State of The Markets

Author: MFMTeam   |   Latest post: Fri, 17 Sep 2021, 9:20 AM


Stocks Dipped After Inflation Slowed

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Stocks dipped after inflation slowed. US stocks took a dip on Tuesday after reports showed that inflation cooled more than expected (+0.3% vs +0.4%) in August. The Annual figure cooled as well (5.3% vs 5.4%) but remained well above Fed’s 2% target. Dow (-0.84%), S&P (-0.57%) to Nasdaq (-0.45%) and Russell (-1.37%) lost bids as investors weighed Fed’s tapering this November. Yields of the 10Y benchmark slipped to a three week low of 1.28% while the 30Y dropped to 1.84% as the Dollar index is firmed above its 21 days WMA circa 92.50 mark.

In the commodities market, crude was little changed, flirting around the $70.50/bl after OPEC projected that  oil demand will exceed pre-pandemic level next year. On the sides, gold jumped back and closed above the $1,800/oz major handle as investors saw that Feds might not be in a rush to raise rates as inflation cooled.

In the FX space, fear was around the corner for short and medium term accounts as Yen, Swiss and Dollar dominated demand alongside Euro and Sterling, while the commdolls were being offered. The sentiment was shared in long term accounts as Dollar overbid Aussie while Yen overbid Sterling. King Dollar is at a cross road and industrial production will provide a clue on Wednesday.

OUR PICK – No New Stock Pick.

No new stock picks as we are at maximum equities exposure. Currently we are holding 8 stocks – 7 longs and 1 short – and have approached maximum equities exposure. We are long AUY with dividends yielding 2.82%, T at 7.61% yields and COG yielding 2.36%. We have booked some profits and reduced exposure in COG as we expect a pullback in the making.

CLVS is currently 23% overvalued with -7.19 z-score but trading central projects a rebound towards 5.62-5.87 where we will most likely close our positions.

We remain bullish with VIPS (41% undervalued with 5.59 z-score), GT (47% undervalued with 1.28 z-score) and CRON (16% undervalued with 9.18 z-score) while bearish GE (26% overvalued with 1.36 z-score).


This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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