One Canadian stock lands in BofA strategists’ top global stock ideas

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

‘Sideways move’

BofA Securities’ global quantitative strategist Nigel Tupper’s latest report is entitled Sentiment Surge,

“The recent sideways move in our macro indicator – the Global Wave – indicates macro trends are somewhat ambiguous, but other global investment regime indicators are providing a more positive signal. The global earnings cycle remains robust with no sign of an earnings downturn. Additionally, our Global News Pulse (30-day) continues to rise on strengthening sentiment in stock-specific news and is now at a four-year high. Long-only positioning = Buying Asia, selling the US Year-to-date, long-only funds globally have bought shares in Asia ($94-billion) and sold shares in the U.S. ($164-billion) according to our analysis of 6,200 funds managing $36 trillion. Last month, long-only funds’ largest share purchase in the US was Palantir Tech ($3.5-billion) and in Asia was Samsung Electronics ($1.3-billion). Crowded Positives currently include Broadcom, Mastercard, Samsung Electronics, Wells Fargo, and UniCredit. Crowded Negatives include Costco, Meituan, Adobe, Nestle, and Accenture … By global sector, Triple Momentum (earnings, price, news) is strongest for Diversified Financials, Banks, and Insurance, and weakest for Real Estate, Consumer Staples, and Software. Among large and liquid stocks globally (more than $20-billion mcap, more than $20-million ADTV), the Triple Momentum Rank is highest for Barrick Mining, Robinhood Markets, Banco BTG Pactual, Fresnillo, Wiwynn, SK Hynix, Soc Gen, KBC, ABN AMRO Bank, and Aselsan”

Cut ahead?

BMO senior economist Shelly Kaushik described why the retail sales data supports another Bank of Canada rate cut,

“Canadian retail sales jumped 1 per cent in August in both nominal and real terms. Despite that decent print, sales have been choppy in recent years. The previous inflation spike and resulting monetary tightening, the soft labour market, and trade and economic uncertainty have all weighed heavily on consumers. Removing the significant price swings, it’s clear that real spending has struggled to gain traction even after interest rates began to fall—sales volumes have edged up just 0.3 per cent in the past six months. To highlight that point: the September flash estimate calls for a 0.7-per-cent decline in nominal spending, which could lead to volumes dropping more than 1% after accounting for the increase in goods prices. Ultimately, it’s the weak outlook for economic growth—and further downside risks—driving the Bank of Canada’s dovish stance. We don’t expect that to change anytime soon and continue to expect a further 50 bps of easing in the pipeline”

“BMO: Ultimately, it’s the weak outlook for economic growth—and further downside risks—driving the Bank of Canada’s dovish stance. We don’t expect that to change anytime soon and continue to expect a further 50 bps of easing in the pipeline” “ – (text, chart) Bluesky

Bubble concern

The sheer volume of Wall Street strategists writing “this isn’t an imploding market bubble” reports is starting to make me think it’s a bubble. Goldman Sachs’ Peter Oppennheimer is the latest,

“The market’s gains reflect sound fundamentals rather than rampant speculation or unsustainable leverage. Surging valuations for firms involved in AI and technology have largely arisen from the robust performance of established firms, not shaky startups. Although market concentration is high, it’s not unprecedented. Similar cycles of industry dominance in finance or energy lasted for decades without necessarily culminating in crisis. In addition, most capital expenditures in tech are now financed internally rather than fueled by debt. This means financial leverage remains contained, limiting systemic risk even if sector corrections occur”

Bluesky post of the day

Diversion

“China Found Something Fascinating on the Far Side of the Moon” – Futurism