A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
BMO chief investment strategist Brian Belski expressed some frustration with investors during an appearance on BNN Bloomberg, where he noted that people have lost faith in Canada and don’t realize earnings are hitting all-time highs.
Mr. Belski also reported that after numerous meetings with portfolio managers “the predominant feeling is still fear.”
“People have lost faith in Canada: Investment strategist” – BNN Bloomberg (video)
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Nomura strategists are worried that global markets will adopt a “buy the rumour, sell the fact” trade ahead of the Federal Reserve’s expected announcement of a rate cut at the end of July.
The trade would have seen institutional investors buying equities up until a few days before the Fed meeting, and taking profits at that point and pushing markets lower,
“Momentum seems to be losing steam… With market participants converging on the view that the Fed will cut interest rates by 25bp (but not by more), stock market sentiment is softening in markets worldwide. It appears to us that, rather than expecting a risk rally once the rate cut decision has been made, the market is starting to worry that a rate cut would be followed by a round of “selling the fact”. we see signs of ebbing risk appetite, we think it best to be on the lookout for selling of global equities for profit-taking purposes ahead of the event, particularly among speculative traders. We note that hedge funds have staked out positions that look especially vulnerable to a combination of rising volatility and falling stock prices.”
“@SBarlow_ROB Nomura: "momentum seems to be losing steam"” – (research excerpt) Twitter
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I need to do more research on network security software stocks because it’s so surprising that they’re not among the top performing market sectors.
There’s been a number of prominent network hacking episodes in recent years, and those companies who haven’t been breached live in constant fear of it. Demand for increased security seems obvious to me but profit growth is mediocre, and the stocks don’t get much attention.
Citi analyst Walter Pritchard has a preview of sector earnings,
“Channel and customer conversations pointing to healthy demand across the sector and solid pipeline for 2H19. Network security continues to sound stable (albeit slightly higher levels of discounting) and Identity, SIEM, Content and Next-gen Endpoint maintain momentum. That said, we continue to expect slowing overall spend growth vs. 2018 with reports of “product digestion”, but view this as effectively factored into estimates. Investor sentiment is more cautious vs. this time in Q1 after a historically weak round of earnings reports that saw the lowest level of revenue beats since 17’ and the steepest magnitude of next day stock declines’
“@SBarlow_ROB C on network security stocks” – (research excerpt) Twitter
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Tweet of the Day: “
Diversion: Top 10 Science Fiction Movies of All Time – Cinefix (video)
Newsletter: “12 reasons forecasting is bad, but why we all do it anyway whether we know it or not” – Globe Investor