Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

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

Scotiabank analyst Meny Grauman has re-opened the firm’s coverage of Canadian bank stocks, recommending a barbell approach to the sector featuring some stocks with exposure to potential upside in the sector and also safe picks with the financial strength to withstand higher than expected losses,

“The COVID-19 pandemic has triggered the first recession the sector has had to face since the 2008/2009 global financial crisis and the most significant credit cycle since the early 1990s. For the time being, the damage appears to be limited, but we recognize that the impact is being buffered by an unprecedented amount of government and private-sector support. The big test will come in the fall and early winter, when many of these programs are reduced or eliminated. In our view, this heightened level of uncertainty suggests that a barbell approach to the space remains the most prudent strategy”

Story continues below advertisement

Mr. Grauman does not state his top picks outright, but it seems to be CIBC – “Given its aggressive provisioning in Q2 and an overweight in personal secured lending, we have growing confidence that the bank will pass this test” – and Royal Bank. In the latter case, the analyst writes, “RY has a number of important attributes that have made this the bank to own through the COVID-19 pandemic. These factors include dominant scale to better manage expenses; conservative provisioning; a diversified business mix with less reliance on one specific business or region; a good balance of fee income and net interest income; and a peer-leading capital ratio (tied with CM)”

“@SBarlow_ROB Scotia likes Royal Bank” – (research excerpt) Twitter

***

BMO economist Doug Porter notes that U.S. inflation expectations have recovered to pre-pandemic levels,

“The implied five-year forward U.S. inflation rate is almost right back to pre-pandemic levels. (The rate looks at the difference between nominal and real Treasury yields, for both the 5- and 10-year terms, and is regarded as a relatively pure measure.) After bottoming out below 1% in mid-March, this metric has climbed steadily back to around 1.8% in recent days. That’s almost precisely where it stood in the opening weeks of the year. No coincidence, the Dow has largely tracked these expectations”

The inflation or no inflation debate, with its significant implications for bond yields and equity sector performance (higher bond yields likely mean value stock outperformance), is fast becoming the most important for investors.

" @SBarlow_ROB BMO: U.S. inflation expectations back to pre-COVID levels” – (research excerpt) Twitter

Story continues below advertisement

***

Also from BMO, equity strategist Brian Belski sees little or no upside for the S&P 500 for the coming months,

“we see limited upside for US stocks overall in the coming months as we believe the host of uncertainties investors will be forced to contend with in the current market landscape will likely lead to elevated levels of volatility and a sideways market for the foreseeable future… Even When the Market Moves Sideways, Certain Stocks Can Still Produce Attractive Returns: Growth-at-a-reasonable-price (GARP) attributes are common among stocks posting solid gains during range-bound market periods. Quality and momentum characteristics also tend to be rewarded "

“@SBarlow_ROB BMO’s Belski sees flat, volatile U.S. equity markets ahead” – (research excerpt) Twitter

***

Diversion: “U.S. Air Conditioning Use Could Surge Nearly 60 Percent by 2050” – Gizmodo

Story continues below advertisement

Tweet of the day:

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies