A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Bank Of Montreal reported disappointing profit results early Wednesday.
The Globe and Mail’s James Bradshaw provided analysis,
“Bank of Montreal reported a 5-per-cent bump in profit and raised its quarterly dividend thanks to strong U.S. growth and muted loan losses, but the results still fell shy of analysts’ forecasts due partly to severance costs … Provisions for credit losses, which are the funds banks set aside to cover bad loans, increased by 10 per cent to $176-million, compared with last year. The bank’s provisions on impaired loans decreased by $22-million thanks to a recovery on a commercial loans”
“BMO boosts its dividend as profit bumps higher, but still falls short of estimates” – Report on Business
There is something about the term “rare earth metals” that drives financial media into a frenzy.
BNN Bloomberg is talking this morning about China “weaponizing” its dominant position as a rare earth metal exporter, but, as Merrill Lynch analyst Michael Widmer notes, these elements are actually not rare at all,
“Rare earths elements (REE) have long had strategic importance given their chemical and physical properties make them suited for new, often low-carbon and defence technologies. REE comprise of 17 materials, which are not rare as such: cerium is more common than copper and all of the other elements, excluding promethium, more abundant in the earth’s crust than silver, gold or platinum.”
Mr. Widmer goes on to argue that a Chinese refusal to export rare earth metals would just spur production elsewhere,
“A complete export ban to the US would be impractical, as the US could import from other countries, including Malaysia for processed products and Japan for magnets. Nonetheless, some of these measures may come at a cost, so export restriction may be a headache at least in the short term.’
“@SBarlow_ROB ML: rare earth metals are not rare” – (research excerpt) Twitter
“@SBarlow_ROB ML: global response to rare earth export ban” – (research excerpt) Twitter
“ Explainer: China's rare earth supplies could be vital bargaining chip in U.S. trade war” – Reuters
“@tracyalloway Rare earths (BofaML)” – (global map of deposits) Twitter
An apparent abrupt slowdown in the global economy is a far bigger issue for Canadian investors than whether the U.S. Defense Department has the ingredients to make more missiles.
Morgan Stanley U.S. equity strategist Michael Wilson highlights the recent performance of cyclical stocks relative to defensive stocks as a sign further economic disappointment is ahead,
‘We think leadership from Treasuries and bond proxies is just another sign that growth is slowing more than the average investor thinks and blaming trade and hoping for a deal may simply serve as a trap. Therefore, we remain defensively positioned and overweight utilities and consumer staples. Quality will likely continue to perform as well but with growth slowing investors need to be more careful with their idiosyncratic risk given the greater likelihood of an earnings miss from late cycle growth companies”
“@SBarlow_ROB MS: "blaming trade and hoping for a deal may simply be a trap" – (research excerpt) Twitter
“@SBarlow_ROB MS: "Cyclicals and 10-Year Yields Signaling Further Downside in Macro Data Is Likely. We Agree" – (chart) Twitter
“Bond yields pushing the outer limits” – Financial Times (paywall)
Tweet of the Day:
🇰🇷 #SouthKorea | Kospi is usually a leading indicator of global trade growth and recent moves suggest more pain ahead (in line with the New Export Orders of the Global Manufacturing PMI). pic.twitter.com/gb0jvRk9sX— Christophe Barraud🛢 (@C_Barraud) May 29, 2019
Diversion: “I deeply resent how we’ve infantilized the workplace”: A manager’s manifesto goes viral” – Quartz