Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
The research team at RBC Capital Markets made only marginal changes to their Canadian Focus List of top picks for the third quarter of 2023. The weighting on Alimentation Couche-Tard Ltd. (ATD-T) was doubled to 5.0 per cent of the portfolio, TC Energy Corp’s (TRP-T) weighting was halved to 2.5 per cent and Waste Connection Inc.’s (WCN-T) allocation was increased to 5.0 per cent from 2.5 per cent.
The other stocks on the list are Bank of Montreal, Bombardier Inc., Brookfield Corp., Brookfield Infrastructure Partners LP, Canadian Natural Resources Ltd., Canadian Pacific Kansas City Ltd., CCL industries, Constellation Software, Dollarama, Element Fleet Management Corp., First Capital REIT, GFL Environmental, Intact Financial Corp., National Bank of Canada, Nutrien Ltd., Pembina Pipeline, Shopify Inc., Suncor Energy, Telus Corp., Thomson Reuters Corp., Toromont Industries Ltd., TD Bank and WSP Global.
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Citi analyst Ephrem Ravi is cautious on base metal commodity prices for the next six to nine months,
“We remain bearish the complex over the next three months, particularly nickel and zinc — We see approximately 0-5-per-cent downside from current spot prices vs our 0-3 mt pt price targets for copper ($8,000/t), aluminium ($2,050/t) and tin ($25,000/t) with 10-15-per-cent downside over the same period for nickel ($18,000/t) and zinc ($2,100/t) and lead ($2,000/t). The common bearish theme is our expectation for a continued deterioration in developed market demand over the next 6-9 months amid the current restrictive monetary policy environment, with China growth likely to remain sluggish amid a lack of meaningful stimulus (see our recent China commodities outlook here). We suggest selling rallies on a short-term tactical basis and for consumers and longer-term bullish investors to wait for better value at lower price levels. We continue to see copper trading in a broad $7,500-$8,500 range over the next 6-9 months…We are particularly downbeat on nickel and zinc on bearish micro factors. We expect wider refined surpluses as easing bottlenecks in nickel conversion capacity and zinc refined capacity drive widening availability of exchange-deliverable metal”.
Copper is currently trading in near US$8425.
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BofA Securities weekly Flow Show report included some interesting nuggets,
“Net 44 per cent of Americans now support labor unions, highest since ‘72 … 10-year Treasury on course for 3rd consecutive loss (down 0.3 per cent in ‘23, down 17.0 per cent in ‘22, down 3.9 per cent in ‘21) … has never occurred in 250-year history of US republic; reflects staggering 40-per-cent jump in US nominal GDP (growth + inflation) since ‘20 COVID lows … 40-per-cent surge US nominal GDP past 3 years (on back of $13-trillion Fed/govt stimulus) surpassed only in ‘49-’52 (43 per cent) & ‘75-’79 (44 per cent); stocks love booms…S&P500 up 136 per cent in ‘49-’52, +97% in ‘75-78, up 113 per cent since Mar’20 lows; big difference…in prior 2 nominal booms value outperformed growth stocks by 45ppt & 105ppt, complete reverse past 3 years … US jobs market softer…job openings/unemployed ratio lowest since Sep’21 = strong tell Fed is done”
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Analyst Christopher Wood made what sounds like an important realization about changes to the BRIC umbrella of companies,
“The chief outcome of last week’s somewhat ballyhooed meeting of the BRICS countries in Johannesburg was the announcement that Saudi Arabia and the UAE, among other countries, have been invited to join the grouping. South African President Cyril Ramaphosa announced last Thursday after the summit that the BRICS members have decided to invite Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates to become full members of BRICS, effective from 1 January 2024… Such an outcome would mean that the BRICS grouping would control 40 per cent of world oil exports at a time when the overwhelming probability is that US shale oil production has peaked … This is, potentially, a momentous development. The current BRICS members accounted for 14.2 per cent of world total crude oil exports in 2022, while the newly invited BRICS members accounted for a further 25.4 per cent of the total”
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Diversion: Are self-driving cars already safer than human drivers? – Ars Technica
Scott Barlow