Cabrera Capital Daily Game Plan

Wednesday January 5, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:30ET  ADP employment report; 9:45ET Markit services PMI; 2:00ET FOMC minutes

ADP says U.S. firms added 807k jobs in December, estimates were for +410k.                                                  

TODAY’S HIGHLIGHTS:   

Global markets are mixed with the focus remaining on Omicron commentary and the narrative around restrictions and lockdowns. Concerns over the
sharp moves in Treasuries and the slump in tech shares is keeping a lid on investor optimism. Hong Kong reimposed strict social curbs for the first time in almost a year and halted flights from eight countries including the US and UK.  Hong Kong is one of
the only places in the world that hasn’t experienced a delta outbreak, maintaining a strict Covid Zero policy.  The city is hampered by one of the lowest vaccination levels among developed economies, with just 22% of the over-80 population vaccinated.      

US EQUITIES: 
 

US equity index futures trade marginally lower, with the selling again concentrated in the tech heavy Nasdaq 100 contracts amid caution over
the impact of higher yields on equity valuations.  Data Tuesday showed mixed signs on US inflation as prices paid by manufacturers in December came in sharply lower than expected. However, figures showing a faster US job quit rate added to concerns over wage
inflation. 4.5 million Americans left their jobs in November, compared with 10.6 million available positions. Today’s focus turns to the FOMC minutes where expectations are for a hawkish bias and ahead of US non-farm payrolls data on Friday. US companies in
December added the most jobs in seven months, according to ADP, indicating that more Americans are returning to the labor force and helping employers to fill a near-record number of open positions.                      

E-mini S&P futures -0.1%, Nasdaq -0.35%, Russell 2000 futures -0.05%, Dow futures +0.05%.

NASDAQ versus SP 500; still holding above the 200 day moving average in the pair…

In pre-market trading, Pfizer rose 1.7% after a buy recommendation by BofA as US regulators this week cleared the company’s Covid-19 booster
shot for younger adolescents. Major technology and internet stocks are lower. Among notable movers, both Adobe and Salesforce.com fell after UBS downgraded the pair on growth concerns. Beyond Meat shares jump 9% following a CNBC report that Yum! Brands’ KFC
will launch fried chicken made with the company’s meat substitute.     

European indices crept higher after a record close on Tuesday as traders considered the impact of higher bond yields on some of the frothier
parts of the market.  Europe’s Stoxx 600 gauge traded near a record high as Autos (+2%), Travel (+1.15%) and Chemicals (+1%) lead higher as defensives lag.  The region’s technology gauge was little changed. Utilities and Food & Beverage underperform, down
over 1%.  On the inflation front, ECB governing council member Kazaks said this morning that the central bank stands ready to act if the inflation outlook strengthens.  Stoxx 600 +0.1%, DAX +0.7%, CAC +0.65%, FTSE 100 +0.15%.     

Most Asian indexes fell with technology shares leading the decline, prompting a rotation from growth to value stocks as investors are concerned
about the prospects of higher interest rates. The MSCI Asia Pacific Index fell as much as 0.6%, the most in two weeks, dragged down by Tencent and Meituan (-11%). The rout in US tech spilled over to Asia, where the Hang Seng Tech Index plunged 4.6%.  Tencent
Holdings came under pressure as it pared investment in the technology sector amid Beijing’s regulatory crackdown. The Hang Seng Index underperformed in the region, -1.6%, after the city tightened rules to curb the spread of the omicron variant.  Casinos shares
fell and delivery firms surged.  South Korea’s Kospi fell 1.2% while the Shanghai Composite lost 1%.  Philippine stocks gained 0.7% as trading resumed following a one-day halt due to a systems glitch. Japanese department-store operators advanced following
the release of monthly sales data for December. The Topix ended higher by 0.45%. Shares in India rose for a fourth straight day, with the Sensex +0.6%, lifted by a rally in banking and financial stocks.       

