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‘At these levels, there’s a 70% chance of the S&P 500 being down 12 months from now’

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

Citi’s Canadian-born chief U.S. equity strategist Tobias Levkovich is sounding very tactically bearish on U.S. markets,

“Investor sentiment has moved into “euphoria” again, signaling the need for more cautious positioning. Our proprietary Panic/Euphoria Model has tracked higher alongside the rise in stock prices, with few investors indicating concern, partially due to an underlying strong economy, robust earnings, and powerful buybacks. At these levels, there’s a 70% chance of the S&P 500 being down 12 months from now, which is more than three times the random probability of losing money.

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"Margin debt, gasoline prices, NASDAQ versus NYSE trading volumes, put/call premiums, and AAII/Investor Intelligence bullishness all have contributed to our sentiment tracker’s rise. In essence, five of the nine inputs have pushed the gauge into worrisome territory.”

“@SBarlow_ROB Levkovich not bringing the good news” – (research excerpt) Twitter

See also: “@SBarlow_ROB Golub from CS a lot more bullish, but still warns of market trickiness” – (research excerpt) Twitter

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BMO economists parsed the recent data on domestic housing prices,

“August housing market results from Toronto and Vancouver are now in. Toronto looks to be firming, with sales up 8.6% y/y (and roughly 2% from July, seasonally adjusted). The year-over-year rate is down from a 17% pop in July, but keep in mind that sales went on a strong run from August through December, between the Fair Housing Plan fallout and implementation of new OSFI rules … The picture is quite a bit weaker in Vancouver, where sales were down 37% y/y in August — the fallout from more aggressive tax measures continues. While the benchmark price was still up 4.1% y/y, that’s the slowest pace since early 2014”

“@SBarlow_ROB BMO on Cdn housing market” – (research excerpt) Twitter

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Goldman Sachs research, using a Conde Nast It Girl survey, uncovers the most dominant retail brands among millennial consumers, along with stock picks,

“The shift online persists as the single biggest change among surveyed consumers, and we find that Amazon is becoming an increasingly dominant retailer in almost every category. One caveat here is the observation that fashion forward consumers appear to be resisting this change … The top 10 ranked brands and retailers for It Girls are Victoria’s Secret, Sephora, Nike, Ulta, Nordstrom, Kate Spade, Michael Kors, Adidas, Gucci and Coach. Smaller brands with building influence include Fenty, Glossier and Tarte. Top 10 brands & retailers for our national sample not appearing on the It Girl Love List include Walmart, Bath & Body Works, and Amazon. Stock ideas: TPR (CL-Buy), JWN (CL-Buy), AMZN (CL-Buy), ADSGn.DE (Buy), PRTP.PA (Buy), and EL (Buy).”

“@SBarlow_ROB GS talks top millenial retail stock ideas” – (research excerpt) Twitter

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Oil stocks were hit hard on Wednesday but it seems like temporary weather effects were to blame,

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“Crude prices were hit by their biggest one-day percentage decline since August 15, as concerns fade about the potential fallout from Tropical Storm Gordon and markets brace for upcoming inventory updates… Oil companies “shut a number of offshore platforms in anticipation of damage from the tropical storm — the market had anticipated the storm would strengthen to a hurricane,” OANDA analyst Dean Popplewell said in a note.”

“Oil sees biggest one-day drop in three weeks” - Financial Times (paywall)

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Tweet of the Day:

Diversion: “Here Are the Most Extraordinary Quotes From Bob Woodward’s Book” – The Atlantic

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