Cabrera Capital Daily Game Plan

Wednesday December 22, 2021                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:30ET Gross domestic product revision; 10:00ET Consumer confidence index, Existing home sales

TODAY’S HIGHLIGHTS:   

• U.S. population growth falls to record low 0.1%
• Criminals have stolen nearly $100 billion in Covid relief funds: Secret Service
  
• Chicago Mayor Lightfoot asks federal government for help fighting city’s crime
  
• Putin vows “adequate, military-technical” retaliation if US & NATO continue “aggressive” policy against Russia

Global shares rose as investors returned to riskier assets globally after Monday’s broad sell-off. Sentiment has improved after President Biden
said there’s still a chance he can strike a deal with Senator Manchin to get his economic plan through Congress. Data today showed that the U.K. economy has recovered from the pandemic faster than previously thought despite a downgrade to growth in the latest
quarter. Virus cases in the UK have hit record levels, but Prime Minister Johnson ruled out stricture restrictions before Christmas, even cutting isolation times for people that test positive to counter worker shortages.      

US EQUITIES: 
 

US equity futures fluctuated on thin trading volume ahead of the holidays, as investors awaited clarity on the economic impact of the omicron
variant and the outlook for fiscal stimulus. President Biden said he still thinks there is a chance of getting his $2 trillion spending plan through Congress… On the virus front, the Biden administration expects to take delivery of 4 million courses of Covid-19
treatments over the next month and the FDA is set to authorize a pair of pills from Pfizer and Merck & Co. as soon as this week. Biden’s announcement of a new strategy to defeat omicron did not include any new curbs.                  

E-mini S&P futures +0.05%, Nasdaq +0.00%, Russell 2000 futures +0.25%, Dow futures +0.15%. Choppy last few weeks with swings of roughly 5%. ES
has 4658 area as short term key resistance today.

In pre-market trading, Tesla rose over 2% after Elon Musk sold more of his stake in the firm, enough to meet his pledge to sell 10% of his shares.
BlackBerry (BB) fell 2.2% after the company’s 4Q guidance disappointed. Alibaba (BABA) shares fall over 3% with other Chinese ADRs also coming under pressure. Aerospace product supplier AAR (AIR) drops 8% after reporting second quarter earnings that trailed
estimates. Allakos Inc. (ALLK) shares fell about 87% as analysts lowered their ratings of the stock and slashed price targets after data for the biotechnology company’s lead candidate drug was “disappointing.” CarMax (KMX) rises 4% after an earnings beat.
 CarMax, Paychex and Cintas Corp. are among the companies reporting results.

European equities were steady in muted trading before the holidays as traders weighed omicron lockdown risks.  Investors remain optimistic that
Omicron will have only limited economic fallout even though global cases are surging.  The Stoxx Europe 600 Index is up 0.15% with travel shares outperforming, up 1.65% after U.K. Prime Minister Boris Johnson ruled out stricter pandemic restrictions before
Christmas while cautioning that they may come later.  Delivery Hero jumped 6% as it exits German delivery business after 7 months to “focus on better growth areas.”   Shares of rival Just Eat Takeaway.com were also boosted by a new U.K. grocery delivery partnership.
Tech sector +0.55%, retail +0.5%. Chemicals, Food & Beverage, and utilities underperform -0.5%. 

Asian equities rose for a second-straight day of gains as investors gauged progress in the US administration’s spending plans.  China’s tech
stocks extended its bounce as traders unwound short bets ahead of the year-end holidays. A buying frenzy that lifted Chinese property stocks on Tuesday subsided after a statement from authorities supporting the sector was withdrawn.  The Hang Seng Tech index
pared its gain of more than 2% as Alibaba  reversed early gains after local media reported a unit’s cooperation with a government agency has been suspended. Shares in India led gains in the region with the Sensex +1.1% as autos and metal companies outperformed.
Both sectors had fallen sharply in Monday’s sell-off. The MSCI Asia Pacific Index added 0.3%, China was flat, while Japan’s Topix index closed 0.1% higher. Shares in the Philippines underperformed, down 0.65%.   

