRB) shares soar as much as 30% after Oppenheimer initiated coverage with an outperform rating and a $15
price target. Cerner (CERN) jumps 17% from a report that Oracle is in talks to buy the medical-records company. Futu Holdings (FUTU) and Up Fintech Holding (TIGR) slump 8% and 11% after Reuters said China plans to ban online brokerages from offering offshore
trading services to mainland clients.
European indices are lower, with the exception of the UK as telecom, airlines and basic resources lead the FTSE 100 marginally higher. The Stoxx
Europe 600 Index is down 0.8% with the auto sector leading losses, down 2.3%. Tech and energy are lower by 1.6% while basic resources and travel & leisure outperform. Italian biotech firm DiaSorin SpA (-12%), Nordic Semiconductor ASA (-9%) and Cellnex Telecom
SA (-4%) were among the biggest declines in Europe. DAX -1%, CAC -1.3%. Basic Resources +0.4%, Travel & Leisure +0.2%.
Asian stocks slid as a risk-off mode resumed amid concerns over ongoing tensions between China and the US. China was among the region’s worst
performers after the Biden administration added 34 Chinese companies to its banned-entity list. Shares of some of China’s largest pharmaceutical companies rebounded as those firms were not mentioned in the list. Japanese stocks held their losses after the
Bank of Japan lengthened its cautious withdrawal from emergency pandemic aid. The Bank of Japan kept its main policy tools unchanged, in line with expectations.
FIXED INCOME:
Treasury yields remain lower on week led by the 5Y, which declined 8.1bp Thursday. 5s30s is flatter by ~2bp after steepening
7.2bp Thursday. 10 year yield is lower by 2.5bps at 1.39%.
METALS:
Gold headed for its first weekly advance since the middle of November, following several central bank announcements on monetary
policy. Analysts said gold gained despite the possibility of higher interest rates because rate hike prospects had been priced in before the Fed announcement. Safe-haven gold also seemed to take some cues from reduced risk appetite due to fears over the Omicron
coronavirus variant. Spot gold is up 0.7% with silver +0.3%.
ENERGY:
Oil retreated for the first time in three days as traders grew more concerned about the demand impact from the omicron variant.
Daily Covid-19 cases in the UK have jumped to a record, while hospitalizations have surged across the US. The Biden administration is pushing EU allies to finalize a broad package of sanctions against Russian banks and energy companies if the Kremlin attacked
Ukraine. Putin has shown no sign of pulling back the thousands of troops he’s amassed near the border. European natural gas prices plunged from a record close after Russia topped up supplies to the region. Traders remain unsure of Russia’s supply strategy
given increasing political tensions with the west over Ukraine. Below-normal temperatures in Europe are now forecast to end within a week. Goldman says $100 oil is possible as demand outpaces supply. WTI and Brent futures are down 1.8%.
CURRENCIES:
The US Dollar Index is set to end another week flat, after a series of central-bank meetings made way for renewed focus
on omicron. The safe-haven yen leads gains as risk-sensitive currencies such as the Aussie$ were dragged down amid rising Covid cases and stock declines. AUD/USD fell 0.3% halting a two-day gain. GBP/USD falls 0.2% after rallying Thursday on the Bank of England
rate hike. In Turkey, the lira touched an all-time low. USDJPY -0.4%. EURJPY -0.4%, USDCAD +0.4%.
Bitcoin is down about 2% and we are looking for a test of the .618 retracement; view as key support. Moxian (BVI) gains
13% after the company said it plans to enter the bitcoin mining business and other related activities.
