CRONOS GROUP INC. - Equities Dipped Further on Virus Resurgence - 04/21/2021 (GMT)

STATE OF THE MARKETS
Equities dipped further on virus resurgence. Global equities dipped further on Tuesday as rising covid cases in India sparked concerns for virus resurgence. S&P (-0.68%), Dow (-0.75%), and FTSE (-2.00%) ended the day in red; while Nikkei (-2.01%) gapped down on open and continue to slide lower as of this writing.  A rush to bonds safety saw the US 10Y yields spiked to 1.66% before settled at 1.57% – the lowest in 7 weeks, benefitting the Greenback.

Crude was sold-off as news hit the wires that the India covid variants, B.1.617 has deadlier features that might put the global re-opening at risk. India, the third largest oil importer, had already registered a falling import of 12.7% YoY. Crude settled around $62.45/bl as New York closed. Flight to safety and inflation concerns also saw gold erased earlier losses to close above $1,777.25/oz.

In the FX space, crude weakness sent Loonie to the back burner as the safe haven currencies captured bigger demands. King Dollar closed higher against a basket of six major currencies as the 91 mark of the Dollar index seemed well defended. A risk off tone is evident as Yen took center stage while the Comdolls running on the back foot. Further risk off would see EUR rally against Pound.

OUR PICK – Cronos Group (CRON, NASDAQ)
Gearing for Q1 earnings report. Late January we picked Cronos to short and closed on breakeven as the share skyrocketed to over $15 but our longs have hit target. Now that price slid lower close to Morning Star’s fair value around $7, demand might be back as more US states legalized recreational use of marijuana. S&P GMI see 27% upside in fair value which should put the stock back around $9.80. Nevertheless, current risk-off sentiments in the equities market might hold back any new longs. We remain bullish gearing into Q1 earnings report on May 6th as the stock had net institutional purchases of 2.3 million shares. We prefer buy stop @ 8.50


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