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A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web

Merrill Lynch bank analyst Ebrahim Poonawala has turned more cautious on Canadian banks ahead of upcoming profit reports,

“[Recent] outperformance can be attributed to two things: 1) the defensive nature of these stocks which has led to relative outperformance during previous risk-off periods … However, we find it hard to imagine that the operating outlook for the banks (and oil prices) will be immune to a worsening macro backdrop, especially if the US economy falters under the weight of trade uncertainty and an ongoing recession in the global manufacturing sector. As a result, we are cautious on the group as the risk/reward equation is not stacking up attractively… We are lowering our ‘19/’20e EPS on back of a weaker revenue growth outlook and as we bake-in the impact from lower interest rates (see Exhibit 3). Our forecast implies YoY EPS growth of 3%/4% in ‘19/’20 respectively”

“@SBarlow_ROB Merrill Lynch turns cautious on Canadian bank stocks” – (research excerpt) Twitter

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Citi strategist Jonathan Stubbs has succinct bullish advice for investors,

“Either: a) It’s Different This Time, or b) Buy Equities. Global bond yields have fallen sharply over the last few weeks with slowing growth, rising recession fears coupled with investor risk aversion. In Germany, 10-year bund yields fell below -0.7%. Swiss 10-year bond yields touched -1.2% In the US, 10-year Treasury yields retreated from above 2% at the start of August to a trough last week below 1.5%. This is the third time that US bond yields have fallen below 1.6%; mid-2012 and mid-2016 were the previous occasions. This has previously been a strong buy signal for equities in both Europe and the US. Investors who bought equities with US bond yields at or below 1.6% would have enjoyed a 100% 12-month “win ratio” and high median returns, eg DAX 23%, CAC 24%, FTSE 17%. Previously slowing growth was arrested/stabilised by weight of policy actions and stimulus.”

“@SBarlow_ROB C: “Either: a) It’s Different This Time, or b) Buy Equities” – (research excerpt) Twitter

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Reuters’ energy specialist John Kemp notes that hedge funds are moving out of bullish positions in the sector. The futures data is delayed, so the numbers should be taken with a grain of salt,

“Hedge funds and other money managers reduced their net long position in the six major petroleum futures and options contracts by 35 million barrels in the week to Aug. 13, having cut it by 25 million barrels the previous week. Portfolio managers last week sold Brent (37 million barrels), U.S. gasoline (15 million), U.S. heating oil (9 million) and European gasoil (4 million) as the consumption outlook deteriorated… By contrast, funds bought NYMEX and ICE WTI (30 million barrels) as new pipelines from the Permian Basin to the coast reduced congestion near the oilfields and supported local prices. ”

“Column: Hedge funds sell oil as global economy slows” – Kemp, Reuters

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Tweet of the Day:

Diversion: “What Would Happen If the Whole Internet Just Shut Down All of a Sudden?” – Gizmodo

Newsletter: “Who to believe?: How to decide which market strategists to read” – Globe Investor

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