Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Goldman Sachs U.S. equity strategist David Kostin published his monthly slide presentation Tuesday. which reiterated his top stock picks from the report I featured earlier in the week.
The presentation also updated his top picks in the dividend-paying sectors , which he ranked according to yield, balance sheet strength and reasonable payout ratios.
The full list includes 40 stocks. The most notable names for Canadian investors include Home Depot Inc., Bank of America, Merck & Co., defence contractor Raytheon Technologies, Caterpillar Inc., IBM and Nucor Inc.
“@SBarlow_ROB GS: "High dividend yields, healthy balance sheets, and reasonable payout ratios" – (Table) Twitter
“ @SBarlow_ROB GS: "GS: "High dividend yields, healthy balance sheets, and reasonable payout ratios" part 2 “ – (table) Twitter
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TD economists detailed the dire state of Canadian employment in a Wednesday report,
“Over 40% of firms [reported] layoffs since the outbreak. Of those 40%, most (34.6%) report laying off more than 20% of their workforce and 10.6% of firms report laying off all employees. Some regions have fared better than others, but even in those with smaller outbreaks (Manitoba, Saskatchewan) roughly 7.5% of firms have laid off all employees. Accommodation and food services has seen the most severe impact, with roughly 60% of firms laying off half their employees, although it was more surprising to see health care among the most affected industries.”
“Canadian Firms Adapt to Harsh Realities of COVID-19” – TD Securities
“@SBarlow_ROB TD: "40% of [Cdn] firms reporting layoffs since the outbreak. Of those 40%, most (34.6%) report laying off more than 20% of their workforce and 10.6% of firms report laying off all employees" – (research excerpt) Twitter
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Citi credit strategist Matt King is among my favourite thinkers on financial markets. His most recent report asks the question, “ When liquidity meets insolvency: Can markets be propped up indefinitely?” (my emphasis),
“$5-trillion in prospective central bank buying is once again igniting FOMO among investors. The gap between markets and economic data has never been larger. But the challenge from the coronavirus is less about liquidity than about solvency. Sovereign, corporate and household credit quality are all taking a very big hit. The size of this hit rises almost exponentially with the duration of lockdowns. Debt forms long chains which are only as strong as their weakest link. Expense cutbacks, although individually rational, risk being collectively disastrous. Expect evidence of this to emerge gradually, then suddenly, in coming weeks. Government and central bank bailouts are only a partial panacea. Absent a magic cure for the virus, this makes a V-shaped return to normal extremely unlikely. At best, the debt overhang and desire to rebuild buffers will have long-lasting deflationary consequences. At worst, defaults will feed on each other.”
“@SBarlow_ROB King: When liquidity meets insolvency” – (research summary) Twitter
“ @SBarlow_ROB King: rates will back up sharpish if history precedent” – (chart) Twitter
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Newsletter: “You weren’t the first one to come up with that investment idea” – Globe Investor
Diversion: “ The 1918 influenza did not kill the US economy” – VoxEU
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Scott Barlow