Cabrera Capital Daily Game Plan

Friday January 21, 2022                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
10:00ET Leading Economic Indicators; 11:00ET Yellen speaks at Davos, Biden speaks on chip shortage

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

TODAY’S HIGHLIGHTS:   

• FBI Raids Home, Campaign Office Of Democrat Biden Critic Rep. Henry Cuellar
• Singing legend Meat Loaf has died at the age of 74 – reportedly after catching Covid
• U.S. RAISES FEDERAL EMPLOYEE MINIMUM WAGE TO $15/HOUR: AXIOS
  

Global stocks fell as investors assessed shaky company earnings and the prospect of higher US borrowing costs. Elevated energy costs and rising
prices of other goods amid supply-chain bottlenecks have added to worries about faster-than-expected monetary-policy tightening.  BlackRock Investment Institute strategists wrote in a note that “Monetary policy cannot stabilize both inflation and growth: it
has to choose between them.”  Global bonds rallied today with investors seeking havens from a tech stock sell-off and concern over increased US-Russia tension. A report yesterday that the US is allowing some Baltic NATO states to send American made weapons
to Ukraine raised concerns about a standoff with Russia.  Tensions are high ahead of a meeting today in Geneva between the top US diplomat, Antony Blinken, and Russia’s foreign minister.                  

US EQUITIES: 
  $3.3T of Options Notional Expiring Today; According to Bespoke, this was one of the worst months for last-hour trading on
record.    

US equity futures are lower with Nasdaq again leading declines. S&P futures did get a bounce off its overnight low after testing its key 200
day moving average for the first time since June 2020.  The tech heavy Nasdaq fell further into correction territory driven by disappointing earnings from Netflix after the bell.  Today’s options expiration is in focus, as roughly $3.3T of notional value expires,
which will likely add to volatility.

E-mini S&P futures -0.5%, Nasdaq -0.9%, Russell 2000 futures -0.3%, Dow futures -0.3%.  The 200dma in SPX is around 4427 area.

Netflix and Peloton Interactive, two of the highest-profile stars of the lockdown era, both plunged Thursday, the latest sign that investors
have moved on from the so-called pandemic trade. Netflix shares were down 21% in premarket on Friday, its biggest drop in a decade, on disappointing subscriber outlook. Peloton shares were up 7% in premarket after sinking 24% yesterday.  Other stay-at-home
names have been suffering  as well. Zoom is trading at the lowest level since May 2020, as is DocuSign. Both slid further after the Netflix results.  In other news, Intel (-0.25%) plans to spend $20 billion on a chipmaking hub on the outskirts of Columbus
Ohio, which the company expects to grow to be the world’s biggest silicon-manufacturing site. Apple’s (AAPL -0.6%) price target and estimates are raised at Wells Fargo ahead of the tech giant’s results next Thursday. PPG fell 3% post-market after the chemicals
maker forecast adjusted earnings missed estimates.  International freight company CSX fell over 3% as a Q4 profit and revenue beat was overshadowed by a miss in operating ratio. Schlumberger (SLB -0.5%) and IHS Markit (INFO +0.05%) earnings beat estimates.
PetSmart is in talks to go public through a blank-check company backed by KKR.

Peloton’s stock plunges 24% following a report it will pause production of bikes and treadmills.

Small caps have been underperforming. 10% is considered a correction, 20% a bear market…The Nasdaq 100 Stock Index has fallen 9% this month,
which is on pace to be the worst since 2008.

European shares are broadly lower with every major sector in the red.  The Stoxx Europe 600 Index touched the lowest level in a month weighed
by miners, tech, travel & leisure and automakers.  Parts of Europe are emerging from emergency coronavirus measures even as Germany joined the U.K., France and Italy in recording more than 100,000 new infections in a single day. Investors will focus next week
on how quickly restrictions come off amid some evidence that the crest of the wave is passing.
U.K. retail sales plummeted in December as omicron kept shoppers at home. The volume of goods sold in stores and online fell 3.7%
from November, the biggest slide since January 2021’s lockdown and way more than forecast.  Nordic Entertainment Group shares fall as much as 8% as disappointing user growth numbers from Netflix triggered negative read across to other streaming platforms.
Playtech shares drop 16% after JKO Play said it does not intend to make an offer for the British gambling firm. Siemens Energy shares plunge as much as 14% after the renewable energy company slashed its full-year guidance signaling that soaring raw materials
costs will crimp margins. Boiron shares jump as much as 11% on upgrades. Stoxx 600 -1.6%, DAX -2%, CAC -1.7%, FTSE 100 -1.1%. Basic Resources -3.2%, Autos -2.7%, Tech -2.5%, Travel & Leisure -2.5%.

