Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Yesterday, I highlighted BMO’s argument for continued weakness in domestic real estate, but happier news for investors in the sector today comes from asset management behemoth Blackstone.
Fund managers there view commercial real estate, notably warehouses, as their “highest conviction” investment idea as e-commerce grows,
“Blackstone, the world’s largest alternative-asset manager, invested more than $25bn last year in warehouses in America and Europe. It calls logistics its “highest-conviction global investment theme”. A battle over industrial wasteland is under way … Hamid Moghadam, an Iranian-born property developer, made a $5m bet on Webvan, an American online grocer. It was a bust. Webvan was one of the most spectacular casualties of the dotcom crash. More galling still, Mr Moghadam turned down the opportunity to invest in another e-commerce upstart called Amazon … Sensing a potential bounty in the online craze, the firm he co-founded, amb, sold its portfolio of shopping centres and bought millions of square feet of warehouse space on the tarmac of American airports instead. ‘We got the company wrong, but we got the big trend right,’ he says. Two decades later the company he heads, Prologis, is Amazon’s biggest landlord. Mr Moghadam, now 63, stands tall over the world’s warehouse business.’
“The e-commerce boom makes warehouses hot property” – The Economist
Scotiabank strategist Jean-Michel Gauthier notes that price momentum for Canadian bank stocks is near record lows, and this potentially signals a lucrative buying opportunity,
“TSX Banks have been underperforming since 2018, on a combination of the economic slowdown, rising PCLs, and a flattening curve. They further underperformed significantly in the March bear market and failed to lead on the rebound. Still, a turning point may be near, according to our SQoRE data. Based off Banks’ near-record-low Momentum metrics, the sector is due for a turnaround. Past Momentum lows correlate well with subsequent Bank outperformance (median of +6% over the TSX in the next 12 months)”
“@SBarlow_ROB BNS sees buying opp for Canadian bank stocks in "Banks Face Bottom of Barrel" – (research excerpt) Twitter
Citi U.S. equity strategist Tobias Levkovich updated his widely followed Panic-Euphoria model and the results are disquieting.
The model uses nine different (non-specified) inputs to measure investor sentiment. It is a contrarian indicator – the current euphoric sentiment levels indicate negative returns for U.S. equities ahead,
“The Panic/Euphoria Model captures nine inputs that also can contradict one another at times, but the metric was designed to signal the preponderance of the evidence, mostly encompassing investor positioning rather than feelings… The true benefit of Panic/Euphoria is its predictive nature. When the numbers go into euphoric territory, there’s a 70% probability of the S&P 500 being down in the subsequent 12 months. At the most current readings, the chances of a decline now have climbed to near 80% and that is indeed quite worrisome.”
“@SBarlow_ROB C: Panic euphoria model indicated almost 80% chance of negative SPX returns’ – (research excerpt) Twitter
“@SBarlow_ROB Panic Euphoria chart’ – (chart) Twitter
Diversion: The list is entirely, inexplicably wrong but fun, “The 100 Greatest Debut Singles of All Time’ – Rolling Stone
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