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

BofA Securities’ widely-read survey of portfolio managers sees ‘peak pessimism’, a potentially bullish sign for markets. Highlights from the survey include (my emphasis),

“BofA April FMS shows extreme investor pessimism…cash levels jump from 5.1% to 5.9% = highest level since 9/11 terrorist attacks; we say April = peak pessimism… 93% expect global recession in 2020; investors think global GDP cuts largely over, but global EPS cuts just beginning (rare dichotomy)… 52% believe economic recovery from COVID-19 shock will be U-shaped, 22% say W-shaped, just 15% say V-shaped …macro pessimism… BofA Bull & Bear Indicator remains pinned at 0.0, i.e. investor positioning very bearish; we say one last leg up in risk rally but take profits SPX 2850-3000

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“@SBarlow_ROB BoA: highlights from FMS” – (research excerpt) Twitter

***

Also from BofA, my favoured source of analysis of earnings – quantitative strategist Savita Subramanian – published a U.S. earnings preview on Monday (my emphasis),

“14% of S&P 500 1Q20 earnings are slated to report this week, dominated by Banks. 1Q consensus EPS has fallen 13% from the start of the year to $35.22 (implying -10% YoY) - the biggest pre-season EPS cut since 1Q09′s ~30% cut (where 1Q09 saw a beat of 4%). Energy and Consumer Discretionary have seen the biggest downward revisions. Our forecast of $34.00 (-13% YoY) is 3% below consensus. Bottom-up EPS likely has further to fall. Whereas early reporters and macro data suggest a beat, data have dramatically deteriorated since late March.”

“@SBarlow_ROB BoA: "Bottom-up EPS likely has further to fall'” – (research excerpt) Twitter

***

Canadians are braced for some historically bad economic data, but the recent indications on unemployment are still really unnerving,

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“The headline 1 million decline in March was still a shock to look at. Unfortunately, April looks like it will be far worse. The federal government has received 6 million applications for support, and 5.4 million are now receiving emergency aid (nearly 30% of the labour force). That suggests employment could drop another 4-to-5 million in April.”

If investors consider this calamity in combination with near-record household debt levels, they can see why I’m not banking on a V-shaped recovery for the domestic economy.

“@SBarlow_ROB YEEEEIKES. BMO: "That suggests employment could drop another 4-to-5 million in April (to around the horizontal line)” – (research excerpt, chart) – Twitter

“Nearly 6 million people have applied for COVID-19 emergency benefits” – CBC

***

As if we didn’t have enough to worry about, there could be an imminent shortage of meat as Citi analyst Joao Pedro Soares noted,

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“BS USA announced today that its Greeley beef production plant in Colorado will remain temporary closed until April 24 due to the growing COVID-19 outbreak in the region. The company also announced a series of measures to help the local community, including funding to replenish personal protective equipment to essential workers and distribution of tests kits for low-income local residents. The news follows yesterday’s announcement from pork processor Smithfield Foods that its hog slaughter and pork processing plant in Sioux Falls, SD, would be indefinitely closed down.”

“@SBarlow_ROB Like we don't have enough to worry about ? (Citi)” – (research excerpt) Twitter

***

Newsletter: “Why I’m worried about investor confirmation bias” - Globe Investor

Diversion: (News on the movie I’m most looking forward to) “ Denis Villeneuve’s Dune Reveals Its First Look at Paul Atreides” – Gizmodo

Tweet of the Day:

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