FIXED INCOME: 
                                       

Treasuries slip, cheaper by up to 2bp across the curve. 10-year yields are around 1.475%.  While rates are expected to climb
in 2022 thanks to inflation and signaled hikes from the Federal Reserve, strategists expect the advance to top out in negative territory on an inflation-adjusted basis. A global glut of saved cash has the potential to restrain an increase in rates, even as
central banks dial back their pandemic stimulus. 

METALS: 

Gold trades slightly higher, amid choppy, low-liquidity trade leading up to the final sessions of the year. Spot gold +0.1%,
silver +0.6%, as safe-haven demand fueled by the rapidly spreading Omicron variant countered higher risk appetite.                   

ENERGY:     

Crude oil is steady ahead of inventory data later this morning. Meanwhile, the energy crunch in Europe, supply disruptions
in Libya and little progress on the Iran talks all point to higher crude prices.  Elsewhere, European gas and power prices eased after surging to a fresh record on Tuesday as Russia keeps shipments to Europe capped. Constrained supplies from Russia mean Europe
has to rely on its already depleted storage sites, as nuclear outages in France mean more gas is needed to generate electricity. Inventories in Europe are expected to end the heating season at record-low levels, extending this year’s crunch.     

CURRENCIES:   

The pound gained against the dollar and euro after revised data showed the U.K. economy has recovered from the pandemic
faster than previously thought.  Commodity currency, the Norwegian krone, outperformed all Group-of-10 peers as risk appetite remained supported. The yen lagged all peers, followed by the Swiss franc. GBP/USD +0.35%, EURGBP -0.15%, AUDUSD +0.2%, USDNOK -0.5%.
The US Dollar Index is down 0.15%.   

Bitcoin is slightly lower after rising the most in a month yesterday, briefly climbing back above $49,000. Coinbase is having
technical issues this morning… On the regulatory front: The SEC is said to have tapped Senate banking aide Corey Frayer to develop policy. That’s causing consternation in crypto circles, given Frayer has worked for Senate banking panel head Sherrod Brown,
a vocal critic. NBA player and crypto convert Stephen Curry released a collection of $333 digital replicas of the shoes he wore when he broke the three-point scoring record this month, allowing owners to show them off across three different metaverses. They’re
already sold out.

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:

• BigCommerce (BIGC) raised to outperform at Wedbush; PT $50
• Caterpillar (CAT) raised to outperform at Bernstein; PT $240
• Darden (DRI) raised to buy at Stifel; PT $165
• Global Payments (GPN) raised to buy at Northcoast; PT $160
• Paccar (PCAR) raised to outperform at Bernstein; PT $98
• Williams-Sonoma (WSM) raised to buy at Loop Capital; PT $205

DOWNGRADES:

• AGCO (AGCO) cut to market perform at Bernstein; PT $127
• Adagio Therapeutics (ADGI) cut to hold at Jefferies; PT $10
• Allakos (ALLK) cut to market perform at William Blair
• Alx Oncology (ALXO) cut to hold at Jefferies; PT $25
• Cerner (CERN) cut to sector weight at KeyBanc
• Cognyte (CGNT) cut to neutral at Wedbush; PT $17
• Scholar Rock (SRRK) cut to hold at Jefferies; PT $28

INITIATIONS:

• Acasti Pharma (ACST CN) rated new outperform at Oppenheimer; PT $6
• Artisan (APAM) rated new inline at Evercore ISI; PT $48
• Atlassian (TEAM) resumed overweight at KeyBanc; PT $442
• Cytokinetics (CYTK) rated new outperform at Oppenheimer; PT $55
• Ess Tech (GWH) rated new outperform at Baird; PT $15
• First Solar (FSLR) rated new inline at Evercore ISI; PT $107
• Local Bounti (LOCL) rated new outperform at Oppenheimer; PT $11
• Luminar (LAZR) resumed buy at Citi; PT $38
• Microsoft (MSFT) rated new outperform at SMBC Nikko; PT $410
• Payfare (PAY CN) rated new overweight at Cantor; PT C$11
• StepStone Group (STEP) rated new outperform at Evercore ISI; PT $48
• Upstart (UPST) rated new neutral at Wedbush; PT $160
• XPO Logistics (XPO) rated new buy at Benchmark; PT $103

David Wienke

Cabrera Capital Markets, LLC