Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BMO economist Sal Guatieri notes that U.S. economic growth is set to peak in year-over-year terms.
It will be interesting to see the effects on earnings revisions from here,
“The New York Fed’s Weekly Economic Index (which compiles ten weekly series) peaked in late April and, as of June 19, is averaging a tick above 11% in Q2. This suggests some downside risk to our call for 13.2% y/y growth, or 11% annualized. Q2 should mark the apex for growth this cycle (unless Congress cooks up another stimulus plan), though it should still average 6% in H2 as most restrictions have ended and consumers will unleash a torrent of pent-up demand and savings.”
“@SBarlow_ROB BMO: “U.S. Growth Peaking But At Everest Levels” – (research excerpt) Twitter
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Scotiabank analyst Himanshu Gupta is raising his price targets on industrial REITs across the board,
“A ~2.5M sf [million square feet] GTA industrial portfolio sold for ~$300/sf and implied sub-3% cap rate (on [next 12 months net operating income])! The $750M portfolio transaction implied 36% above IFRS valuation (as per Artis Q1/21 financials). This is a high valuation mark for GTA industrial markets … Exposure to GTA markets: SMU ~53%; DIR ~23%; GRT ~20% and WIR 0%. If we use $300 per sf for GTA portfolio, our NAVs could increase by 10% to 30%+ (Exhibit 1). CDN-Industrial REITs are trading at 9% P/NAV (vs CDN REIT sector at 4% P/NAV) vs U.S. Industrial REITs trading at 17% P/NAV”
“@SBarlow_ROB BNS raises industrial REIT target prices across the board” – (research excerpt) Twitter
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Credit Suisse analyst Andrew Kuske details the winning companies from Amazon’s plans to expand solar power operations in Alberta,
“We focus on Amazon’s 375MW solar foray in Vulcan County, Alberta and reiterate a constructive market view… project is scheduled to come on line in 2022 among a long list of potential projects in Alberta as per the project queue … Our constructive Alberta power market view continues with Outperform ratings on both Capital Power Corporation (CPX) and TransAlta Corporation (TA). In our view, some of the dynamics associated with Alberta’s power market are becoming better understood … To us, the best relative value exists in the Alberta centric stocks, however, our preferred pure play renewable exposure comes from Innergex Renewable Energy (INE) and Northland Power (NPI) – both Outperform rated”
“@SBarlow_ROB CS: Winners from AMZN’s Alberta solar foray” – (research excerpt) Twitter
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ESG, the asset class without a workable definition, will continue to attract investor assets at a rapid pace according to Morgan Stanley’s Mark Carlucci,
“MS Strategist Mark Carlucci highlights that the backdrop remains constructive for sustainable investing in the US. Globally, inflows into sustainability funds slowed to $39 B in May (from $48 B in April), though remain elevated at ~2x the rate prior to the pandemic, according to data from Morningstar. The MS global asset management team expects AUM will grow from ~$2 trillion currently to ~$6.5 trillion by 2025. Mark also believes three pillars could underpin an inflection in ESG towards becoming more mainstream in the US: (1) climate catch-up, (2), stakeholder capitalism, and (3) ESG disclosure”
“@SBarlow_ROB Undefined asset class will continue to annually attract trillions in investor $ (MS)” – (research excerpt) Twitter
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Newsletter: “Why Canada may see less inflation than the U.S” – Globe Investor
Diversion: “How astronauts deal with the boring parts of being in space” – M.I.T. Technology Review
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