Cabrera Capital Daily Game Plan

Monday January 10, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
10:00ET  Wholesale Inventories

TODAY’S HIGHLIGHTS:   

• US and Russia open tense talks over Ukraine crisis with low expectations
• Pope Francis suggested that getting vaccinated against COVID-19 is a “moral obligation”
• Scientists in Singapore found deaths were lowest among people who had the Moderna vaccine
  
• Alexandria Ocasio-Cortez tested positive
  

Global markets are generally quiet as investors await another US inflation reading that may seal the deal on an early rate hike from the Fed. 
Markets face increasing volatility as investors grapple with how to reprice assets as the pandemic liquidity that helped drive equities to record highs is withdrawn. Analysts fear the U.S. consumer price report on Wednesday will show core inflation climbing
to its highest in decades and usher in a rate rise as soon as March.  Meanwhile, the explosion in COVID cases globally also threatens to curtail consumer spending and growth.  On the geopolitical front, the US and Russia began tense negotiations in Geneva
today with the US hoping it can stave off the danger of a new Russian invasion of Ukraine without conceding to the Kremlin’s security demands.  Russian Deputy Foreign Minister Sergei Ryabkov said over the weekend it was possible that the diplomacy could end
after a single meeting.  The US and allies may slap export controls on Russia, including on sensitive technology and electronics, if it seizes more of Ukraine.      

US EQUITIES: 
 

US equity index futures are falling as the rotation out of high-growth equities into cheaper cyclical stocks continues. US inflation data this
week will be closely watched as the Federal Reserve prepares to subdue price pressures with faster-than-expected rate increases. The headline rate may have sped up to 7% in December, the fastest in almost 40 years.  Also, a slew of Fed officials will be out
to offer their latest views this week, including Chair Jerome Powell and Governor Lael Brainard who face confirmation hearings. Fourth-quarter earnings season kicks off this week.  JPMorgan, Citi and Wells Fargo report on Friday with the group looking to build
off a largely positive set of third-quarter results.       

E-mini S&P futures -0.7%, Nasdaq -1.35%, Russell 2000 futures -0.65%, Dow futures -0.35%.

In pre-market trading, BioMarin (BMRN) shares jump 5.5% after the biotech firm announced positive results for its hemophilia treatment trial
on Sunday. Take-Two will buy all the outstanding shares of Zynga in a cash and stock transaction valued at about $12.7B. Beam Therapeutics (BEAM) rises about 5% as Pfizer agreed to pay the company as much $1.35 billion in a partnership to develop drugs for
rare genetic diseases. Codex DNA (DNAY) jumps 11% as Pfizer licensed its synthetic technology for use in its coronavirus vaccine. ViacomCBS shares are up 3% after Deutsche Bank raised to buy. Ocugen (OCGN) shares gain 8% after the company said Saturday that
a booster dose of the Covaxin Covid-19 vaccine candidate demonstrated a robust immune response. Lululemon (LULU) falls 6% after saying it expects fourth-quarter revenue to come in at the low end of its previous forecast. Tilray (TLRY) jumps over 8% after reporting
net revenue +20% from a year ago.

Technology and growth stocks have tumbled as investors switched to banks and energy firms, while bonds took a beating.

The S&P Bank ETF (KBE) has risen over 17% from the December 20^th low

European indices struggled as investors fretted about the prospect of rising interest rates and a surge in COVID-19 infections.  Travel & Leisure
are greatly outperforming today, while Technology shares lag. Technology stocks, which have soared the past two years thanks in part to very low interest rates, led declines last week while investors bought into lower-valued energy and financial shares.  UK’s
blue-chip FTSE 100 index slipped in morning trade as housebuilders were hit by $5.4 billion in costs to remove cladding from buildings, while banking shares extended gains on expectations of interest rate hikes. Big banks such as HSBC and Barclays rose more
than 1.5%, extending last week’s gains. Biotech firm Avacta Group plunged 26% after it said it was halting sales of its COVID-19 antigen lateral flow test. Stoxx 600 -0.5%, CAC -0.45%, DAX -0.35%, FTSE 100 -0.1%. Travel & Leisure +2%, Banks +0.55%, Autos +0.5%.
Tech -1.4%, Construction -1.15%.     

Asian shares were mostly higher as China said it will speed up bond issuance to spur investment in a bid to support its slowing economy. Increased
government spending will help boost private investment in the first quarter of 2022, the cabinet said. Chinese technology shares extended gains for a third day on bargain hunting.  China’s blue-chip CSI 300 gained 0.45%. The MSCI Asia Pacific Index rallied
as much as 0.4%, boosted by financial shares. Hong Kong stocks were among the best performers, +1.1%, as technology giants including Tencent and Meituan continued to recoup some of their recent losses, while real estate shares extended a rally on state support.
The Philippine Stock Exchange led gainers, up 1.8% while India’s Sensex gained 1.1%.  South Korea’s Kospi Index was among the region’s biggest decliners, down 1%, as losses in chipmakers and internet stocks weighed.  Vietnam was the biggest loser, down 1.6%.
        

