Cabrera Capital Daily Game Plan

Friday January 14, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:30ET Retail sales, Import price index; 9:15ET Industrial production; 10:00ET UMich consumer sentiment index; 11:00ET Fed’s Williams speaks

TODAY’S HIGHLIGHTS:   

• Russia’s Lavrov says potential response from Moscow in event of failure of talks would entail deployment of military hardware  
  
• Meta Platforms faces a UK class action suit claiming Facebook exploited personal data  
• Nurses across the country strike to protest working conditions due to the virus

Global shares fell after a slew of Federal Reserve officials signaled they’ll combat inflation aggressively.  Fed Governor Brainard said officials
could boost rates as early as March to ensure that high price pressures are brought under control, while Govs Harker and Evans also called for multiple rate hikes this year.  Investors will turn their attention to earnings over the next few weeks to assess
companies’ performances amid soaring inflation, virus restrictions and supply chain issues.  On the geopolitical front, North Korea appears to have fired two ballistic missiles, its third test in ten days, and vowed a “stronger and certain reaction” to the
United States’ attempt to halt its weapons programs.     

US EQUITIES: 
 

US equity futures fell after bank earnings, with the tech heavy/rate sensitive Nasdaq extending yesterday’s decline. President Biden will nominate
Sarah Bloom Raskin to be the Federal Reserve’s next vice chair for supervision, a powerful regulatory role. In choosing Raskin, Biden looks to make good on Democrats’ promises to reinforce the Volcker rule that restricts banks’ ability to trade for their own
profit. Pennsylvania Republican Senator Pat Toomey, the ranking member of the Banking committee, criticized Biden’s choice. “Sarah Bloom Raskin has specifically called for the Fed to pressure banks to choke off credit to traditional energy companies and to
exclude those employers from any Fed emergency lending facilities,” he said in a statement.          

E-mini S&P futures -0.8%, Nasdaq -1.15%, Russell 2000 futures -0.85%, Dow futures -0.55%.

US banks face lofty expectations as JPMorgan, Wells Fargo and Citi kick off earnings before the bell. Trading revenue and loan growth are in
focus and, with the KBW Bank Index returning more than 50% since the start of 2021, double the S&P’s gain.  The surge in bank shares in recent weeks has been driven by rising rates and expectations of accelerated loan growth.  Wells Fargo has added 17% this
month alone and rose another 2% after its earnings beat.  JPMorgan Chase said its fourth-quarter profit fell on weak equity & FICC trading, and commercial and consumer loans fell from a year earlier.  Shares slipped 4% in pre-market trading.  Citigroup fell
over 4% after it reported FICC sales & trading revenue for the fourth quarter that missed estimates.   

European indices are in the red, with only energy in the green.  Technology companies, which are seen as most sensitive to higher rates, were
among the biggest declines in Europe’s Stoxx 600 Index.   Electricite de France (EDF FP) plunged as much as 25% as the French government confirmed plans to force it to sell more power at a steep discount to protect households from surging wholesale electricity
prices. Software AG falls as much as 5.7% after Goldman Sachs downgraded the stock to neutral from buy on margin outlook. Nordic Semiconductor declines alongside the broader tech selloff despite publishing preliminary 4Q numbers that looked positive. SAP declines
after initially gaining due to an earnings beat. U.K. retail stocks slip as electronics retailer Currys cuts its profit outlook. A majority of strategists still see the rally in European equities continuing this year, with the average call for a +5.2% gain
in the Stoxx 600. The U.K. economy surpassed its pre-pandemic size in November for the first time with surprisingly strong growth before omicron struck. Germany’s economy contracted as much as 1% in the last quarter of 2021. Stoxx 600 -0.9%, CAC -0.9%, DAX
-0.95%, FTSE 100 -0.2%. Energy +0.7%, Technology -1.75%, Retail -1.6%, Banks -0.6%.

Stocks in Asia were broadly lower as investors sold technology shares on growing speculation the US Federal Reserve will raise interest rates
in March.  The MSCI Asia Pacific Index fell as much as 1.3% before paring losses to 0.7% in afternoon trading. Alibaba (-2.2%), Keyence and Sony Group were among the largest contributors to the benchmark’s slide. The Hang Seng Tech Index, which tracks China’s
biggest tech firms, recovered an early thumping to close down 0.5%. Electronics makers dragged down indexes in Japan and South Korea, as the Topix (-1.4%) and Kospi (-1.35%) led declines in the region.  The BOK hiked rates for the third time since the summer,
raising by 25 bps to 1.25%, as expected. Sentiment soured in Japan after Tokyo raised it Covid alert as cases surged. Frozen food makers in China surged on prospects of more home-cooked meals during the coming Chinese New Year holiday with rising omicron cases.
Hang Seng Index down 0.2%, Australia’s ASX 200 down 1.1%, Shanghai Composite -0.95%, CSI 300 -0.8%. Singapore’s Straits Times Index was the region’s best performer, up 0.7%.                 

