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

Scotiabank mining analyst Orest Wowkodaw is looking for a mixed environment for the sector but provided some top picks to offset headwinds,

“We anticipate the miners to post stronger Q4/22 financial results driven by improved commodity prices and positive provisional pricing (PP) adjustments, partially offset by the lag affect of higher costs. Our estimates appear somewhat mixed relative to consensus expectations. While 2023 guidance risks remain skewed to the downside given a tough operating environment and ongoing inflationary pressures, most miners have gotten in-front of this disappointing news cycle by pre-releasing. Although balance sheets remain strong, we forecast the majority of miners to generate negative FCF this quarter … Our Q4/22 EPS and EBITDA estimates appear somewhat mixed relative to current consensus for our coverage. Positive PP adjustments are expected to serve as a tailwind for many miners (excluding FM-T and HBM-T) … Among the mid- to large-cap producers, we forecast ANTO-L, HBM-T, and LUN-T to beat consensus EBITDA expectations this quarter. On the other hand, we anticipate IVN-T and TECK.B-T to miss consensus. We anticipate largely in-line EBITDA for CS-T, ERO-T, FM-T, and NEXA-N. On an EPS basis, we forecast below consensus results for FM-T, HBM-T, IVN-T, and TECK.B-T. We do not view results for CCO-T as particularly relevant.”

“Scotiabank’s top picks in mining sector” – (research excerpt) Twitter


Goldman Sachs chief U.S. equity strategist David Kostin doesn’t sound very excited about the S&P 500 from here,

“An improvement in US and global macro data has lifted the S&P 500 by 8 per cent year-to-date and leads us to lift our 3-month S&P 500 target to 4000 (from 3600). However, our year-end S&P 500 index forecast remains 4000, slightly below the current level. A soft landing –and in fact above-trend growth –is already priced in U.S. equities. Valuations are elevated vs. history and will be constrained by an eventual rise in interest rates. Even avoiding recession, earnings are unlikely to grow substantially in 2023. Alternatives to US equities, including non-US stocks, credit, and cash, offer superior risk-adjusted returns and are garnering assets. The debt ceiling deadline later this year adds uncertainty to thepath for US stocks.”

“GS’s Kostin not sounding overly optimistic” – (research excerpt) Twitter


Citi strategist Edward Morse sees a large number of reasons to invest in commodities,

“In this Wildcard report for 2023, we place great emphasis on a resurgence of Vox Populi factors across the planet, from emerging markets to advanced economies, from democratic regimes to authoritarian regimes, creating great uncertainty over policies and even political stability. Sections of this report review that resurgence and then look in detail as Vox Populi conditions arise in commodities intensive countries like Brazil, Chile, and Peru in Latin America, where policies can stymie exploitation of minerals. With economics and commodities analysts working together we also explore how protests can lead potentially to change. We also look at changes in policies deriving from public pressures in China and Russia.

“Among the 15 wildcard scenarios of this report we also dive into weather, supply chains, stockpiling incentives, a new rush to gold, potential for central bank policy changes and we have a focus on Europe with potential surprises in natural gas as well as carbon pricing. And we look at some critical international issues like the rise in India and the evolution of US-China relations.”


Diversion: “So Are Nonstick Pans Safe or What?” – The Atlantic

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