Barlow’s Research Roundup: Why market doomsayers are rarely right

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

Doom gets the headlines

Ritholtz Wealth Management portfolio manager Ben Carlson wrote about why the doomsayers are rarely right,

“The fact that the economy snapped back so quickly [after the pandemic] is kind of amazing. Sure, we had high inflation but that outcome was much better than what some were predicting (which is something I wrote about in 2020). If you ran the pandemic simulation 100 times, things probably end up in a much worse place than they did maybe 90 times? … These aren’t headlines you’ll read in the financial media: THERE WAS NO RECESSION YET AGAIN TODAY. THE STOCK MARKET DIDN’T CRASH … AGAIN. ANOTHER MONTH AND NO FINANCIAL CRISIS. However, it can be helpful to look back at some of the outcomes people were sure of at the time that never came to fruition … During the Great Financial Crisis the Federal Reserve took drastic measures to shore up the financial system as it teetered on the edge of collapse. They took interest rates to 0 per cent. They implemented quantitative easing, which essentially involved buying assets from banks to shore up their balance sheets.

“Many pundits, investors and economists were concerned these actions would lead to much higher inflation (some said hyperinflation), a crash in the dollar and a potential financial crisis down the road. A lot of well-respected people even penned an open letter to Ben Bernanke laying out their concerns over the Fed’s actions … we just lived through the longest economic boom in history and one of the longest bull markets ever. Interestingly enough, as I was drawing comparisons between the current bull market and the 1980s/1990s boom, I decided to look at the inflation that occurred in each period. From 1982 to 1999, the cumulative change in CPI was roughly 79 per cent. From 2009 to 2026, the consumer price index is up 56 per cent in total. So even if you include the inflationary spike in 2022, prices have risen at a lower rate than they did in the 1980s and 1990s.

“A lot of people assumed Fed policy would lead to an even greater crisis down the road. Some would say they weren’t wrong just early. Either way, it’s worth remembering that there are a lot of dire predictions in the financial pundit forecasting graveyard. Most of the bad stuff people predict doesn’t come to pass”

Cameco’s bright future

Scotiabank analyst Orest Wowkodaw detailed better than expected results from Cameco Corp. (CCO-T) and the increasingly bright future for the company,

“CCO released better than anticipated Q1/26 results. .. The adjusted fully diluted EPS of $0.47 was well above our estimate of $0.23 and consensus of $0.34. Similarly, adjusted EBITDA of $509-million was 38 per cent above our estimate of $370-million and 16 per cent above consensus of $440-million … The company highlighted the growing opportunity set of planned AP1000 reactor builds in the USA. Overall, we view the update as positive for the shares given our higher estimates. We rate CCO shares Sector Outperform based on improving fundamentals driven by the Western World agendas of decarbonization, energy independence, and power security. Our revised 12-month target of C$175.00 per share (vs. C$150.00 previously) is based on a 50/50 weighting of 30.0x our avg. 2028E-29E EV/EBITDA and 3.0x our updated 8% NAVPS estimate … CCO’s updated 2026-2030 contract book is based on strong average sales volume of 28M lbs pa (unchanged QoQ) with average expected price realizations of US$67-87/lb (average of US$78/lb) at spot/term prices of US$100/lb …

Investing on robots

Morgan Stanley’s morning research summary emphasized Rockwell Automation as a main beneficiary of the U.S. reshoring trend,

“MS Research Analyst Chris Snyder notes that ROK FQ2 results more than delivered on his bullish preview and while FY’26 was revised up 8 per cent, he continues to see upside in the model. He highlights that while it always encouraging to get revisions and see positive rate of change, what it is most important for the equity is that he believes US Mfg capex is entering an extended multi-year (perhaps) decade upcycle on the back of his $10-trillion U.S. Reshoring thesis, and as the most used technology in U.S. Mfg, ROK remains a top choice on the theme. He explains that it is difficult to overstate the impact of a served market returning to growth after decades of decline, a tailwind for both ROK organic and valuation, as Industrial Machinery orders declined 50 per cent in real terms in the 25yrs after China joined the WTO (1999-2024) but have now rallied 50-per-cent post ‘Liberation Day.’ He explains that while the move off the bottom is encouraging, he is more focused on the opportunity ahead. With leading-edge demand is still tracking below 1990s levels, he sees significant pent-up investment following decades of outsourcing. While the initial wave of US Reshoring is being fueled by policy, he thinks the momentum will be sustained beyond the current Administration with the long-term driver being structural tech diffusion, allowing U.S. Mfg costs to decline at a faster rate vs ROW”

Bluesky post of the day

Diversion

“This Is What Makes You Irresistible to Mosquitoes” - SciTechdaily