Cabrera Capital Daily Game Plan

Tuesday January 11, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
9:12ET Fed’s Mester speaks; 9:30ET  Fed’s George speaks; 10:00ET Fed’s Powell confirmation hearing; 1:00ET $52b 3-year new issue; 4:00ET Fed’s Bullard speaks

TODAY’S HIGHLIGHTS:   

• Pfizer is developing a hybrid vaccine that shields against the omicron variant
• Chicago teachers to end walkout and return to in-person classes
• US surgeons at University of Maryland transplant a PIG heart into a human
  

Global markets are moving higher as investor sentiment improves on signs that the omicron virus variant may be peaking and optimism that the
US Fed will seek to avoid hampering growth.  At a conference yesterday, Pfizer’s CEO said a vaccine for the omicron variant could be available as early as March.  Meanwhile, Covid-19 is ushering in fresh restrictions in China and Hong Kong, while Japan is
extending its border measures until the end of February.  World markets will be paying close attention to Fed Chair Powell’s answers to questions from the Senate Banking Committee today.  In his prepared remarks, Powell said the Fed will prevent higher inflation
from becoming entrenched, without mentioning any specific policy actions.       

US EQUITIES: 
 

US stock futures are pointing higher, extending Monday’s biggest intraday rebound since March 2020 as dip buyers rescued the Nasdaq from a fifth
straight loss. The index reversed a drop of 2.7% to finish higher by 0.1%     According to an estimate by JPMorgan Chase, retail investors snapped up more than $1 billion of stocks yesterday.  JPMorgan’s strategist Marko Kolanovic put out a note midafternoon
calling the downturn overdone and it was time to buy the dip. “Policy tightening is likely to be gradual and at a pace that risk assets should be able to handle and is occurring in an environment of strong cyclical recovery,” the note said. Strategists from
Goldman Sachs to UBS remain bullish on equities, saying stocks can weather higher interest rates.       

E-mini S&P futures +0.3%, Nasdaq +0.4%, Russell 2000 futures +0.25%, Dow futures +0.15%. SPX hit first key short term Fibonacci resistance yesterday
and that will be initial key to start the day.

Mega-cap  technology stocks edged higher in premarket trading after last week’s selloff wiped $1.1 trillion from the value of the Nasdaq Composite
Index. Tesla (TSLA) gains 2% following positive autos sales data from China and a price target hike at Morgan Stanley. Intel (INTC) shares lift 2.3% after the chipmaker hires Micron’s David Zinsner as CFO.  American Eagle Outfitters (AEO) gains nearly 4% after
raising outlook.  Accolade (ACCD) gains 11% after the health-care service provider beat estimates and boosted its outlook. Juniper Networks (JNPR) rises 5% as BofA turned bullish on the stock. Rivian Automotive (RIVN) dropped 3.5% in post-market trading Monday
after a Dow Jones report that its chief operating officer left the company last month. Inari Medical (NARI) jumped 10% after the medical device company posted preliminary 4Q revenue that topped expectations. FANG+ holding the key 200 day moving average.    

Biotech ETF (IBB) hit bear market territory, down more than 20% from the August all-time high.

European stocks are bouncing back with tech, retail and travel shares outperforming while all sectors are in the green.  Technology stocks led
an advance of 1% in the Stoxx Europe 600 Index in the wake of a recovery in the Nasdaq 100.  Many analysts are optimistic on European equities.  Bernstein strategists wrote a note on Monday, recommending an overweight position on stocks, and a preference for
Europe. BNP Paribas strategists believe a combination of earnings revisions, bearish positioning in European equities and attractive valuations could pave the way for a strong equity rally over coming months. Morgan Stanley analysts said estimates in the region
“look low, while valuations are undemanding.” Bank of America strategists, however, doubled down on their call for a sharp correction in the region, as “growth momentum is weakening” and “central banks are turning hawkish.”  Meanwhile, UK Prime Minister Boris
Johnson is facing calls to resign as allegations emerge about a COVID rule-breaking party at his official residence. Pandora shares rise as much as 7.5% after publishing preliminary 4Q sales numbers. Sika shares climb as much as 5.2% after reporting better
than expected Q4 sales.  DAX +1.2% with Delivery Hero leading gains, up over 5%. CAC +1.3%, FTSE 100 +0.6%. Tech +2.1%, Retail +2%, Travel +1.8%. 

