A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Bank of Montreal economist Doug Porter attempted to explain the sharp jump in Canadian insolvency filings,
“[insolvencies] were up 19.3% y/y in September, and that’s not a big outlier—over the past 12 months combined, insolvencies have risen a meaty 8.5%. In level terms, they are the highest since 2010 and have long since moved above the oil-related spike in 2016… all 10 provinces have posted increases in the past year, and Ontario has seen the biggest leap at 28.5% y/y. We would point to two items: 1) It’s proposals that are jumping; bankruptcies are actually down a touch in the past 12 months. 2) Record debt levels have no doubt pushed some consumers to the limit with no margin for error, prompting the rise in proposals”
“@SBarlow_ROB BMO: What's behind the spike in Canadian insolvencies?” – (research excerpt) Twitter
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Morgan Stanley U.S. equity strategist got my full attention with a contrarian set of market projections in 2018 that turned out to be remarkably accurate.
Mr. Wilson has lost some followers this year for remaining bearish through the market rally but has now doubled down on his pessimistic outlook (my emphasis),
“We think Value's performance relative to Growth is bottoming after 13 years of underperformance. We see a two-step process that plays out over an extended investment horizon: Growth's underperformance drives Part 1, and then Value's outperformance drives Part 2. In between, there’s a recession… [growth stock are] trading at a significant valuation premium relative to earnings growth expectations, but we don’t believe Growth stocks are immune to slowing corporate and consumer activity. We see Growth multiples contracting as cyclical pressures—decelerating capex and eventually a slowing consumer—weigh on earnings expectations.”
Investors don’t have to fully buy into the bearish view but the importance of 2020 U.S. consensus profit estimates should be obvious.
“@SBarlow_ROB MS: "We Believe A Secular Regime Shift from Growth to Value Is Just Beginning" – (chart) Twitter
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Citi analyst Atif Malik jacked his price target on NVIDIA higher by US$45 Friday morning to $245 (currently trading near $210).
Mr. Malik believes that NVIDIA – the semiconductor manufacturer once dubbed “the smartest company in the world” by M.I.T. Technology Review - is set up for a surge in profits,
“[Year over year] revenue growth resumes in the Jan-Q led by strong datacenter growth (we think +15% Q/Q or in-line with Street…) as inference and conversational AI led training demand grows at hyperscalers. We like the stock setup on improving Y/Y comps next couple of quarters and believe NVDA offers the best programmable data center computing platform.”
“@SBarlow_ROB Citi jacks NVDA target from $200 to $245” – (research excerpt) Twitter
“Nvidia follows Intel to predict strong growth in data center business” – Reuters
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Column: “For domestic REITs, relative yields matter, valuations don’t” – Barlow, Inside the Market
Diversion: Rod Stewart’s remarkably large and detailed model railways, “ Sir Rod Stewart” – Marginal Revolution
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Scott Barlow