Cabrera Capital Daily Game Plan

Tuesday January 18, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:30ET Empire state manufacturing index; 10:00ET NAHB home builders index

Fed speakers are in self-imposed quiet period ahead of Jan. 26 policy decision                                                   

TODAY’S HIGHLIGHTS:   

• Hong Kong orders a cull of 2,000 hamsters after a new cluster of COVID cases is traced to a pet shop
• Biden’s Fed nominees seem less worried about prices than pushing progressive policies that aren’t the bank’s job – WSJ
• Janet Yellen marked Martin Luther King Day by saying the economy “never worked fairly for Black Americans”

Global equities continued their volatile start to the year as investors have shifted out of more expensive and rates-sensitive sectors such as
technology into cheaper value shares.  MSCI’s index of world shares is on course for its worst January since 2016.  Market participants are now waiting for the earnings season to gauge whether companies can continue delivering strong profits despite higher
costs and challenges from omicron. JPMorgan strategists maintain that global corporate earnings will deliver significant beats this year.  As expected, the BOJ left unchanged its -0.1% target for short-term interest rates and a pledge to guide long-term rates
around 0% at a two-day meeting that ended today. In a quarterly outlook report, the BOJ revised up its inflation forecast for the year to 1.1% from the prior estimate of 0.9%. Influenza has returned to Europe at a faster-than-expected rate this winter after
nearly disappearing last year. Concerns are mounting about a prolonged “twindemic” with COVID amid some doubts about the effectiveness of flu vaccines.   A fourth dose of the Pfizer shot was insufficient to prevent infection from the variant, Israel data showed.
      

US EQUITIES: 
 

US equity futures are broadly lower. Nasdaq 100 index fell as much as 2.2% as traders returned from a long holiday weekend, while rate-sensitive
technology stocks came under pressure in Europe and Asia.  Mega cap tech companies including GOOGL, AAPL, FB and MSFT all fell more than 1% before the bell.  Alibaba fell premarket after Reuters reported the U.S. is reviewing potential threats to national
security posed by its cloud service. Goldman Sachs sinks 3% as trading revenue misses estimates, though investment banking pulled off a big beat and FICC trading topped expectations. Revenue from the bank’s trading operation slid 7%, missing analysts’ estimates
for a small gain. The surprise letdown came from its equities business, which declined 11%. After the disappointing results last week from JPMorgan and Citigroup, today’s numbers will set the scene for Morgan Stanley and BofA tomorrow. Gap (GPS) falls 5% after
a Morgan Stanley downgraded the retailer. Microsoft to buy Activision Blizzard for $95 a share, in what would be the U.S. technology giant’s largest-ever takeover. ATVI surged 37% on the news. The White House is working on a bill that would keep the climate
measures of Biden’s Build Back Better plan but pare down or cut child tax credit and paid family leave proposals.              

E-mini S&P futures -0.1%, Nasdaq -1.65%, Russell 2000 futures -0.85%, Dow futures -0.8%.

European stocks declined as rising Treasury yields weighed on frothier parts of the market. Technology and travel shares led the retreat in Europe,
while telecom and energy shares nudged higher. Luxury stocks including Swatch, Kering, Tod’s and Richemont fell after Morgan Stanley flags risk of “soft” 1Q consumer demand in China even as sector valuation looks “attractive.”  In individual names,  Aspire
Global shares rise as much as 40% after NeoGames announced a bid to buy the online casino platform.  THG fell as much as 11% after saying it expects the early part of 2022 to be “a more challenging comparable period.”  The Stoxx Europe 600 Index dropped 1.1%,
DAX -1%, CAC -1%. The FTSE 100 slipped only 0.5% as Britain’s labor market grew strongly even amid a surge in infections late last year. The jobless rate dropped to 4.1%, the best reading since June 2020.  Telecom +0.8%, Energy +0.7%, Banks are flat.  Travel
& Leisure -2.2%, Tech -2.1%, Media -1.85%, Financials -1.65%.   

