Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BofA Securities chief investment strategist Michael Hartnett made some bold statements about the next decade of investing in his weekly report,
“Cash outperformed both global stocks (-1.3%) & bonds (-1.0%) in Q3 … The great inflation of 2021 means commodities on course for 3rd best year since 1960 (bettered only in ‘73 & ‘79); rare to see commodities up >20% and US dollar up in the same year … 2010s was deflationary driven by excess Debt, aging Demographics, technological Disruption + globalization; 2020s will be inflationary driven by economic Isolationism (goods/labor/capital to flow less freely, e.g. China factory to US retail store supply chain broken), government Intervention (central banks want inflation, >$30tn policy stimulus past 18 months & social expectation government must step-in to address every crisis), wealth Inequality (regulation & redistribution). Deflation to inflation: means financial assets to real assets, credit to commodities, large to small, tech to banks…and asset allocation less concentrated … Low beta “permanent portfolio” (bond/stock/cash/commodities, 25/25/25/25) annualizing 14.9% in 2021, highest since ‘86.”
“@SBarlow_ROB BofA’s Hartnett: “2010s was deflationary driven by excess Debt, aging Demographics, technological Disruption + globalization; 2020s will be inflationary driven by economic Isolationism... government Intervention ... wealth Inequality” – (research excerpt) Twitter
The research team at RBC released their Top 30 Global [stock] Ideas Friday morning,
" Additions: Alexandria Real Estate Equities (ARE US), Amazon (AMZN US), American International Group (AIG US), S&P Global (SPGI US), UnitedHealth Group (UNH US) Deletions: Americold Realty Trust (COLD US), Arch Capital (ACGL US), Enterprise Products (EPD US), The Home Depot (HD US), Humana (HUM US)… We increase our Top 30 exposure to Financials to a slightly overweight position, and the list remains notably overweight Energy relative to our benchmark (the MSCI World Index). While our US Equity Strategy team has a market weight view of the Materials sector, the Top 30 remains notably overweight … In Consumer Discretionary we add Amazon (AMZN US), which in our view has unmatched scale and advantage in verticalized E-commerce and an industry-leading cloud business … Within Financials, we replace Arch Capital (ACGL US) with American International Group (AIG US), where we see a significant valuation gap to peers and increasing visibility to sustainably improved results. We also add S&P Global (SPGI US) … In Energy, we remove Enterprise Products (EPD US). While we maintain our positive investment thesis and note strong YTD results and a stable dividend payout through commodity volatility, we believe Energy investors could potentially favor names more levered to natural gas prices in the current commodity environment.”
In addition to the names mentioned, the list includes a number of Canadian names – Alimentation Couche-Tard Inc., Brookfield Asset Management Inc., Canadian Natural Resources Ltd., Canadian Pacific Railway,Element Fleet Management Corp. and Telus Corp.
" @SBarlow_ROB RBC’s top 30 global investment ideas” – (full table ) Twitter
Citi analyst Ephrem Ravi downgraded copper,
“We are incrementally bearish on copper in the near term, and we downgrade our price forecast to $8,200/t on a 0- to 3-month view (from $8,800/t), more than 10% below current prices. We lower our 4Q’21 and 1Q’22 forecasts to $8,600/t (from $9,000/t). The very recent rapid increase in global coal, gas, and power prices and resulting negative impact on Chinese and global supply chains, household income, and growth are the main catalysts for the downgrade. These developments are incrementally bearish relative to the three red flags we highlighted in the Metals Weekly on September 15 and the ongoing shortages of chips and containers, which are constraining metals consumption and placing upward pressure on inflation. The next 3-6 months may provide investors an opportunity to buy into the copper Supercycle, in which we are still strong believers. The near-term outlook is deteriorating.
The three red flags are “weakening construction activity indicators in China, the high likelihood of China credit tightening into this weakness, and the very large disconnect between metals prices and both the China PMI (new orders less inventories) and Global PMIs”
“@SBarlow_ROB Citi downgrades copper” – (research excerpt) Twitter
Diversion: “Most Police Killings in the U.S. Aren’t Officially Counted, Study Finds” – Gizmodo
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