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A daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

An interesting series of charts from CIBC economist Avery Shenfeld in a report called Canadian Housing Market: No Distance Too Far? shows that housing prices have increased faster in regions further away from major city centers,

“There’s a clear positive correlation between the distance from the city and home price inflation… The post financial crisis period between 2009 and 2014 saw a notable divergence in price trajectory as centres closer to the city experienced a much faster pace of price appreciation. The period between 2014 and the correction of 2017 saw more equal performance across locales of different sizes. But since then, we’ve seen the script completely flipped, with more remote centres leading the way … while prices in more remote centres are rising faster than in Toronto and its immediate suburbs, total sales in centres that are between 50km and 300km removed from the city account for no more than 5% of total sales … it’s possible that the share continues to grow in the near term, but prices in those centres have been rising so fast already that they risk reaching a resistance level … While each centre has its own price resistance level … on average that might already have occurred in Greater Vancouver and the surrounding areas. The premium paid had been narrowing until 2017, but since then, home price inflation in Vancouver has outpaced that seen in more remote centres. Given that Toronto traditionally lags Vancouver when it comes to housing trends, it’s not surprising to see that Toronto is now where Vancouver was pre-2017”

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“@SBarlow_ROB Interesting chart from CIBC (right): “House Price Inflation Outside of Toronto Has Risen Faster (L); With Houses Further Away Rising Most (R)”

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BofA strategist Savita Subramanian talks TINA,

“The long-standing bullish mantra for stocks has been “There is no alternative” or TINA. Especially for income investors, given that the S&P 500 dividend yield has been within spitting (100bp) distance of bond yields for 104 of the last 120 months. Today over 60% of S&P 500 stocks pay a dividend yield that is above the 10-yr yield. But our rates strategists’ forecast for a 10-yr yield of 1.75% by year-end renders TINA less compelling. The opportunities for higher dividend yielders would drop well below 50% (Exhibit 1) and the S&P 500 yield would fail to clear bond yields. But rising rates alone aren’t bad for stocks: stocks posted positive returns 13 of the last 15 rising rate cycle …1.5% is the 10-yr yield above which, following the GFC, the average recommended stock allocation was ~50%, well below the current recommended allocation of 58.4%... 4% is the level at which the spread between the S&P 500′s current dividend yield and 10-yr yield drives decreasing allocations to stocks for investors.’

“@SBarlow_ROB BoA: “No More TINA” – (research excerpt) Twitter

“@SBarlow_ROB BoA: “Buy-rated U.S. stocks that benefit from rising nominal interest rates” – (table) Twitter

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Morgan Stanley quantitative analyst Boris Lerner published a list of the most promising U.S. stock opportunities based on their proprietary model,

“Morgan Stanley’s Biannual Equity Select Tool (BEST) is a systematic multi-factor stock selection alpha model with a 24-month horizon … Our BEST Quantamental long screen includes stocks in the top quintiles of BEST that are rated Overweight by the Morgan Stanley analysts.”

The accompanying table ranks the highest scoring stocks by market cap. It starts with Johnson & Johnson, Merck & Co., Linde PLC , Charter Communications Inc., Raytheon Technologies Corp., Lockheed Martin Corp., Gilead Sciences Inc., Cigna Corp., General Motors Co., Schwab Corp., Capital One Financial Corp., Northrup Grumman Corp., Metlife Inc., Conocophillips and Freeport Mcmoran Inc.

“@SBarlow_ROB MS: Morgan Stanley’s Biannual Equity Select Tool (BEST) is a systematic multi-factor stock selection alpha model with a 24-month horizon” – (table) Twitter

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Diversion: “The next act for messenger RNA could be bigger than covid vaccines” – M.I.T. Technology Review

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