Cabrera Capital Daily Game Plan

Thursday December 23, 2021                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:30ET Weekly Jobless Claims, personal income/spending, Core Inflation, PCE, Durable Goods; 10:00ET New Home Sales, UofM Consumer Sentiment (final)

The PCE deflator for November is expected to show a rise to 5.7%. Canada open half day tomorrow.                                                 

TODAY’S HIGHLIGHTS:   Merry Christmas

• Large holiday gatherings in U.S. not safe even if boosted, Fauci says
• Intel apologized after its opposition to Xinjiang labor sparked a backlash in China
  

World shares are higher after a trio of studies showing that omicron appears less likely to lead to hospitalizations and deaths than the delta
strain boosted risky assets. One study came from the University of Edinburgh where researchers said the number of cases who needed to be hospitalized was 68% lower than those with the Delta strain. Meanwhile lab results indicated a third dose of AstraZeneca’s
vaccine significantly boosted antibodies against the strain, and Pfizer’s Covid pill gained clearance for emergency use in the US. Australia reintroduced COVID-19 curbs to cover most of the population as daily infections hit a fresh record despite double-vaccination
rates of more than 90%.  The Chinese city of Xian, where no Omicron cases have been detected, put its 13 million residents in a lockdown as Delta cases rise.  Each household may send only one person to shop for necessities every two days.  In Europe and the
U.S. there is resistance to more severe curbs ahead of the Christmas break.      

US EQUITIES: 
 

US equity futures rose for a third day on investor optimism that the global recovery can weather the omicron flareup. Investors are watching
the latest data on the rapidly spreading Omicron for signs of how much the virus could impact the economy and earnings as the market heads into an historically strong time of year for equities.                 

E-mini S&P futures +0.05%, Nasdaq +0.00%, Russell 2000 futures +0.25%, Dow futures +0.15%.

In pre-market trading, Novavax (NVAX) shares jump 5% after saying that both a vaccine booster dose as well as an omicron-specific shot may be
beneficial in helping to protect against the Covid-19 variant. Nikola (NKLA) rises 3.5% after the electric-vehicle startup said on Twitter that more deliveries were to come. SciPlay (SCPL) the maker of mobile and web games falls 17% after ending talks to sell
out to majority owner Scientific Games. Shares in tiny biotech stocks soar on strong volume, amid broad risk-on appetite thanks to positive omicron variant studies. Genocea Biosciences +24%, Ensysce Biosciences +23%, Allakos +15%.   

Travel & leisure and banking shares boosted European indices amid thin trading ahead of the Christmas holiday. News that omicron is not getting
worse, the approval of the Pfizer pill, and the European Central Bank is prepared to remain dovish is supporting growth prospects and sentiment. While stocks have been eking out gains in recent days, volumes are getting thinner ahead of the holidays. Among
individual movers, Flutter Entertainment rose after striking a deal to buy Italian gambling operator Sisal. Prosus NV climbed in Amsterdam, mirroring gains in Tencent. Koninklijke Philips NV jumped after company provided an update on ventilators that were
recalled due to health concerns. The Stoxx 600 Index is up 0.6%, DAX +0.6%, CAC +0.4% FTSE 100 lags, +0.2%. Travel +3.15%, banks +1.3%, autos +1.25%. Food & Beverage lagged, down 0.05%.   

Asian stocks gained, bolstered by signs the omicron strain is less severe than previous variants. Tech and communication services sectors led
the advance. Tencent was the biggest contributor to the MSCI Asia Pacific Index, +4.25%. The Chinese internet giant declared a one-time dividend in the form of JD.com shares worth more than $16 billion, causing the latter’s stock to plunge intraday by the
most on record. JD.com ended lower by 7%. Equity benchmarks in the Philippines, Malaysia and Thailand were among the top gainers amid a broad advance in the region. Japan stocks also rose, with the Topix +0.9%, as the country looks set to unveil another record
annual budget this week. Shares in China also rose even as the country locked down the western city of Xi’an to stamp out a persistent virus outbreak.  Vietnam was the only loser in the region, down 1.4%.     

