A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Morgan Stanley analyst Jessica Alsford assesses the future for decarbonization-based investments in 2022,
“But next comes the execution phase. Decarbonisation will continue to drive growth across sectors including renewables, EVs, hydrogen, CCS [carbon capture] , renewable fuels and energy efficiency for the next 30 years. However, with a lack of broad policy-based catalysts in 2022, we think investment performance will be stock-specific and based on best-in-class execution…”
The report includes a list of top investment picks.
Under renewable power, there’s SolarEdge, Sunrun, TPI Composites, American Electric Power and FirstEnergy.
The energy storage area features Quantumscape.
Green hydrogen picks are New Fortress Energy, Chart Industries, Air Products, Linde, Chevron, Enbridge, Baker Hughes and Schlumberger.
There are a lot of names in the carbon capture subsector, but Ms. Alsford sees near term attractiveness as ‘moderate to low’.
See link for full list.
“MS top picks in renewables” - (research excerpt) Twitter
DBRS Morningstar took a close look at the effects of rising bond yields on Canadian bank profitability,
“Generally, rising interest rates are a positive for banks, as their balance sheets are asset-sensitive (assets will reprice higher faster than liabilities). Thus, net interest margins should expand, bolstering profitability. An upward sloping yield curve and rising interest rates typically signal that the economy is expanding and doing well. However, as interest rates increase, variable-rate borrowers will need to pay out more in interest on the same loan, which could pressure borrowers’ ability to service their debt. Moreover, new borrowing is more expensive… Gradual rate hikes, combined with fixed-rate borrowing, typically give borrowers ample time to adjust to higher interest costs…Canadian banks have generally been able to report higher net interest income, regardless of the interest rate cycle, by growing earning assets "
“DBRS: rising yields generally positive for Canadian banks” - (research excerpt) Twitter
TD Securities has entitled their 2022 market outlook The Year of Living Dangerously. The report is far less bullish on commodity prices than most year-ahead reports so far,
“We still believe the risks are biased to the downside for inflation and growth. This should see less tightening delivered than priced in right now, but it will be a close game of chicken into mid-2022 between market fears and macro facts … The surge in consumer prices has been caused by a mesh of several factors that we still see as mostly transitory … We assume that the BoC will pause at 1% until the Fed starts lifting rates … following a very strong year, the industrial and energy complex is set to disappoint many investors who believe that the crude oil and base metals bull market will run uninterrupted for the next twelve months. TD Securities projects that crude oil, copper, aluminum and others will start to moderate from current cyclical highs, in the first few months of the new year. In contrast, gold and silver should have a relatively better year, with most of the positive news materializing in the first six months.
“However, the projected energy and industrial metals declines are expected to be modest by historic standards due to persistent bottlenecks on the supply side, which will offset much of the negative impact coming from slowing demand growth and reduced central bank liquidity.”
“TD far less bullish on commodities than most for ‘22″ - (research excerpt) Twitter
Newsletter: “Staying rich is the hard part” - Globe Investor
Diversion: “Xi Jinping’s Terrifying New China” - The Atlantic
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