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

The Financial Times’ Alphaville site, which is free to read with registration, provided an interesting perspective on responsible or ESG investing, namely that it’s anti-social,

“A new piece of research by Vincent Deluard, a director of Global Macro Strategy at INTL FCStone, has found that ESG strategies have a natural bias against companies with employees … Here’s Deluard’s rather colourful explanation: “ESG’s bias against humans is probably unconscious, but it is a feature, rather than a bug. Companies with no employees do not have strikes or problems with their unions. There is no gender pay gap when production is completed by robots and algorithms. Biotech labs where a handful of PhDs strive to find the next blockbuster molecule have no carbon footprint. Financial networks which enjoy a natural monopoly in processing payments can have the luxury of ticking all the boxes of the corporate governance checklist.”

“ESG without the ‘S’” – FT Alphaville

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CIBC economist Avery Shenfeld attempted to predict how much of our behaviour will be permanently changed by social distancing measures,

“At-home simulators like stationary bikes were a pre-virus fad, and could permanently steal some additional market share from gyms. In contrast, long hair for men wasn’t a fashion trend, so barbers can expect a full return. More broadly, e-commerce was already an established trend (Chart 2), showing that it was becoming a preferred mode for early adopters … remember that the vast majority of employers/ employees were revealing their preference to work at the employer’s premises. The technology to work at home has been in place for decades, but that’s not what was preferred. Co-working facilities like WeWork were in fact aimed at those who could have hunkered down at their kitchen tables but chose not to.”

“@SBarlow_ROB CM: "The technology to work at home has been in place for decades, but that’s not what was preferred" – (research excerpt) Twitter

See also: “The Discreet Charm of Coronavirus” – Positions Politics

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Scotiabank strategist Hugo Ste-Marie highlighted the extremely narrow nature of North American market rallies (my emphasis),

“The percentage of outperformers in the S&P 500 is the lowest in years at 36%. Worse, the percentage of stocks underperforming the S&P 500 by more than 10% has not been higher in 15 years at 45% … Back in 2009 and 2010, when the market was recovering from the financial crisis, the percentage of large underperformers (more than 10%) was much lower at 31% and 25%, respectively. Hence, the odds of a very bad pick were much lower. The situation is the same in Canada... the percentage of stocks underperforming the TSX by more than 10% (46%) is also the highest in years and well above the percentage of stocks outperforming by more than 10% (26% - lowest in years). That’s probably what a narrow market looks like.”

“ @SBarlow_ROB Scotia: Number of stocks outperforming and underperforming the TSX” – (chart) Twitter

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Diversion: “The best comedy specials on Netflix” – AV Club

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