Barlow’s Research Roundup: ‘Am I Diversified?’ asks a BMO economist

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

Crypto not diversifying

BMO senior economist Robert Kavcic discussed the effectiveness in Am I diversified? published late last week,

“The unwinding of AI and crypto positions in recent weeks pulled Bitcoin down by more than 50 per cent from its recent high at one point, and the Nasdaq by almost 6 per cent before a Friday rebound. Through all that, the S&P 500 finished the week down 0.1 per cent, while the TSX rose 1.7 per cent. Massive capex in the AI space continues, but big plans for 2026 are being met with skepticism … Where is the money going? We’ve seen a classic rotation into liquidity and safety. U.S. money market fund assets drew in $85-billion in the week through February 4, or a hefty $430-billion since crypto peaked in October. For what it’s worth, the market capitalization of Bitcoin has fallen by roughly $1-trillion over that period. Within the equity market, sectors like energy, materials and consumer staples have now posted double-digit gains early in the year, even as technology has slid … Here’s an opportunity to take a step back and look at asset performance through the decades [click link below to see table] … Bonds, on the flip side, have been the real dog, with total GoC returns running at roughly zero since the end of 2019 … Real estate also has real value over the long term as a physical asset (think anti-fiat sentiment) and as a reliable inflation hedge. In fact, Canadian home prices, even before accounting for rent, have outperformed inflation in most decades. You really just have to avoid catching the top of a frothy market”

“Ami I Diversified?” – BMO Economics

GLP-1 threatens restaurants, distillers

Citi analyst Filippo Falomi thinks GLP-1 proliferation is a threat to restaurant and alcohol revenues,

“Increased adoption of GLP-1 drugs and impacts on consumer behaviors are increasingly a key part of the debate across several consumer sectors. In late 2025, we performed an update of our Citi Research Innovation Lab survey of 800 GLP-1 users and compared it to a sample of ~400 consumers under other weight loss regimens. Our survey update shows increased interest levels in GLP-1 drugs for weight loss with the development of oral formats, with similar self-reported weight loss & calorie reduction. Further expansion of oral formats and insurance coverage could accelerate GLP-1 adoption and increase investor concerns on impacts across consumer sectors. We see the US Food & Beverage (incl. alcohol) and Restaurants sectors as most at risk given concerns on volumes”

China already selling Treasuries

Scotiabank strategist Simon Fitzgerald-Carrier highlighted China’s steady diversification away from U.S. Treasuries,

“After Pimco and Amundi recently announced that they will reduce their exposure to U.S. assets, Bloomberg reported yesterday that Chinese regulators have advised banks to trim their holdings of U.S. Treasuries. .. China has been reducing its holdings of Treasuries for more than a decade (though actual holdings may be somewhat understated due to Chinese custodial accounts in certain European countries). This time, however, Chinese officials are framing the move as a ‘diversification of market risk,’ rather than a geopolitical signal or a loss of confidence in U.S. creditworthiness. The shift could gain momentum if other major foreign holders of U.S. Treasuries follow suit. Still, foreign holdings of U.S. Treasuries reached a record high in November, indicating continued appetite for U.S. debt. But if the new trend broadens, it could further exacerbate the divergence between U.S. rates and the U.S. dollar that we have been observing for some time”

According to the attached chart, Chinese holdings of Treasuries have declined from US$1.3-trillion in 2013 to about US$700-billion.

Bluesky post of the day

Diversion

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