Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Citi U.S. equity strategist Tobias Levkovich has developed the acronym CARING for the most important concepts for investors as 2021,
“Confidence, Adaptability, Rotation, Income, Normalization and the Greenback all should affect and reflect investment activity, beginning with the return of both consumer and corporate confidence as a result of vaccines and anticipated better health conditions. Therefore, economic data is set to improve, supporting earnings growth, though much appears priced into stocks already.. euphoric sentiment translates into the potential for sharp downward market moves in an environment where few can see imminent catalysts for such dips. Admittedly, we easily can imagine disruptive global developments or domestic political ones that could prove damaging … better-than-typical dividends with low CDS [credit default swaps] profiles provide an increasingly important option for an income-starved Street. Bond prices are expected to slide, and there should be greater competition, but until that occurs, we envision strength for consistent yielding names”
“@SBarlow_ROB Citi equity strategy : ‘CARING’ about 2021” – (research excerpt) Twitter
The video gaming industry, including equipment providers like NVIDIA Crop., were among the biggest beneficiaries of the COVID lockdowns and the trend shows little signs of slowing
“Supply issues have hamstrung the rollout of the latest generation of video game consoles. Even now, nearly two months after the Xbox Series X and Xbox Series S released, Microsoft is still scrambling to meet demand and has reportedly reached out to chipmaker AMD to fast-track production on its end. … Microsoft’s not the only one struggling, though: Competitor Sony is dealing with similar shortages for its next-gen console, the PlayStation 5, which also relies on AMD for its GPU and CPU.
“But it’s not just us, I think gaming has really come into its own in 2020,” [Microsoft Xbox head Phil] Spencer told Hyrb. “Obviously, PlayStation 5 is in very tight supply. When you look at the graphics cards from AMD and Nvidia… there’s just a lot of interest in gaming right now and console sales are just a sign of that, game sales are a sign of that, and hardware is in short supply.””
“Xbox Series X and S Shortages Have Microsoft Asking AMD for Help” – Gizmodo
Japan’s FANUC Corp., one of the world’s leading robotics providers, is the company I watch to gauge the trend of worldwide manufacturing automation. Previously, cries of “the robots will take all the jobs” were not supported by FANUC’s lackluster profit growth but that might be changing as Citi analyst Graeme McDonald reports,
“Fanuc is one of our top picks in the Japanese machinery sector, and this month will see a number of catalysts that should underline the improving outlook for earnings and the shares’ own appeal. First, on January 13 the [JMTBA Japan Machine Tool Builders’ Association] will announce provisional order data for December, and we look for total orders of ¥95bn (+5% YoY). Secondly, Fanuc is scheduled to announce FY3/21 Q3 results on January 27, and we model orders of ¥140bn (+18% YoY, +11% QoQ), sales of ¥133bn (+6%, +10%) and OP [operating profits] of ¥26bn. Thirdly, on January 25 Yaskawa is scheduled to host a presentation on its robot business, and we think one possible read-across will be a reminder of Fanuc’s position as the top robot supplier in China … From our perspective Fanuc is set to be one of the long-term winners of the secular growth of automation in the country with >30% of total sales from China directly”
“@SBarlow_ROB The robots might actually be taking over this time ... in China” – (research excerpt) Twitter
Diversion: “Netflix’s CEO says the success of his company is, in part, a result of the radical management style he has developed” – (short video) The Economist
Tweet of the Day:
Commodities in 2020, a year split down the middle between #COVID19 despair and vaccine hopes. The latter turbo charging the sector ahead of 2021. #oil #gold #copper #grains #inflation $USD pic.twitter.com/SX12mR0b3t— Ole S Hansen (@Ole_S_Hansen) January 3, 2021
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