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

CIBC strategist Ian de Verteuil published a surprisingly cautious outlook for equities but a brightened outlook for domestic markets,

“So far, equities have been bolstered by rapid increases in estimates, substantial earnings surprises and even rising inflation. We are close to the point when the rate of “change of change” of these variables turns negative. This argues for more caution on equities… inflation is very likely to moderate as the global economy reopens. CIBC Economics suggests the current calendar quarter will be peak inflation … We are moving into the heart of earnings season for the S&P 500 with high expectations for unusually strong year-over-year comparisons. This will likely be the peak for earnings momentum. From here, we expect each quarter will see slower growth – and probably fewer material earnings surprises… Canadian equities are looking comparatively more attractive. First, trailing earnings for the S&P/TSX are already back to record levels. Furthermore, given current commodity prices, it is reasonable to assume earnings for Canada’s public companies will earn 20% more than their previous peak in 2019. Valuation levels for Canadian equities are at long-term averages – a statement that can be seldom made for many asset classes today.”

“@SBarlow_ROB CIBC: “Canadian equities are looking comparatively more attractive”” – (research excerpt) Twitter


BMO chief economist Doug Porter seems unconvinced that U.S. inflation pressures are entirely transitory,

“Policymakers and markets continue to mostly brush off the spike in U.S. inflation, since it is being led by vehicles and re-opening sectors. We fully agree that these jumps won’t last, and will reverse in some cases. But, digging beneath the garish headlines, one doesn’t have to hunt far for lots of signs of some real inflation brewing, in areas that are not so obviously tied to re-opening or chip pressures. Here are 10 components of the CPI that are up more than 4% y/y and are up at least 6% in the past two years (so not just base effects): 1. Domestic services (chart) 10.6% y/y 2. Furniture 8.6% 3. Sporting goods 7.5% 4. Cigarettes 7.3% 5. Fast food meals (chart) 6.2% 6. Appliances 5.8% 7. Cable service 5.1% 8. Pet/vet services 4.9% 9. Telephone services 4.4% 10. Garbage collection 4.1%”

“@SBarlow_ROB BMO: “One doesn’t have to hunt far for lots of signs of some real inflation brewing, in areas that are not so obviously tied to re-opening or chip pressures”” –(research excerpt) Twitter


Diversion: " How to mend your broken pandemic brain” – M.I.T. Technology Review

Tweet of the Day: " @SoberLook US vehicle production tumbles due to chip shortages, becoming a significant drag on the nation’s industrial output” – Twitter

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