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Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

BMO senior economist Robert Kavcic is tracking the declining sentiment in the domestic housing market,

“Market psychology heading into the spring real estate period is not good. In Canada, according to weekly survey data from Nanos, more than a third of respondents expect home prices to fall over the next six months, a very high reading. On the flip side, just 22 per cent coming into the year expect home prices to rise, lower than all prior periods dating back to 2015 with the exception of the depth of the pandemic. On balance, net negative expectations (i.e., more expecting declines than increases) are rare, and highlight that investor appetite will be limited, while end-users will likely tread cautiously even if there is a healthy amount of demand out there. "

“”Not-So-Great Housing Expectations” (BMO)” – (research excerpt) Twitter

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Goldman Sachs strategist John Marshall found 25 potential trades for U.S. earnings season,

“Unlike most quarters where we are focused on call buying, we recommend taking a directionally-balanced approach to earnings events this quarter as low implied moves suggest lower than normal probability of relief rallies on earnings days. Index options suggest macro investors are positioned for near-term upside asymmetry, further adding to positioning headwinds. We leverage our equity analysts’ fresh estimates and qualitative comments to identify the 25 most out-of-consensus opportunities from our Americas coverage. Our analysts see potential for upward earnings revisions to drive upside in 18 names including ALL, AXP, EXPE, HUM and MDB; they expect downward earnings revisions to drive downside in 7 names including CAKE, NDAQ and WDC.”

The stocks listed here implies those are the highest conviction names. As far as names that might be attractive as trade candidates for Canadian investors, these include Gap Inc., Caterpillar Inc., and First Solar Inc. Cheesecake Factory, Nasdaq Inc. and eBay Inc. are potential short ideas for experienced investors.

“25 earnings season trade candidates from Goldman Sachs” – (table) Twitter

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BofA Securities global quantitative strategist Nigel Tupper implements a global wave indicator that measures the economic backdrop for investors,

“The Global Wave has fallen for the fourteenth month as global economic data continued to weaken in December. Four of the seven components of the Global Wave deteriorated with falling Global Producer Prices contributing most negatively. Tighter monetary policy in Developed Markets has the potential to dampen the global economy for several months. Now that China is 20% of global GDP and therefore 20% of the Global Wave, it will be interesting to see if China’s reopening spurs growth and whether that can offset slowing growth in Developed Markets. In the meantime, the Global Wave suggests investors positive defensively until a trough in the global cycle becomes evident … In December, four components of the Global Wave contributed negatively, including Global Producer Prices, Global Industrial Confidence, Global Capacity Utilisation, and Global Unemployment. Three components of the Global Wave contributed positively, including Global Consumer Confidence (which improved in the US and China), Global Credit Spreads, and the Global Earnings Revision Ratio”

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Diversion: “The vinyl revival is in full swing as LPs outsell CDs for the first time since 1987 in the UK” – Bloomberg

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