FIXED INCOME: 
                                       

Treasury yields extended their climb with the 10-year yield at its highest level since early 2020, touching its 200 week
moving average at 1.8% as markets move to price an interest rate liftoff.  10-year Treasury yields have risen a quarter point since the beginning of the year. Analysts fear the US consumer price report on Wednesday will show core inflation climbing to its
highest in decades at 5.4% and usher in a rate rise as soon as March. Treasuries are hampered by expectations for another heavy IG credit issuance slate this week. Coupon auctions also resume this week, beginning with 3-year note sale Tuesday and including
10- and 30-year reopenings.

METALS: 

Gold fluctuated between gains and losses as traders hedged positions against inflation and ongoing geopolitical risks. Spot
gold is down 0.1%, silver -0.2%.

ENERGY:     

Oil prices slipped after climbing 5% last week helped in part by supply disruptions from the unrest in Kazakhstan and outages
in Libya. Kazakhstan’s TCO oilfields are returning output to normal levels.  Libya’s oil exports are set to fall further this week, after bad weather closed the country’s eastern ports. Should the US/Russia negotiations break down, one of the first victims
would be European energy prices as the Russian supplies the region relies on would likely be disrupted.

CURRENCIES:   

The US Dollar Index edged higher by 0.3% as yields rose. The Fed’s hawkish shift has tended to benefit the US dollar, though
it saw profit taking on Friday after the payrolls report failed to meet lofty expectations.  The Pound hit its highest level versus the Euro since Feb. 2020. USDCHF +0.5%, USDNOK +0.3%, EURUSD -0.35%, USDJPY -0.25%.        

Bitcoin traded below $41,000 as cryptocurrencies continue to struggle.  

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:

• Antero Resources (AR) raised to outperform at BMO; PT $28
• Apartment Income REIT (AIRC) raised to buy at Jefferies; PT $63
• Brixmor Property (BRX) raised to buy at Jefferies; PT $29
• CenterPoint Energy (CNP) raised to outperform at BMO; PT $31
• Community Health (CYH) raised to buy at Citi
• Core & Main (CNM) raised to outperform at RBC; PT $33
• Dell Technologies (DELL) raised to outperform at Bernstein; PT $72
• Douglas Emmett (DEI) raised to outperform at Raymond James; PT $41
• Endava ADRs (DAVA) raised to overweight at Morgan Stanley; PT $185
• Expedia (EXPE) raised to overweight at Piper Sandler; PT $216
• F5 Inc (FFIV) raised to outperform at Evercore ISI; PT $275
• Gossamer Bio (GOSS) raised to outperform at SMBC Nikko; PT $24
• HCA Healthcare (HCA) raised to buy at Citi
• Hersha Hospitality (HT) raised to market perform at Raymond James
• Highwoods (HIW) raised to buy at Jefferies; PT $54
• Independence Realty (IRT) raised to buy at Compass Point; PT $27.75
• Infosys ADRs (INFO IN) raised to positive at Susquehanna; PT $29
• Intuitive Surgical (ISRG) raised to buy at BTIG; PT $372
• KB Home (KBH) raised to outperform at RBC; PT $46
• Kimco (KIM) raised to buy at Jefferies; PT $29
• Kinder Morgan (KMI) raised to peerperform at Wolfe; PT $17
• L3Harris (LHX) raised to overweight at Wells Fargo; PT $254
• Northrop Grumman (NOC) raised to equal-weight at Wells Fargo; PT $399
• Pebblebrook (PEB) raised to outperform at Raymond James; PT $27
• Phibro Animal (PAHC) raised to equal-weight at Barclays; PT $23
• Plains All American (PAA) raised to outperform at Wolfe; PT $12
• PriceSmart (PSMT) raised to outperform at Kansas City Capital
• Public Storage (PSA) raised to buy at Jefferies; PT $433
• Resolute Forest (RFP) raised to outperform at CIBC; PT $19
• Teck Resources (TECK/B CN) raised to buy at Canaccord; PT C$48
• Thoughtworks Holding (TWKS) raised to buy at Goldman; PT $32
• Turquoise Hill (TRQ CN) raised to hold at Canaccord; PT C$21
• Unity Software (U) raised to buy at BTIG; PT $171
• ViacomCBS (VIAC) raised to buy at Deutsche Bank; PT $43
• West Fraser Timber (WFG CN) raised to outperform at CIBC; PT C$150
• Xcel Energy (XEL) raised to buy at Mizuho Securities; PT $72
• Zscaler (ZS) raised to buy at UBS; PT $350

DOWNGRADES:

