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

Scotiabank mining analysts Orest Wowkodaw discusses his bullish outlook for copper miners,

“OUR TAKE: Mixed. The Q2/23 reporting season was largely one to forget, with most miners missing expectations. Our major takeaways from Q2 are as follows: (1) Planned 2023 output is even more heavily weighted to 2H than we anticipated (approximately 40/60 for many). Three out of the four companies we had previously flagged with having downside 2023 guidance risk formally cut expectations (ANTO, CS, and TECK; FM did not), (2) Some cost pressures are expected to begin easing in 2H, which combined with higher volumes, should materially improve reported unit costs, (3), Overall, financial performance appears poised to markedly improve in 2H assuming metal prices stabilize, (4) Growth execution appears relatively mixed, with some miners performing better than others (CS, ERO, and IVN are on track/on budget to date, while ANTO, NEXA, and TECK are behind schedule on ramp-ups), (5) There appears to be strong pent-up investor demand for most Cu and U308 equities driven by the decarbonization narrative and M&A, as we observed most shares moving flat to up on disappointing updates, pushing valuations higher. TECK and CCO are our top picks, while FM and CS remain our other preferred picks for Cu exposure; we also recommend CIA, ERO, FCX, HBM, IE, and IVN”


The results from BofA Securities’ monthly survey of global fund managers is out, as summarized by investment strategist Michael Hartnett,

“Bottom line: least bearish FMS [fund manager survey] since Feb’22; cash drops from 5.3 per cent to 4.8 per cent (21-month low), 3 out of 4 expect soft/no landing, smallest equity UW [underweight] since Apr’22, largest tech OW [overweight] since Dec’21; bear positioning strong tailwind for risk assets in H1…not the case in H2… 4/10 say recession ‘unlikely’ (was 1/10 Nov’22), EPS optimism highest since Feb’22; … On Risks: FMS cash … On Asset Allocation: out of cash & REITs (capitulation to GFC/Lehman levels) into stocks & commodities; out of US/EU/UK into EM/Japan; out of industrials/utilities into energy/tech (long Big Tech by far most “crowded trade”)”

“From BofA’s fund manager survey, global investors capitulate on REITs” – (chart) Twitter


Also from BofA, U.S. quantitative strategist Savita Subramanian upgraded consumer discretionary stocks from underweight to overweight, skipping equal weight, and downgrading defensive consumer staples. Here is the summary,

“We raise Consumer Discretionary to O/W from U/W & lower Staples to U/W from M/W. 10 reasons below. 1) soft landing, 2) positioning, 3) shift in cycle, 4) earnings, 5) 85 per cent of US mortgages are fixed-rate, 6) homebuilders = canary in coal mine, 7) + real wages, 8) goods recovery, 9) quant model, 10) exaggerated headline risk.”


Diversion: “Will electrifying cars and home heating break Canada’s grid?” - CBC News

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