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

BMO chief investment strategist Brian Belski does not see the rally in U.S. stocks as sustainable,

“With current price levels now slightly above our 2024 year-end S&P 500 target of 5,100, we have received numerous questions from clients recently on why we have chosen to stay put … we do not view the current pace of US stock market gains as sustainable over the coming months. In fact, as we look ahead to the remainder of the year, we expect price action to be quite volatile as we believe that investors are placing too much emphasis on the timing and magnitude of potential Fed rate cuts, with market expectations and Fed speak seemingly at odds at the current moment. Therefore, we believe it will be difficult for US stocks to finish the year at significantly higher-than-current levels … According to our analysis, a focus on growth-at-a-reasonable-price (GARP) may be a worthwhile fundamental stock-picking strategy, while a significant number of factors may also be appealing from a quantitative perspective”


Morgan Stanley analyst Edward Stanley discussed the proliferation of AI technology and collected stock ideas from analysts (includes two Canadian stocks),

“On the back of our TMT conference, we think three sub-themes screen attractively in terms of (1) Growth vs Valuation; (2) Performance to date; (3) Upside to Morgan Stanley price target; (4) Investor positioning and concentration risk; (5) Large vs mid-cap expansion in breadth. Smartphones & Edge AI: A number of companies at the conference discussed the opportunity here. Even NVIDIA and AMD noted the importance of the PC/workstation as the enabler of this growing Edge AI trend.”

There are more than 10 different, long stock lists in the report. It begins, however, with ‘U.S. Productivity Opportunities’ where the list is (with Canadian names in bold): Accenture, Accenture, Adobe Inc, AES Corp, Alphabet Inc., Inc. , Apollo Global Management Inc., Asana Inc., Atlassian Corp., Axon Enterprise, Baker Hughes, Bank Of America, BlackRock Inc., Blackstone Inc., Canadian Natural Resources Ltd., Colgate-PaImolive, Conocophillips , Coterra Energy, Coursera Inc., CrowdStrike Holdings, Datadog Inc., Definitive Healthcare, Draftkings Inc., EOG Resources, ETSY Inc., Excientia PLC, F5 Inc., Home Depot Inc., Hubspot Inc., Interpublic Group Of Companies, Intuit Inc., JPMorgan Chase & Co, Match Group Inc., McDonald’S Corp., Meta Platforms, Microsoft Corp, Moody Corp., NetApp Inc., Nextera Energy, Nike Inc., Occidental Petroleum, Omnicom Group Inc., Palo Alto Networks Inc., RI RCM Inc., Recursion Pharmaceuticals, Roblox Corp., S&P Global, Salesforce, Schlumberger NV, Schrodinger Inc., ServieceNow Inc., Shopify Inc., Smartsheet Inc., Snowflake Inc., Sportradar Group AG, Spotify Technology SA, Starbucks Corp., Tesla Inc., Uber Technologies Inc., Ulta Beauty Inc., UnitedHealth Group, Vista Corp., Walmart Inc., and Wix.Com Ltd.


In a separate BMO report, economist Shelly Kaushik noted that Canadian households are holding on despite higher borrowing costs,

“Canada’s household debt-to-income ratio improved for the third straight quarter, falling to a seasonally adjusted 178.7% in Q4 as incomes rose faster than debt. The latter was weighed by softness in mortgage demand amid higher rates. Meantime, the debt service ratio was essentially flat at 15.0%—but it is poised to rise in the coming quarters, given the lag in mortgage renewals and a potential easing in income growth. Despite the relatively good news in this report, both measures are still near all-time highs—and it bears noting that mortgage demand looks to ramp back up when rates begin to fall in the middle of this year. That will keep pressure on household spending and broader economic activity”

Read more from the Globe: Canadians’ wealth is bolstered by stock rally amid housing slump, Statscan says


Diversion: “Ongoing History Daily: The catchiest song of all time” - A Journal of Musical Things

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