Shares in Asia fell, with the exception of the Philippines (+1.65%) and China. China’s central bank pledged to use more monetary policy tools
to spur the economy and ease credit stress as signs of a property market slump worsens. The dovish comments come a day after the PBOC cut its policy interest rate for the first time in almost two years, signaling the beginning of an easing cycle.  Economists
now expect Chinese banks to lower the loan prime rate on Thursday following the PBOC’s action on Monday. China’s blue-chip CSI 300 rose nearly 1%.  Shares in Japan nudged lower, with the Topix down 0.4%. The Bank of Japan raised its inflation forecasts but
said it was in no rush to change its ultra-loose monetary policy with inflation projected to stay below its 2% goal for years.   Governor Kuroda acknowledged that price pressures were rising although “the median forecast of board members is for inflation to
move around 1%.”  The MSCI Asia Pacific Index reversed an early gain of 0.6% to end lower by a similar amount, with technology and materials among the worst-performing sectors. Equity benchmarks in Vietnam and India were the biggest losers in Asia, down roughly
1%.                  

FIXED INCOME: 
                                       

Treasury yields gapped higher led by the front end when trading resumed after Monday’s US holiday as Fed rate-hike expectations
grew.  A seven-year high for oil prices lifted US Treasuries to pre-COVID levels with two-year Treasury yields crossing 1% for the first time since February 2020.  Swaps are fully pricing in an initial hike in March and a total of four this year.  Though off
session highs, yields remain cheaper by more than 6bp in 2-year sector, which reached 1.06% during the Asia session, flattening 2s10s curve by 3bp on the day. Over the weekend billionaire investor Bill Ackman said the US central bank is losing the inflation
battle and needs to raise 50bps in March to “restore its credibility.” Nomura noted the 10-year yield, which rose as much as 7 bps to 1.85%, may climb to about 2% this year. 

METALS: 

Gold declined as the dollar firmed and US bond yields climbed. Spot gold slipped 0.35%, silver -0.3% as investors wait for
more clues about the Federal Reserve’s interest rate hike timeline from its policy meeting next week. Global investor attention remains fixed on the Fed’s Jan. 25-26 meeting after central bank officials signaled they would start raising interest rates in March
to curb inflation.

ENERGY:     

Oil climbed to its highest level since 2014 on possible supply disruption after Yemen’s Houthi group attacked oil facilities
in the United Arab Emirates on Monday, adding to an already tight supply outlook.  Additionally, some producers within OPEC are struggling to pump at their allowed capacities due to underinvestment and outages. Goldman Sachs analysts said in a note on Monday
that Brent oil prices are primed to rise above $100 per barrel later this year, adding the oil market remains in a “surprisingly large deficit” as demand hit from the Omicron coronavirus variant is so far smaller than expected.  Rising energy prices have been
a headache for President Biden as his efforts to tame gasoline prices by tapping emergency stockpiles and by cajoling OPEC have fail to yield results. OPEC is set to release its monthly report later today. Brent is +1.3% while WTI gains 1.8%.           

CURRENCIES:   

The dollar rose against most Group-of-10 peers. The yen pared some losses against dollar spurred when the Bank of Japan
governor looked to quash speculation on phasing out stimulus.  A appreciation in the British Pound seen over the past four weeks has forced the large speculative net-short position to be pared back, but the consensus remains staunchly bearish. US Dollar Index
+0.25%, AUDUSD -0.5%, GBPUSD -0.4%, EURUSD -0.35%.      

Bitcoin is down 0.5%, Ethereum -1.1%

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:

• Acushnet (GOLF) raised to buy at Compass Point; PT $56
• AvalonBay (AVB) raised to equal-weight at Barclays; PT $263
• BEP-U CN (BEP-U CN) raised to outperform at National Bank; PT C$47.55
• Blackline Safety (BLN CN) raised to buy at Beacon Securities; PT C$11
• Brixmor Property (BRX) raised to buy at Truist Secs; PT $29
• Brookfield Renewable Partners (BEP-U CN) raised to outperform at BMO
• Conoco (COP) raised to buy at Goldman; PT $101
• CytomX (CTMX) raised to overweight at Barclays; PT $7
• Glaukos (GKOS) raised to buy at BTIG; PT $61
• Hyatt (H) raised to buy at Truist Secs; PT $106
• Incyte (INCY) raised to outperform at RBC; PT $90
• Limelight Networks (LLNW) raised to buy at Truist Secs; PT $7
• MYT Netherlands Parent ADRs (MYTE) raised to buy at SocGen; PT $25
• Minto Apartment (MI-U CN) raised to outperform at National Bank
• Mister Car Wash (MCW) raised to overweight at Morgan Stanley; PT $20
• Northland Power (NPI CN) raised to outperform at BMO; PT C$41
• Qiagen (QGEN) raised to buy at DZ Bank; PT $59.42
• Quaker Houghton (KWR) raised to buy at Seaport Global Securities
• Six Flags (SIX) raised to outperform at Oppenheimer; PT $54
• Snowflake (SNOW) raised to outperform at William Blair
• Sunstone Hotel (SHO) raised to overweight at Morgan Stanley
• Under Armour (UAA) raised to outperform at BMO; PT $25
• Vale ADRs (VALE3 BZ) raised to sector perform at RBC; PT $17
• Vtex (VTEX) raised to buy at Goldman; PT $16
• Zscaler (ZS) raised to overweight at Morgan Stanley; PT $325

