Cabrera Capital Daily Game Plan

Tuesday December 21, 2021                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:30ET Current Account Deficit; 1:00ET $20b 20-year bond reopening; 2:30ET Biden speaks on the pandemic

TODAY’S HIGHLIGHTS:   

• Texas’ Harris County on Monday reported the first known recorded Omicron death in the US
• Omicron is now the dominant strain in the US;  73% of all Covid infections last week
• Biden tested negative after spending time on Friday with an aide who tested positive
  

Global markets are higher on signs that Biden’s economic agenda might be salvaged and optimism that vaccines can tame omicron. But, virus concerns
linger amid tighter curbs in Europe and elsewhere that threaten to dampen the global economy heading into the new year. German consumer sentiment will deteriorate further at the start of next year, a survey showed, as the rise of the Omicron variant pushes
Europe’s largest economy to the brink of a recession this winter.  UK Prime Minister Boris Johnson said yesterday that he may tighten coronavirus curbs while the Netherlands began a fourth lockdown and other European nations are considering Christmas restrictions.
WHO Director-General warned the pandemic might mean canceling in-person events over the holiday period… On the political front, China sanctions four US government officials in response to US imposed sanctions on Chinese officials over policies in Xinjiang. 
  

US EQUITIES: 
 

US equity index futures recouped some of yesterday’s losses after positive COVID-19 cases rose and President Biden’s social spending bill hit
a significant setback. Sentiment improved overnight on reports of talks between Biden and Senator Joe Manchin that the White House believes left the door open to revive talks on the package. Progressive Democrats are pressing Biden to use his executive authority
to get at least some parts of his economic agenda done.  President Biden will announce plans today to send out 500 million free Covid tests starting next month and dispatch the military to help overwhelmed hospitals. No new lockdowns or closures are expected.
               

E-mini S&P futures +1%, Nasdaq +1.1%, Russell 2000 futures +1.15%, Dow futures +0.85%. ES is testing its initial key Fibonacci resistance around
4605.50 area.

Micron Technology, the largest US maker of memory chips, jumped 8% in late trading after giving an upbeat forecast for the current quarter. Other
chipmakers are also higher before the bell. Nike (NKE) shares rose 3.5% in premarket trading after the company’s sales beat analysts’ expectations, despite its business in China plummeting last quarter. Renewable stocks and EV makers are set to rebound from
yesterday’s losses amid hopes that talks will revive President Biden’s economic package. Braze (BRZE) climbed 13% after a strong revenue forecast for 2022. General Mills reported adjusted earnings that missed estimates and Rite Aid cut its revenue forecast
for the full year. Aldeyra Therapeutics (ALDX) fell 36% in after-market trading after the biotech company said it did not meet its primary goal for treating ocular redness in the Phase 3 trial of its Tranquility drug.

European shares rebounded, led by commodity and travel stocks, though fears continue to linger over the prospect of renewed restrictions amid
a surge in the Omicron.  Oil majors gained, tracking crude prices, while miners followed copper higher.  Among individual movers, Bollore SA jumped after getting an approach for its African transport and logistic business.  European sportswear shares advanced
after Nike reported quarterly revenue that topped estimates. U.K. retailer JD Sports (+3.3%) and Nike’s German rivals Adidas and Puma gained modestly. All of the major European indices are up around 1%. Basic Resources +2.3%, Banks +2%, Energy +2%, Tech +1.9%.
Food & Beverage lags, but mostly flat.    

Stocks in Asia rose, shrugging off weakness in the US session, as sentiment improved due to China’s move to help troubled property firms. Japan’s
Nikkei 225 led gains in the region, rising 2.1%, driven by gains in technology and consumer discretionary sectors as the government raised its monthly view of the economy for the first time since the summer of 2020. Shares also rose in Australia, where the
central bank presented an upbeat view of the economy.  Asian semiconductor-related stocks rose after US memory-chip maker Micron gave a strong forecast. China and Hong Kong equities rose, with real estate stocks extending their rebound. The Shanghai Composite
posted a gain of 0.9% and Hong Kong’s Hang Seng index rose 1%. The moves higher came as Beijing reportedly urged large property companies to acquire real estate projects from troubled developers to reduce risks that mounting debt piles will destabilize the
economy. However, China’s video and live-streaming platforms fell after the government fined Viya for tax evasion, stoking fears of fresh crackdowns.   

FIXED INCOME: 
                                       

The yield on benchmark 10-year Treasury notes rose to 1.45%. Treasuries traded heavy yesterday, with losses led by long-end
of the curve as concession builds ahead of today’s $20b 20-year bond sale. Treasury yields are cheaper by up to 2bp from 10-year out to 30-year sectors, steepening 2s10s, 5s30s spreads by 0.8bp and 0.5bp.

