A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web
I read every research report by Merrill Lynch quantitative strategist Savita Subramanian I can get my hands on. In the most recent publication, Ms. Subramanian all-but predicts that 2018 will be a year of market euphoria,
"Given that we seem due for a pullback and volatility is potentially set to rise (given the strong leading relationship between the yield curve and the VIX), should we worry about significant market downside? Maybe, but we are standing by our models, and they say to stick with stocks. We believe 2017 saw building optimism on stocks and 2018 could be the year of euphoria. Our list of bear market signposts suggests more upside than downside risk for 2018… But if this bull market is closer to over, our analysis of factor returns indicates that late-stage bull markets have been dominated by stocks with strong price momentum and growth, while value, analyst neglect, and dividend yield have been the worst-performing factors."
"@SBarlow_ROB ML: 2018 could be the year of market euphoria" – (research excerpt) Twitter
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A strategy report from Citi characterizes 2017 as a year of failure for contrarian investors,
"The contrarian bull picks from the start of the year are down 1% on average. The bear calls are up 17%. Our contrarian long-short strategy has lost 18% YTD, following a 30% gain last year. The strategy held up in 1H17, but was punished badly from July to November… Contrarians are now implicitly calling the end of this economic and market cycle. We think that call is premature. We would resist the temptation to chase any new year rotation."
"@SBarlow_ROB 2017: Contrarians Fail " – (research excerpt) Twitter
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Remember BlackBerry? The stock surged more than 10 per cent on earnings results yesterday and Motley Fool explained why,
"It was a good quarter overall for BlackBerry given the impact of its transition into a pure-play software company, and it was highlighted by record software and services revenue and total company gross margin. The company's results also beat analysts' expectations, which called for breakeven adjusted EPS on revenue of US$214.6 million, so I think the +10% pop in its stock is warranted. I think BlackBerry's stock could continue higher from here, because I think its position in the cybersecurity and autonomous vehicle industries will be key drivers of revenue growth."
"Why BlackBerry Ltd. Is Surging Over 10%" – Motley Fool
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Bond markets on both sides of the border endured a sell-off yesterday, but it might have been merely a 'sell the news' reaction to the passing of the U.S. tax bill
"'The tax reform passing, you'd expect the market to celebrate that,' Kevin Caron, a senior portfolio manager at Washington Crossing Advisors, said by phone. 'But in reality a lot of this has already been part of the drama over the last year or so in anticipation of this moment. The market has gotten what it has already been discounting in.'"
"Bonds Tumble, Equities Mixed as Tax Bill Passes: Markets Wrap" – Bloomberg
"@SBarlow_ROB Canuck 5Y yields right at 3 year highs. (no, i am not doing technical analysis on yields, im just saying)" – (chart) Twitter
"The Global Bond Market Is Having a Lousy Year-End" – Bloomberg
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Tweet of the Day: "@LukeGromen On the day tax reform passed, the USD was down, 10y UST ylds were up big, & gold was up. Translation: "Mr. Market" just downgraded the US' credit rating ever so slightly. Let's watch if there's any follow-through on these moves." – Twitter
Diversion: (Video games have also been among the most lucrative investing ideas of the year) "From Automata to Zelda, these are the best games of 2017" – Wired