Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BofA oil and gas analyst Doug Leggate isn’t fully buying the demand destruction story for his sector,
“The narrative around collapsing demand in response to high gasoline prices amidst recessionary concerns is too perfect a scenario on to fast of a timeline to not demand some examination. This week we finally got the post July 4th rebound we suggested could follow the 4th of July holiday. For the week ending July 22nd, implied gasoline demand rebounded to 9.2 million b/d – a 1 million b/d increase vs the last two week average, and the second highest level of 2022. On a four week moving average basis, the trend line has resumed higher … We see concerns over some inevitable demand collapse akin to 2008/09 as significantly over done … Gasoline demand in particular has rebounded this week leadings us to suggest ‘rumors of the death of gasoline have been greatly exaggerated’”
“BofA not buying the demand destruction story for oil and gas” – (research excerpt) Twitter
***
Wells Fargo strategist Christopher Harvey made growth stock suggestions for a market environment he compares with 1999/2000,
“Market-based measures of inflation, corporate reports of demand destruction, and the aging economic cycle all suggest cyclical inflation has peaked. However, survey measures (i.e., CPI) still run hot. We believe the market-based measures are a better inflation gauge … Notably, the current tightening cycle reminds us of the 1999/2000 tightening cycle and suggests the Fed is almost done with the heavy lifting. Toward the end of the 1999/2000 cycle the yield curve inverted, longer-term rates peaked, and ultimately, the economy dove into recession … We see this lower-inflation, slower-growth environment as prerequisites for the Growth style to make a comeback. In May we started a methodical shift back to Growth from Cyclicality/Value.”
The stock ideas are Meta Platforms, Netflix Inc., Pinterest Inc., Broght Horizons, EBAY Inc., Mattel Inc., Ross Stores Inc., Starbucks Corp., Moderna Inc., BWX Technologies, Expeditors International, Paypal Holdings, Zebra Tech Corp. and Simon Property
“Growth stock ideas from Wells Fargo’s Harvey” – (table) Twitter
***
BMO senior economist Robert Kavcic continues to follow Canada’s fading housing market,
“Next week will start to bring the July housing market results from Canada’s major cities. The numbers will look bad, but here are some other things to think about that won’t show up in the official data: De-listings: These are rampant in the GTA now as sellers aren’t getting any traffic and, if they are, offers are coming in light. Many seem to be either re-listing for less, pulling their property for another time, or rolling it onto the strong rental market. In other areas (like the rest of Ontario), the situation looks more serious. Sold over under asking: It’s a buyers’ market now, where conditions and negotiating are things again. Failed closings: Let’s just say that we’d be bullish on real estate lawyers this year. Buyers watching property values fall are anecdotally trying to back out of some deals. In other cases, appraisals are falling short, forcing buyers to scratch together bigger down payments. Investors: Cash-flow negative properties at 1.5% mortgage rates are now deeply so at 4.5%. Without expectations of price gains, investors are gone … Less supply??? With demand cracking, there is already chatter about project cancelations. Building 5.8 mln units was ambitious in the best of times—now it might be a dream.”
" “Cdn Housing: Important Data That We Don’t See Every Day” (BMO)” – (research excerpt) Twitter
***
Diversion: “Lactose Tolerance Is an Evolutionary Puzzle” – The Atlantic
Tweet of the Day:
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Scott Barlow