STATE OF THE MARKETS

Stocks slide as Dollar rebounds. US stocks slid into the red Thursday after reports of mixed earnings. Dow (-0.33%), S&P (-1.21%) and Nasdaq (-2.14%), including Russell (-0.99%) closed lower while Dollar rebounded higher above 100.75 before settling near the 100.50 minor handle. Bonds were sold-off across the board, sending yields higher, with the 10Y benchmark back at 283 basis points.

In the commodities market, crude continued to rise for the third day after news of a phase-in ban of Russian oil imports from the European Union. Inflation fears continue to put strong bids on gold but the holiday-shortened week saw profit taking and settled the precious metal lower, below $1,973.20/oz. Elsewhere, iron ore remained on bids, settling higher above $155.70/tn while investors waited for the China lockdown to ease.

In the FX space, Sterling continues to reign in the short term demand while losing the helm in the medium term to King Dollar. Demand for Euro seemed eased even after the ECB announced an earlier end to the bond buy back program. Demand for the comdolls trio returned to strength across the board.

The US stock markets are closed for Good Friday.

OUR PICK – No New Pick

No new pick going into the holiday weekend. The continuous outflow from the US equities is nothing new to us for the past five months but what caught our attention is the consistent bids for commodities. The fall in bond prices and major indexes accompanied with the rise in Dollar and major commodities is sending a signal that markets are bracing for higher inflation as PPI registered the highest in history. We believe inflation has not peaked.

Trades updates: 

Equities: AUY (19% undervalued, 1.93% yields) remained well bid and we expect to meet the final target in the coming weeks. We remain bullish CTRA (COG) (21% undervalued, 2.04% yields) and revised target to $35.30, T (23% undervalued, 5.68% yields) fell after Wells Fargo revised target lower to $21, MO (21% undervalued, 6.55% yields) has reach first target, VIPS (47% undervalued with 4.79 z-score) remained well bid after UBS maintain neutral rating but reduced target by 10 cents, CRON (22% undervalued with 27.69 z-score) and WBA (31% undervalued, 4.26% yields) spiked to $47 on Wednesday after news of potential bids from India’s Reliance.

FX & Commodities: EUR/GBP hit stop loss, update silver stop at $24.80 and we remain bearish AUD/CAD.

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