FIXED INCOME: 
                                       

Treasuries edge lower as US equity futures climb, with yields cheaper by up to 2bp across the long-end of the curve. 10-year
yield is around 1.47%. Cash markets are due for an early 2:00ET close ahead of Friday’s full closure.   

METALS: 

Gold futures were climbing modestly ahead of the Christmas holiday, after several days highlighted by concerns that the
spread of the omicron variant may impact the economic outlook in the new year. Today’s PCE report is expected to add to the justifications for the Fed’s hawkish pivot. The inflation data is likely to show a rise to 5.7% as gift spending ran hot ahead of omicron.
Silver is flat.      

ENERGY:     

Crude oil is holding bear a four week high as traders weighed falling U.S. crude stockpiles against the threat to demand
from the omicron virus variant. Gasoline climbed after Exxon reported a blaze at a major U.S. refinery. European gas plunged as much as 20% as at least 10 cargoes of US supplies headed to Europe, helping offset lower flows from Russia. Another 20 ships appear
to be crossing the Atlantic but are yet to declare their final destinations. Prices in Europe are 13 times higher than in the US. Russia is continuing to build up forces close to Ukraine even as the Kremlin denies it plans to invade. While the U.S. said it
is ready to hold talks next month, it has called some of the proposals put forward by Russia “unacceptable.” Putin held a press conference this morning in which he described a “positive” U.S. response to the Kremlin’s demands for legally binding security guarantees
to defuse the stand-off.     

CURRENCIES:   

The US Dollar Index is steady after falling 0.5% yesterday.  The pound rose to its highest level in almost a month as traders
stepped up bets on a Bank of England rate hike. GBPUSD +0.55%. The Australian dollar gained 0.4% versus the dollar as global risk sentiment improved. Swedish krone and haven Japanese yen underperformed peers.  Turkey’s foreign currency reserves tumbled by
billions of dollars since the start of the week, suggesting aggressive interventions have aided the lira’s bounce, the FT said.     

Bitcoin is down 0.7%, Ethereum -1.7%.

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:

• Adobe (ADBE) raised to buy at President Capital Management; PT $660
• Embraer ADRs (EMBR3 BZ) raised to outperform at Grupo Santander; PT $31
• Trilogy Metals (TMQ CN) raised to speculative buy at TD; PT C$3.50

DOWNGRADES:

• Ardmore Shipping (ASC) cut to hold at Fearnley; PT $4.10
• Cascades (CAS CN) cut to hold at TD; PT C$15
• Legend Power Systems (LPS CN) cut to speculative buy at Stifel Canada
• StoneCo (STNE) cut to neutral at Credit Suisse; PT $22

INITIATIONS:

• AT&T (T) reinstated neutral at Daiwa; PT $26
• Beauty Health (SKIN) rated new market perform at Raymond James
• Elevation Oncology (ELEV) rated new buy at HC Wainwright; PT $12
• Hyzon Motors (HYZN) rated new buy at Canaccord; PT $12
• Ikena Oncology (IKNA) rated new buy at HC Wainwright; PT $25
• Onex (ONEX CN) rated new buy at TD; PT C$125
• Osmotica Pharmaceuticals (OSMT) rated new buy at HC Wainwright; PT $5
• Porch Group (PRCH) rated new outperform at Wedbush; PT $21
• Silvercorp Metals (SVM CN) rated new buy at Echelon Wealth; PT C$8.10
• Spartan Acquisition Corp. III (SPAQ) rated new buy at DA Davidson
• T-Mobile (TMUS) rated new neutral at Daiwa; PT $128
• Verizon (VZ) reinstated neutral at Daiwa; PT $57
• Vincerx Pharma (VINC) rated new overweight at Cantor; PT $25

David Wienke

Cabrera Capital Markets, LLC