Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Morgan Stanley analyst Brian Nowak published a research report on eCommerce stocks that included some startling statistics (my emphasis),
“We think profitability is going to matter in ’21. OW [overweight–rated stocks]: AMZN, FTCH, MTCH. UW: ETSY, SFIX. ’20 eCommerce Pull Forward Unlikely to Reverse As Consumer Demand and Brick and Mortar Supply have Structurally Changed: We estimate ’20 resulted in a 3 year pull forward in eCommerce adoption. We don’t think that’s going to reverse (or for eCommerce to decline) as we believe broader consumer eCommerce adoption across more categories (including still under-penetrated … grocery) has arrived and as consumers embrace the growing convenience of being able to order more categories of goods and have them delivered in 2 days or less … our REIT/retail teams (led by Richard Hill, Kimberly Greenberger and Simeon Gutman) estimate that anywhere from 25%-45% of mall square feet are likely to be closed over the next 5-10 years "
“@SBarlow_ROB MS on eCommerce: “25%-45% of mall square feet are likely to be closed over the next 5-10 years” – (research excerpt) Twitter
Citi analyst Klas Bergelind sees signs of a commodity supercycle boosting demand for mining equipment(my emphasis),
“Mining capex as a theme is gaining significant momentum; the second best performing theme globally last month according to Citi’s Global Theme Machine. The debate remains whether the miners will use the surplus cash (FCF less dividends) for incremental capex given the history of major cost overruns of earlier Greenfield projects. At the current spot prices, however, we show that only a fraction of the surplus cash can have meaningful upside to capex. Global mining-exposed favorites are Epiroc, Komatsu, CAT, Metso Outotec and Michelin … We see +50% capex growth potential 2021-22 vs +25% base case at the diversified miners where our coverage has 70-80% exposure.”
“@SBarlow_ROB C: Mining supercycle returns, boosting machinery demand” – (research excerpt) Twitter
BofA Securities global economist Aditya Bhave has really jacked up their first quarter estimate for U.S. GDP,
“The aggregated BAC [Bank of America credit] card data showed a noticeable positive impact from the stimulus funds distributed earlier in the month. We therefore officially upgrade our GDP forecasts. We are revising up 1Q GDP growth to 4% from 1% previously, and downgrading 2Q GDP to 5% from 7%. This leaves annual growth at 5.0% this year, up from our prior forecast of 4.6%. The Fed is committed to FAIT, which means inflation must run above 2% to offset the recent undershoot. We think inflation above 2%, perhaps as high as 2.5%, is welcome.”
“@SBarlow_ROB BoA really jacks up Q1 U.S. GDP estimate” – (research excerpt) Twitter
Diversion: “Toronto, Montreal see exodus pick up pace, aggravated by COVID-19 pandemic’ – Lundy, Report on Business
Tweet of the day:
GOLDMAN: “We do not expect all of the elements of the proposal to pass, but we are increasing our assumption of additional near-term fiscal measures from $750bn (3.4% of GDP) to $1.1 trillion (5% of GDP).” pic.twitter.com/DTSEvOVSkX— Carl Quintanilla (@carlquintanilla) January 15, 2021
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