Asian shares were mostly lower as investors sold high-growth technology shares amid uncertainty over US monetary policy.  The MSCI Asia Pacific
Index fell 0.1% after dropping as much as 0.7% as information-technology firms slid, while gains in financial shares helped limit losses. Chip-related stocks dropped after the sector’s bellwether TSMC reported revenue for the last quarter that was largely
in line with consensus estimates.  China’s CSI 300 and Japan’s Nikkei 225 were among the worst performers in the region, down roughly 1%. China locked down 5 million people living in the city of Anyang after two cases of omicron were reported there.              

FIXED INCOME: 
                                       

Treasuries are cheaper across front-end of the curve while the long-end outperforms as participants set up for the first
of this week’s auctions, a $52B 3-year note sale.  Treasury yields cheaper by 2.4bp in 2-year sector, flattening 2s10s spread as 10s are little changed at 1.76%. Long-end yields are ~1bp richer on the day, flattening 5s30s spread by ~3bp.  Federal Reserve
Bank of Atlanta President Raphael Bostic said the central bank may need to raise interest rates as early as March and start reducing its balance sheet “fairly soon” after liftoff to contain surging inflation. Bostic said he penciled in three interest-rate
increases for 2022 in his forecast.  

METALS: 

Gold extends a modest gain of 0.3%, with the precious metal supported by expectations for higher inflation and volatility
in financial markets. Federal Reserve Chair Jerome Powell said the U.S. economy was expanding at a fast pace and the central bank will prevent higher inflation from becoming entrenched.  Powell is set to tell a Senate panel today that the U.S. central bank
will take steps to make sure higher inflation seen over the past year won’t be allowed to develop deep roots in the economy. Silver is up 0.75%.  

ENERGY:     

Oil recovered as European equities bounced back, with crude continuing to follow the fortunes of wider markets in the first
weeks of 2022.  Oil has made a positive start to 2022 on expectations demand will continue to expand as the pandemic evolves, tightening the market. Supply halts in Libya and Kazakhstan have also aided prices, though crude has largely followed movements in
wider markets at the start of the year with the absence of major news.  The industry-funded American Petroleum Institute will release its weekly U.S. oil inventories report later today, while the EIA is set to publish its monthly market outlook. In China,
the largest crude importer, the authorities have locked down a city of 5 million people, a day after detecting omicron in Henan province. While the country is due to host the Winter Olympics next month, there are no plans as yet to adjust measures for the
event.  Meanwhile, the Biden administration on Monday signaled it would curtail oil development in the National Petroleum Reserve-Alaska and restore restrictions on drilling. WTI +1.5%, Brent +1.35%.   

CURRENCIES:   

The US Dollar Index is slightly lower with commodity-sensitive currencies leading G-10 gains as oil and equities rise. 
Focus is already turning to U.S. inflation figures due Wednesday. Kansas City Fed President Esther George may provide some insight into the timing of the central bank’s first rate hike when she speaks later today.  Oil-sensitive currencies lead gains; USD/NOK
down 0.4%. AUD/USD is flat. The Yen the only loser to dollar, weakening after four positive sessions; USDJPY +0.25%.

Bitcoin recovered to around $42,000 after dipping below $40,000, putting it on track for its worst start to a year since
the earliest days of digital currencies. While the likes of Binance Coin, Solana, Cardano and Polkadot have dropped 36% or more from their record levels, the market value of stablecoins, whose value are pegged to another asset, often the U.S. dollar, has continued
to expand.

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:

