Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web.
Business Insider has collected a list of eight global stocks that are attracting the most interest from professional money managers. These options can be a mixed blessing – Merrill Lynch strategist Savita Subramanian has shown that under-owned stocks perform much better than popular investments over longer time frames – so they should be considered as trade ideas, not investments. The companies are Comcast Corp, Alphabet Inc. (two stock classes), Mastercard Inc., Amazon.com, UnitedHealth Group Inc., Visa Inc. and Priceline Group Inc.
"Stock pickers are piling into these 8 stocks" – Business Insider
See also: "Stock Picker Who Snared a 7,000% Hong Kong Return Eyes His Next Win" – Bloomberg
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Merrill Lynch is recommending that investors sell stocks that fall when interest rates rise (i.e., non-bank dividend stocks) and buy sectors such as energy and financials that rise when bond yields climb:
"assets globally have become more correlated with US rates … Among assets most positively correlated to US yields, we suggest Jan-19 calls on dispersion on ESTX50, DAX, XLE (US Energy), XLF (US Financials), SX7E (EU Financials), and NKY. Alternatively, among assets most negatively correlated to US yields, we suggest Jan-19 calls on dispersion on GLD (Gold), LQD (US IG bonds), XLU (US Utilities), XLP (US Staples), FXY (USDJPY), and IYR (US REITs)."
"@SBarlow_ROB ML: Sell dividends, buy energy and financials" – (research excerpt) Twitter
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Report on Business's Streetwise writers Christina Pellegrini and Niall McGee detail a major slowdown in domestic investment banking activity. Bank earnings are coming up soon, and I'm interested in how much this trend affects their bottom lines for the quarter. The major banks have become what economists call pro-cyclical, exaggerating market trends:
"Canadian M&A craters in third quarter; steep valuations partly to blame" – Streetwise (for Globe subscribers)
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The crude price continues to take a breather after a strong September but Reuters reports that hedge funds have amassed major bullish positions on gasoline, jet fuel and other distillates:
"Hedge funds and other money managers held a record net long position in U.S. heating oil futures and options equivalent to 62 million barrels on Sept. 26, according to regulatory data … Fund managers' net position has risen by almost 95 million barrels over the last 13 weeks, transforming a position that was net short by 32 million barrels as recently as June 27."
"Hedge funds amass record bullish position in distillates: Kemp" – Reuters
"Oil prices ease as speculators grow impatient" – Reuters
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Tweet of the Day: "@HayekAndKeynes Global synchronized growth. Every single manufacturing measure in the world is in growth territory " – (chart) Twitter
Diversion: "Pink Floyd's Ten Tour Commandments" – Alan Cross
Scott Barlow