Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
More upside for gold and silver
Scotiabank analyst Tanya Jacusconek provided top picks for a precious metals rally she believes has room to run,
“In this report, we have analyzed six main gold cycles over the past 50 years. While these cycles are all different (duration, returns, or drivers), they tend to come with (or follow) an economic/financial shock or a geopolitical event, leading to higher uncertainty, with the USD embarking on sustained downtrends. Today’s cycle looks no different: the pandemic shock unleashed unprecedented monetary and fiscal stimulus (higher debt), trade uncertainty is high, geopolitical tensions elevated, and the USD is heading lower. Gold equities often move before bullion (at an average leverage ratio of approximately 1.5:1), similar to today.
“Outlook. Investors’ primary concern is whether the gold rally is nearing an end. From a macro standpoint, not only all major traditional factors driving gold higher remain firmly in place, but we also note some key differences vs prior cycles that could extend its longevity, including central banks being major net buyers, the democratization of gold products, and investors remain broadly underweight the space. Despite recent volatility, we stick to our OW recommendation. Gold equities - what’s not to like? The operators’ disciplined approach to the business, coupled with strong balance sheets, record margins, and FCF to support increased returns, valuations have further room to expand. Generalist investors remain underweight the sector. Top picks are AEM, AGI, AU, B, DPM, EDV, KGC, NEM, OGC, PAAS”
Fund managers really bullish
BofA Securities has released the realists of their monthly global fund manager survey (FMS), summarized by investment strategist Michael Hartnett,
“FMS sentiment stays uber-bullish…asset price upside in Q1 harder when all positioned for it; investors most OW commodities since May’22, most OW stocks since Dec’24, most UW bonds since Sep’22; FMS cash 3.4 per cent up from record-low 3.2 per cent … On Macro: ‘run it hot’ so hot right now…most optimism on ‘boom’ since Feb’22, on more than 10 per cent EPS growth since Aug’21, on growth since Aug’21; but capex too hot right now …CIOs telling CEOs to improve balance sheets (35 per cent from 26 per cent) vs. increase capex (20 per cent from 34 per cent) as FMS investors saying corps ‘overinvesting’ at new record high. On Policy & Risk: majority (38 per cent) say Fed chair Warsh = higher UST yields, lower US$; DEM House/GOP Senate = most likely US midterm election result (62 per cent, then 20 per cent DEM sweep); biggest tail risk = AI bubble (25 per cent), most crowded trade = long gold (50 per cent), likely source of credit event = private credit (43 per cent), 80 per cent positioned for steeper yield curve. otation from U.S. stocks to EM (highest since Feb’21) & EU but not Japan, from tech stocks to energy & materials (highest since Apr’22), investors OW small vs. large cap by most since Apr’21, OW value vs. growth by most since Apr’25.
“FMS Contrarian Trades: BofA Bull & Bear Indicator up to 9.5 from 9.4 = contrarian ‘sell signal’ (since Dec 17th) = reduce risk in Q1; contrarian FMS pair trades…long bonds-short gold, long US$-short EM, long tech-short banks, long REITs-short materials”
AI capex now affecting free cash flow
Evercore ISI strategist Julian Emanuel is still on the lookout for systemic risk in the AI trade,
“The AI boom shows few signs of abating. Capex at Hyperscalers is now expected to reach $650-billion over the next 12 months. While our proprietary ‘Rules of 10′ remains healthy - leveragelow, and circular-economy risks muted, falling Hyperscaler FCF has triggered the 1st of EVR ISI Strategy’s “yellow flags”. More flags being triggered, alongside ongoing stock gains raises the probability of both left, and right, tail outcomes. Today, fundamentals, not sentiment, are still driving stocks. Weakperformance following hyperscalers’ earnings reports highlights the market remains rational, unlike the exuberant FOMO-driven 1990s Bubble. Broad credit remains subdued and even within Tech, disruption exposed High yield spreads have widened while IG spreads remain tight. GOOGL’s 100 year bond offering is also a watershed event, drawing parallels to Motorola’s century bondissue in 1997 which was followed by a 300 per cent+ rally in the NDX tothe Y2K peak. The structural Bull Market has further to run. S&P 500 at 7,750by year-end 2026 as EPS drives performance. Recent weakness reates attractive buying opportunities to gain exposure to the long term structural AI theme supported by rising protectionism and Demographics in pursuit of Productivity. Buyers of AI“Enablers, Adopters and Adapters” in AI-Centric sectors CommServices, Consumer Discretionary and Info Tech”
Bluesky post of the day
Retail Investors just pumped $48 Billion into Stocks over a recent 21-day period, the largest retail flow in history 🚨🚨
— Barchart (@barchart.com) February 16, 2026 at 7:34 PM
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Diversion
“World’s Oldest Known Pieces of Sewn Clothing Sat in an Oregon Cave for 12,000 Years” - Gizmodo