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A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web

Nataxis economist Joseph Lavorgna noted the market’s anticipation of an imminent rebound in U.S. manufacturing activity in a report published Wednesday,

“The manufacturing ISM survey made post-recession low in September before slightly recovering in October. The series largely captures business confidence and therefore its behavior can often mimic the vagaries of the financial markets. When the latter, especially stocks, moves sharply in one direction or another, the manufacturing ISM figures typically follow.”

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… but this is difficult to square with the weak Chinese economic data released this morning,

“China’s factory output growth slowed significantly more than expected in October, as weakness in global and domestic demand and the drawn-out Sino-U.S. trade war weighed on broad segments of the world’s second-largest economy. Fixed asset investment, a key driver of economic growth, rose just 5.2% from January to October, against expected growth of 5.4% and the weakest pace since Reuters record began in 1996.’

I will be watching copper prices for signals on how this plays out.

“@SBarlow_ROB Lavorgna from "The stock market is telling us the factory sector is poised to boom"’ – (research excerpt) Twitter

“ Premarket: Stocks dip as China slowdown deepens, German economy weak” – Report on Business

“China's economy is slowing more than analysts had expected on almost all front” – Bloomberg

“ China fall in fixed-asset investment growth sparks stimulus doubt” – Financial Times (paywall)

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Citi global strategist Beata Manthey believes that equity market inflows will result in a strong equity market rally in the next 12 months,

“Global equities are up 20% YTD despite $230bn of net outflows, according to EPFR. This has happened in only two other years (2012 and 2016). In both instances, once outflows turned into inflows, global equities went up another c20% over the next 12 months. Over 40% of annual global equity market performance can be explained by flows. EM performance has the strongest relationship with its fund flows, the US the weakest”

@sbarlow_ROB “once outflows turned into inflows, global equities went up another 20% over the next 12 months." – (research excerpt) Twitter

***

There’s been a lot of talk about the return of value investing, but Institutional Investor has some cold water for the believers in “Why Value investing sucks,”

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“Others, however, believe that the problems that have plagued value investors for a decade-plus are not cyclical, but structural. These investors and market observers claim that popular indicators of value no longer work — that the market and the companies that operate in it have fundamentally changed in a way that renders ineffective the approach outlined in the bible of value investing, Graham and David Dodd’s Security Analysis.”

“Why Value investing Sucks” – Institutional Investor

***

Newsletter: “ESG and future returns, blue chip dividend stocks with 5% yields, and a small cap delivering big gains’ – Globe Investor

Diversion: “The Strange Life and Mysterious Death of a Virtuoso Coder” – Wired

Tweet of the Day:

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