A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
A remarkable chart from the Wall Street Journal shows that not a single U.S. economist predicted that 10-year Treasury yields would drop to their current levels.
This has happened year after year after the financial crisis – economists universally predict higher rates and yields and yields fall.
Goldman Sachs has joined the crowd predicting slower Canadian economic growth and Bank of Canada rate cuts,
“We are lowering our Canada growth outlook and are raising our subjective probabilities for BoC cuts on the back of slowing global growth, lower oil prices, and increased odds of cuts by DM central banks. We are nudging down our 2019 GDP forecast by 0.2pp to 1.3% (Q4/Q4). And while we still expect no policy change in 2019-2020 as our baseline forecast, we now have an expected value of 0.8 (vs. 0.2 previously) net cuts in 2019 and 0.5 net cuts in 2020 (vs. 0.3 previously).”
“@SBarlow_ROB GS lowers Canadian growth forecast “ – (research excerpt) Twitter
I’m not generally a big fan of “Top Investing themes” from sell-side research – usually there’s more story than accurate stock price forecasts – but Citi’s Global Theme Machine, with a focus on the performance of numerous growth stories, is an exception.
The current top ranked investment theme is insurance as premiums for property and casualty insurance continue to climb. Education, services offshoring, IT services, finance technology, are next.
The worst-performing investment themes Citi follows are electric vehicles, generic drugs and deepwater oil drilling.
“@SBarlow_ROB C: To performing investment themes” – (full table) Twitter
Russian Energy Minister Alexander Novak noted the possibility of US$30 per barrel oil prices if current production curbs are abandoned,
“Novak said there were big risks of oversupply on the market and that Moscow needed to monitor the oil market more in order to be able to take a balanced decision in July. Saudi Energy Minister Khalid al-Falih, who was in Moscow for talks with his Russian counterpart, said steps were being taken to prevent a sharp fall in oil prices. ‘
“Oil price could fall to $30 if global deal not extended: Novak” – Reuters
Chinese stocks are rallying but tensions with the U.S. remain, as the Reuters headline “China says will respond if U.S. escalates trade tension” underscores.
Citi strategists provided a plan for investors to cope with trade-caused market volatility,
“Trade’s an issue the White House clearly likes to revisit so it’s fair to assume that trade-related volatility persists … Defense generally screens well amidst global trade concerns thanks to a high degree of domestic sales & loosening exports … Our Top 5 US picks are HII, NOC, SAIC, HRS/LLL, MRCY all of which have limited tariff/trade & only long-cycle rare earth metal exposures.” Regarding rare earth metals, Citi writes, “In late 2018 Congress made it illegal for defense contractors to rely on magnets imported from China, so the shift [away from Chinese supply] is already happening.”
“@SBarlow_ROB C: top stock picks for intensifying trade war’ – (research excerpt) Twitter
Tweet of the Day:
“It would be wonderful if ... a medical-cannabis law could prevent deaths from opioid overdose, but the evidence doesn’t seem to support that.” Hopes that legal pot could keep Americans away from opioids might have been misplaced, @olgakhazan reports: https://t.co/kItbEkxmNZ— The Atlantic (@TheAtlantic) June 11, 2019
Diversion: “ When battling high blood cholesterol, white meat is no better than red meat, study says” – CBC
Newsletter: Cannabis stocks and 1999 – Globe Investor