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Bracing for Inflation | Flow Traders Investment Competition | Week 28


This week, markets have been seized by volatility over fears of returning inflation. The CPI, a measure of inflation in the US has risen 4.2% on a yearly basis which gives it its highest level since February. This inflation is the effect of a strong economic recovery coupled with a loose economic policy. In the stock market, this has resulted in a weekly drop from 1.49% of the S&P 500 and a 0.35% decrease from the NASDAQ. The Fed believes that this inflation is only temporary and is at this moment thus not interested in changing its monetary policy. Europe is also bracing for inflation as the German price index could rise above 3% this year. This has intensified talks about slowing the buying of European emergency bonds. Overall, the European stock markets have fallen in midweek but regained some of their losses by Friday, with the AEX losing 1.99%, the CAC 40 0.10% and the DAX 0.01%. 


The commodities have been booming lately which has been making investors believe that we are entering a new super cycle. Indeed, Copper, Lumber and Iron are all on all-time highs. Their rise has been fuelled by a strong economic recovery and large scale investment plans like Joe Biden’s Green New Deal. Even oil may be heading upwards as its demand could be exceeding its supply. In America the Colonial Petroleum pipelines were hacked and held offline for three days causing fears of oil shortages.


Regarding the Investment Competition, we are finally seeing some shakeups at the top of the ranking with Merx taking the first spot, after Conquistadores Capital suffered a loss of 1.47% this week. Alpha Investments has also dropped out of the top three, with Heeren XIII making its entry by taking the third spot. In fact, Heeren XIII and Floryn were the only groups which managed to gain a positive return this week. Heij Fidelity was hit the hardest with a loss of 6.61%, followed closely by Ares Investment Group which lost 6.59%. Hopefully the marktet will treat our Investment Groups more kindly next week!

Things did not work out so well in our second Investment Competition either, with every group having a negative return this week. Das Kapital stands tall above the rest with an M^2 of 9.91%, with runner up Aurelia scoring an M^2 of -0.33%. Aurelia itself seems to be quite safe in its number two spot, as number three Aethelstan Investments still has some catching up to do with an M^2 of -7.97%. 


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