Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
RBC published a research report on Canadian consumer spending and some of the results were surprising,
“Sales at restaurants, bars and other food services providers were just 9% below year ago levels at the end of July, as compared to -17% a month earlier … After several weeks of rapid gains, spending on clothing was just below year-ago levels at the end of July. Spending at department stores and household goods retailers was flat, as high home improvement spending started to cool … Overall travel spending remained down 64% from a year earlier—still better than late March when it was 90% lower than a year prior.
“@SBarlow_ROB RBC: YoY Canadian consumer spending rose in July” – (chart) Twitter
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Credit Suisse U.S. equity strategist Jonathan Golub highlights an improving outlook for S&P 500 profits (my emphasis),
“Bottom-up consensus forecasts currently call for $129 and $165 of EPS in 2020-21, up from June 30 estimates of $124 and $162, an improvement of 4.3% and 1.6% respectively. 3Q-4Q estimates have risen by 2.6% and 0.1%. Estimates Rise in 8 of 11 Sectors: 2020 estimates have been adjusted higher in most sectors, save Industrials, Utilities and REITs. Forecast have improved the most in Discretionary and Health Care.”
“@SBarlow_ROB CS: “S&P 500 Consensus EPS Growth – Current vs. June 30” – (sector table) Twitter
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BofA Securities’ monthly report from their Research Investment Committee has been touting the end of the 60/40 portfolio (60 per cent equities, 40 per cent bonds) for almost a year. They believe that government bonds (specifically U.S. but the problem is widespread) yield so little that they no longer make sense as investment,
“First, we would emphasize that secular stagnation is blurring the lines between traditional asset classes. Is a 30-year Treasury bond really so different from a high-flying consumer tech stock that pays a 0.7% dividend? Neither provides investors with a positive inflation-adjusted income stream, and both would look suddenly very unattractive in our Stagflation… scenario… Every investor has to take risk somewhere, and we suggest allocating capital only to the kinds of risk one wants to take. Today, that means equity, credit (corporate, [emerging markets], and taxable municipal), and liquidity ([fixed income related closed-end funds trading at discounts to NAV] and gold)”
“@SBarlow_ROB BoA: how to diversify when 60/40 is dead” – (research excerpt) Twitter
" @SBarlow_ROB BoA: ‘Cross-asset comparison of yield per unit of risk"” – (chart) Twitter
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Newsletter: “Which of the 5 types of investors are you?” – Globe Investor
Diversion: " The global coffee crisis is coming” – Vox
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Scott Barlow