Cabrera Capital Daily Game Plan

Thursday March 4, 2021                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES  
8:30ET Weekly Jobless Claims, Productivity (revision), Labor Costs (revision); 10:00ET Factory Orders; 12:05ET Fed Chair Powell speaks at job summit

Weekly jobless claims data is expected to show an increase to 750,000

TODAY’S HIGHLIGHTS:   

• Xi Jinping: “The United States is the biggest threat to our country’s development and security” -NYT
• Apple is being probed by the UK over suspected anti-competitive behavior
  
• Mitch McConnell is working with the Kentucky Legislature on a Senate exit strategy,  possibility that he does not serve out his full term
  
• Fauci: Quite Reasonable To See Some Return To Normal By Autumn
  

Global equity markets are lower across the board with the MSCI world equity index slipping 0.5%. The rise in inflation expectations and long-term
borrowing costs is stoking volatility and raising concern that a prolonged rally in equity markets may be in jeopardy. Rising yields have started to draw the attention of US Federal Reserve officials, with focus today on Fed Chair Jerome Powell’s comments.
Germany agreed to a phased easing of coronavirus curbs along with an “emergency brake” to let authorities reimpose restrictions if case numbers spike again.  However, daily cases are creeping up again and only around 5% of the population have received a first
vaccine shot.   

EQUITIES: 
 Companies reporting earnings include Broadcom, Cooper Cos, Costco, Gap, Kroger  

US equity futures are lower as traders await remarks from Federal Reserve Chairman Jerome Powell following a renewed bout of bond volatility.
 The employment situation may be one of the things that Powell will use to reaffirm that the central bank is determined to keep monetary policy accommodative. The Fed Chair is expected to say the central bank will be patient in pulling back its support for
the economy after the pandemic has ended. The Senate enters the final stages of debate on President Biden’s pandemic relief bill today, with passage in the chamber likely pushed off until the weekend. If House Democrats find major changes unacceptable, it
may delay final passage further. Warnings that a militia group may be plotting to attack the Capitol today caused the House to cancel meetings.      

E-mini S&P futures -0.15%, Nasdaq -0.25%, Russell 2000 futures -0.2%, Dow futures -0.1%.  E-mini S&P broke the ascending trend line overnight,
before climbing back. A settle below the 50dma in SPX would likely see some downside momentum, but it Powell may save the day… 3817 is initial support in SPX to start the day.

Consumer Discretionary sector underperformed again

Ark Investment CEO Cathie Wood said Wednesday that Zoom Video Communications is “probably undervalued.” ZM broke its 200dma and would likely
see a bounce today if it can gain a settle back above it.

European shares are lower, ending a three day rally. The Stoxx 600 Index slipped 1%, with miners and technology shares retreating the most among
sectors. The technology sector fell 3% as rising yields turned the spotlight on frothy valuations. ASML Holding dropped over 4% despite news that it had extended a deal to sell chip manufacturing equipment to China’s largest chipmaker SMIC. German broadcaster
Prosiebensat.1 Media fell over 7% after it forecast its revenue and profits would grow in single digits this year. Gains in defensive sectors such as utilities, food & beverage and real estate helped limit losses. The UK construction industry rebounded more
than expected as data showed the Markit Construction Purchasing Managers’ Index rising to 53.3 from 49.2 after a tax break was extended for home buyers. Basic Resources are down 4.5%, Retail and Bank sectors -1.3%. Utilities +1%, Food & Beverages +0.5%.

Asian stocks tumbled as investors sold technology companies, which outweighed gains in banking shares. Tencent and TSMC were the biggest drags
on the MSCI Asia Pacific Index, while Meituan and SoftBank each slid by at least 5%.  China led losses in Asia, with the CSI 300 Index falling 3.15%. Hong Kong and Japan fell more than 2%, while only Singapore was able to gain. Shares in India fell 1.1%, 
dragged down by metal and financial stocks. Japan’s Nikkei index fell to its lowest level in a month (-2.1%), as investors sold off heavyweights including SoftBank and clothing store operator Fast Retailing (-5.45%). Hitachi Zosen surged 19.5% after local
media reported that the energy and infrastructure company had developed a high performance solid-state battery.