UPGRADES:
- ACM Research (ACMR) raised to buy at Needham; PT $100
- Advanced Energy (AEIS) raised to buy at Needham; PT $120
- Crombie REIT (CRR-U CN) raised to outperform at BMO; PT C$19.50
- DCP Midstream (DCP) raised to buy at Mizuho Securities USA; PT $35
- Edwards Life (EW) raised to overweight at JPMorgan; PT $140
- F45 Training (FXLV) raised to overweight at JPMorgan; PT $15
- Federated Hermes (FHI) raised to buy at Deutsche Bank; PT $45
- Integra LifeSciences (IART) raised to neutral at JPMorgan; PT $75
- Invesco (IVZ) raised to outperform at BMO; PT $33
- Martin Marietta (MLM) raised to overweight at Barclays; PT $485
- Moelis & Co (MC) raised to outperform at KBW; PT $77
- PRO REIT (PRV-U CN) raised to outperform at BMO; PT C$7.50
- Slate Grocery REIT (SGR-U CN) raised to outperform at BMO; PT C$11.75
- T. Rowe (TROW) raised to outperform at BMO; PT $246
- iRhythm (IRTC) raised to overweight at JPMorgan; PT $116
DOWNGRADES:
- Boardwalk REIT (BEI-U CN) cut to market perform at BMO; PT C$56.25
- Boyd Group Services (BYD CN) cut to neutral at CIBC; PT C$230
- Chartwell Retirement (CSH-U CN) cut to market perform at BMO; PT C$13.50
- Franklin Resources (BEN) cut to market perform at BMO; PT $38
- Medtronic (MDT) cut to neutral at JPMorgan; PT $105
- Starbucks (SBUX) cut to neutral at Baird; PT $116
- Williams Cos (WMB) cut to neutral at Citi; PT $27
INITIATIONS:
- 3M Co (MMM) rated new neutral at Mizuho Securities; PT $180
- Allegion (ALLE) rated new buy at Mizuho Securities; PT $170
- Ametek (AME) rated new buy at Mizuho Securities; PT $159
- Bicycle Therapeutics ADRs (BCYC) rated new outperform at SVB Leerink
- Biomea Fusion (BMEA) rated new outperform at Oppenheimer
- BlueLinx (BXC) reinstated buy at DA Davidson; PT $102
- BrightSpire Capital Inc (BRSP) rated new market outperform at JMP
- CF Industries (CF) rated new overweight at Piper Sandler; PT $78
- Cardiol Therapeutics (CRDL CN) rated new overweight at Cantor; PT $8
- Carrier Global (CARR) rated new neutral at Mizuho Securities; PT $57
- Chefs’ Warehouse (CHEF) rated new buy at Benchmark; PT $41
- Deere (DE) rated new buy at DA Davidson; PT $400
- Dover (DOV) rated new buy at Mizuho Securities; PT $195
- Dyadic International (DYAI) rated new buy at HC Wainwright; PT $7
- EQT Corp (EQT) rated new sector perform at Peters & Co; PT $28
- Eaton Corp (ETN) rated new buy at Mizuho Securities; PT $200
- Eloxx Pharma (ELOX) rated new outperform at Oppenheimer; PT $4
- Emerson Electric (EMR) rated new neutral at Mizuho Securities; PT $100
- Enovix (ENVX) rated new overweight at Piper Sandler; PT $39
- Flowserve (FLS) rated new neutral at Mizuho Securities; PT $34
- Fortive (FTV) rated new neutral at Mizuho Securities; PT $82
- Freyr Battery (FREY) rated new neutral at Piper Sandler; PT $11
- GreenBox POS (GBOX) rated new speculative buy at Taglich Brothers
- Honeywell (HON) rated new buy at Mizuho Securities; PT $245
- Hubbell (HUBB) rated new buy at Mizuho Securities; PT $240
- Idex (IEX) rated new neutral at Mizuho Securities; PT $233
- Innovage Holding (INNV) rated new neutral at JPMorgan; PT $10
- International Game (IGT) reinstated buy at Stifel; PT $43
- Johnson Controls (JCI) rated new buy at Mizuho Securities; PT $93
- Kore Group (KORE) rated new equal-weight at Morgan Stanley; PT $7.50
- Lennox (LII) rated new underperform at Mizuho Securities; PT $295
- Life Storage (LSI) rated new outperform at Wolfe; PT $186
- Lument Finance Trust Inc (LFT) rated new overweight at Piper Sandler
- Microvast (MVST) rated new neutral at Piper Sandler; PT $8
- ModivCare Inc (MODV) rated new buy at Deutsche Bank; PT $180
- Mosaic (MOS) rated new overweight at Piper Sandler; PT $44
- Nutrien (NTR CN) rated new neutral at Piper Sandler; PT C$102.22
- Oshkosh (OSK) rated new neutral at DA Davidson; PT $118
- Parker-Hannifin (PH) rated new neutral at Mizuho Securities; PT $345
- Pentair (PNR) rated new underperform at Mizuho Securities; PT $65
- Playtika Holding (PLTK) rated new buy at DA Davidson; PT $25
- Roblox (RBLX) rated new buy at Needham; PT $136
- Rockwell Automation (ROK) rated new neutral at Mizuho Securities
- Roper (ROP) rated new buy at Mizuho Securities; PT $550
- Spruce Biosciences (SPRB) rated new outperform at Oppenheimer; PT $15
- Stanley Black & Decker (SWK) rated new buy at Mizuho Securities
- Tidewater Renewables (LCFS CN) rated new speculative buy at Canaccord
- Trane Technologies (TT) rated new neutral at Mizuho Securities
- Trilogy Metals (TMQ CN) rated new sector perform at Scotiabank; PT C$3.50
- Vertiv Holdings (VRT) rated new neutral at Mizuho Securities; PT $27
- Vor BioPharma (VOR) rated new buy at HC Wainwright; PT $26
- Wabash National (WNC) rated new buy at DA Davidson; PT $25
- Xylem (XYL) rated new neutral at Mizuho Securities; PT $115
- Zurn Water Solutions Cor (ZWS) rated new buy at Mizuho Securities
David Wienke
Cabrera Capital Markets, LLC