Asian shares fell amid the risk-off sentiment as global inflation concerns and the impact on borrowing costs weighed on
technology stocks. The MSCI Asia Pacific Index fell as much as 1.4%, dragged down by shares of chipmakers. Australia’s ASX 200 led the decline in the region, down 2.25%.  China’s central bank lowered the interest rate on a shorter-term emergency policy loan,
the latest in a series of easing measures to spur a slowing economy. Chinese tourism and reopening stocks jumped, as did some Japanese shares, as the nation surprised investors by issuing a broad plan on ways to promote travel. Meanwhile, China vowed to curb
the influence of technology companies and root out corruption tied to the “disorderly” expansion of capital, a sign that authorities may expand a regulatory crackdown that erased more than $1 trillion of market value last year. The Shanghai Composite fell
0.9%, Topix -0.6%, Taiwan -1.75%, Kospi -0.9%. The Hang Seng Index was flat while Jakarta (+1.5%), Philippines (+0.75%, Vietnam (+0.5%) bucked the trend.                 

FIXED INCOME: 
                                       

Demand for havens pushed the 10-year U.S. Treasury yield below 1.80%. Treasury futures are off session highs reached during
Asia trading hours, holding modest gains from the belly to the long end. The moves in the bond market come ahead of a widely anticipated meeting by the Federal Reserve next week.  The spread between two- and 10-year yields hasn’t been this narrow at the start
of a rate-hike cycle since the 1980s, when the Fed did successfully tighten without a recession. But the last attempt during similar circumstances in the late 1990s saw the yield curve invert with the dot-com bust.        

METALS: 

Gold trimmed a weekly gain as inflation-adjusted bond yields continued to advance, diminishing the appeal of the non-interest
bearing asset. Gold has managed to hold steady in 2022 even as central banks turn more hawkish.  U.S. Treasury Secretary Janet Yellen said Thursday she continues to forecast inflation falling close to 2% by the end of 2022. “We still expect broad U.S. dollar
strength, moderating inflation, and rising real yields to weigh on gold over the course of 2022, dragging its price down to $1,650 an ounce by year-end” analysts at UBS Group AG wrote in a note. Spot gold slipped 0.3%, silver also down 0.3% after testing its
key 200 day moving average.    

ENERGY:     

Oil was lower on a surprise climb in U.S. crude stockpiles. The White House also said it can work to accelerate the release
of strategic reserves.  Meanwhile, Morgan Stanley joined the list of banks calling for $100 oil later this year. The bank expects stockpiles to slide even lower by the end of the year, after falling substantially in 2021, according to a research note to clients.
WTI and Brent are down roughly 1.5%.          

CURRENCIES:   
 

Haven currencies outperformed as foreign-exchange markets took their cue from the risk-off mood across markets.  The Swiss
franc strengthened to its highest versus the dollar in a week, outperforming all Group-of-10 peers; the euro saw its biggest gain against the pound in over a month. EUR/GBP gains as much as 0.5%. AUDUSD -0.55%, USDJPY -0.3%, USDCAD +0.2%, USDNOK +0.35%. US$
Index -0.1%.   

Bitcoin tumbled in an extended selloff for cryptocurrencies, falling past $39,000 to its lowest level in more than five
months.  Ether fell below $3,000, losing as much as 11%. Bitcoin has suffered a rocky start to the year and prices are down roughly 40% from the early November peak on rising regulatory threats and concerns around tightening US monetary policy. Regulators
in the U.K., Spain and Singapore this week suggested toughening the rules on crypto-asset promotion to inexperienced investors, while the Russian central bank on Thursday proposed a ban on cryptocurrencies entirely. “At the same time, increased use and adoption
of Bitcoin in high-inflation economies creates a confusing market picture”, according to digital asset research firm Quantum Economics.  NYC Mayor Adams’ First Paycheck Will Automatically Be Converted Into Cryptocurrency Via Coinbase.’  

