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A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web

Goldman Sachs’ U.K.-based global strategist Peter Oppenheimer published his 2020 outlook earlier this week. He sees a mild economic recovery that unfortunately has mostly been priced in already,

“2019 has generated the highest returns for a benchmark balanced fund (60% equities and 40% bonds, US) since the late 1990s) … with the vast bulk of the return coming from multiple expansion (profits have been close to flat in the US and Europe and slightly negative in Asia and Japan) … a good deal of this prospective recovery has already been reflected in the strong equity rebound … In terms of style, we see some further tactical opportunities in cyclicals and value, but do not see this as the start of a long-term secular trend. The prospects of positive but modest growth through 2020, alongside low bond yields and inflation expectations, still favour quality, low-volatility growth companies”

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“@SBarlow_ROB GS: "a good deal of [the 2020] prospective recovery has already been reflected in the strong equity rebound" – (research excerpt) Twitter

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Citi strategist Chris Montagu recommended a trading strategy that’s clearly not for every investor, but does provide food for thought about what is driving equity markets,

“basic strategy where each month we rank stocks based on their 6 months volatility. We then buy the Top Quintile and Short the market. This simple strategy has consistently out-performed the market over the past two years, offering protection during market volatility (e.g. 4Q 2018), but allowing participation to positive up trends”

There are a lot of implications here, primarily that high volatility momentum stocks continue to outperform the market. The highest quintile of volatility might also include cases where broken down value stocks recover.

“@SBarlow_ROB C trading strategy: buy vol, short the market” – (research excerpt) Twitter

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Financial Times columnist Martin Wolf is among the most respected voices in global media.

His most recent essay looks for a precedent for today’s investment environment,

“Today’s era is a mixture of all three of these. It is marked by a conflict of political systems and ideology between two superpowers, as in the cold war, by a post-financial crisis decline of confidence in democratic politics and market economics as well as by the rise of populism, nationalism and authoritarianism, as in the 1930s, and, most significantly, by a dramatic shift in relative economic power, with the rise of China, as with the US before 1914. For the first time since then, the US faces a power with an economic potential exceeding its own … perhaps the most important conclusion is that avoiding yet another catastrophe is insufficient. We cannot afford the old games of great power rivalry, however inevitable they must seem. Our fates are too deeply intertwined for that.”

I pay for an FT subscription out of my own pocket so I’m well aware it’s expensive. But anyone who can wrangle a read of Mr. Wolf’s column today will benefit from his perspective in my opinion.

“Unsettling precedents for today’s world” – Financial Times (paywall)

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Nomura analyst Jing Wang reported on some dismal Chinese industrial data. The trend is important for Canadian investors in that a significant rally in global commodity prices is unlikely as long as Chinese manufacturers struggle,

“China’s industrial profit growth dropped to -9.9% y-o-y in October from -5.3% in September, taking its ytd growth to -2.9% y-o-y from -2.1% in September … State-owned enterprises experienced a significant slowdown in profit growth over the first ten months of 2019 to -12.1% y-o-y ytd from 12.6% in 2018

“@SBarlow_ROB Nomura on Chinese industrials” – (research excerpt) Twitter

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Diversion: “Progress Isn’t Natural: Humans invented it—and not that long ago” – The Atlantic (from 2016, but new to me)

Tweet of the Day:

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