Cabrera Capital Daily Game Plan

Thursday January 13, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:30ET Weekly Jobless Claims, Producer Price Index; 10:00ET Fed’s Brainard confirmation hearing as vice chair; 12:00ET Fed’s Barkin speaks;  1:00ET 30 Year Auction, Fed’s Evans speaks

TODAY’S HIGHLIGHTS:   

• Russia’s Deputy Foreign Minister: Talks In Dead End After US Refusal On Key Points – IFX
• China state-backed consumer rights group calls for KFC boycott for “causing unnecessary food waste” and “impulsive consumption”
• U.S. Diplomats in Geneva, Paris, Struck with Suspected ‘Havana Syndrome’ Neurological Illness
• Biden’s approval rating falls to 33%

It’s a relatively subdued session in global markets after US inflation numbers registered 40 year highs which were in line with expectations. 
China detected omicron in a second major port city, raising concerns about global supply chains. The effects of restrictions in China as the country maintains its Covid-zero policy are starting to hit supply chains in the region. Amid Covid-induced delays
near Beijing and elsewhere, ships are heading for Shanghai, causing growing congestion there and delaying schedules for container ships by about a week  Meanwhile in the US,  President Biden is set to announce today that the military will be deployed to hospitals
in six states to help with a wave of infections driven by the omicron variant. Money managers are saying to sell the greenback and put money into assets such as emerging-market stocks as the global economy recovers from the worst of the pandemic. On the geopolitical
front, Russia said today that it was hitting a dead end in its efforts to persuade the West to bar Ukraine from joining NATO and threatened consequences in response. A senior Russian diplomat says that a Russian military deployment to Cuba and Venezuela can’t
be excluded if tensions with the United States mount.             

US EQUITIES: 
 

US equity futures inched higher as investors digested the latest read on inflation. In the wake of yesterday’s highest annual US inflation reading
since 1982, more Federal Reserve officials are signaling support for a hike as soon as March.       

E-mini S&P futures +0.05%, Nasdaq +0.05%, Russell 2000 futures +0.00%, Dow futures +0.1%.

In pre-market trading, US chip stocks are mixed after sector bellwether TSMC gave a 1Q sales outlook that beat estimates. Applied Materials (AMAT)
+2%, Snap fell over 3% after Cowen downgraded the stock. KB Home (KBH) shares rise 6% after the homebuilder’s 4Q EPS beat estimates. Adagio Therapeutics (ADGI) surged 30% citing ADG20 has neutralization activity against omicron. Delta Air Lines (DAL) gains
3% after reporting earnings that missed estimates but said it expects to post a “healthy profit” from the second quarter onwards. Advent International and KKR are among private equity firms studying potential bids for the international drugstore business being
sold by Walgreens Boots Alliance.

Major banks including JPM, Citigroup, Wells Fargo report earnings tomorrow. The KBW bank index has risen 19% from the December 20^th
low.

Small caps remain negative relative to the S&P 500

Emerging Markets have outperformed the US…

European indices struggled for direction in quiet trading. The Stoxx 600 is little changed with healthcare underperforming while Autos and tech
lead gains. Semiconductor equipment stocks rose after sector bellwether TSMC beat estimates. BE Semiconductor up 8%; ASML +2.5%; Infineon Technologies +2.6%. Chr. Hansen rises 6.4% after the Danish probiotics manufacturer’s 1Q earnings came in above expectations.  
Just Eat Takeaway shares rise as much as 7.5% after reports that management indicated they’re open to the idea of a sale of Grubhub. UK retail stocks slid after a slew of subdued updates from bricks-and-mortar heavyweights that highlighted the lingering impact
of the Covid-19 pandemic. Marks & Spencer shares drop as much as 6.8%. Autos +1.15%, technology +0.85%, travel +0.5%, healthcare -0.6%.  Stoxx 600 -0.05%, DAX +0.05%, CAC -0.55%, FTSE 100 +0.1%.