FIXED INCOME: 
                                       

Treasuries are mixed as investors weighed the Federal Reserve’s tightening path against the spread of the pandemic. 10-year
Treasury yields rose to their highest in more than a month yesterday, as investors are set for Fed rate hikes by mid-year to curb stubbornly high inflation. Shorter-term Treasuries were steady, while the 30-year rate shed as much as two basis points. Yields
are rising this week amid increasing conviction that the Fed will raise rates at least three times beginning in May to counter price pressures. Markets have ramped up bets on a quarter percentage point rate increase by March and fully priced one in by May. 
Focus is expected to continue on IG issuance, which has impacted the market in the past couple of days. Thirteen borrowers priced $23.1b across 30 tranches Tuesday. No U.S. coupon auctions until next week, when 3-, 10- and 30-year sales are scheduled.   

METALS: 

Gold edged higher as rising Omicron virus cases supported its safe-haven appeal.  Gold came off the overnight highs after
ADP Research said that the US added 807,000 jobs in December.         

ENERGY:     

Oil was steady after OPEC and its allies agreed to a scheduled increase in production for next month, and an industry report
pointed to another decline in U.S. crude inventories. The API reported U.S. stockpiles fell by 6.43 million barrels last week. Official government figures are due today. The OPEC+ coalition led by Saudi Arabia and Russia has been restoring production halted
during the pandemic, and on Tuesday agreed to press on with further increases at a rate of 400,000 barrels a day. But the process has been hindered as some members struggle with investment constraints and internal instability.   Meanwhile, Iraq’s cabinet will
allow a state company to look at buying Exxon Mobil’s portion of a huge oil field in the south of the country. Kazakhstan’s government resigned after increases in fuel prices led to protests.      

CURRENCIES:   

Currency markets are fairly muted. The US Dollar Index is lower by 0.2% as traders await the FOMC minutes today. The Japanese
yen pared losses against the dollar ahead of the ADP jobs report and the release of the FOMC meeting minutes. EUR/USD rises 0.2% to 1.1310; GBP/USD little changed at 1.353, hovering near early November highs.      

Goldman Sachs highlighted a scenario in which bitcoin hits the often-touted price milestone of $100,000. To reach that price
level, institutional adoption towards the primary cryptocurrency needs to increase significantly and surpass gold. Bitcoin is flat in a choppy session so far.

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:

• Acadia Pharma (ACAD) raised to buy at Citi; PT $30
• American Equity (AEL) raised to overweight at Piper Sandler; PT $46
• Cheesecake Factory (CAKE) raised to overweight at Stephens; PT $47
• Chesapeake Energy (CHK) raised to overweight at Wells Fargo; PT $84
• Chevron (CVX) raised to overweight at Wells Fargo
• Computer Modelling Group (CMG CN) raised to buy at Canaccord; PT C$5.50
• Emerson Electric (EMR) raised to outperform at RBC; PT $116
• Equifax (EFX) raised to overweight at Morgan Stanley; PT $325
• Garmin (GRMN) raised to buy at Deutsche Bank
• Liberty Oilfield (LBRT) raised to overweight at Wells Fargo; PT $14
• Lincoln National (LNC) raised to overweight at Piper Sandler; PT $83
• LoanDepot (LDI) raised to overweight at Piper Sandler; PT $8
• Murphy Oil (MUR) raised to equal-weight at Wells Fargo
• Pfizer (PFE) raised to buy at BofA
• Pinterest (PINS) raised to overweight at Piper Sandler; PT $53
• SM Energy (SM) raised to overweight at Wells Fargo; PT $43
• Sterling Check (STER) raised to overweight at Morgan Stanley; PT $25
• Suncor Energy (SU CN) raised to overweight at Wells Fargo

DOWNGRADES:

