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

Deutsche Bank economists are recommending a work-from-home tax. I’m posting this not because I support it or think it will happen, but because it’s a reminder that public budgets are blown - for good reasons - but tax increases are likely inevitable.

"Remote working is a luxury not afforded to everybody, and therefore should be taxed as such, according to a provocative new research report from Deutsche Bank called What We Must Do to Rebuild.

“They argue that ‘Remote workers are contributing less to the infrastructure of the economy whilst still receiving its benefits.’ … Deutsche Bank suggested a tax of 5%, which they say ‘is roughly the amount an office worker might spend on commuting, lunch, and laundry etc. A tax at this rate, then, will leave them no worse off than if they had chosen to go into the office.’ What if you work from home part-time? Their idea is that this tax is only paid only on days that you work from home. Again, I have no idea how they enforce this. Honor system? … Income inequality is a real thing, and I’m all for solutions to make a dent in it, but this does not seem like an answer. First of all, not everybody who works from home has a high income. Second of all, the $48 billion of tax revenue will not be funneled directly into the pockets of less fortunate people. Lastly, there has to be the political will to pass something like this.”

“A Work From Home Tax” – Irrelevant Investor

“@SBarlow_ROB People Who Work from Home Should Pay a New Tax, Economists Suggest” – Gizmodo


BMO economist Robert Kavcic puts some numbers on the dramatic transformation in U.S. market leadership this week,

“In a nutshell, after the early-week vaccine news, we’ve seen movement back into banks and cyclicals, and out of technology and consumer discretionary. Also, note the dramatic outperformance of small-cap stocks, which makes perfect sense given that most of the economic damage has been done at ground level on Main Street.”

“@SBarlow_ROB BMO: That Equity Market Rotation…” – (research excerpt, chart) Twitter


BofA Securities' weekly roundup of economic news was simply titled Winter is Coming, warning of the effects of rising COVID-19 infections in the west using an ominous chart,

"Global COVID-19 cases have passed 52mn and deaths are nearing 1.3mn. The US has seen a sharp rebound in infections in recent days, with the 7-day average reaching 131k. New York State has announced additional restrictions. The 7-day average of new cases in the five major European countries has plateaued at around 140k, as the effect of lockdowns has started to kick in … We forecast a 3.8% contraction in global GDP in 2020, and 5.6% growth in 2021″

Investors should keep an eye out for cuts in 2021 global GDP forecasts.

“@SBarlow_ROB BoA: Winter is Coming” – (research excerpt, chart) Twitter


Scotiabank analyst Orest Wowkodaw is really bullish on copper producers,

“Cu prices have staged a remarkable recovery this year in the face of a severe pandemic induced global (ex-China) economic slowdown. Looking ahead, we believe that recent positive vaccine hope, evolving U.S. election clarity, along with massive global stimulus and associated future infrastructure investment, combined with already low visible inventories and ongoing Latam supply risks, provide a positive backdrop for the Cu market … We are increasing our 12-month targets for the Cu equities by an average of 11%, or 8% for the large/mid-caps only … Growth. We forecast TECK, FCX, FM, and LUN to grow their Cu production by an impressive +50%, +29%, +28%, and +26% through to 2024E as the companies (exLUN) complete and ramp-up several large projects … Value. GMEXICO, HBM, LUN, and TECK all trade at relatively attractive 2021E EV/ EBITDA multiples below 5.5x (at $3.00/lb Cu). FCX and FM join this group based on 2022E (at $3.10/lb Cu) … Overall, we recommend FCX, FM, LUN, and HBM for large/mid-cap Cu exposure. Although valuation is mixed, FCX offers superior production growth, high leverage to Cu prices, a well positioned balance sheet, and the potential for large future capital returns driven by strong FCF generation. FM offers a similar growth profile with similar Cu price leverage (beyond 2021) at a more attractive valuation”

“@SBarlow_ROB BNS is really bullish on copper producers” – (research excerpt) Twitter

“Thursday’s analyst upgrades and downgrades” - Globe Investor


Diversion: “25 Movies You Should Stream Now” – (podcast) The Ringer

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