FIXED INCOME: 
                                       

Buyers of long-dated Treasuries overnight with yields little changed across front-end of the curve, flattening 2s10s, 5s30s by 2bp and 2.6bp.
The five-year breakeven rate held close to 2.5% today after topping it yesterday for the first time since 2008. Investors are waiting to see if Federal Reserve Chairman Jerome Powell will address concerns about the risk of a rapid rise in long-term borrowing
costs when he speaks at a job summit today.  There has been speculation in the market about the possibility of "Operation Twist", which would see the Fed simultaneously increasing its holdings of longer-term debt and reducing its ownership of Treasury bills.
Such a move has not been openly discussed by Fed members.

30 year yield continues to hold key Fibonacci resistance.

METALS: 

Gold inched up 0.4%, buoyed by a temporary reprieve in treasury yields, but a firm dollar limited gains. Investors are looking for clues on policy
outlook when Jerome Powell speaks at a virtual Wall Street Journal Jobs Summit at 12:00ET.  Base metals extend lower with copper dropping almost 5%.  The plunge was led by nickel, which fell by the most in four years.

ENERGY:  

Oil declined as investors await today's OPEC+ meeting. Yemen’s Houthi forces said today that they had fired a missile at a Saudi Aramco facility,
which helped limit losses.  OPEC and its allies kept traders guessing about their next move, after a day of preliminary talks offered few clues as to whether the market will get the April supply increase it has been expecting. Russia has been insisting on
raising output to avoid prices rising any further and lending support to shale oil output from the United States.  In the US, despite a record surge of more than 21 million barrels in crude oil stockpiles last week, gasoline stocks fell by the most in 30 years
as refining plunged to a record low because of the Texas freeze.

CURRENCIES:  

The US Dollar Index is holding on to gains as a renewed sense of calm in the Treasury market underpinned sentiment. The dollar hit a seven-month
high against the yen as a more orderly rise in US Treasury yields lent support ahead of a speech by Federal Reserve Chairman Jerome Powell that may determine the trend for global bond markets and currencies. The pound fluctuated as investors digested the budget
presented by Chancellor Rishi Sunak, who yesterday put off steps to tackle the UK’s record budget deficit for another two years, focusing instead on stimulus.

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

Equity movers in early trading, as of 7:35ET:

Advancers

• SKT +26.8% (+$4.75)
• CCNC +7.2% (+$0.43)
• REZI +7% (+$1.83)
• RMNI +6.3% (+$0.55)
• CLXT +6.1% (+$0.60)
• UNFI +6% (+$1.70); UNFI Extends Partnership With Whole Foods to Sept. 2027
• CLNE +5.6% (+$0.69); Clean Energy, Total in Carbon-Negative Fuel, Infrastructure JV
• CVAC +4.7% (+$3.94); Novartis to Make Up to 50 Million CureVac Covid Shots This Year
• SPLK +4.4% (+$6.30); Splunk Shows Better Execution After Recent Weakness: Street Wrap
• AEO +4.2% (+$1.07); American Eagle Gains as Analysts Buy Into Profit Improvement
• GLPG +4.2% (+$3.43); Galapagos Data May Help Bowel Drug U.S. Approval, Jefferies Says
• TCOM +3.9% (+$1.56)
• FVRR +3.5% (+$8.52); Fiverr Turns Positive Premarket After Withdrawing Stock Sale
• DKNG +3.4% (+$2.25); UFC & DraftKings in Sportsbook, Fantasy Deal in U.S., Canada

Decliners

• BZUN -2% (-$0.92); Baozun Reports Earnings: Chart of Net Revenue vs Estimates
• DOYU -2.3% (-$0.33)
• DAO -2.3% (-$0.77)
• VIPS -2.4% (-$0.96)
• MNSO -2.4% (-$0.70)
• SDGR -21.3% (-$21.1)
• QTT -20.2% (-$0.77); Qutoutiao 4Q Cash And Cash Equivalents 494.5M Yuan
• YEXT -17.8% (-$2.94); Yext Inc. 1Q Revenue Forecast Misses Estimate; Yext Cut at William Blair
• KMPH -16% (-$2.15)
• VRM -15.6% (-$6.85); Vroom Sinks as Results Highlight Execution Risk: Street Wrap
• TELL -11.5% (-$0.30)
• OKTA -10.5% (-$25.2); Okta Slumps After Tepid Outlook and Big Acquisition: Street Wrap
• YGMZ -9.6% (-$1.02)
• WNW -8.9% (-$1.09)

David Wienke

Cabrera Capital Markets, LLC