Markets Focus

It was a mixed trading day as traders returned from their Labor Day Holiday. Growth stocks had a good run as Nasdaq Composite closed at a record high while S&P 500 and Dow retreated. Cyclical stocks such as industry and energy were lower, while growth stocks in technology and communication services remain resilient.

The 10 Year Treasury Yield is back up to 1.37%, as Pika World maintains an outlook on a higher yield environment.

Bitcoin: A massive Sell-Off

What is supposed to be a rally turned out to be a rout. Now, it is settling around $47,000, which is 9% down within 24-hour. Some attributed to massive profit-taking after prices had soared since July. However, it could also be related to the sell-the-news trend after El Salvador became the first country to use Bitcoin as their legal tender with the dollar.

Likewise, we have read about reports of outages and some “unscheduled maintenance” seen in Bitfinix. Coinbase also experienced trouble during the noon trading hours.

Some is pointing to consolidation as the sell-down may be a minor setback. However, Pika World is looking keenly at the $44,000 support level. If we do fall below this level, it will likely be a test of the 50-day moving average.

Emerging Markets On a Weak Note

What is seen as a highlight for the year since to have some shine fading. Emerging market stocks have underwhelmed many investors. In particular, we have seen the MSCI Emerging Markets Index fallen by about 8% from the Feb peak.

The pressure on return is primarily attributed to China’s weakness, given the extensive reliance on China by the index. We have observed how the non-manufacturing and PMI indexes had declined considerably. With the rise of Covid 19 cases hurting growth, especially in the services sector, market participants are looking at China’s monetary policy for comfort.

Tesla: Evolving to a Mature Company?

It seems to have hit a roadblock in the corporate culture of the company. With the introduction of new models, increased capacity across different geographies, the hiring of new employees means a more complex corporate structure is facing the company on a backdrop of the ongoing pandemic.

There’s the reason why Elon Musks had a chat with his employees.

It is perhaps a piece of good news; after all, tidying up and communicating plans is crucial to align the workforce. But, unfortunately, expansion to the bottleneck has seen Cybertruck delayed-release. This put Tesla in an unfavourable position given that it is lagging behind Ford Motor, General Motor, and Rivian in the competition to launch an all-electric trunk.

On the flip side, we hear about the $25,000 low-cost model car, which is a bright spot since it opens up to a larger addressable market. However, in the longer term, Tesla key strategy is to improve margin by effectively bringing down the battery costs.

What’s on the Menu Today?

At 10 pm, we will receive the JOLTs Job Openings for July, which is expected to hold at 10 million, about the same level as the prior period.

It is 8 September, Wednesday, 7.55 am in Singapore and 7.55 pm in New York. It has been a long break, and we hope all friends have a splendid week ahead!