DOWNGRADES:

• Airbnb (ABNB) cut to hold at Gordon Haskett
• Altice USA (ATUS) cut to underperform at Exane; PT $14
• Andlauer Healthcare Group (AND CN) cut to sector perform at RBC; PT C$56
• Atlassian (TEAM) cut to hold at Erste Group
• Brandywine Realty (BDN) cut to hold at Truist Secs; PT $15
• Charter Communications (CHTR) cut to neutral at Exane; PT $672
• Choice Hotels (CHH) cut to underweight at Morgan Stanley; PT $136
• Dollar General (DG) cut to equal-weight at Morgan Stanley; PT $225
• Dream Office REIT (D-U CN) cut to sector perform at National Bank
• Duke Realty (DRE) cut to hold at Truist Secs; PT $63
• Gap (GPS) cut to underweight at Morgan Stanley; PT $14
• Graphic Packaging (GPK) cut to underweight at KeyBanc; PT $17
• LyondellBasell (LYB) cut to neutral at Atlantic Equities; PT $113
• Neurocrine Bio (NBIX) cut to sector perform at RBC; PT $90
• Ovintiv (OVV) cut to neutral at JPMorgan; PT $53
• Selectquote (SLQT) cut to equal-weight at Barclays; PT $9
• Sportradar Holding (SRAD) cut to equal-weight at Morgan Stanley; PT $19
• eHealth (EHTH) cut to equal-weight at Barclays; PT $22
• iCAD Inc (ICAD) cut to neutral at Guggenheim

INITIATIONS:

• AdTheorent Holding (ADTH) rated new buy at Needham; PT $10
• AutoNation (AN) reinstated overweight at Wells Fargo; PT $135
• Brickell Biotech Inc (BBI) rated new buy at HC Wainwright; PT $2
• Columbia Sports (COLM) rated new neutral at Seaport Global Securities
• CureVac (CVAC) rated new market outperform at JMP; PT $52
• Deckers Outdoor (DECK) rated new buy at Seaport Global Securities
• Dole (DOLE) reinstated buy at Goodbody; PT $21
• DoorDash (DASH) rated new neutral at Davy
• E. Automotive (EINC CN) rated new buy at Laurentian Bank; PT C$25
• Finward (FNWD) rated new outperform at Hovde Group; PT $56
• Foot Locker (FL) rated new buy at Seaport Global Securities; PT $59
• Independence Realty (IRT) rated new overweight at Barclays; PT $30
• Joby Aviation (JOBY) rated new equal-weight at Barclays; PT $6
• Kiwetinohk Energy (KEC CN) rated new sector outperform at Peters & Co
• Marathon Digital Holding (MARA) rated new buy at BTIG; PT $50
• Marqeta (MQ) reinstated neutral at Goldman; PT $18
• Melco Resorts ADRs (MLCO) rated new hold at Jefferies; PT $10.10
• Nike (NKE) rated new buy at Seaport Global Securities; PT $175
• Pardes Biosciences (ALU FP) rated new buy at Jefferies; PT $25
• Renalytix ADRs (RENX LN) rated new buy at HC Wainwright; PT $30
• Sernova (SVA CN) rated new speculative buy at Industrial Alliance; PT C$3
• SoFi Technologies (SOFI) rated new neutral at Goldman; PT $16
• Tilly’s (TLYS) rated new buy at Seaport Global Securities; PT $18
• Up Fintech Holding ADRs (TIGR) rated new buy at Daiwa; PT $6.60
• Vertical Aerospace (EVTL) rated new underweight at Barclays; PT $7
• Vtex (VTEX) rated new overweight at Piper Sandler; PT $13
• Westlake Chemical Corp. (WLK) resumed buy at deutsche Bank; PT $125

David Wienke

Cabrera Capital Markets, LLC