A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
The Americans have been remarkably slow to ratify the new trade deal replacement for NAFTA, and BMO economist Doug Porter highlighted the risks,
“The ongoing cloud of uncertainty for the USMCA is no friend for the Canadian economic outlook. After running against the global grain with a powerful rebound in Q2 growth, Canada has rapidly come back to the pack… Canadian bonds responded to the generally downbeat domestic economic releases with a furious rally of their own this week. Yields fell by 12-16 bps across the curve, and the market even put a possible rate cut back on the radar screen. While the odds of a trim at the October meeting are still barely 20%, a move by December is close to 50/50.”
“@SBarlow_ROB BMO: "The ongoing cloud of uncertainty for the USMCA is no friend for the Canadian economic outlook"” – (research excerpt) Twitter
Citi U.S. equity strategist (and Montreal-born) Tobias Levkovich has released the results of his analysis on U.S. market sectors and make subsequent changes to his list of recommended stocks,
“We now are Overweight about 37% of the S&P 500′s market cap and only Underweight roughly 12%, underscoring a bullish outlook for US equities. We currently have positive stances on Retailing, Capital Goods, Insurance, Health Care, Energy and Semis plus cautious postures for Utilities, Autos, Telecom Services, Consumer Durables, Household & Personal Products, and Transportation. And, we have Real Estate (currently Market Weight) on a Downgrade Watch owing to peak-like earnings revisions and neutral valuation. As a result of the aforementioned adjustments, we are removing Procter & Gamble from the Citi Recommended List and adding Target.’
There are 22 stocks on the recommended list. Popular names include Restaurant Brands International Inc., Starbucks Corp., Morgan Stanley, Alphabet Inc. and Conoco Phillips.
“@SBarlow_ROB Top stock picks from C's Levkovich” – (full table) Twitter
Morgan Stanley U.S. equity strategist Michael Wilson believes the recent failure of the We Company IPO is a watershed event,
“The inability of We Company to go public may have been a key event signaling the end of a powerful trend that has been in place this cycle – the end of abundant capital willing to fund unprofitable businesses… there has been a lot of money directed toward private unprofitable business ventures during this decade in search of the next successful startup and we think that the large amount of money chasing this trend has likely found its way into the real economy. Our sense is that many of these businesses fit into the “new economy” segment which likely means a lot of that money has been spent on web services, software, and advertising to ramp their ‘platforms.’ Now, if profitability is once again important, many of these companies will need to cut back.’
“@SBarlow_ROB MS: WeWork IPO fail signals end of unicorn hunting season” – (research excerpt) Twitter
Financial media loves to tout the coming revolution in electric vehicles, but very little attention is paid to ongoing dominance of gasoline-powered SUVs in the market,
“Anyone who believes that behavioural change is going to produce a solution to the challenge of global warming should take a good look at the lat est figures on consumer choices in the auto sector. Electric vehicles are growing in number and quality but they are being outstripped by the popularity of SUVs… The 7m to 8m EVs that should be on the road by the end of 2019 represent less than a tenth of 1 per cent of the 1.1bn cars and other light vehicles that use internal combustion engines. Some 85m ICE vehicles were sold worldwide in 2018… In the US, SUVs account for 45 per cent of new car sales.
“Electric vehicles are being outpaced by the growth of SUVs” – Financial Times (paywall)
Tweet of the Day:
In 1950, the ultra-wealthy paid 70% of their income in taxes.— Gabriel Zucman (@gabriel_zucman) October 7, 2019
In 2018, for the first time, they paid less than every other social group—23%.
Terrific animation in tomorrow's New York Times. Thanks @DLeonhardt @stuartathompson!https://t.co/3Pckj7HwfW pic.twitter.com/A4abmHpJN1
Diversion: The General Manager for the NBA’s Houston Rockets tweeted a single message in support of Hong Kong protestors and the blowback originating from China might get him fired, “Daryl Morey’s Hong Kong Tweet Has Put His Relationship With the Rockets in Limbo” – The Ringer