Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Citi commodity analyst Aakash Doshi believes the gold price has further to run (my emphasis),
“While nominal gold prices have posted fresh records north of $2,000/oz in 3Q'20, inflation-adjusted gold prices bouncing around $750-800/oz still remain 30% below the 1980 peaks above $1,000/oz. Given Fed policy at the ZLB [zero lower bound] … a bearish US$ environment, and heightened macro uncertainty across the real economy (e.g., high sector dispersion), we believe investors will likely make a push towards record bullion prices in real terms over the next calendar year. We lift the 2021E base case gold price forecast by ~$300/oz, versus our early July update, to a record $2,275/oz.”
BoA strategist Savita Subramanian published an investor guide to the upcoming U.S. election,
"A contested vote: Could drive 5% downside for the S&P 500. At least that’s what happened in 2000 … Taxes: Biden’s proposal to increase taxes could cost as much as 9 ppt [percentage points] of S&P 500 earnings … A Biden victory is not an automatic negative for Health Care as long as Congress remains split. In fact, our Life Sciences and Diagnostic Tools team sees a Biden administration, either with or without a split Congress, as sector positive. Industrials: Perceptions of tighter regulations under Biden hurting Industrials could be offset by an infrastructure bill, which may have a higher likelihood under a Dem sweep… "
“@SBarlow_ROB BoA: Investors guide to U.S. election” – (research excerpt) Twitter
Jefferies strategist Christopher Wood is bearish on large-cap technology stocks,
“For if Big Tech’s business models were massive beneficiaries of the economic lockdowns, as has clearly been the case this year as demonstrated by these companies' earnings reports as well as their surging share prices, it follows that the same companies will be relative losers if the world goes back to normal sooner rather than later which is what [we]still expects to happen … there is a more mundane explanation for why value should now be expected to enjoy at least an extended period of relative outperformance. For that is what should happen if cyclical momentum continues to build, in line with [our] base case, as the virus continues to prove less virulent than previously feared”
"@SBarlow_ROB Jefferies: “For if Big Tech’s business models were massive beneficiaries of the economic lockdowns ... it follows that the same companies will be relative losers if the world goes back to normal” – (research excerpt) Twitter
“Are value stocks ready for a revival?” – Fidelity
Citi’s global economics team is still bearish,
"Rebound does not equal recovery. The path to full recovery might be much more gradual in most economies after Q3, and riddled with uncertainty. We expect global level of output to reach pre-pandemic levels in mid-2021 at the earliest … markets remain largely detached from economic fundamentals. As equity markets remain in “euphoria” according to Citi’s model, the risk of a correction in the coming months remains elevated. There is no shortage of upcoming risk events, such as the second wave of the pandemic, vaccine development, US elections and Brexit to name a few, that could act as catalysts.'
HSBC analyst James Pomeroy believes a much larger share of our lives is moving to virtual reality,
“Even though the initial application for VR was for immersive gaming (as seen from the 5m units of PSVR being sold globally, reported by Sony, which makes it the biggest selling VR headset to date), today VR in general is beginning to make inroads for virtualising many other non-gaming experiences too through wireless headsets like the Oculus Quest. Applications we have observed include: social VR, working from home in VR, education, conferences, concerts and festivals (Burning Man 2020 is in VR this year), sports, theatre, museums, medicine and fitness – all without physical travel. VR has the potential to virtualise previous experiences where there was only an analogue counterpart and for which you had to physically travel. This can push more of the global GDP to digital.”
“@SBarlow_ROB HSBC thinks everything’s going VR” – (research excerpt) Twitter
Diversion: “Esports Pros Have ‘Dream’ Jobs—but Game Publishers Have All the Power” – Wired
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