• 3M Co (MMM) cut to underperform at RBC; PT $166
• Adobe (ADBE) cut to neutral at UBS
• Allegiant Travel (ALGT) cut to market perform at Raymond James
• Altria (MO) cut to neutral at BofA; PT $50
• American Tower (AMT) cut to underweight at JPMorgan; PT $271
• Amgen (AMGN) cut to neutral at BofA
• Avrobio (AVRO) cut to neutral at BTIG
• BP ADRs (BP/ LN) cut to underweight at Wells Fargo
• Brighthouse Financial (BHF) cut to inline at Evercore ISI; PT $57
• CNH Industrial (CNHI) cut to neutral at Mediobanca SpA; PT $18.08
• CNO Financial (CNO) cut to neutral at Piper Sandler; PT $27
• Carrols Restaurant Group (TAST) cut to equal-weight at Stephens; PT $3
• Crown Castle (CCI) cut to neutral at JPMorgan; PT $200
• Digital Realty (DLR) cut to hold at Deutsche Bank; PT $175
• Domino’s Pizza (DPZ) cut to underweight at Stephens; PT $500
• Enerpac Tool (EPAC) cut to underperform at RBC; PT $19
• Estee Lauder (EL) cut to neutral at BofA; PT $375
• Forward Air (FWRD) cut to neutral at Baird; PT $125
• GoHealth (GOCO) cut to underperform at BofA; PT $3.50
• Kellogg (K) cut to neutral at BofA; PT $70
• Lincoln National (LNC) cut to inline at Evercore ISI; PT $75
• Magnolia Oil & Gas (MGY) cut to equal-weight at Wells Fargo; PT $23
• Morgan Stanley (MS) cut to neutral at Daiwa; PT $105
• New Jersey Resources (NJR) cut to neutral at Mizuho Securities; PT $42
• Nielsen Holdings (NLSN) cut to underweight at Morgan Stanley; PT $19
• Northrop Grumman (NOC) cut to hold at Jefferies; PT $410
• Occidental (OXY) cut to underweight at Wells Fargo
• Prudential Financial (PRU) cut to underperform at Evercore ISI
• Ryder (R) cut to neutral at Baird; PT $90
• Salesforce (CRM) cut to neutral at UBS
• Spire (SR) cut to neutral at Mizuho Securities; PT $68
• Verisk (VRSK) cut to equal-weight at Morgan Stanley; PT $237
• Wayfair (W) cut to neutral at Wedbush; PT $160
• Whiting Petroleum (WLL) cut to equal-weight at Wells Fargo; PT $77

INITIATIONS:

• ADT Inc (ADT) resumed buy at Citi; PT $10.25
• AdTheorent Holding (ADTH) rated new buy at Canaccord; PT $12
• Applied Materials (AMAT) reinstated buy at Jefferies; PT $197
• Asana (ASAN) rated new neutral at DA Davidson; PT $65
• Ballard Power Systems (BLDP CN) rated new sector weight at KeyBanc
• Beam Therapeutics (BEAM) rated new buy at Guggenheim; PT $130
• Cardiff Oncology Inc (CRDF) rated new outperform at William Blair
• Carnival (CCL) reinstated hold at Jefferies; PT $24
• Cerevel Therapeutics (CERE) rated new overweight at JPMorgan; PT $50
• Euronet (EEFT) reinstated outperform at William Blair
• FuelCell (FCEL) rated new sector weight at KeyBanc
• Innovid (CTV) rated new market outperform at JMP; PT $11
• Iris Energy (IREN) rated new outperform at Cowen; PT $31
• JBG SMITH (JBGS) rated new outperform at Wolfe; PT $37
• KLA Corp (KLAC) reinstated buy at Jefferies; PT $515
• Lam Research (LRCX) reinstated buy at Jefferies; PT $869
• Monday (MNDY) rated new neutral at DA Davidson; PT $275
• Nubank (NU) rated new buy at Nau Securities; PT $12.40
• One Group Hospitality (STKS) rated new outperform at Wedbush; PT $20
• Plug Power (PLUG) rated new overweight at KeyBanc; PT $40
• Roku (ROKU) rated new underweight at Atlantic Equities; PT $136
• Smartsheet (SMAR) reinstated buy at DA Davidson; PT $100
• Stereotaxis (STXS) rated new buy at Loop Capital; PT $13
• Stronghold Digital Mining (SDIG) rated new outperform at Cowen; PT $22
• Wells Fargo (WFC) reinstated outperform at Daiwa; PT $56

David Wienke

Cabrera Capital Markets, LLC