Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
The monthly Teranet-National bank report on domestic housing prices finds signs of virus-related weakness (my emphasis),
“There are two signs that data from land registries reflect the slowdown in home sales activity that started in the second half of March. The first is the 22% y/y decline in the number of sales pairs … from which May indexes were derived. This was the largest y/y decline since April 2013 and a clear break in the upward trend that was taking place earlier. There were declines in sales pairs in all the 11 metropolitan areas. The second sign is the slowdown in the seasonally adjusted raw Composite index, which rose only 0.2% in May after three months of gains topping 0.8%. The raw index declined or was unchanged in five of the eleven constituent metropolitan areas. In our view, declines in home prices lie ahead.”
Sales pairs represent “price increase observed between two sales of the same property.”
“@SBarlow_ROB Ternaet NBF housing Index: Cracks appearing in domestic real estate’ – (research excerpt) Twitter
Wells Fargo provided an update on their Focus List of top U.S. equity picks.
The list features 14 stocks – Activision Blizzard Inc., Alphabet Inc., Verizon Communications Inc., The Walt Disney Co., Amazon.com Inc., The Home Depot Inc., McDonald’s Corp., Ross Stores Inc., Costco Wholesale Corp., Coca-Cola Co., The Allstate Corp., Berkshire Hathaway Inc., Blackrock Inc. and JP Morgan Chase & Co.
“@SBarlow_ROB Wells Fargo Focus List of top U.S. stock picks” – (table) Twitter
BMO economist Sal Guatieri is studying the Canadian technology sector with hopes it can grow far beyond its current 5 per cent of GDP influence on overall national growth,
“This week’s Focus publication feature discusses the role the high-tech sector could play in partly immunizing Canada’s economy from the pandemic. Though still small at just under 5% of GDP, it is consistently the fastest growing sector, and will only benefit from the acceleration of activity online. … the sector held up much better than most other industries in the first quarter. While real GDP contracted 8.2% annualized, the ICT sector slipped just 0.4%”
“@SBarlow_ROB BMO: Tech only 5% of Cdn GDP but consistently the fastest growing” – (research excerpt) Twitter
Morgan Stanley is arguably the most bullish big research firm, so economist Ellen Zentner‘s warning about U.S. corporate investment carries more weight,
“Looking at on-average data over the past eight recessions, business investment has taken an average of 11 quarters to get back to prerecession levels … Soft capacity utilization is one reason for this typical slow recovery in investment over cycles. As the economy weakens, capacity utilization declines and that excess capacity needs to be used up before a capex cycle begins… After a deep contraction in 2Q20 at what we believe will be a 34.7% annualized pace, we expect business investment will grow at just a 0.7% annualized pace in 3Q20, quickening to an average 8.0% pace of growth between 4Q20 and 2Q21.'
“@SBarlow_ROB MS: Slow recovery for U.S. capex’ – (research excerpt) Twitter
Newsletter: “It pays to be an optimist, but too many indicators suggest caution now” – Globe Investor
Diversion: “The 7 most disturbing allegations about Trump in John Bolton’s forthcoming book” – Vox
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