Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Scotiabank mining analyst Orest Wowkodaw is bullish on copper and uranium stocks,
“Heightened macroeconomic concerns from elevated interest rates, high energy prices, a strong U.S. dollar, and a sputtering China, continue to stoke global recession fears. Although we remain concerned with near-term consumption risks, particularly in China, several commodity markets, including Cu [copper], U3O8 [uranium], and Fe [iron] , appear surprisingly tight in 2024, driven by ongoing supply[1]side underperformance and remarkably resilient demand. Moreover, with visible inventories for some metals already at critically low levels (Cu at only ~3 days), we anticipate a relatively attractive pricing environment this year, despite economic uncertainty. In the medium to long term, we anticipate the emergence of a new commodities super cycle for several metals (notably Cu), driven by growing demand from global decarbonization efforts to address climate change … We are concerned with near-term over-supply risks in Zn and Ni… We recommend 12 of 25 equities under our combined coverage. TECK.B-T [Teck Resources] and CCO-T [Cameco] remain our top picks; we also highly recommend CS-T [Capstone Mining] and FCX-N [Freeport McMoran] for Cu exposure. We also prefer ECOR-L [Ecora Resources PLC] , HBM-T [Hudbay Minerals] , and IVN-T [Ivanhoe Mines Ltd.]
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Citi U.S. equity strategist Scott Chronert refreshed the research department’s large-cap recommended list, adding Constellation Brands Inc., LPL FInancial Holdings, Merck, Intuitive Surgical, Union Pacific Corp., Lockheed Martin Corp. and CRH PLC.
The list is now T-Mobile, Amazon.com Inc , Walmart Inc. Constellation Brands Inc, Schlumberger NV, Bank of New York Mellon, LPL Financial Holdings Inc., HCA Healthcare , Intuitive Surgical Inc., Merck & Co Inc., Deere & Company, Union Pacific Corp, Quanta Services Inc., Rockwell Automation, Lockheed Martin Corp., Applied Materials Inc., Microsoft , CRH PLC , Prologs, Inc and Edison International
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Goldman Sachs U.S. economist Jan Hatzius remains bullish on growth but discussed the top 10 risks to economic expansion,
“Risk 1: A consumer slowdown looks unlikely because real income should grow about 3% and household balance sheets are strong … Risk 2: Rising consumer delinquency and default rates mostly reflect normalization from very low levels in recent years … Risk 3: A sharper deterioration in the labor market is unlikely with job openings still high and the layoff rate still very low … Risk 4: The narrow breadth of job growth is not indicative of either a mismatch problem or weak labor demand in most sectors—job openings are high in nearly all sectors—and it should normalize as hiring rebounds in industries that are particularly sensitive to financial conditions … Risk 5: Rising corporate bankruptcies look less ominous and indeed quite low when compared to pre-pandemic levels … Risk 6: The corporate debt maturity wall will raise corporate interest expense with a longer delay than usual, but the resulting hit to capital spending and hiring is likely to be quite modest… Risk 7: Commercial real estate broadly is not a problem, office specifically is… Risk 8: A bank credit crunch was a valid concern last spring, but the banking stress has not been as serious as feared … Risk 9: Something finally “breaking” due to higher interest rates is unlikely at this point because the peak growth hit from higher rates and tighter financial conditions is well behind us… Risk 10: Fading fiscal support is less real than it appears”
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Diversion: “Bottled Water Contains 100 Times More Plastic Particles Than Previously Thought” – Gizmodo
Scott Barlow