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The Scotiabank GBM Canadian Spending Tracker provides a far more up to date and detailed profile of domestic retail spending than Statistics Canada reports. It’s currently pointing to a major post-COVID change in consumer habits that benefits specific stocks covered by Scotiabank research.

The Spending Tracker uses the bank’s proprietary debit and credit card data to estimate the strength of retail activity while simultaneously tracing the economic sectors getting the most and least consumer attention. The index is updated to the last week of June, a stark comparison to the StatsCan retail sales data which has only been reported until the end of April.

Scotiabank strategist Jean-Michel Gauthier sees a clear pattern in recent results: a shift from pandemic winners like home renovation and eating at home, to pandemic losers including travel, entertainment, movies and restaurants.

The research team have uncovered five winners arising from recent trends and these are Restaurant Brands International (QSR-T), Dollarama (DOL-T), Air Canada (AC-T), Cineplex (CGX-T) and BRP Inc. (DOO-T)

Restaurant Brands and Air Canada are clearly part of the pandemic recovery trend as trips to Tim’s and abroad ramp up. Mr. Gauthier estimates that consumers are spending 50 per cent more at Air Canada this year compared with 2019.

Movie theatre revenues have doubled year to date, albeit from small numbers. Cineplex revenue for the first half of 2023 was 121 per cent higher than in 2019. The company’s focus on international movies has generated revenue growth above the industry average.

In Dollarama’s case, management’s ability to control costs and pass inflation through to customers leaves the stock with high rankings for growth and quality, according to Mr. Gauthier.

Scotiabank believes BRP’s wealthier clientele will protect the company from the worst effects of rising borrowing costs and that new product releases and the tackling of new markets will provide growth.

For investors, the change in character of domestic consumption patterns is the important takeaway from the Scotiabank GBM Canadian Spending Tracker results as companies benefitting from activities outside the home continue to gain leadership.

-- 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.

The Rundown

Might we see GIC rates hit 6 per cent this summer?

It was just about a year ago that the interest rate on guaranteed investment certificates hit the 5 per cent mark. This summer, we could see 6 per cent, says Rob Carrick.

What bonds offer the best returns right now? The answer is an unusually easy one

Yield curves are particularly important lately because curves in the industrialized world are inverted – meaning that interest rates for shorter terms are higher than those for longer terms. But the bond yield curve will eventually normalize - it always does. And as we await that day, there’s an opportunity that veteran fund manager Tom Czitron thinks is an unusually easy one for bond investors to take advantage of for juicy future returns. (Hint: it has to do with the maturity dates of the bonds you buy.)

Explainer: U.S. yield curve hits deepest inversion since 1981. What is it telling us?

David Rosenberg says it’s time to deploy profits from the U.S. stock market to the TSX

The S&P 500 is expensive: Its price-to-earnings ratio is nearing the top 20 per cent of its historical levels. And as David Rosenberg points out, history shows that now is not the time to be chasing the excessive price of the index. His advice: start shifting funds from the U.S. market into the much cheaper Canadian stock market.

How to beat the pros, Part 6: An off-the-radar stock from overseas that we think has great potential

Jason Del Vicario and Steven Chen are back with the final installment of their series looking at their strategy for picking outperforming stocks. This one profiles a Japanese stock they are liking a lot.

Undecided? Bonds get squeezed out

Unsure which way the cookie crumbles from here - investors are being tempted to drop the bond. This was supposed be the year when the ‘safe’ investment buffer outperformed - recession and rate cuts were due and locking in hefty long-term, investment-grade coupons and sub-par bond prices were expected to easily trump ebbing cash returns while avoiding assumed company earnings turbulence in equity. It hasn’t worked quite like that. As the second half of the year kicked off this week, something of a capitulation of the bond trade seems to be underway. Mike Dolan of Reuters tells us more.

Also see:

When the Fed stops, keep calm and carry on buying stocks

Retail traders pile into U.S. stocks; focus shifts to EVs from AI

ESG equity funds suffer big outflows, buffeted by market jitters and U.S. backlash

Equity funds with an environmental, social and governance (ESG) tilt suffered a large loss of investors in the three months to end-June, dragging the sector into a rare net outflow for a first half of the year, data showed. Outflows were driven by economic and regulatory worries in Europe, analysts said, and by concerns connected to an anti-ESG backlash in the United States, where funds saw their fifth consecutive quarter of net outflows, as Reuters reports.

Others (for subscribers)

Markets and economists react: How views have shifted on the BoC’s next moves after June’s surprising job gains

The highest-yielding stocks on the TSX, plus risk data

Number Cruncher: Six sustainable oil and gas dividend stocks

Friday’s analyst upgrades and downgrades

Thursday’s analyst upgrades and downgrades

Friday’s Insider Report: CEO invest almost US$800,000 in this energy stock

Minto Apartment REIT CEO and CFO buy on the dip

What the Charts Say: Bullish on Alamos Gold Inc.

Globe Advisor

Why this $6-billion money manager remains fully invested despite recession threats

How Canadian fund managers are playing Japan’s market rally

Canadian investors have high hopes for returns after steep downturn

Are you a financial advisor? Register for Globe Advisor (www.globeadvisor.com) for free daily and weekly newsletters, in-depth industry coverage and analysis.

Ask Globe Investor

Question: What do you think of High Interest Savings Account (HISA) ETFs in the current investment environment? Any suggestions about where to get the best rates? – Dale Y.

Answer: These ETFs have become very popular with investors recently, with $3.8-billion in new money pouring in during the first four months of the year, according to National Bank Financial.

HISA ETFs typically pay higher rates of return than savings accounts or money market funds, because of the negotiating power of their sponsors due to the large cash inflows.

Several companies offer them. One of the best-known is the CI High Interest Savings ETF (CSAV-T), which trades in a tiny range of $50.00-$50.10. It closed on June 30 at $50.06. The payout varies from one month to the next. The trailing 12-month total is $2.094, which would work out to a yield of 4.2 per cent at the current price. But recent payments are much higher than those of a year ago because of the interest rate increases we have seen. The June monthly payout was $0.214 which would imply a forward yield of 5.1 per cent.

As for which fund has the best rates, that will vary from month to month. Find one you’re comfortable with and stay with it. Remember, if rates start to pull back, so will the distributions from these ETFs.

Two things you should know. First, the Office of the Superintendent of Financial Institutions (OSFI) has launched a review into the liquidity requirements for these funds. In other words, do they have enough cash to meet the demands of a sudden sell-off – the ETF equivalent of a run on the bank?

Second, some financial institutions limit the sale of these funds to their own products. Ask your broker about which ones are available to you.

--Gordon Pape

What’s up in the days ahead

Equal-weight index ETFs have been discussed a fair bit recently, mostly as a lower-valuation alternative to AI-driven hoopla. But are they really worth considering given their bigger fees and long-term underperformance? David Berman will share his thoughts.

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

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 01/03/24 4:00pm EST.

SymbolName% changeLast
QSR-T
Restaurant Brands International Inc
-0.03%105.35
DOL-T
Dollarama Inc
-0.69%104.26
AC-T
Air Canada
0%18.12
CGX-T
Cineplex Inc
+1.52%8.03
DOO-T
Brp Inc
-0.21%89.39

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