Barlow’s Research Roundup: Strategist warns of a sharp spike in crude prices

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

Much higher crude

BofA Securities commodity strategist Francisco Blanche sees the potential for a sharp spike higher in crude prices,

“In our view, continued geopolitical skirmishes through year-end are now the most likely scenario and we raise our 2H26 Brent forecast to $95/bbl from $83/bbl. Although alternative routes and escorted Hormuz shipments have mitigated some of the shortfall, damaged infrastructure and rising geopolitical tensions make rapid normalization unlikely. Continued inventory draws support an average Brent price of around $80/bbl in 2027, but the most important change is an expanding tail risk: strategic and commercial inventories are becoming progressively thinner while physical crude markets are already signaling acute near-term scarcity through extreme backwardation. Despite this tightness, energy prices are still relatively affordable when adjusted for income and inflation, and growth is not slowing down yet. Thus, if disruptions persist into spring 2027 or oil infrastructure damage intensifies, ICE Brent front month contracts may have to spike well above $150/bbl to curb global oil demand.”

Obesity market massive

Scotiabank analyst Louise Chen notes the scale of the obesity treatment market after a meeting with Novo Nordisk A/S,

“NVO estimates that by 2035, there will be over 1.2B people living with obesity. Only <2% of people are getting treated with GLP-1. Even if they get on treatment, the average stay time is nine months. Obesity is associated with more than 200 different complications. Obesity has driven unprecedent growth in healthcare. It has continued to do so. Over time, more obese patients will get on treatment and stay on treatment longer. The market has evolved rapidly, including the trend of consumerization. NVO will expand its pipeline and find new products that it could sell more like consumer goods than traditional medicines, building off what’s occurring with its obesity treatments. NVO noted that 90% of sales of its Wegovy pill have been through a cash channel. Other companies in our coverage universe have also talked about consumerization for their products/pipeline … NVO expects to launch CagriSema in early 2027. Today, NVO announced positive topline results from its Phase 3 REIMAGINE 5 (type 2 diabetes [T2D]) and REDEFINE 9 (overweight/obese) trials of once-weekly CagriSema for weight management and T2D. NVO is scaling its capacity to be able to serve 10x more people with obesity on oral GLP-1.”

Luxury goods

RBC Capital Markets luxury goods analyst Piral Dadhania provides ways to profit from wealth inequality,

“We refresh our luxury company views estimates which results in rating downgrades for LVMH and Burberry, and estimate reductions for Kering, Moncler, Hermes and Swatch Group. Three key reasons underpin our more prudent luxury sector view into 2H26E and FY27E: 1) Macro and luxury demand conditions have incrementally softened in 3Q26E - with mixed datapoints in China and potential US moderation, and oil price led inflation and rising interest rates as well as volatile equity markets. 2) Consensus mid-term estimates are too optimistic assuming accelerating revenue growth expectations and margin expansion which in our view is not justified based on current momentum, 3) Creative renewal for soft luxury brands is unlikely to deliver expected revenue growth improvement given tougher macro, which removes the bull case for affected stocks (e.g. LVMH, Kering, Burberry). RBC FY27E EPS estimates are now below consensus for LVMH (-9%), Burberry (-7%), Kering (-6%), Moncler (-4%) and Hermes (-2%), which could see further earnings revisions pressure despite low valuation. We prefer Ferrari and Richemont in Luxury, adidas in sporting goods and EssilorLuxottica.”

Bluesky post of the day

Diversion

“Dengue Is Surging in Florida—and It’s Claimed Its First Life in Nearly 100 Years” - Gizmodo