Loonie could spike higher as short squeeze pressure builds, says Scotiabank analyst

A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web

Scotiabank analyst Shaun Osborne sees the potential for a short squeeze driving the loonie higher,

“CAD Bears Vulnerable to Short Squeeze As JPY Bulls Build On Large Longs … The aggregate speculative bearish USD position more than doubled in the week ended April 15, widening nearly $6-billion to a net short $10.1-billion. The bulk of this week’s adjustments were observed in the JPY and CAD, with positive improvements in EUR also contributing to the USD’s (sentiment) losses. Digging deeper, Real Money (institutional) investors continue to represent the bulk of the bearish USD position. However, this week’s data also showed a notable contribution from speculative traders as well.· The bearish CAD net short position remains the largest among the reporting currencies, leaving it vulnerable to continued adjustment in an environment of broad-based USD weakness. CAD bears were indeed the largest contributors to the $2.4-billion narrowing in the net short to -$6-billion, as CAD bulls only marginally increased their modest long”

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CIBC World Markets strategist Ian de Verteuil continues to back their multi-factor investment strategy,

“If one thing has become clear over the past few weeks, it is that the future is as uncertain as ever. As tempting as it might be to make tweaks, chasing specific stocks, sectors or factors is more likely to generate transaction costs rather than alpha, in our opinion. In that vein, we still recommend our Multi-factor Model approach for Canada, which weights Quality at 25 per cent, Low Vol and Momentum at 20 per cent, Value at 15 per cent and Growth and Size at 10 per cent. Our top 10 names ... skew heavily to Financials and Staples”.

The stocks are Power Corp Canada, Royal Bank of Canada, Loblaw Companies Ltd., Intact Financial Corp., CIBC, Quebecor Inc., George Weston Ltd., Great-West Lifeco Inc., Toronto Dominion Bank and Empire Co Ltd.

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Wells Fargo analyst Eric Luebchow detailed a slowdown in AI-related spending,

“AWS Pauses Certain Colo[cation] Deals. Over the weekend, we heard from several industry sources that AWS has paused a portion of its leasing discussions on the colocation side (particularly international ones). It’s not clear the magnitude of the pause, but the positioning is similar to what we’ve heard recently from MSFT—they are digesting aggressive recent lease-up deals (however, we do not believe they are canceling already signed deals; simply pulling back from a pipeline of LOIs [letters of intent] or SOQs[statements of qualifications – preapprovals for data center projects]). 3 Other Hyperscalers Remain Active. With MSFT and AWS both slowing the pace of signing new leases for now, 3 existing hyperscalers—Meta, Google and Oracle—all remain active, in addition to elevated activity at NVIDIA. This also does not include the aggressive expansion of Project Stargate (Open AI / Oracle) which has already signed 2 sizable deals earlier this year. Apple also has publicly stated it is ramping up its data center builds over the next 4 years”

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Bluesky post of the day:

Diversion: “Neuroscientists are racing to turn brain waves into speech” – Ars Technica (soft paywall)