A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
BMO’s Doug Porter interpreted the Bank of Canada’s remarks on monetary policy as an apology for previous hawkishness. The report is called Mea Cutta,
“The Bank continued to bravely talk about “uncertainty around the timing of future rate increases”, but all the market heard was “slowdown” “headwinds” “weaker” “belowpotential” “wider output gap” and “will take time”. An already reeling loonie was promptly sent for another spin lower … The further drop in yields took the 5-year GoC yield down below 1.70%, well south of the Bank’s overnight target of 1.75%. In the past 10 years, that’s only happened three other times, and only briefly each time. “
“@SBarlow_ROB BMO: "drop in yields took the 5-year GoC yield down below 1.70%, well south of the Bank’s overnight target of 1.75%. In the past 10 years, that’s only happened three other times" – (research excerpt) Twitter
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Merrill Lynch strategists have developed a feminist “She-conomy” investment theme,
“To celebrate International Women's Day, we focus on the impact women could have on the economy and financial markets. It is estimated that advancing women's equality could boost global GDP by 31% or US$28tn by 2025, the size of US and China GDP combined. We see women driving the labour market, as well as the wealth management sector. By 2020 they are expected to hold US$72tn of the world's financial assets, double the 2010 level and accumulating assets 1.5x faster than men. But there is still much to do. The economic gender gap is reducing at a snail's pace and, all being equal, will not close for centuries - 202 years.
US: more women on boards, higher ROE - our work suggests that companies focused on gender diversity at a board, C-suite and firm level have consistently achieved higher ROE and lower earnings risk in subsequent years. Moreover, companies focused on diversity have generally traded at premia to more homogenous counterparts.
“ @SBarlow_ROB Merrill Lynch: "Equality for women could boost global GDP by up to 31%" – (research excerpt) Twitter
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The Financial Times described the increasing bearishness of Wall Street strategists. All else equal, I interpret this as a contrarian bullish signal,
“Fund manager views on how the global economy will develop over the coming year are near their gloomiest levels since 2008, according to Bank of America’s latest investor survey. As a result, fund managers have trimmed their exposure to US stocks to the lowest point in nine months and now have their greatest allocation to cash since the depths of the financial crisis in January 2009, the survey indicates. Over a third think that the S&P 500 has already seen its peak.”
“Why bulls on Wall Street are becoming an endangered species” – Financial Times (paywall)
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Chinese economic data have always been treated with a grain of salt and a new study by the Brookings Institute concludes that the country’s gross domestic product has been overstated by an enormous amount,
“China’s economy is about 12 per cent smaller than official figures indicate, and its real growth has been overstated by about 2 percentage points annually in recent years, according to research. .. They also add to concerns that China’s slowdown is more severe than the government has acknowledged. Even based on official data, China’s economy grew at its slowest pace since 1990 last year at 6.6 per cent.”
“ China GDP overstated by 12%, research finds” – Financial Times (paywall)
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Tweet of the Day:
Diversion: “Geneva Motor Show: The weird and wonderful” – BBC