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

BMO published a chart late Monday with a depressing indicator of the relative effectiveness of the Canadian versus U.S. COVID response,

“While most restaurants across Canada are closed for indoor eating, U.S. diners are now serving about four-fifths their normal customer base. A few states— Florida, Texas and Arizona—are actually punching above their normal weight, reflecting pent-up demand and increased tourism. Canada broadly followed the U.S. pattern of closings and reopenings during the first and second waves of the virus, but got swept up by the third wave”

“@SBarlow_ROB BMO with the starkest indicator of U.S. vs Canada COVID response” – (research excerpt, chart) Twitter


BofA U.S. quantitative strategist Savita Subramanian is dead certain that markets have moved from an early to mid-cycle phase which requires different stock picking criteria,

“Our US Regime Indicator rose to highs seen only once before in the last 30+ years: in Feb. 2004, after which Mid-Cycle continued for four more months. Moreover, historically, Mid-Cycle has lasted for 12 months, but today we are just four months in … P/E and Price to Book are less effective, but EV/EBITDA has outperformed the index 75% of the time in this phase (and today EV/EBITDA positioning is close to a record underweight– more below.) “Quality value” tends to outperform “deep value” in this phase … LO [long only fund] LOs exposure to secular growth factors (High Projected 5-Yr Growth & Long Duration) declined by 22ppt and 46ppt respectively, now well below average, whereas exposure to EPS Momentum, a cyclical growth factor, increased by 22ppt and the factor is now 12% overweight vs. its history.”

“@SBarlow_ROB B of A is confident markets have moved to mid-cycle phase’ – (research excerpt) Twitter


Also from BofA, strategist Anthony Cassamassino published the firm’s top 10 “high conviction” stock ideas for the second quarter. The first-quarter list outperformed the Hedge Fund Research HFRX North American index by a remarkable 10.0 per cent.

The strategist is vague about the stock selection process, noting only that “The picks for Q2 are based on our views of potential significant market and business-related catalysts that we think will affect these stocks "

There are nine long ideas and two short ideas. The longs are Booking Holdings Inc., Walt Disney Co., Newmont Corp., NXP Semiconductors NV, O’Reilly Auto Inc., Parker-Hannifin Corp., Schlumberger NV, and Stryker Corp., (disclosure: I own a position in Stryker).

The short ideas are Dollar Tree Inc. and Iron Mountain Inc.

“@SBarlow_ROB B of A’s high conviction stock ideas for Q2. Q1 ideas OP’d by 10%” – (table) Twitter


Newsletter: “Morgan Stanley predicts pause in the bull market” – Globe Investor

Diversion: “Why Am I Still Embarrassed About Things That Happened 10 Years Ago” – Gizmodo

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