Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BMO economist Robert Kavcic noted that domestic REITs have drastically underperformed the TSX – an average loss of 21.5 per cent over the past year versus a 5.8-per-cent drop for the TSX – and sees four reasons why the real estate sector will continue to underperform,
“Most of the job losses (and expected persistent losses) are concentrated at the lower-end of the pay scale—think bars/restaurants, tourism and other service industries [where employees tend to rent instead of own]… [rental] units in the biggest cities, in general, were not cash-flow positive with 20% down initially, rather banking on price appreciation or a few years of rent growth … If rent growth ceases and price expectations weaken, many investors could be holding units that no longer make much economic sense … with [the short term rental] segment (i.e., Airbnb) in limbo with travel restrictions, it will likely push units back onto the long-term market out of necessity (depressing rents) or onto the resale market (pressuring prices) … Immigration: International inflows have been a massive source of rental demand but, while Canada is sticking to its targets and still processing applications, the actual number of entrants certainly appears at risk”
“REIT or Wrong?” – Kavcic, BMO Economics
Wells Fargo published their U.S. Focus list of top stock picks, which combines the work of their company analysts and strategists.
There are 30 stocks on the list, Activision Blizzard inc., Alphabet Inc., Verizon Communications Inc., Walt Disney Co. , Amazon.com Inc., Home Depot Inc., McDonalds Corp., Ross Stores Inc., Costco Wholesale Corp., Coca-Cola Co., Allstate Corp., Berkshire Hathaway Inc., Blackrock Inc., JP Morgan Chase and Co., Abbott Laboratories , Danaher Corp., Humana Inc., Zoetis Inc., Honeywell International Inc., L3Harris Technologies Inc., Accenture PLC., Apple Inc. , Intel corp., Mastercard Inc., Microsoft Corp., Paypal Holdings Inc., Salesforce.com inc., Texas Instruments inc., Realty Income Corp., and NextEra Energy Inc.
“@SBarlow_ROB Wells Fargo U.S. Top picks part 1’ – (table) Twitter
“ @SBarlow_ROB Wells Fargo Top picks part 2” – (table) Twitter
Morgan Stanley remains the most bullish of major U.S. research firms.
Economist Chetan Ahya sees recent upside surprises in economic data as proof of a V-shaped recovery,
“Over the past three weeks, driving indices in the key DM economies (the US, France and Germany) have all rebounded by 30-50 [percentage] points, moving above the 100 mark relative to the January 13 baseline in the US and Germany… We expected the recovery in manufacturing to outpace services. However, incoming services sector data from the US, Europe and China point to a faster recovery than we had anticipated. In the US, consumer activity – the key barometer of aggregate demand – has been surprisingly strong. Credit card transactions data (tracking small business activity) indicate that sales are now growing at 5%Y versus the declines of ~30%Y seen just a few weeks ago… This trajectory of services sector improvement is even more pronounced in China. Along with the expansion under way in property, construction and infrastructure, domestic flights and hotel occupancy have recently shown marked improvement.”
“@SBarlow_ROB MS: Growth data validate our V-shaped recovery forecasts” – (research excerpt) Twitter
Diversion: “Are They Police Departments or Armies?’ – The Atlantic
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