A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Morgan Stanley equity strategist Ridham Desai made the case for investment in India,
“India is set to become the world’s third-largest economy and stock market, with GDP of more than US$7.5 trillion and an equity market cap of US$10 trillion. It is poised to drive about a fifth of global growth in the coming decade… It is one of the few countries in the world that is gaining from the disruptive global trends of demographics, digitalization, decarbonization and deglobalization … India is likely to increase its share of global exports, thanks to a surge in offshoring: The pandemic only enhanced India’s attractiveness as the office to the world as CEOs became comfortable with work from home. New developments are also allowing India to gain traction as a factory to the world ... India’s energy consumption and energy sources are changing in a disruptive fashion, with broad economic benefits: On the back of greater access to energy, per capita energy consumption is likely to rise by 60% to ~1,450 watts per day over the next decade, on our estimates, with two-thirds of the incremental supply coming from renewable sources.”
“Morgan Stanley makes the case for India” - (research excerpt) Twitter
**
Deutsche Bank strategist Binky Chadha is predicting a U.S. recession later in 2023,
“Fifth bear market rally to continue into Q1… Our house economics forecast is for a recession beginning in H2 2023. Historically: (i) equities went flat in the run up to recession; (ii) peak-to-trough equity declines were explained jointly by initial valuations and the extent of the earnings decline; (iii) equities bottomed half-way through recession and recovered their losses by the time it ended; (iv) earnings turn slowly, with trailing earnings not bottoming until well after the recession was over; .. Down hard in Q3 as recession begins. High initial valuations and our expected earnings decline (-12% vs an average -15%), point to a -33% decline (S&P 500 3250); But bottoming half-way through and recovering the decline as is typical during Q4. Bottoming half- way through a Q3-Q4 recession and recovering all of the losses by the time it ends would put the S&P 500 at year end back at its Q1 peak (S&P 500 4500)”
“DB sees U.S. recession later than most” - (research excerpt) Twitter
**
The global asset allocation team at Citi published their outlook for 2023,
“We are currently at a spot in the US business cycle where fears of inflation and the Fed are fading, but fears of a recession are not yet pronounced enough to lead to downside in equity markets. As we enter 2023, we expect US recession fears to become the driver. We therefore treat rallies in US equities as bear market rallies and shift our underweight from Europe, where the business cycle is further advanced, to the US. We also go long China equities on the re-opening theme. In credit we close our European credit underweight, but keep the US one. US Treasuries will become a buy early next year, but we are not quite there yet… We remain underweight base metals. Our quant corner finds macro-economic conditions still challenging for asset prices using our regime lens.”
**
Diversion: “This Year’s Top AP Photos Are a Haunting Reminder of the State of the World” - Gizmodo
Tweet of the Day:
Scott Barlow