Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BofA Securities sees the possibility that copper, currently trading near US$4.50 per pound after a strong rally, could reach US$9 by 2024,
“Given the fundamental backdrop, and low inventories, we see a risk that the red metals may spike to $5.89 per pound … we expect a rebalancing of the copper market in 2023 and 2024, before renewed shortfalls and another draw on inventories kick in from 2025 … In our view, scrap supply is critical and our analysis suggests that scrap usage at smelters/refiners could increase from around 4200 tonnes in 2016 to 6700 tonnes by 2025. If our expectation of increased supply in secondary material … did not materialise, inventories could deplete within the next three years, giving rise to even more violent price swings that could take the red metal above $20,000 per tonne ($9.07/lb)”
“@humenm Anyone for $20,000 a tonne copper? ' – (research excerpt) Twitter
Stocks representing companies with high ESG rankings have been outperforming, but, as Credit Suisse U.S. equity strategist Jonathan Golub noted, the positive performance is not coming from environmental-related stocks, it’s the ‘S’.
Mr. Golub published a chart Monday showing that stocks qualifying for the environmental segment of ESG have outperformed the S&P 500 by only 0.2 per cent while those conforming to social requirements – diversity and inclusion primarily – have beat the benchmark by 4.8 per cent.
“@SBarlow_ROB CS’s Golub: It’s the ‘S’ in ESG creating the outperformance,” – (chart) Twitter
BMO economist Shelley Kaushik relayed StatsCan data showing the economic effects of the pandemic by province,
“The pandemic and its accompanying restrictions were certainly the biggest story of : the best-performing economies were in the relatively less-affected Maritime Provinces, led by Prince Edward Island’s 3.0% contraction. And, who can forget the historic oil price drop of last spring? That drop, plus a heavy caseload, dragged Alberta’s economy down by 8.2%, marking the deepest recession in the country. A strong concentration of cases in other economic heavyweights, including Quebec (-5.3%) and Ontario (-5.0%) brought national economic output down 5.3% on an industry basis for the year … "
“@SBarlow_ROB BMO: pandemic-related economic damage by province” – (research excerpt) Twitter
Scotiabank strategists see a major commodity index at an important level,
“While the ride in copper prices to $4.50 has grabbed a lot of attention, most commodity prices have enjoyed a strong ride in the past year. As shown below, iron ore, steel, lumber, corn, soybeans, wheat, coffee, cotton, and lean hogs have also performed well, with some standing at/near record highs. ... The CRB index is now back to a five-year ceiling. While the 200/210 level could offer some resistance, if that zone is exceeded, it would mark a major breakout for the commodity basket, with the uptrend potentially extending toward the 280 level.”
“@SBarlow_ROB BNS: Important level ahead for CRB index’ – (research excerpt, charts) Twitter
Newsletter: “Investors should start preparing for an inflation ‘earthquake’” – Globe Investor
Diversion: “20 percent of full workdays will be supplied from home after the pandemic ends, compared with just 5 percent before” – Marginal Revolution
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