Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
Merrill Lynch had added Facebook to its US1 list of top American stock picks,
"[Snapchat] metrics are now available and user growth trends suggest less competitive pressure than expected … as for the ad load growth slowdown in 2H17, we believe the risk is well understood."
"@carlquintanilla BofA puts $FB on US1 list, saying Snap isn't as big a competitive threat as expected." – (research excerpt) Twitter
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BMO chief strategist Brian Belski predicts that U.S. stocks will outperform the S&P/TSX Composite this year,
"Following Canada's first annual outperformance relative to the U.S. since 2009, Canadian stocks will likely take a back seat to their U.S. neighbors again in 2017. Indeed, a broad policy shift in the US, especially relative to Canada (less regulation and renewed fiscal stimulus) will likely see asset flows swing back to the US at some point during the year."
Mr. Belski favours Canadian financials, industrials and materials stocks. In the U.S., he recommends overweight positions in the same sectors, with the addition of health care stocks.
"Sector Overview [Canada] – February 2017" – BMO
"Sector Overview [U.S.] – February 2017 – BMO
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Crude prices have been under pressure in recent days as the inventory glut and U.S. production continue to build,
"Declines came on the back of unexpectedly big increases in U.S. fuel inventories, as reported by the American Petroleum Institute (API) on Tuesday … 'If the official data from the U.S. Department of Energy were to show a similar inventory build ... U.S. crude oil stocks would be catapulted to almost a record level,' Commerzbank said in a note… Gasoline stocks rose by 2.9 million barrels, compared with expectations for a 1.1-million-barrel gain."
"Oil prices fall on bloated U.S. fuel inventories, stalling China demand" – Reuters
"US crude oil output expected to grow in 2017" – Trend News
"Oil Falls to Two-Week Low After Data Shows U.S. Stockpile Gains" – Bloomberg
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Bloomberg's Sid Verma presents an interesting theory on why equity markets are expensive, namely that the share buyback trend and lack of public stock issuance have created a lack of supply of equities relative to the dollar amount of investment,
"Net supply of global equities, for example, may flatline this year after falling into negative territory in 2016 for the first time on record, according to JPMorgan Chase & Co. Meanwhile, bond investors in Europe, the U.S., and emerging markets are poised to become cash-rich in the coming months thanks to an avalanche of maturing debt -- a dynamic which should help them soak up fresh sales.
"In both the equity and bond markets, the implications are the same. A benign supply outlook is a positive market technical for corporate financing conditions around the world that may lend support to asset valuations."
"Supply Is the Technical Factor Behind Global Rally in Markets" – Bloomberg
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Tweet of the day: "@davidakin Waking up to Bombardier loan? Reminder: We don't know how much it paid back from earlier federal loans bit.ly/2kH4Lyr " – Twitter
Diversion: "Albert Camus on Strength of Character and How to Ennoble Our Minds in Difficult Times" – Brainpickings
Scott Barlow