• AMD (AMD) raised to overweight at KeyBanc; PT $155
• Allegheny Technologies (ATI) raised to outperform at Cowen; PT $23
• American Air (AAL) raised to equal-weight at Morgan Stanley; PT $21
• BDGI CN (BDGI CN) raised to buy at Stifel Canada; PT C$34.50
• Brookfield Renewable Partners (BEP-U CN) raised to outperform at CIBC
• Certara (CERT) raised to buy at Jefferies; PT $31
• Citizens Financial (CFG) raised to buy at Citi; PT $65
• Houghton Mifflin (HMHC) raised to outperform at BMO
• Illumina (ILMN) raised to equal-weight at Barclays
• Innergex Renewable Energy (INE CN) raised to outperform at CIBC; PT C$21
• Intercept Pharma (ICPT) raised to buy at B Riley; PT $30
• Juniper (JNPR) raised to buy at BofA
• L3Harris (LHX) raised to outperform at Wolfe; PT $266
• Las Vegas Sands (LVS) raised to overweight at JPMorgan; PT $48
• Lithium Americas (LAC CN) raised to overweight at Piper Sandler
• Monolithic Power (MPWR) raised to overweight at KeyBanc; PT $520
• Paychex (PAYX) raised to outperform at Cowen; PT $145
• Quebecor (QBR/B CN) raised to buy at Canaccord; PT C$33
• Regions Financial (RF) raised to buy at Citi; PT $30
• Stag Industrial (STAG) raised to outperform at Baird; PT $48
• Zealand Pharma ADRs (ZEAL DC) raised to buy at Jefferies; PT $30.50
• Zynga (ZNGA) raised to neutral at Credit Suisse; PT $9.86
• iRhythm (IRTC) raised to outperform at Oppenheimer; PT $150

DOWNGRADES:

• Alcoa (AA) cut to hold at Deutsche Bank; PT $65
• American Tower (AMT) cut to neutral at Goldman; PT $281
• Bilibili ADRs (BILI) cut to market perform at Bernstein; PT $45
• Cleveland-Cliffs (CLF) cut to peerperform at Wolfe; PT $23
• Cogent Comms (CCOI) cut to sell at Goldman; PT $57
• IBM (IBM) cut to sell at UBS
• Intel (INTC) cut to sector weight at KeyBanc
• Kimberly-Clark (KMB) cut to neutral at Exane; PT $148
• Lundin Mining (LUN CN) cut to hold at Deutsche Bank; PT C$10.50
• Northrop Grumman (NOC) cut to peerperform at Wolfe
• Nucor (NUE) cut to underperform at Wolfe; PT $102
• Old Dominion (ODFL) cut to inline at Evercore ISI
• Shopify (SHOP CN) cut to neutral at Atlantic Equities; PT C$1,643.85
• Steel Dynamics (STLD) cut to underperform at Wolfe; PT $60
• Take-Two (TTWO) cut to neutral at MoffettNathanson LLC
• Ternium ADRs (TX) cut to underperform at Wolfe; PT $45
• Terreno Realty (TRNO) cut to neutral at Baird; PT $79
• U.S. Steel (X) cut to underperform at Wolfe; PT $24
• Wynn Resorts (WYNN) cut to neutral at Citi

INITIATIONS:

• 3M Co (MMM) rated new market perform at Bernstein; PT $175
• Aadi Bioscience Inc (AADI) rated new buy at Jefferies; PT $45
• Apollo Medical (AMEH) reinstated buy at Colliers; PT $93
• AvePoint (AVPT) rated new overweight at Cantor; PT $10
• Bill.com (BILL) reinstated buy at Goldman; PT $296
• CoStar (CSGP) rated new outperform at RBC; PT $85
• Compass (COMP) rated new buy at Berenberg; PT $11
• Danaher (DHR) rated new outperform at Bernstein; PT $365
• Embark Technology (EMBK) rated new sector weight at KeyBanc
• Emerson Electric (EMR) rated new market perform at Bernstein; PT $100
• GE (GE) rated new outperform at Bernstein; PT $120
• Idex (IEX) rated new market perform at Bernstein; PT $230
• IronNet (IRNT) rated new neutral at Guggenheim
• JD.com ADRs (JD) rated new overweight at Atlantic Equities; PT $100
• Latch (LTCH) rated new buy at Berenberg; PT $8
• Nuvei (NVEI CN) rated new buy at Goldman; PT C$121.40
• Offerpad Solutions (OPAD) rated new buy at Berenberg; PT $7
• Opendoor Technologies (OPEN) rated new buy at Berenberg; PT $15
• Pet Valu (PET CN) rated new buy at Stifel Canada; PT C$42
• Porch Group (PRCH) rated new buy at Berenberg; PT $21
• Powerband Solutions Inc (PBX CN) rated new buy at Desjardins; PT C$1.60
• Rockwell Automation (ROK) rated new outperform at Bernstein; PT $378
• Roper (ROP) rated new market perform at Bernstein; PT $505
• TuSimple Holdings (TSP) rated new overweight at KeyBanc; PT $50
• Wendy’s (WEN) reinstated underperform at BofA; PT $25

David Wienke

Cabrera Capital Markets, LLC