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Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

Bank of America currency analyst Ben Randol published a report titled CAD: Is it Unstoppable? on Thursday.

He says:

“Up nearly 6% against the US dollar YTD (Chart of the Day), the Canadian dollar has been the strongest performing currency in G10 and major EM FX this year and is bested only by ZAR on the basis of total return. CAD’s outperformance is consistent with our directional views, albeit considerably larger in magnitude than we expected. Not only did CAD outperform in 1Q while the broader US dollar was rising (one of three currencies marginally stronger against USD over the period), but also managed to keep pace with peers over Apr-May when the broader USD retreated. We find that, in the context of moderate positioning, CAD’s strength - particularly of late - is largely attributable to the recent surge in commodity prices, Looking forward, we expect CAD to continue to trade with commodity proxy status, which presents both upside and downside risks. For now, we remain a CAD buyer on dips this year but see present levels as overdone.”

I wrote a column at the end of April noting copper prices as the most visible driver of the loonie rally.

“@SBarlow_ROB From BoA’s ‘CAD: Is it Unstoppable?’” – (research excerpt) Twitter

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BMO economist Robert Kavcic highlighted cooling expectations in the domestic housing market,

“Canada’s housing market remains extremely strong, but expectations of price growth look like they may have peaked. Sales and price growth could follow suit. Important: This is not to say that the market is going to decline, but the rate of change may be ready to slow down. Hey, it’s a start… most importantly, the conversation about excessive strength and potential policy measures got very loud in early April. Maybe most important amid all the chatter was the BoC’s more hawkish policy announcement, that at least changed the conversation slightly on rates rising sooner than previously expected. There’s still a long way to go until we find a more balanced market, but this shows how effective even small tweaks to monetary policy can be on this front… "

“BMO: ‘Have Inflation Expectations in Cdn Housing Peaked?”” – (research excerpt, chart) Twitter

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Citi analyst Jason Bazinet risked heresy accusations by downgrading Facebook Inc. and Alphabet Inc.,

“The team now isn’t recommending any large-cap, ad centric, Internet stock in North America except Roku. Jason likes Roku because he and the team believe the connected TV market is still nascent. Amazon remains the team’s favourite US Internet stock because they see ample growth in B2B services beyond ads (e.g. AWS, FBA, Commissions and Logistics). In this important report Jason argues persuasively that throughout history, especially American history, the idea of ‘Turning’ has been described as a way to describe the cyclical nature of events. Looking at the Internet Ads space, Jason notes that: “during the last 15 years, Internet ads enjoyed three periods of accelerating growth: ’10 to ’12, ’15 to ’18 and today. But, they also exhibited three periods of decelerating growth: ’08 to ’10, ’13 to ’15 and ’18 to ’20. Even if the bullish sell-side forecasts are right, the next wave of deceleration – the 6th turning - begins in 3Q21 (when yoy comps are tough) or 2Q22 (when two-year stacked growth rates peak)”.”

“@SBarlow_ROB Citi downgrades Facebook and Alphabet” – (research excerpt) Twitter

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New column: “An inflation roadmap for equity investors” - Barlow, Inside the Market

Diversion: “How COVID-19 is spreading in Canada on domestic flights” – Macleans

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