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

Scotiabank strategist Hugo Ste-Marie highlighted a difficult first quarter for domestic dividend strategies,

“After a challenging 2023, dividend strategies continue to struggle so far this year … while all four dividend ETFs we track [ishares S&P TSX CDN Dividend ETF, ishares S&P TSX Comp High Div Index ETF, ishares Canadian Select Div Index ETF and Ishares Core MSCI CAD Qlty Div ETF] delivered positive total return performance in QI, they all underperformed the TSX Composite by a significant margin. Higher bond yields and strong risk appetite didn’t help, but some go-to dividend sectors are also experiencing industry-specific headwinds, such as tough competition in Communications (-10% year-to-date). Utilities (-2.3%), Real Estate (+0.8%), and Banks (+2.1%) are among the notable underperformers in QI. All major U.S. dividend ETFs are also trailing the S&P 500 this year”

… And in a separate Scotiabank report, strategist Jean-Michel Gauthier warned clients about flagging momentum in U.S. tech stocks,

“After an impressive run in the first two months of 2024, Momentum hit a slow patch in March that accelerated in the final days of the month. We are not terribly surprised as overheated price action met a dearth of news/catalysts with the end of the Q4 earnings season … Looking at the median % difference between current stocks prices and their 52 weeks highs/lows, we see that most stocks in the US stand at, or near, their 52-week highs after the rally. This is especially true in the Tech space, which has been making new all-time highs since February. Most stocks being near their 52-week highs doesn’t imply they can’t exceed it (see most of the 2021 bull run), but it does imply that earnings need to deliver as the multiple expansion phase of the recovery may have run its course. Growth over Momentum stocks could thus have a better time in the coming months. In Canada, we definitely have further room to run, especially if commodity prices keep rising”


BMO Canadian rates and macro strategist Benjamin Reitzes noted a “firming” of domestic economic growth,

“The holiday-shortened week had more than chocolate Easter eggs as a treat for Canadian economy watchers. GDP growth surged 0.6% in January, well above expected, and the best month in exactly one year. In addition, February’s flash estimate was +0.4%, pointing to a potentially strong Q1 reading. In case you were hoping that firmer growth meant productivity also turned higher, don’t get too excited. Hours worked saw big increases in January and February (we’ll get March on Friday), suggesting that productivity remained muted to start 2024. One additional point to make on GDP… January’s growth was more than the prior 11 months combined. Interestingly, January 2023 also recorded a chunky increase in activity (+0.7%) only for growth to falter through the rest of the year. We’ll be watching to see if 2024 follows a similar script”


CIBC analyst Sid Mokhtari noted an improving technical picture for commodity prices,

“On a different note, technical internals for the CRB Raw Industrials index have begun showing bottom-building characteristics, while appearing on pace for another potential trough … Copper shows a quiet break out of its narrowing range; zinc and steel charts are similarly turning back up from their higher-low trendline supports; and both WTI and Brent commodity charts are acting better on the upside – tactically, we are paying more attention to commodities and their related GICS sectors’


RBC Capital Markets head of global commodity strategy Helima Croft is concerned that rising tensions in the Middle East could push crude prices higher,

“Today’s Israeli strike on the Iranian consulate in Damascus, which killed several senior Iranian Revolutionary Guard Corps (IRGC) officials, marks one of the most serious escalatory actions since October 7th … Today’s actions raise the specter of a significant Iranian retaliation, as Iran’s ambassador to Syria immediately pledged a harsh response. Nevertheless, Iranian Supreme Leader Ali Khamenei may seek a more cautious approach to walk a fine line between sending a tough warning message, while avoiding a response that would trigger a direct confrontation with Israel and/or the U.S. … A key question, in our view, is whether Israel is willing to risk a direct confrontation with Iran to achieve its regional security objectives . One could certainly make the case that today’s action demonstrate s an elevated risk tolerance on the part of the Netanyahu government. It remains to be seen whether the consulate strike was part of the ongoing Israeli effort to sever arms supply lines running through Syria to Hezbollah in Lebanon, potentially in advance of a ground offensive”


Diversion: “Google Maps Is Officially the Greatest App of All Time” – Gizmodo

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