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Inside the Market Merrill Lynch’s top 10 stock picks for growth and value investors

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

Merrill Lynch published quantitative strategist Savita Subramanian’s top 10 stock picks for both value and growth investors. The choices are the result of a model emphasizing companies with a high probability of beating earnings estimates.

The growth names include a mix of some usual favourites like Amazon.com Inc., Facebook Inc. and Alphabet Inc., but also some lesser knowns, including United Rentals Inc. and Flowserve Corp. The value list uncovered Chubb Ltd. and Warren Buffett holding Kraft Heinz Co.

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“@SBarlow_ROB Merrill Lynch 'Value 10'” – (table) Twitter

“ @SBarlow_ROB Merrill Lynch 'Growth 10'” – (table) Twitter

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Global economic data released Thursday was again a bit disturbing for investors. European Union services growth was solid but manufacturing output was announced at levels last seen in 2013,

“Overall growth was centred on the service sector where activity also rose at the fastest pace in three months amid an improving picture in Germany and stabilisation in France. On the other hand, euro area manufacturing production decreased for the first time since June 2013 … the manufacturing sector was the main source of weakness in new business. Manufacturing new orders decreased to the greatest extent in almost six years, with new export orders also falling at a faster pace than in January.”

“Eurozone growth remains muted amid decline in manufacturing” – IHS Markit

“ @Breakingviews As the Euro zone’s February PMI output is contracting for the first time since 2013, time to re-read @swahapattanaik’s yesterday view about warning signals on global growth among equity analysts: reut.rs/2XdUEEd “ – (chart and link) Twitter

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“@jsblokland The massive gap in #Germany's Manufacturing and Services #PMI explained: Global Trade! “ – (chart) Twitter

“@RVAnalysis *SOUTH KOREA FEB. 1-20 EXPORTS FALL 11.7% Y/Y *SOUTH KOREA FEB. FIRST 20 DAYS IMPORTS FALL 17.3 % Y/Y *SOUTH KOREA FEB. 1-20 CHIP EXPORTS DROP 27.1% Y/Y *SOUTH KOREA FEB. 1-20 EXPORTS TO CHINA DECLINE 13.6% Y/Y’ – (chart) Twitter

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The Canadian real estate market was described as ‘stable but struggling’ by Maclean’s magazine,

“After what appeared to be a stabilizing period over the summer of 2018, national home sales have been falling since September. Actual activity was down 19 per cent year-over-year in December, while the national average sale price dropped 4.9 per cent. Analysts chalk up these lacklustre numbers to stricter mortgage qualification rules, which came into effect in January 2018, and steadily rising interest rates… Less positive is the picture in Alberta, where the market continues to struggle under the effects of lower oil prices and a struggling energy sector. Resales in the province hit an eighty-year low in January, while prices in Calgary and Edmonton were down 3-4 per cent year-over-year.”

“Canadian real estate market outlook 2019: Stable but struggling” – Maclean’s

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Citi economist Catherine Mann argued that markets are now dependent on a recovery in global trade,

Domestic resilience has weakened. Financial turbulence is on pause for now. External headwinds have intensified. Trade tension is the common global factor that will drive prospects in 2019. An escalation and multilateralization of trade tensions with tariffs, retaliation, and spillovers could take 0.4pp off global growth, with trade growth nearing the levels last seen in 2015-2016. A resolution and roll back of current tensions, tariffs, and retaliation with concomitant spillover benefits and sentiment boosts could lift global growth by some 0.5pp. Fiscal and monetary policy are currently poised for a worsening global climate. Upside trade outcomes would require asset price adjustments, which would bring financial turbulence back into play. What is currently a modest fiscal expansion to support growth as trade weakens could reverse, with uncertain impact on a rebound in domestic resilience.”

“@SBarlow_ROB C: "Domestic resilience has weakened. Financial turbulence is on pause for now. External headwinds have intensified. Trade tension is the common global factor that will drive prospects in 2019."” – (research excerpt ) Twitter

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Tweet of the day:

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Diversion: “The first privately funded trip to the moon is about to launch” – M.I.T. Technology Review

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