METALS: 

Gold prices firmed as the US dollar slipped but higher treasury yields kept gains in check. Spot gold is up 0.3% while silver
climbed 1.8%.                

ENERGY:     

Oil rose as traders assessed the outlook for demand amid the rapid spread of omicron. WTI and Brent are up around 1.4% after
having fallen about 5% over the past two days.
Crude’s gains came against the backdrop of surging gas and power prices in Europe, with France even burning fuel oil in a bid to
keep the lights on. Libya suspended crude exports from two ports after militias shut down the OPEC member’s biggest field days before an election.  European gas and power prices soared as Russian gas flows via a key route were halted, worsening the supply
crunch.    

CURRENCIES:   

The US Dollar Index is marginally lower, GBPUSD +0.3%, AUDUSD +0.3%. Australia ruled out lockdowns despite modeling pointing
to crisis in hospitals. The Turkish lira hit its strongest level in a month in volatile trading, building on yesterday’s 25% rally
that followed President Erdogan’s announcement of support for the crippled currency. The government measures included a pledge to guarantee deposits in lira.   

Crypto-exposed stocks rebound in premarket trading as Bitcoin rises 4.5%. Marathon Digital (MARA) and Riot Blockchain (RIOT)
rise 5.2% and 4.6%, respectively. Jack Dorsey has predicted that Bitcoin will replace the US dollar in the boldest statement yet from one of the cryptocurrency’s biggest backers. The Twitter founder, who recently resigned as the social network’s chief executive,
made the prediction in a series of controversial exchanges online.

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:

• Bank of Montreal (BMO CN) raised to outperform at RBC; PT C$160
• Centrus Energy (LEU) raised to buy at Roth Capital; PT $58
• KLA Corp (KLAC) raised to overweight at Wells Fargo; PT $500
• Mastercard (MA) raised to buy at President Capital Management
• Micron (MU) raised to buy at Summit Insights
• Patterson-UTI (PTEN) raised to overweight at Piper Sandler; PT $10.25
• Precision Drilling (PD CN) raised to overweight at Piper Sandler
• ResMed (RMD) raised to overweight at KeyBanc; PT $302
• UMB Financial (UMBF) raised to buy at Janney Montgomery; PT $115

DOWNGRADES:

• Acadia Pharma (ACAD) cut to neutral at Guggenheim
• Alibaba ADRs (BABA) cut to neutral at Atlantic Equities; PT $140
• Arena Pharma (ARNA) cut to neutral at Cantor; PT $100
• Bank of Montreal (BMO CN) cut to neutral at CIBC; PT C$157
• Bluerock Residential (BRG) cut to market perform at JMP
• Cigna (CI) cut to neutral at JPMorgan; PT $248
• HCA Healthcare (HCA) cut to neutral at JPMorgan; PT $270
• Herc Holdings (HRI) cut to neutral at Baird; PT $161
• Oracle (ORCL) cut to sector weight at KeyBanc
• United Rentals (URI) cut to neutral at Baird; PT $317
• Vir Biotechnology (VIR) cut to underperform at Baird; PT $36

INITIATIONS:

• AbCellera Biologics (ABCL) rated new buy at Benchmark; PT $27
• Boot Barn (BOOT) rated new buy at Benchmark; PT $135
• CSG Systems (CSGS) rated new outperform at William Blair
• Deveron (FARM CN) rated new buy at Roth Capital; PT C$1.20
• DocGo (DCGO) rated new buy at Canaccord; PT $13
• Farmers Edge (FDGE CN) rated new neutral at Roth Capital; PT C$3.60
• Hippo Holdings (HIPO) rated new overweight at Morgan Stanley; PT $4.60
• Legend Biotech ADRs (LEGN) rated new overweight at Piper Sandler
• Local Bounti (LOCL) rated new buy at Roth Capital; PT $8
• Markforged Holding (MKFG) rated new buy at Goldman; PT $6.50
• Marqeta (MQ) rated new hold at Loop Capital; PT $19
• NaturalShrimp (SHMP) rated new neutral at Roth Capital; PT 36 cents
• Nuvve Holding (NVVE) rated new buy at Chardan Capital Markets; PT $24
• Offerpad Solutions (OPAD) rated new overweight at Cantor; PT $10
• Reneo Pharmaceuticals (RPHM) rated new buy at HC Wainwright; PT $28
• ShotSpotter (SSTI) reinstated market perform at JMP; PT $30.46
• Tarsus Pharmaceuticals (TARS) rated new buy at HC Wainwright; PT $40
• Tomi Environmental Solutions (TOMZ) rated new buy at HC Wainwright
• Wejo Group (WEJO) rated new outperform at Wedbush; PT $10

David Wienke

Cabrera Capital Markets, LLC