FIXED INCOME: 
                                       

Treasuries are paring declines with stock index futures under pressure.  Governor Christopher Waller agreed three this year
is a good baseline, but if inflation stays hot, “the case will be made for four, maybe five.” New York Fed chief John Williams weighs in this morning at 11:00ET. Joe Biden will nominate Lisa Cook and Philip Jefferson as Federal Reserve governors.  The appointments,
subject to Senate confirmation, may tilt the FOMC toward fewer hikes in 2022, analysts said.

METALS: 

Gold fluctuated while demand in top consumer China stabilized as Lunar New Year festivities approached. Physical gold buying
stalled in India this week as prices climbed and rising coronavirus cases prompted consumers to postpone purchases.

ENERGY:     

Oil futures reversed overnight highs as US equity futures extend their decline. Oil is headed for a fourth weekly gain and
its longest winning streak since October
on signs that the market is tightening as global consumption withstands the impact of the omicron virus. The Senate blocked a measure
to impose new sanctions on the Nord Stream 2 pipeline after the administration warned it may disrupt allied unity in the confrontation over Ukraine. WTI is flat, Brent +0.35%.         

CURRENCIES:   

The yen rose against all Group-of-10 currencies after Reuters reported that the Bank of Japan may consider raising rates
before meeting its 2% inflation target. The yen is set for its largest weekly advance in more than a year as speculation about a shift in BOJ policy spurred a further unwinding of dollar longs. The report makes next Tuesday’s Bank of Japan meeting more important. 
The US Dollar Index is flat. USDJPY -0.35%, GBPUSD +0.05%, AUDUSD -0.4%, EURJPY -0.45%.     

Dogecoin surged 9% after Elon Musk tweeted it can be used to buy Tesla merchandise. Jack Dorsey’s Block is building a Bitcoin
mining system and hiring a team for the effort.

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:

• ATI Physical Therapy (ATIP) raised to buy at Jefferies; PT $5
• Amicus (FOLD) raised to outperform at SVB Leerink
• Canadian National (CNR CN) raised to buy at Deutsche Bank; PT $137
• Check Point Software (CHKP) raised to outperform at Raymond James
• Chipotle (CMG) raised to overweight at Morgan Stanley; PT $1,920
• Five Below (FIVE) raised to overweight at KeyBanc; PT $230
• Mosaic (MOS) raised to outperform at BMO; PT $50
• NetApp (NTAP) raised to outperform at Cowen; PT $116
• O’Reilly Automotive (ORLY) raised to overweight at JPMorgan; PT $785
• Oneok (OKE) raised to neutral at Goldman
• Pinduoduo ADRs (PDD) raised to buy at DBS Bank; PT $96
• RLJ Lodging (RLJ) raised to outperform at Baird; PT $18
• Santander Brazil ADRs (SAN SM) raised to neutral at Goldman; PT $6
• Sherritt (S CN) raised to speculative buy at TD; PT 90 Canadian cents
• Texas Roadhouse (TXRH) raised to outperform at Evercore ISI; PT $110

DOWNGRADES:

• Acutus Medical (AFIB) cut to hold at Canaccord; PT $3
• BJ’s Wholesale (BJ) cut to underweight at JPMorgan; PT $60
• Cerence (CRNC) cut to sector perform at RBC; PT $77
• Cheniere Energy Partners LP (CQP) cut to neutral at Goldman
• Corning (GLW) cut to hold at Deutsche Bank; PT $41
• Digital Realty (DLR) cut to equal-weight at Barclays; PT $172
• Disney (DIS) cut to neutral at Guggenheim; PT $165
• Domino’s Pizza (DPZ) cut to equal-weight at Morgan Stanley; PT $535
• Fiserv (FISV) cut to sector weight at KeyBanc
• Ford (F) cut to sector perform at RBC; PT $26
• I3 Verticals (IIIV) cut to sector weight at KeyBanc
• Mimecast (MIME) cut to neutral at SMBC Nikko; PT $82
• MorphoSys ADRs (MOR GR) cut to equal-weight at Morgan Stanley; PT $14
• PagSeguro (PAGS) cut to sector weight at KeyBanc
• Restaurant Brands (QSR CN) cut to underweight at Morgan Stanley
• Sensata (ST) cut to neutral at Baird; PT $67
• Sirius XM (SIRI) cut to underweight at JPMorgan; PT $6
• TC Energy (TRP CN) cut to sell at Goldman

INITIATIONS:

• AdTheorent Holding (ADTH) rated new outperform at Cowen; PT $8
• Ascend Wellness (AAWH/U CN) rated new outperform at ATB Capital; PT $13
• Custom Truck One Source (CTOS) rated new outperform at Baird; PT $11
• Dada Nexus ADRs (DADA) rated new buy at Mizuho Securities; PT $25
• Honeywell (HON) rated new hold at Berenberg; PT $230
• Ree Automotive (REE) rated new overweight at Cantor; PT $9
• Santander Mexico ADRs (BSMXB MM) reinstated neutral at Goldman
• Softchoice (SFTC CN) rated new sector perform at Scotiabank; PT C$30
• Teradyne (TER) rated new buy at Loop Capital; PT $202
• Vincerx Pharma (VINC) rated new buy at HC Wainwright; PT $25

David Wienke

Cabrera Capital Markets, LLC