Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Commodity price tailwind
Scotiabank analyst Robert Hope forecasted another strong quarter ahead for the yield-heavy energy infrastructure sector,
“OUR TAKE: Positive. Overall, Q1/26 results reinforced our constructive view on the infrastructure sector. Results on balance were ahead of expectations and 2026/2027 estimates moved higher. The key takeaway remains that the opportunity set across the group continues to expand: utilities are poised to increase capital plans, power companies are making tangible progress toward securing data center-related off-take agreements, and pipeline operators are seeing structurally higher natural gas demand tied to incremental load growth. Higher energy pricing is a tailwind for the pipeline and midstream group, which could drive further guidance and estimates upside through 2026. We see ALA-T, KEY-T, PPL-T and TWM-T benefiting most from higher pricing over the medium term. While interest rates have increased we note the utility group is holding in as investors look to defensive sectors. Our overall favourite names are ALA-T, BIP-N, CPX-T, ENB-T, KEY-T, TA-T and TRP-T”
Engineering and Construction winners
RBC Capital Markets analyst Sabahat Khan forecasted the winners from the federal government’s National electricity Strategy,
“On May 14, 2026, the Canadian government announced the launch of a new National Electricity Strategy, with a plan to double the capacity of its grid by 2050 … his initiative aims to address growing demand for electricity that will require at least a doubling between now and 2050, with estimated costs of +$1 trillion. Key drivers of the growing demand include: 1) industrial growth (could require 11-16 GW by 2050); 2) electrification (In Canada, transportation electrification could require 150-215 TWh of electricity by 2050); 3) Population and housing growth (households are expected to grow 15 per cent by 2035 in Ontario alone); and, 4) AI data centres (electricity demand from AI data centres could reach 3-5GW by 2030 and 10GW by 2050) … We would highlight that while this initiative is in the very early stages (and potentially with some funding overlaps – i.e., some of the associated projects such as Darlington New Nuclear Project in Ontario already underway), the momentum and possibility to unlock growth across multiple end-markets (e.g., resources, energy, infrastructure, etc.) are difficult to overlook. To that end, below, we highlight infrastructure names with meaningful Revenue exposure to Canada: Dealers/Rental – TIH (90-per-cent Canada, Eastern Canada focused), FTT (50-per-cent Canada, Western Canada focused), URI (likely mid-single-digits percentage of revenue). E&Cs – ARE (85 per cent, with 18 per cent of total company LTM [last 12-month] revenue from Utilities), STN (25 per cent), ATRL (20 per cent), WSP (mid-teens percentage ; highlighting its strong position in power/electricity following acquisitions of POWER Engineers and TRC Companies), TTEK (10 per cent), ACM/J (mid-to-high single digits )”
Fund managers more bullish
BofA Securities investment strategist Michael Hartnett summarized the results of BofA’s monthly global fund manager survey (FMS),
“Big cut in cash levels (4.3 per cent to 3.9 per cent) driven by surge in EPS optimism and forecast of Fed rate cuts; BofA Bull & Bear Indicator now at 7.8 (chip shot from ‘sell-signal’); bull capitulation almost complete, early June ripe for profit-taking, bond yields to determine degree of pullback.
“On Macro & Rates: pessimism on global growth melts, just 4 per cent predict ‘hard landing’; record jump in FMS investors expecting double-digit EPS growth; Iran concerns subdued, 66 per cent expect Hormuz bottleneck ends in the next few months; bull vulnerability is ‘behind-the-curve’ Fed (just 16 per cent expect Fed hikes in ’26) driving long-end higher (62 per cent of FMS investors targeting 6 per cent on 30-year Treasury yield vs just 20 per cent targeting 4 per cent). On Risk & Allocation: 73 per cent say “long global semiconductors” = #1 crowded trade, 40 per cent say “inflation” = #1 tail risk, most likely sources of credit event = shadow banking (42 per cent) & AI hyperscalers (34 per cent); AA = all-in on risk-on…most OW cyclicals vs defensives since Jan’18, most OW tech since Feb’24, 4th highest commodity OW ever, most UW bonds since Jun’22, Eurozone UW 1st since Dec’24, and consumer most out of favor. FMS Contrarian Trades: based on FMS positions relative to history, contrarians would be covering shorts in bonds, US dollar, UK assets & consumer stocks, and paring length in commodities, stocks, EM assets & tech/semis”
Bluesky post of the day
Semiconductor Stocks just had their biggest 2-day down move since the melt-up began 🚨📉🤯👀
— Barchart (@barchart.com) May 19, 2026 at 7:17 AM
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Diversion
“Why I am skeptical on the relationship between smart phones and fertility” - Marginal Revolution