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A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web

Two hopeful signs that the global economy may be stabilizing after an extended period of declining growth levels.

First from China,

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“Housing prices in 70 big Chinese cities increased an average of 10.6 per cent year on year in March, the quickest gain since April 2017… According to one recent central bank study, China’s property sector accounted for 12 per cent of total economic output in 2016. Other studies have estimated the sector’s contribution could be as high as 25 per cent.’

The German economy, which has been hurt badly by slowing exports in recent months, is showing some corporate optimism,

“The Zew survey’s indicator of economic sentiment rose in April to 3.1 points, moving into positive territory for the first time since March last year and up from minus 3.6 points last month… The Zew index “adds to tentative evidence that a gradual rebound of the German economy is in the making”, analysts at ING said.’

“China house prices rise signals economic rebound” – Financial Times (paywall)

“German economic outlook swings positive for first time in a year” – Financial Times (paywall)

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Merrill Lynch’s widely followed survey of global portfolio managers sees cautious positioning and expectations for continued sluggish growth,

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“Investors are positioned for ‘secular stagnation,’ long assets that outperform when growth & rates fall (cash, EM, utilities), short those that require higher growth & rates (equities, Eurozone, banks)… 70% of investors surveyed expect a global recession to start in H2’2020 or later … No to buybacks: 44% say corporations are excessively leveraged; 43% say corporates should “improve their balance sheet”; just 16% want more stock buybacks & dividends”

“@SBarlow_ROB ML FMS Summary” – (research excerpt) Twitter

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Also from Merrill Lynch, quantitative strategist Savita Subramanian is recommending clients sell U.S. utility stocks to buy financials,

“We moved to an underweight in Utilities and remained overweight Financials for a host of reasons, and current valuation statistics still provide more support. Some argue that Financials have become Utilities (regulation, cash return over growth, capped ROEs, etc.) But one key difference is the price tag: Utilities now trades at a 60% premium to Financials on forward P/E (two standard deviations above its average relative multiple), marking the fourth highest relative multiple in 33 years (Chart 1). Since 1986, we have seen eight instances of relative valuations above two standard deviations. Results in the following twelve months saw the long Financials/short Utilities trade outperform the S&P 500 seven out of eight times, generating 19.7% return on average’

“@SBarlow_ROB ML says : long financials/short utilities” – (research excerpt) Twitter

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This paragraph from a research report from Morgan Stanley strategist Andrew Sheets makes a mockery of some commonly held ideas about risk management,

“Growth has been a ‘lower-beta’ [lower volatility relative to the market] asset to global equities than value for the most of the last decade. But this dynamic is starting to change. The beta of value stocks to global equities has been falling, making them a ‘lower-beta’ asset when compared with growth stocks. However, we note that this relationship has been volatile across history. For example, value outperformed the market in the sell-off in 2000 but failed to cushion a broad market sell-off in 2008.”

“@SBarlow_ROB MS research paragraph chock full of surprises" – (research excerpt) – Twitter

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Tweet of the Day:

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Diversion: “Why the Notre-Dame Cathedral Fire was So Difficult to Tackle” – Archdaily

Newsletter: “ Four helpful observations for investors” – Globe Investor

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