Scotiabank strategist Hugo Ste-Marie recently traveled through Montreal, Toronto and into Mexico, discovering a lot of very confused institutional portfolio managers along the way.
The strategist found that fund managers have very little conviction as to the global economic backdrop for the remainder of the year. Managers are roughly evenly split between a hard landing, soft landing or no landing - no economic pause at all.
There is also little conviction in terms of sector positioningm according to Scotiabank. Most portfolios are neutrally positioned - neither emphasizing the defensive sectors that would have outperformed in February nor the more aggressive, growth-oriented stocks that would have surged in January.
When 2023 began, the risk of downward profit guidance was arguably the most important issue for global investors. Mr. Ste-Marie reports that most managers are positioning for a mild earnings decline so market volatility will likely intensify if deeper cuts materialize.
Scotiabank recommends investors maintain defensive positioning. “Our main concern remains the timing of the recession as we still doubt the economy will easily swallow 500+ [basis points] of tightening,” he wrote. The team’s quantitative analysis points to overweight positioning in cash, at least until the Federal Reserve is done raising rates, with an underweight in bonds and equal weight in equities.
-- Scott Barlow, Globe and Mail market strategist
This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.
Stocks to ponder
TC Energy Corp. (TRP-T) Shares have recently fallen out of favour with investors, but portfolio manager Robert Gill explains why he believes this would be the right time to add the energy infrastructure company to any investment portfolio.
Why Canadian tech stocks could see a surge of takeovers
The drubbing across the entire IT space in North America has investors largely ignoring the same startups they were obsessed with two years ago. But there are opportunities growing where few are looking. With discounts of 50 to 75 per cent from previous highs not uncommon, lots of small-cap Canadian tech companies are priced to sell, as Tim Shufelt reports.
This self-directed investor has been beating Buffett for decades. Here’s his portfolio
Chris Rees was featured in The Warren Buffetts Next Door, a book about self-directed investors outperforming the market. It’s a feat that Mr. Rees continues to accomplish with ease. Now in his 70s, he continues to invest in deep-value stocks – those selling for less than the break-up value of the company – on which he has reported an average annual return of 18 per cent for the past 31 years. That beats even Warren Buffett’s track record. Larry MacDonald tells us about his current portfolio - and how he’s planning to leave a legacy.
It’s time to guard my RRIF portfolio against the difficult investing environment
These days, no investment is safe – not even cash, whose purchasing power is eroded by inflation. Last year was one of the most difficult for investors in a generation. This year should be somewhat better, as long as inflation keeps moving down and the central banks don’t go on another rate-increase spree. But we won’t know that until 10 months from now. In the meantime, we need to pay close attention to RRIF portfolios with a view to minimizing risk and preserving capital. Gordon Pape tells us about the latest adjustments to his model RRIF portfolio.
Five reasons to look hard at a 5-per-cent one-year GIC
If you’re hunting for the best GIC yields right now, check out the one-year term. A good variety of issuers of guaranteed investment certificates still offer returns of 5 per cent or more for one year. Rob Carrick presents five reasons why this GIC option could make sense in the current financial environment.
Investors step into U.S. bank stocks, but with some caution
U.S. bank stocks have been attempting a comeback so-far this year after a more than 20 per cent fall in 2022, fueled by hopes that the Federal Reserve will succeed in taming inflation without causing an economic catastrophe. But, as Reuters reports, some investors are circumspect as banks themselves warned during earnings season in January that they expect higher loan losses and weaker demand for borrowing.
Clock ticks on lofty U.S. stocks
Analysts agree that U.S. equity valuations are expensive, nominally and relative to history and overseas peers. Reuters columnist Jamie McGeever reports that the only real debate over a coming correction is its timing and scale, even if U.S. stocks still end the year higher.
Also see: Defensives may not be safe place to hide as U.S. stock market stumbles
Canadian dollar forecasts stay upbeat as analysts eye global recovery
Analysts are sticking to their forecasts for a stronger Canadian dollar over the coming year, expecting an improved global economy and less central bank uncertainty that would boost the commodity-linked currency, a Reuters poll showed on Friday.
Chinese shares eye earnings boost from re-opening over coming months
Chinese stocks could get some respite in the coming months after a big decline in February, reports Reuters, as companies begin to enjoy a post-reopening earnings revival and as investor optimism over growth returns.
Others (for subscribers)
The highest-yielding stocks on the TSX, plus risk data
John Heinzl’s model dividend growth portfolio as of Feb. 28, 2023
Number Cruncher: Six Canadian firms set to gain from a manufacturing shift
Number Cruncher: 24 cheap but well-rated Canadian ETFs
Friday’s analyst upgrades and downgrades
Thursday’s analyst upgrades and downgrades
Director buys after Canadian Tire reports fourth-quarter results
Why this money manager is betting on global food and entertainment giants
Population ‘moving south in droves’ creates opportunities for U.S. real estate investments
Are you a financial advisor? Register for Globe Advisor (www.globeadvisor.com) for free daily and weekly newsletters, in-depth industry coverage and analysis.
What’s up in the days ahead
David Berman will share his thoughts on this past week’s earnings from the big Canadian banks. Ian McGugan will explore the possibility that inflation and interest rates could remain high for years to come. And Rob Carrick compares bond offerings in the latest installment of his ETF Buyers’ Guide.
A manic March: World market themes for the week ahead
Click here to see the Globe Investor earnings and economic news calendar.
More Globe Investor coverage
For more Globe Investor stories, follow us on Twitter @globeinvestor
Compiled by Globe Investor Staff