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Inside the Market Canadian money managers move to REITs and utilities, away from banks and energy: Survey

A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web

Scotiabank analysts published the results of their Canadian portfolio manager survey Wednesday,

“Institutional investors have been skeptical regarding the recent equity rally, preferring instead the relative safety of cash (highest proportion of investors adding to cash since our survey began) … US and EM equity allocation were boosted at the expense of Canada and Latin America… While most investors continue to expect Energy and Financials to outperform the most over the next 12 months, their preference is slowly shifting. Real Estate and Utilities jumped in rankings, likely on expectations of lower yields and worsening prospects for cyclicals.. Just over half of investors believe that strong equity gains are not validated by fundamentals (Exhibits 7-8). The rationale is that earnings expectations are deemed too high for both the TSX and S&P 500”

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“@SBarlow_ROB Scotia PM survey summary , "over half of investors believe that strong equity gains are not validated by fundamentals'” – (research excerpt) Twitter

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54 of the 498 S&P 500 companies have reported earnings for the first quarter so far. Forecasts were for a year-over-year decline of just over 2 per cent, and, so far,, profits are coming in barely in negative territory at -0.5 per cent.

“ @SBarlow_ROB SPX EPS reports so far; kinda sorta ok in yoy terms’ – (table of sector reports) Twitter

“ IBM quarterly revenue misses on weak mainframe computer business’ – Reuters

“ Morgan Stanley quarterly profit falls 9 pct’ – Reuters

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A really interesting chart from CIBC interest rate strategist Ian Pollick projects a steepening in the domestic yield curve – higher ten year bond yields relative to two-year bond yields. The chart compares the declining percentage of business executives surveyed by the Bank of Canada that report either ‘Some ability to meet demand’ or ‘significant ability to meet demand’ to the yield curve,

“if the [Bank of Canada’s] Business Outlook Survey is to be believed than it is indeed signaling a tremendous steepening opportunity in Canada. The natural level of the curve vis-à-vis economic slack would argue for a much steeper term structure" – (chart) Twitter

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A fascinating column on Disney and the changing media landscape was published on the Stratechery site. It’s long but interesting throughout. Here’s a sample,

“By controlling distribution of its content and going direct-to-consumer, Disney can deepen its already strong connections with customers in a way that benefits all parts of the business: movies can beget original content on Disney+ which begets new attractions at theme parks which begets merchandising opportunities which begets new movies, all building on each other like a cinematic universe in real life. Indeed, it is a testament to just how lucrative the traditional TV model is that it took so long for Disney to shift to this approach: it is a far better fit for their business in the long run than simply spreading content around to the highest bidder.”

“Disney and the Future of TV” – Stratechery

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Tweet of the Day:

Diversion: “Zapping the brain with electricity seems to improve memory in older people” – M.I.T. Technology Review

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