Asian stocks were mixed after seeing their biggest rally in a year, with health-care and software-technology names retreating while financials
advanced. Benchmarks in China and Japan were the day’s worst performers, while the Philippines and Australia outperformed. Chinese real-estate developers declined as Sunac China’s $580 million share sale triggered a rout in the sector amid ongoing liquidity
concerns.  Japan’s travel-related stocks slid as daily virus infections surged.  The Philippine Stock Exchange Index rose 1.3% led by retailers and grocers as more areas are being put under tighter Covid-19 curbs. Hong Kong’s Hang Seng Tech Index lost 1.8%.
China’s CSI 300 fell 1.65%.  Japan’s Nikkei 225 down 1%. Hang Seng Index up 0.1%. Australia’s ASX 200 gained 0.5%. Vietnam’s VN Index down 1%.               

FIXED INCOME: 
                                       

Treasuries are steady with yields broadly within a basis point of Wednesday’s close. 10-year yield around 1.74% is slightly
cheaper on the day. Eurodollars slightly lower across green- and blue-pack contracts after Fed’s Daly and Harker sounded hawkish tones during Asia hours. Markets are now pricing a 90% chance of a rate hike in March.  30-year bond reopening at 1pm ET concludes
this week’s coupon auction cycle.  The 30 year auction follows 0.3bp tail in Wednesday’s 10-year auction, and large tails in last two 30-year sales.  

METALS: 

Gold fluctuated as benchmark 10-year Treasury yields recovered some losses but stayed close to last session’s one-week high
as the dollar extended its slide. Silver continues to outperform, up 0.35% with spot gold relatively flat.

ENERGY:     

Crude oil is slightly lower  Road traffic has thinned across Asia at the start of the year as the highly contagious omicron
variant of the coronavirus sweeps through the region, flashing a bearish signal for oil demand. Gasoline demand faded for a second week according to US EIA data.  Still, global oil demand has proven stronger than expected as omicron inflicts a softer hit to
the economy than anticipated, the International Energy Agency said Wednesday.      

CURRENCIES:   

In currency markets, the US Dollar Index continues to slip towards a 2-month low, down 0.1%, adding to its 0.6% decline
yesterday. Some strategists note dollar is starting to decouple from Treasury yields.  A growing view among money managers is that the dollar has reached a peak in a dramatic turnaround from a month ago when positioning in the greenback was the most bullish
since 2015. They’re saying that the dollar will weaken on a wider US deficit and improvement in global growth.  GBPUSD +0.25%, AUDUSD +0.25%, USDCAD -0.25%, EURUSD +0.25%, USDJPY +0.25%   

Kazakhstan accounts for nearly 20% of the world’s
mining power (second only to the U.S.’s 35%) so when political
unrest rocked the Central Asian country last week and prompted internet
blackouts, many miners were forced offline. Though Bitcoin’s total mining power,
or “hashrate,” has declined since the blackout, it remains near
all-time highs. 
 Last week, Goldman Sachs told
investors that Bitcoin would continue to chip away at gold’s dominance as a store
of value while Bloomberg analysts suggested mining’s
shift from China to publicly traded companies in North America — “many of which are more inclined to hold coins, not sell them” — would boost BTC in coming years. And legendary investor Bill Miller revealed
that he now has 50% of his net worth in Bitcoin and related investments – Bitcoin.com
 

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:

• Bandwidth (BAND) raised to overweight at Piper Sandler; PT $102
• Carpenter Tech (CRS) raised to buy at Benchmark; PT $40
• Chegg (CHGG) raised to overweight at Piper Sandler; PT $43
• Delta Air Lines (DAL) raised to positive at Susquehanna; PT $50
• Enphase Energy (ENPH) raised to buy at Guggenheim; PT $213
• Exelon (EXC) raised to overweight at KeyBanc; PT $68
• Halliburton (HAL) raised to overweight at JPMorgan; PT $32
• Hawaiian Holdings (HA) raised to market perform at Cowen; PT $23
• Kite Realty (KRG) raised to outperform at Baird; PT $24
• LTC Properties (LTC) raised to overweight at KeyBanc; PT $40
• Marqeta (MQ) raised to buy at Mizuho Securities; PT $20
• Mattel (MAT) raised to buy at MKM; PT $30
• NIO Inc. ADRs (NIO) raised to buy at 86Research; PT $52
• NuVista Energy (NVA CN) raised to outperform at CIBC; PT C$10
• ResMed (RMD) raised to outperform at Baird; PT $300
• SQM ADRs (SQM/B CI) raised to equal-weight at Morgan Stanley; PT $58
• SolarEdge (SEDG) raised to buy at Guggenheim; PT $329
• SunPower (SPWR) raised to equal-weight at Morgan Stanley
• WEC Energy (WEC) raised to neutral at Goldman; PT $99
• Xenia Hotels (XHR) raised to overweight at KeyBanc; PT $21

