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

I don’t see a lot of BofA Securities research that focuses directly on Canada, but Ohsung Kwon’s The bull case remains intact: Stay long Canada over US report released Monday is a notable exception,

“The BoC has paused its tightening cycle at 4.5 per cent vs. house view of 5-5.25-per-cent terminal rate for the Fed, which translates to a lower discount rate for Canadian equities. The BoC is clearly being more cautious given the slowdown, which also lowers the risk of a housing crisis, which has been a major bear case for Canada. With a lower discount rate and the risk premium already largely pricing in recession risk (more below), we believe TSX multiples are at trough levels at just 13 times forward P/E, in line with the Tech Bubble low relative to the S&P 500′s 17 times … Commodities are on the rise again amid China reopening. Tight inventories and limited supply response suggest the commodity markets can remain tight for longer (house view: copper $10,000 per ton by 4Q23, Brent $100 per barrel on average in 2023). We believe the commodity upcycle in the 2020s is still playing out following years of underinvestment, which should support the TSX over the S&P 500 … The TSX is pricing in much more risk than the S&P 500″

“From BofA’s “The bull case remains intact: Stay long Canada over US”” – (research excerpt) Twitter


The global strategy team at Citi expect the rally in Chinese equities to continue,

“The MSCI China has gained 57 per cent since October, sharply outperforming the global benchmark (up 8 per cent in local currency). China-exposed stocks elsewhere have also rallied, with global Metals & Mining and European Luxury Goods up 30 per cent-plus. Not So Cheap Anymore — After a sharp re-rating, the MSCI China is now trading on 16-17 times trailing EPS, above its 15-year median and its usual 30-per-cent discount to the MSCI AC World. 15% Re-Rating, 15% EPS Growth — We think this rerating could go further and target an 18 times trailing PE, similar to the 2017 recovery. In addition, we forecast 15-per-cent EPS growth in 2023, much better than the 5-10-per-cent contraction forecast for the MSCI AC World benchmark. 30% Upside, Still Overweight China — This suggests potential for further 30-per-cent upside for the MSCI China and a doubling from last year’s lows, consistent with performance in previous recovery trades.”

I personally wouldn’t buy an individual Chinese equity, but the equity market is relevant to Canadians as a reflection of the country’s economic recovery from lockdowns, and the subsequent import growth in raw materials.


BMO chief economist Doug Porter uncovered more evidence of a normalizing domestic labour market,

“A couple of recent indicators hint that the Canadian job market may be coming off its rolling boil. First, StatCan released revisions to last year’s jobs tallies. True, it was a bit of a mixed bag, as total employment was revised up by more than 100,000 (and approaching 20 million people) and last year’s Dec/Dec gain was nudged slightly higher. Yet, the blow-out gains near the end of the year were clipped. Both of the 100,000+ advances in October and December were shaved to just under 70,000 gains—so a little less red hot in Q4. Next, the Bank of Canada’s BOS found that net hiring intentions faded to 35 per cent, which is back to pre-pandemic norms. And perhaps most notably, the job vacancy rate eased to 4.6 per cent in November. These figures aren’t seasonally adjusted, but it’s the lowest since the spring of 2021, and compares with a peak of 6 per cent in spring of 2022. It is, however, still well above the 3.0-per-cent vacancy rate reported in Nov/19, but it’s getting closer to quasi-normal.”

“BMO: “Cdn Job Market: Less Steamy " – (research excerpt) Twitter


Diversion: “The Most Dazzling Ocean Photos of the Year” – Gizmodo

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