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 buy at Goldman; PT $24
• Ardagh Metal Packaging (AMBP) raised to outperform at BMO; PT $11
• BankUnited (BKU) raised to outperform at KBW; PT $50
• Beyond Meat (BYND) raised to hold at HSBC; PT $62
• Boise Cascade (BCC) raised to neutral at Goldman; PT $77
• Centennial Resource (CDEV) raised to neutral at JPMorgan; PT $9
• Cloudflare (NET) raised to outperform at Credit Suisse; PT $140
• Commercial Metals (CMC) raised to outperform at Exane; PT $45
• Dollarama (DOL CN) raised to outperform at BMO; PT C$71
• Eli Lilly (LLY) raised to buy at DZ Bank; PT $291
• Eneti (NETI) raised to buy at Jefferies; PT $10
• Louisiana-Pacific (LPX) raised to neutral at Goldman; PT $84
• Moderna (MRNA) raised to neutral at BofA
• Netflix (NFLX) raised to hold at Benchmark
• Oatly Group ADRs (OTLY) raised to hold at HSBC; PT $7.40
• Peloton (PTON) raised to buy at Stifel; PT $40
• Under Armour (UAA) raised to buy at Citi; PT $29

DOWNGRADES:

• Activision Blizzard (ATVI) cut to market perform at Raymond James
• Callon Petroleum (CPE) cut to underweight at JPMorgan; PT $62
• CureVac (CVAC) cut to underperform at BofA; PT $20
• Devon (DVN) cut to neutral at Goldman; PT $52
• Ecolab (ECL) cut to sector perform at RBC; PT $225
• HB Fuller (FUL) cut to neutral at JPMorgan; PT $73
• MAG Silver (MAG CN) cut to sector perform at Scotiabank; PT C$21.29
• Mayville Engineering (MEC) cut to neutral at Baird; PT $13
• Netflix (NFLX) cut to equal-weight at Barclays; PT $425
• Netflix (NFLX) cut to equal-weight at Morgan Stanley; PT $450
• Netflix (NFLX) cut to inline at Evercore ISI; PT $525
• Netflix (NFLX) cut to neutral at Baird; PT $420
• Netflix (NFLX) cut to neutral at Credit Suisse; PT $450
• Netflix (NFLX) cut to sector weight at KeyBanc
• Tal Education ADRs (TAL) cut to hold at BOC Intl; PT $3.81
• Travelers (TRV) cut to equal-weight at Barclays; PT $170

INITIATIONS:

• AeroVironment Inc (AVAV) rated new hold at Berenberg; PT $66
• Brighthouse Financial (BHF) rated new outperform at Wolfe; PT $79
• Carter Bankshares (CARE) rated new neutral at Piper Sandler; PT $17
• Cloudflare (NET) rated new hold at Stifel; PT $113
• Curtiss-Wright (CW) rated new buy at Berenberg; PT $170
• Kratos (KTOS) rated new buy at Berenberg; PT $23
• Latch (LTCH) rated new buy at DA Davidson; PT $11.50
• MGP Ingredients (MGPI) rated new outperform at Cowen; PT $99
• Mercury Systems (MRCY) rated new buy at Berenberg; PT $76
• MetLife (MET) rated new peerperform at Wolfe; PT $70
• NIO Inc. ADRs (NIO) rated new buy at Guosheng Securities; PT $50
• Novavax (NVAX) rated new outperform at Cowen; PT $150
• Principal Financial (PFG) rated new peerperform at Wolfe; PT $79
• Reinsurance Group (RGA) rated new underperform at Wolfe; PT $100
• SmartRent (SMRT) rated new buy at DA Davidson; PT $14
• Vecima Networks (VCM CN) rated new outperform at Raymond James; PT C$24
• Xencor (XNCR) rated new outperform at SMBC Nikko; PT $60
• Zscaler (ZS) rated new buy at Stifel; PT $335

David Wienke

Cabrera Capital Markets, LLC