DOWNGRADES:

• 2U (TWOU) cut to neutral at Piper Sandler; PT $23
• Advantage Energy Ltd (AAV CN) cut to neutral at CIBC; PT C$9
• Atlantica Sustainable (AY) cut to equal-weight at Morgan Stanley
• Baker Hughes (BKR) cut to neutral at JPMorgan; PT $29
• Biogen (BIIB) cut to neutral at Guggenheim; PT $202
• Birchcliff Energy (BIR CN) cut to neutral at CIBC; PT C$8.50
• CF Industries (CF) cut to hold at Berenberg; PT $77
• CenterPoint Energy (CNP) cut to neutral at Goldman; PT $30
• Corporate Office Properties (OFC) cut to underweight at KeyBanc
• Dominion Energy (D) cut to sell at Goldman; PT $72
• Empire State Realty (ESRT) cut to underweight at KeyBanc; PT $8
• Evergy (EVRG) cut to neutral at Goldman; PT $72
• Gaming and Leisure (GLPI) cut to hold at Truist Secs; PT $51
• Global Medical REIT (GMRE) cut to sector weight at KeyBanc
• Hudson Pacific (HPP) cut to sector weight at KeyBanc
• Imperial Oil (IMO CN) cut to sector underperform at Peters & Co; PT C$50
• PSEG (PEG) cut to sector weight at KeyBanc
• Q2 Holdings (QTWO) cut to neutral at Piper Sandler; PT $81
• Qorvo (QRVO) cut to market perform at Oppenheimer
• Snap (SNAP) cut to market perform at Cowen; PT $45
• Zynga (ZNGA) cut to hold at Stifel; PT $10

INITIATIONS:

• AbbVie (ABBV) rated new buy at Redburn
• Advance Auto (AAP) rated new buy at Truist Secs; PT $273
• AutoZone (AZO) rated new buy at Truist Secs; PT $2,329
• Best Buy (BBY) rated new hold at Truist Secs; PT $108
• Bumble (BMBL) rated new neutral at Piper Sandler; PT $35
• Coastal Finl (CCB) rated new strong buy at Raymond James; PT $69
• Costco (COST) rated new buy at Truist Secs; PT $606
• Cue Biopharma (CUE) rated new buy at HC Wainwright; PT $20
• Dollar General (DG) rated new hold at Truist Secs; PT $228
• Dollar Tree (DLTR) rated new buy at Truist Secs; PT $162
• FWRG US (FWRG) rated new outperform at Raymond James; PT $24
• Five Below (FIVE) rated new buy at Truist Secs; PT $214
• Fiverr (FVRR) rated new overweight at Piper Sandler; PT $120
• Genenta Science S.P.A ADRs (1233838DIM) rated new buy at Roth Capital; PT $24
• Genuine Parts (GPC) rated new hold at Truist Secs; PT $142
• Hertz (HTZ) rated new outperform at Oppenheimer; PT $31
• International Flavors (IFF) reinstated buy at Jefferies; PT $180
• Match Group (MTCH) rated new overweight at Piper Sandler; PT $160
• O’Reilly Automotive (ORLY) rated new buy at Truist Secs; PT $796
• Ollie’s Bargain (OLLI) rated new hold at Truist Secs; PT $50
• Signa Sports United (SSU) rated new buy at Jefferies; PT $11
• Target (TGT) rated new buy at Truist Secs; PT $270
• Tractor Supply (TSCO) rated new buy at Truist Secs; PT $270
• Upwork (UPWK) rated new overweight at Piper Sandler; PT $40
• Walmart (WMT) rated new hold at Truist Secs; PT $153

David Wienke

Cabrera Capital Markets, LLC