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

The RBC Capital Markets research team made a number of changes to their Top 30 Global Ideas for 2024, removing Albemarle, American International Group, Lonza, M&T Bank and Palo Alto Networks and adding Amazon.com, Bank of America, Biogen, Chubb and Hubspot.

The remainder of the list includes six Canadian stocks in Alimentation Couche-Tard, Canadian Natural Resources, Constellation Software, Element Fleet Management, Restaurant Brands international and Telus Corp. The non-domestic stocks are Alnylam Pharmaceuticals, Americold Realty Trust, Anheuser-Busch InBev, Associated British Foods, Boston Scientific Corp., Crowdstrike Holdings, Diamondback Energy, Ferrari NV, HEICO Corp., Illumina Inc., London Stock Exchange Group, Mastercard, Meta Platforms, PG&E Corp., S&P Global Inc., Siemens Aktiengesellschaft, Union Pacific, Veeva Systems and WESCO International.

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Goldman Sachs U.S. equity strategist David Kostin summarized 2023 and succinctly restated his forecast for 2024,

“The S&P 500 index returned 26% including dividends in 2023, more than 2x the average annual return of 12% since 1986. Information Technology and Communication Services sectors led the advance returning 58% and 56%, respectively. Stocks outperformed the 10-year US Treasury note by 23 percentage points. While Bitcoin generated a return 3x greater than the market-leading Info Tech sector (153% vs. 58%), the two assets achieved similar risk-adjusted returns (3.4 vs. 3.0). In 2024, we expect decelerating inflation and Fed easing will keep real yields low and support a P/E multiple greater than 19x. We forecast that in 2024 S&P 500 EPS will grow by 5% to $237 and the index will reach 5100 by year-end.”

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Wells Fargo senior global market strategist is cautious on equities as the year begins,

“Do we look for higher stock prices in the coming 12 months? As far as the S&P 500 Index goes, we think the market will struggle to post meaningful gains in the first part of the year while the economy continues to slow and before it bottoms out, which we believe will happen in 2024. We also believe that the market consensus for five or six Federal Reserve rate cuts starting in March is too optimistic. We believe these two factors likely will produce volatility until the consensus accounts for these negative trends, which appear to be at the bottom of Santa’s sleigh heading into year-end. We continue to focus on domestic over international exposure and quality large-cap stocks over mid and small caps. We favor the short-term and long-term segments of the fixed-income market. We suggest trimming exposure down to recommended allocations in the Information Technology, Communication Services, and Consumer Discretionary sectors and putting those funds to work in the Health Care, Industrials, and Materials sectors”

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Diversion: “52 things I learned in 2023″ – Kent Hendricks

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