A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Citi analyst Prashant Rao believes things will get worse before they get better for Canadian oil stocks,
“A combination of pipeline issues (Keystone), rail service issues (CN strike), and maintenance activity at US complex refiners caused Western Canadian crude oil inventories to climb from a near-normalized ~23mmbbls to ~38mmbbls through Nov/Dec 2019, widening Canadian heavy crude discounts to our forecast US$23/bbl to WTI. Though ultimately transitory, we think there will be further upward pressure on inventories in the coming weeks, adding trading pressure on more Upstream exposed equities (CVE, Buy) while favoring more integrated names (SU, Buy)… “
Reading between the lines, Mr. Rao likes Suncor in the near term and Cenovus after domestic inventory level peak – he expects that to happen in the second quarter of 2020.
Both stocks are trading close to his price targets, however.
“@SBarlow_ROB C: It'll get worse before it gets better in Canadian oil patch” – (research excerpt) Twitter
“Oil drops on doubts over demand boost from U.S.-China trade deal” – Reuters
The number of domestic insolvencies dipped in November but the Canadian Association of Insolvency and Restructuring Professionals believes that is just the calm before the storm,
“The Canadian Association of Insolvency and Restructuring Professionals says the number of people struggling with debt in November is “just the tip of the iceberg.” … The Office of the Superintendent of Bankruptcy says almost 136,000 Canadians became insolvent over the 12-month period, up from 125,000 in the prior year.’
I hadn’t heard of this group previously so I can’t assess the objectivity of the dire statements.
“Spike In Canadian Households Going Bust ‘Just The Tip Of The Iceberg’: CAIRP” – Huffington Post
The Oscar nominations were announced recently, but for U.S. portfolio manager Matthew Ball, investors should ignore the movie industry and focus on video games,
“In October of last year, I wrote about the absurdity of the fact that Big Media content companies and distributors were spending unprecedented sums to increase their exposure to a segment of the media industry with declining value (video), even as another (video games) was growing 15-25% per year…. One of the best ways to understand gaming’s runway is to consider the present-day focus on Hollywood. Every big media company wants to establish a direct-to-consumer content platform and relationship, and to collect/use audience data to improve their content investments. The gaming industry has had this in place for years.”
“7 Reasons Why Video Gaming Will Take Over” – Matthew Ball
The Bespoke Investment Group provided an update on their model growth portfolio of U.S. stocks Tuesday. The manager has sold the majority of their position in chipmaker NVIDIA for a gain of 63 per cent , sold down holdings in homebuilder Pulte and the entire position in Square . New stocks purchased are General Electric and Snap.
One thing I like about Bespoke’s approach is the public disclosure of stops – the prices where the portfolio will sell a position automatically to protect against bigger losses – on each stock.
@SBarlow_ROB Bespoke's growth portfolio” – (full portfolio) Twitter
Diversion: This is one of the most amazing uses of the Internet I’ve ever seen. “The Deep Sea”
Tweet of the Day: