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

Credit Suisse U.S. equity strategist Jonathan Golub recounts the “perfect storm” that has hit equity markets this week,

“Perfect Storm: (Covid-19 + Lack of Stimulus + Election) … Stocks sold off 3½% [Wednesday], 7½% over the past 2 weeks. With all of the chatter around the election, it’s the virus that has been giving the market heartburn, not politics … case counts in the U.S. are again rising — up almost 3-fold in the past 2 months. However, it is the precipitous increase in Europe that is more alarming. In response, French President Macron and Germany Chancellor Merkel announced lockdowns, reminiscent of—though not as draconian as—measures taken earlier in the year … Oh, and then there’s the election. With all that’s going on, we’re less convinced that the outcome will be the big market driver that many predict. In reality, the market has had plenty of time to discount possible election scenarios”

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"@SBarlow_ROB CS: “American consumers might appear to be healthy, however, the chart below highlights just how dependent they are on government support"” – (research excerpt, chart) Twitter

***

Scotiabank analyst Justin Strong sees a buying opportunity ahead for domestic renewable power utilities,

“We see potential near-term valuation risk to the renewables sector ahead of what we see as a period of volatility. In our view, a number of near-term headwinds face the renewables sector, namely valuations near recent highs and the uncertainty around upcoming U.S. election and its implications for the outlook of renewable energy sector. However, we view near term weakness as a buying opportunity … On October 16, the basket of Canadian renewable energy producers reached its highest valuations in recent history … Near-term downside risk larger than upside potential. Our bear and bull scenario outcomes for our coverage show an average price depreciation of 23% with only 7% upside.”

Mr. Strong' outperform rated stocks in the sector are Boralex Inc. and Northland Power Inc.

"@SBarlow_ROB BNS sees buying opportunity ahead for Cdn renewable power stocks' – (research excerpt) Twitter

***

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Citi global macro strategist Jeremy Hale says “Canadian GDP is forecast to be the outperformer in 2021” (my emphasis) ,

“Substantial fiscal support has allowed the Canadian economy to rebound strongly; Canada has the highest data momentum globally. Citi’s Economics' team have noted: ‘Following the bottom in GDP reached in Q2, the rebound in activity has been stronger than initially expected, with many data points such as home sales, retail sales, and auto production already at or above pre-COVID levels.’ While there are downside risks to growth if the current more stringent restrictions in Quebec and Ontario are extended beyond the planned one month, we believe that if needed, the government would step in again with further fiscal measures. Additionally, when thinking relatively for FX, lockdown levels in Canada and case growth is much less severe than many other countries. We would also note here that the improvement we’ve already seen in Canada’s ToT [terms of trade] , as well as the 12m forecast of 56$/bbl WTI will be supportive for the economy. The net result is that Canadian GDP is forecast to be the outperformer in 2021″”

“@SBarlow_ROB From Citi global macro:”Canadian GDP is forecast to be the outperformer in 2021′" – (research excerpt) – Twitter

***

Diversion: “@SBarlow_ROB Photos of the Week: Murder Hornets, Giant Hands, China Fashion” – The Atlantic

Tweet of the Day:

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