A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web
Not to bother readers with my problems, but an extremely bearish research report on the outlook for the Canadian economy presents a dilemma.
Macquarie's David Doyle published Past the Point of No Return this week, which included the following,
"It is difficult to imagine a more challenging environment for the domestic Canadian economy. Our 'sharp slowing' thesis played out in 2H17 with real GDP moderating to a 1.6-per-cent pace, from 4.2 per cent in 1H17. We expect growth to slow further still to 1.4 per cent in 2018 (consensus 2.0 per cent) (4Q on 4Q). Housing headwinds have intensified, structural challenges have become more severe, and exports and business investment continue to struggle."
I certainly share Mr. Doyle's concerns about housing market-related headwinds but the economist has also been bearish for a while during a period of decent growth. This is not to say he's wrong, but it's also the case that economists from Bank of Montreal and CIBC have far more sanguine views.
I could use "Canadian economy is 'Past the Point of No Return''' which, by presenting the conclusions as fact would generate more web traffic here, but it seems a manipulative use of what is, so far, an outlier perspective.
"@SBarlow_ROB I suppose its theoretically possible for Macquarie's Doyle to be more bearish on Canada. Point of No Return:" – (research excerpt) Twitter
"@SBarlow_ROB CIBC's Shenfeld not that concerned about today's GDP miss" – (research excerpt) Twitter
"@SBarlow_ROB BMO's Porter on Cdn GDP miss: "main message though is that the exciting growth from the middle of 2016 up until the middle of 2017 is now truly in the past"" – (research excerpt) Twitter
"Consumer Confidence Takes a Hit With Canada's Economy Gearing Down" – Bloomberg
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Goldman Sachs has published an extended list of stocks which they believe represent high quality and sustainable profit growth,
"@SBarlow_ROB GS: top stock picks for high quality, sustainable growth" – (full table) Twitter
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Morgan Stanley analysts provided a helpful summary on how investors can tell the difference between a bull market correction and the start of a bear market,
"The lead-up to equity bull corrections tends to see an orderly risk-on environment – US stocks lead, credit spreads tighten, yields rise slowly and USD strengthens against EMFX. Drawdowns of 5 per cent or more over one month tend to point to a bull correction rather than a bear market… Run-ups to bear markets see exuberance – equities can rally by 20-per-cent-plusin the final 12 months of a bull market. EM outperforms, US 10-year yields rise 110bp on average, EMFX strengthens materially, credit spreads widen and crude peaks before equities make their final cycle high."
"@SBarlow_ROB Bull correction or start of a bear?" – (research excerpt) Twitter
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Today's trade and tariff links,
"Premarket: Shares recover as Trump tariff plan faces resistance" – Report on Business
"U.S. Metals Tariffs Would Hit Canada Much Harder Than Mexico" – Bloomberg
"Canadian dollar dips below 77 cents US on trade worries" – CBC
"Goldman Sachs Rips Into Trump's Tariffs Plan" – Bloomberg
"In Trump's tariff war, it's the U.S. that will be in the crosshairs" – Report on Business
"Cohn Tries to Head Off Trump Tariffs With White House Summit" – Bloomberg
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Tweet of the Day: "@vsualst #confessyourunpopularopinion - a turn in the Canadian credit cycle is a far bigger risk than NAFTA's collapse (although Trump could provide the trigger): " – (chart) Twitter
Diversion: "Oldest message in a bottle found on Western Australia beach" – BBC
Scott Barlow