Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Citi strategist Chris Montagu published his monthly report regarding the relative attractiveness of global markets and Canada ranked very low,
“In June 2004, we introduced a market-ranking model that ranked 22 global markets for which exchange-traded funds were available. The model uses a mix of style, fundamental and macroeconomic indicators as inputs. This model was updated in July 2013 and a number of changes were implemented. The update of the model includes changes to factor aggregation calculation and the sample period in which to measure the efficacy of country selection factors.”
The Canadian market ranks 18th thanks to low ratings for average dividend yield, price-to-sales ratios, price to book value, price to cash flow and recent change in foreign exchange value. Only the Netherlands, Sweden, Hong Kong and India finished lower. Top five markets were Austria, China, Brazil, South Korea and the U.S.
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Wells Fargo strategist Christopher Harvey quickly summed up his reaction to Wednesday’s Fed meeting for investors in a report called When Doves Cry ,
“When Doves Cry. Initial equity optimism stopped during Chairman Powell’s conference when he indicated the terminal fund funds rate may need to go higher than they expected in September. He followed up with the belief that over-tightening carries a smaller penalty than going too slowly. The equity market did not like this comment. The major message during the press conference was that rates needed to go (and stay) higher for longer than many expected.
“Takeaway: Get more comfortable with higher interest rates, as they could be around for some time. Market reactions around CPI and jobs reports will continue to be volatile. Momentum is the all-weather strategy in this environment "
“WF from ‘When Doves Cry’” – (research excerpt) Twitter
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BofA Securities global quantitative strategist Nigel Tupper emphasized the recent outperformance of stocks with strong price and earnings momentum, and provided a list of top ideas that included a Canadian company,
“Globally, stocks with positive earnings and price momentum continue to outperform stocks with negative combined momentum. The performance spread was 3.1% in October and has been 14.6% over the last 12 months. Combined positive momentum is currently dominated by stocks Japan, India, and Canada. By global sector, combined positive momentum is dominated by stocks in Energy, Banks, and Consumer Staples. Adding a valuation overlay has also contributed positively to performance. Inexpensive combined positive momentum (The Contenders) outperformed expensive combined negative momentum (The Defenders) by 8.0% in October and by 28.3% over the last year.”
The Contenders list of top ideas identifies the 30 lowest price-to-earnings stocks with above average price and earnings momentum.
Imperial Oil Ltd. is there from the domestic market.
Other stocks are Mahindra (India), Mineral Resources (Australia), State Bank of India, Banorte (Mexico), Bayer (Germany), Compass Group (U.K.), Imperial Brands (U.K.) and Stanchart (U.K.). From the U.S. there’s Abermarle, American Express, Aramark, Arista Networks, CDW Corp., Centene Corp., CIGNA, Electronic Arts, Enphase Energy, Fair Isaac, Fiserv, Godaddy, Jazz Pharma, Kroger, PACCAR, Regions Financial, Snap-On, Ultra Beauty and Vistra.
“Canadian stock among BofA’s global Contenders top stock pick list” - (table) Twitter
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Diversion: “Alcohol to Blame for 1 in Every 8 U.S. Deaths Under 65, CDC Finds” – Gizmodo
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