‘Pandemic Leaders’: Top global stock picks from Credit Suisse

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

The driving forces behind gold’s rally

Citi’s head of North American commodities research Aakash Doshi appeared on BNN Bloomberg to describe the driving forces behind gold’s rally.

Mr. Doshi had previously predicted gold at US$2000 per ounce before the pandemic owing to U.S. – China trade tensions and lower inflation-adjusted yields (which reduce the opportunity cost of holding gold, which does not provide income.

Central bank policy continues to push real yields lower, helping boost the gold price. In addition, the global amount of negative yielding government debt has “exploded,” in his words, again increasing the attractiveness of gold. Mr. Doshi also notes that central banks have been buying gold and the U.S. dollar has been falling, verifying the precious metals’ effectiveness as a hedge against Federal Reserve currency debasement.

Mr. Doshi remains bullish on gold, noting that “gold cycles usually last for several years” and has a US$2,300 target in the next six months.

“There are three major catalysts driving up the price of gold and it isn’t COVID” – BNN Bloomberg

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Top global stock picks from Credit Suisse

Credit Suisse strategist David Rones implemented an in-depth stock selection process emphasizing cash flow generation and profit margins to uncover the best and worst global stocks for the pandemic era. In a Tuesday research report, Mr. Rones favoured companies that have shown the best downside protection during the volatility of markets this year.

The top 20 ‘pandemic leaders’ ranked by market cap are Abbot Laboratories, United Parcel Service, Zoom Video, Veeva Systems, Agilent Technologies, Seattle Genetics, Clorox, Moderna, McCormick, Xilinx, Yum China, West Pharmaceutical, Citrix Systems, Take-Two Interactive, ZScaler, Teladoc Healthm Abiomed, Masimo, Pool, and C H Robinson Worldwide.

The analyst warns that many of these stock prices are well above pre-COVID-19 levels and are expensively valued.

“@SBarlow_ROB CS: Top 20 ‘Pandemic leaders’ ranked by market cap” – (table) Twitter

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TD economists compared the domestic economic recovery to that in the U.S.

“In a more recent report, we highlighted the growing downside risk to that US Q3 call owing to surging COVID-19 cases in some southern and western states… However, it does appear that June’s upward momentum [in the U.S. economy] has been sputtering in affected areas so far in July. Indeed, a forecast released by the Bank of Canada in its July Monetary Policy Report showed a better 2020 real GDP projection for Canada (-7.8%) relative to the U.S. (-8.1%) ... While Canada doesn’t possess the breadth of real time data as stateside, timelier high-frequency sources for late June/early July have broadly pointed to a recovery that remains on track … There remains good reason for caution. Notable near-term downside risks include the recent uptick in COVID-19 cases in large provinces and the potential for waning government income support. Importantly, any pullback in U.S. activity owing to surging infection rates and shutdowns stateside would also likely weigh on Canadian exports and business activity.”

“@SBarlow_ROB TD: “Checking in on Canada’s Economic Recovery” – (research excerpt) Twitter

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