A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Citi mining analyst Ephrem Ravi’s Tuesday research report is called Super-cycle sunrise? Copper to $10k/tonne sooner rather than later,
“We upgrade our 0-3 month copper point price to $9,000/t and 6-12 month point price to $10,000/t, based on our updated copper model balances, which point to a deep deficit during 2021 and low inventories for years to come … Prospects for a super cycle in copper and aluminium are real, as we see strong decarbonization-led demand for copper, and decarbonization-led supply constraints for aluminium, keeping inventories low despite an eventual turn in the global cycle”
The current copper price is about US$8250 per tonne.
Citi: Super-cycle sunrise for metals (research excerpt) - Twitter
BofA Securities’ popular monthly fund manager survey (FMS) raised a stir in financial circles when it was released this morning, in part because of the report’s first line,
“The only reason to be bearish is...there is no reason to be bearish: FMS sentiment on global growth at all-time high, V-shaped recovery finally consensus, cash levels at 8-year low, equity & commodity allocations highest since ’11 (the last year both had negative returns), only 13% say it’s a bubble... Boom-boom: net 91% of investors say stronger economy in 2021, majority now say it’s a V-shaped recovery, 1st time since Jan’20 investors want CIO’s to “increase capex” rather than “improve balance sheet”; CPI [ consumer price index], EPS [ earnings per share] and yield curve expectations close to record highs. Cash is trash: FMS cash level down to 3.8%, lowest since Mar’13 (just before Bernanke “taper tantrum”); allocation to stocks & commodities highest since Feb’11; record number investors taking “higher-than-normal” risk.
“@SBarlow_ROB BoA fund manager survey:’ record number investors taking “higher-than-normal” risk’” - (research excerpt) Twitter
CIBC analyst Ian de Verteuil took a comprehensive look at ESG investing and its potential effects on the Canadian market,
“Global assets within ESG ETFs are approximately US$200 billion, and the category more than doubled in 2020. Growth was particularly strong in Europe, where almost 10% of the ETF assets are in ESG funds, far above the 1.5% share seen in North America. In aggregate, these funds are overweight Information Technology, Industrials and Utilities (with a bias to renewable utilities). On the other hand, Financials, Health Care, Communications and Energy are underrepresented. .. At the end of 2020, roughly 1.5% of the ETF assets of the U.S. and Canada are within ESG-oriented funds .. "
Mr. de Verteuil listed Canadian companies with the highest ownership by global ESG funds.
These are, in order, GreenPower Motor Co. (16 per cent of market cap owned by ESG funds), Canadian Solar Inc. (14 per cent) , Absolute Software (11 per cent ), Boralex Inc. (10 per cent) and Innergex Renewable Energy Inc. (8.0 per cent) .
Morgan Stanley chief economist Chetan Ahya details why this time might be different for U.S. inflation pressure,
“Cumulatively, the Covid-19 recession has cost US households US$400 billion in income, but they have already received more than US$1 trillion in transfers (even before the late December and forthcoming rounds of stimulus). Households have already accumulated US$1.5 trillion in excess saving, which is set to rise to US$2 trillion (9.5% of GDP) by early March once the additional fiscal package is enacted. These policy-making regime shifts also mean that policy-makers will tighten much later in the recovery than in the previous cycle.”
Household balance sheets are not usually this strong, or savings this high, coming out or recessions .
“@SBarlow_ROB MS: U.S. households are flush” - (research excerpt) Twitter
Diversion: “The adorable Nandi Bushell pays tribute to Keith Moon” - A Journal of Musical Things
Tweet of the Day:
GOLDMAN: “S&P 500 profits have already surpassed their pre-pandemic level. Results from 367 firms accounting for 84% of S&P 500 market cap show that 4Q 2020 EPS came in 2% above 4Q 2019, easily surpassing analyst forecasts at the start of reporting season ..” [Kostin] pic.twitter.com/nfblyj2GfN— Carl Quintanilla (@carlquintanilla) February 15, 2021
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