Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BofA’s widely read monthly survey of global portfolio managers concludes that ‘the pain trade is still up’,
“Pain trade still up: BofA FMS shows growth expectations jumping, cash levels collapsing, risk appetites surging; Wall St past ‘peak pessimism’; but June optimism fragile, neurotic, nowhere near dangerously bullish … largest number of FMS [fund manager survey] investors since 1998 think stock market is ‘overvalued’ … just 18% expect V-shaped recovery vs 64% expecting U- or W-shaped and while 37% now say ‘it’s a bull market’, 53% majority still say 'it’s a bear market rally’ … Summer of upgrades: GDP & EPS expectations jumped as lockdowns ended; fear of prolonged recession down to net 46% in June (was 93% in April); new trend of GDP optimism far outpacing EPS hope driven by GDP +ve fiscal stimulus vs. EPS -ve politics … June FMS cash level down from 5.7% to 4.7%, biggest drop since Aug’09”
The “pain trade” in the market trend that would put most active fund managers offside relative to their benchmarks.
“@SBarlow_ROB BoA: market "optimism fragile, neurotic, nowhere near dangerously bullish"’ – (research excerpt) Twitter
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Strategists at Jefferies Research have provided a list of “rock solid” U.S. dividend stocks based on … ,
“Global high-yield companies with rock solid dividends, identified based on “a sequential screening process that removes various risks such as forecast, dividend sustainability, value destroyers and cashflow/balance sheet, as well as a COVID-19 overlay using the modified dividend sustainability (DS) framework”
The top ten picks by market cap are Johnson & Johnson, Proctor & Gamble Co., Intel Corp., Pfizer Inc., Merck & Co., Cisco Systems Inc., Bristol-Myers Squibb Co. (disclose: I own BMY in my RRSP) , Medtronic PLC, Accenture PLC and Honeywell International Inc.
“@SBarlow_ROB Jefferies "US rock solid dividend portfolio" – (table) Twitter
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BMO economist Benjamin Reitzes warns that the worst is likely yet to come for domestic data,
“Canadian manufacturing sales plunged a record 28.5% in April. The drop was worse than expected, but isn’t much of a surprise as the chart looks like those seen throughout the world. It looks as though April was the bottom for broader activity, but May likely didn’t pick up significantly as the lockdowns were still in force through much of the country. June will likely be a better indicator of the speed and extent of the recovery. In the meantime, recall that StatsCan estimated that April GDP fell 11%. The manufacturing report (26% drop in volumes) suggests that the risk is for an even deeper decline in monthly GDP. We’ll get wholesale and retail trade later this week to sharpen our estimate.”
“@SBarlow_ROB BMO: "StatsCan estimated that April GDP fell 11%. The manufacturing report (26% drop in volumes) suggests that the risk is for an even deeper decline in monthly GDP" – (research excerpt) Twitter
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Newsletter: “The five biggest reasons to be bullish have all stalled” – Globe Investor
Diversion: This story involves allegations that boxes of live cockroaches were mailed to critics, “Former eBay Execs Allegedly Made Life Hell for Critics” – Wired
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Scott Barlow