Barlow’s Research Roundup: U.S. strategist recommends these ‘stocks for stability’

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

Portfolios unprepared for normal conditions

Evercore ISI strategist Julian Emanuel recommends “stocks for stability”,

“Prediction markets as of Friday assigned a 12-per-cent probability of a U.S./Iran ceasefire by April 7 and a 39-per-cent probability by April 30. It is unsurprising then that in the rush to place large scale Equity and Credit Hedges, augmented last week by Bearish Bond (Higher Yields) and Gold Hedges, amplified by degrossing (Memory stocks sold aggressively) and a generalized move toward Cash, there is one scenario investors may be unprepared for … Stability. What if, over the next few weeks the newsflow turns favorable, validating the idea that while Credit Markets are stressed, a Recession remains “off the table”? While at the same time the “runaway” in short rates (In our Friday Macro webinar, 86 per cent of Clients saw the Fed as on hold or cutting in 2026, directly contravening the market’s pricing a probability of a Rate Hike) and long end yields (The 10 year remains rangebound between 4.0 per cent and 4.6 per cent) moderates? And the Oil Price, key to the Macro puzzle, moves back toward an elevated yet more tolerable $88/bbl. Brent (Steve Richardson’s 2026 forecast)? Such a confluence of events would reinforce 2 per cent+ U.S. GDP in 2026, increase the odds of a Fed that cuts rates before year end, and keeps the USD essentially the “non-event” it has been for 9+ months. Stability would reinforce our Strategy Base case view that the Structural Bull Market which began in late 2022, stressed but not broken in Spring 2025, has further to run in 2026 despite the obvious volatile Macro/Policy pullback, driven by another year of double digit EPS growth, historically positive for stocks. In order to prepare for the “tail risk” of a more Stable macro scenario, we present Evercore ISI’s fundamental analysts “Stocks for Stability”; names best positioned to outperform should a more Stable Macro environment emerge in April, seasonally a time of significant market turning points … Names include O/P rated CRM, XYZ, NOW, AMZN, ALGN, DIS, MSFT, DHR”

Other companies on the “stability” list that may interest Canadian investors include Coca-Cola, Moody’s, Boston Scientific, Siemens Energy, Amazon.com,and Palo Alto Networks.

From cautious to bearish

Citi strategist David Chew finds outright short positions on the S&P 500 increasing for portfolio managers,

“S&P 500 positioning has weakened materially in recent weeks, with last week marking a notably different shift—driven primarily by aggressive new short positioning flows rather than simple long reductions. Rising short‑side profits further reinforced the bearish tilt. Nasdaq positioning remained steadily bearish, as modest short covering provided a temporary pause in recent trends, though this move was largely mechanical de‑risking rather than a signal of renewed bullish sentiment. Across US indices, bearish positioning is currently most pronounced in the S&P 500, though these levels remain moderate relative to longer‑term history … Although KOSPI still carries a modest bullish bias, it registered the sharpest week‑on‑week deterioration across the indices tracked, with long‑side profits almost entirely erased over the week. The rapid erosion in long P&L, combined with the early signs of short positioning beginning to build, raises the risk of a disorderly long‑side capitulation”

The South Korean equity benchmark has historically been strongly correlated to industrial metals prices and global economic growth.

Crude prices mostly noise in long term

BofA Securities rates strategist Ralph Axel found that crude prices have big influence on asset prices in short term, but it’s mostly noise,

“History strongly suggests that a long bond position is short oil and vice versa (i.e. oil and rate levels are positively correlated). Interest rate levels have overwhelmingly increased on higher oil and fallen on lower oil for at least 30 years … U.S. 2-year rates since Oct 2004 (the introduction of TIPS = Treasury inflation protection securities) increased 125 basis points which split into +1258bp on oil-up days and -1133bp on oildown days. The 125bp move is roughly in line with the underlying signal of Fed policy stance which moved from 1.0 per cent in mid ’04 to 3.6 per cent today … The moves in rates from oil volatility is more noise vs signal. Central banks don’t tend to react as strongly as markets to developments that cause oil to move dramatically. Drops lower in rate after period of high oil are about the same size as upward moves in rates when oil stabilizes or declines. The signal through the noise is how central banks react. This leads us to lean in the direction of fading the recent rate rise while acknowledging that the top in yields may still be in front of us”

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Diversion

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