Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BMO Capital Markets analyst Ben Pham provided an earnings preview and top picks in the yield-heavy energy infrastructure sector,
“Q2/24 earnings season kicks off on July 29 with GEI [Gibson Energy Inc.]. We have made estimate changes to ~55% of our coverage and expect almost an even distribution of beats, in-line, and misses. Following our analysis of public data sources, proprietary models, and detailed discussions with our coverage, we point to notable potential Q2/24 beats from KEY [Keyera Corp.], NPI [Northland Power Inc.], and TA [Transalta Corp.], and potential quarterly misses from INE [Innergex Renewable Energy Inc.], BEP [Brookfield Renewable Partners LP], and EMA [Emera Inc.]. We recommend positioning accordingly into Q2/24 results”
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National Bank analyst Daren King reported the June results for the Teranet-National Bank House Price index,
“Five of the 11 markets in the composite index were up during the month: Winnipeg (+3.9%), Edmonton (+2.3%), Quebec City (+1.1%), Calgary (+0.1%) and Toronto (+0.1%). Conversely, prices fell in Hamilton (-2.2%), Halifax (-0.8%), Ottawa-Gatineau (-0.8%), Vancouver (-0.3%) and Montreal (-0.3%), while they remained stable in Victoria … market conditions for the housing market continue to indicate balanced conditions between buyers and sellers … we didn’t see a major wave of new transactions that could have put upward pressure on prices. While record population growth, a shortage of housing supply and upcoming rate cuts by the Bank of Canada will continue to support the Canadian real estate market in the months ahead, we are cautiously optimistic about the magnitude of any recovery in the housing market in the coming months, and its potential impact on prices. Indeed, many uncertainties remain, including the risk of a further deterioration in the labour market, particularly among young people who are facing the worst affordability conditions in decades.”
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I have always viewed markets as a metaphorical tug of war between bullish and bearish factors. I was therefore susceptible to UBS U.S. equity strategist Jonathan Golub’s approach of listing tailwinds and headwinds for the S&P 500,
“Late last year, we forecasted higher stock prices on fading recession risks and improving TECH+ earnings. While risks still appear skewed to the upside, the backdrop has become more nuanced. ... We highlight several of the key headwinds and tailwinds that have informed our decision to maintain our 5600 and 6000 targets for end of 2024-25. Market Tailwinds: Economy expected to grow above long-term trend, with limited recession risk. Above-average EPS trajectory expected to continue and broaden. Rates and inflation expected to continue declining. Market Headwinds: ISM Manufacturing and Services below 50 [indicating contraction]. GDP forecasts slowing; economic surprises negative. Elevated political and geopolitical risks. Depressed Vix and elevated valuations tend to result in weaker forward returns.”
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Diversion: “The Winners and Losers of the 2024 Emmy Nominations” – The Ringer