• API Group (APG) cut to neutral at Baird; PT $26
• Airbnb (ABNB) cut to neutral at Piper Sandler; PT $169
• Avangrid (AGR) cut to underperform at Mizuho Securities; PT $47
• Cognizant (CTSH) cut to equal-weight at Morgan Stanley; PT $95
• CommScope (COMM) cut to inline at Evercore ISI; PT $12
• Corporate Office Properties (OFC) cut to hold at Jefferies; PT $30
• Crown Castle (CCI) cut to hold at Jefferies; PT $203
• DiamondRock Hospitality (DRH) cut to market perform at Raymond James
• Digital Realty (DLR) cut to hold at Jefferies; PT $172
• Easterly Government (DEA) cut to hold at Jefferies; PT $25
• Easterly Government (DEA) cut to market perform at Raymond James
• Equinix (EQIX) cut to hold at Jefferies; PT $840
• Eversource (ES) cut to market perform at BMO; PT $95
• Extra Space (EXR) cut to hold at Jefferies; PT $223
• Hilton Worldwide (HLT) cut to market perform at Bernstein; PT $161
• Information Services (ISV CN) cut to neutral at CIBC; PT C$30
• Medtronic (MDT) cut to neutral at BTIG
• Mercer International (MERC) cut to neutral at Credit Suisse; PT $12.50
• Mohawk Industries (MHK) cut to inline at Evercore ISI; PT $195
• NV5 (NVEE) cut to neutral at Baird; PT $127
• National Retail (NNN) cut to hold at Jefferies; PT $50
• Nike (NKE) cut to hold at HSBC; PT $182
• Oneok (OKE) cut to underperform at Wolfe; PT $60
• Raymond James (RJF) cut to market perform at JMP
• SBA Comms (SBAC) cut to hold at Jefferies; PT $377
• STORE Capital (STOR) cut to hold at Jefferies; PT $37
• Schwab (SCHW) cut to market perform at JMP
• Spirit Realty (SRC) cut to hold at Jefferies; PT $52
• TTEC (TTEC) cut to underweight at Morgan Stanley; PT $90
• Tal Education ADRs (TAL) cut to underweight at Morgan Stanley
• Talos (TALO) cut to market perform at BMO; PT $12.50
• Toll Brothers (TOL) cut to sector perform at RBC; PT $70
• UWM Holdings (UWMC) cut to equal-weight at Barclays; PT $7
• Zimmer Biomet (ZBH) cut to neutral at BTIG

INITIATIONS:

• Accenture (ACN) reinstated neutral at Goldman; PT $446
• Aclara Resources (ARA CN) rated new speculative buy at Canaccord; PT C$2
• AppLovin (APP) rated new buy at Cannonball Research; PT $107
• Berkshire Hills (BHLB) reinstated market perform at KBW; PT $30
• Bionomics ADRs (BNO AU) rated new outperform at William Blair
• Brookline Bancorp (BRKL) reinstated market perform at KBW; PT $18
• BuzzFeed (BZFD) rated new outperform at Cowen; PT $7
• CGI Inc (GIB/A CN) reinstated sell at Goldman; PT C$109
• Cisco Systems (CSCO) reinstated neutral at Vertical Group; PT $57.75
• Cognizant (CTSH) reinstated buy at Goldman; PT $104
• Community Bank System (CBU) reinstated market perform at KBW; PT $75
• Cvent Holding (CVT) rated new neutral at Citi; PT $9
• Cytokinetics (CYTK) rated new outperform at Oppenheimer; PT $55
• Dime Community (DCOM) reinstated outperform at KBW; PT $44
• Evans Bancorp (EVBN) rated new market perform at KBW; PT $39
• Guardian Capital Group (GCG/A CN) reinstated outperform at BMO; PT C$48
• Independence Realty (IRT) rated new outperform at RBC; PT $28
• Kore Group (KORE) rated new hold at Deutsche Bank; PT $8
• Micron (MU) rated new buy at New Street Research; PT $135
• NBT Bancorp (NBTB) reinstated market perform at KBW; PT $44
• Oncocyte (OCX) rated new overweight at Stephens; PT $3.10
• Phillips Edison (PECO) rated new outperform at Wolfe; PT $43
• Samsara (IOT) rated new buy at Goldman; PT $27
• Samsara (IOT) rated new inline at Evercore ISI; PT $25
• Samsara (IOT) rated new outperform at Cowen; PT $31
• Samsara (IOT) rated new outperform at RBC; PT $28
• Samsara (IOT) rated new outperform at Wolfe; PT $35
• Samsara (IOT) rated new overweight at JPMorgan; PT $34
• Samsara (IOT) rated new overweight at Morgan Stanley; PT $30
• Samsara (IOT) rated new overweight at Wells Fargo; PT $31
• Softchoice (SFTC CN) reinstated neutral at Goldman; PT C$27
• Solid Power (SLDP) rated new buy at Needham; PT $13
• TaskUS (TASK) reinstated buy at Goldman; PT $77
• Verde Agritech (NPK CN) rated new buy at Fundamental Research; PT C$11.94
• Voyager Digital (VOYG CN) rated new outperform at KBW; PT C$19

David Wienke

Cabrera Capital Markets, LLC