Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BMO chief economist Doug Porter notes that domestic nominal GDP passed $3-trillion for the first time,
“One little-noted factoid in the latest quarterly national accounts was that Canada’s nominal GDP topped the $3 trillion mark in Q2 for the first time on record (annual rates). This comes just under 10 years after reaching the $2 trillion mark and exactly 25 years after first reaching $1 trillion (in 1999). The rise in nominal GDP since 2014 implies an average annual growth rate of 4.2%—broken down by 1.5% real and 2.6% price increases. In the 25 years since the economy first hit the $1 trillion level, the average nominal growth of 4.5% per year has been driven by 2.0% real growth on average and GDP inflation of 2.5%. The GDP deflator has actually risen 3 ticks faster than the CPI over that period (2.2% on average)”
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Scotia analyst Orest Wowkodaw still finds copper miners expensive,
“Although the valuation range is fairly wide, we estimate that the large/mid-caps are currently implying an average Cu price of $5.06/lb, representing a still relatively large 27% premium to spot of only ~$4.00/lb (vs. premiums of 28% in mid-August and a peak 34% in April; average premium of 20% since 2023 and 7% since 2018). We believe this strong premium is being driven by robust investor appetite for Cu exposure, M&A speculation, and lower by-product prices (ex. Au/Ag). FM (at $4.33/lb due to Panama uncertainty), HBM ($4.35/lb), GMEXICO ($4.45/lb), ERO ($4.48/lb), and LUN ($4.65/lb), are the least expensive; conversely, SCCO ($7.06/lb), IVN ($6.32/lb due to very weak PGM prices), FCX ($5.50/lb), and ANTO ($5.28/lb), are the most expensive. MTAL ($4.67/lb), CS ($4.67/lb), and TECK.B ($4.94/lb), are priced in the middle. CS, HBM, ERO, and TECK remain our top picks for Cu exposure. We also highly recommend FCX, IVN, LUN, and MTAL. We rate ANTO and FM as Sector Perform”
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The U.S. Non-Farm Payroll data will be released Friday. The usually-overrated number might live up to the hype this week because pundits are very nervous about the prospect of any result that doesn’t match the consensus.
Morgan Stanley chief investment officer Michael Wilson wrote another weak report and a further rise in the unemployment rate would likely rekindle growth fears and pressure equity valuations like last month” in his weekly report released over the weekend.
This morning, BofA Securities derivatives analyst Gonzalo Asis added, “Equities seem more excited about the cuts than concerned about a potential recession, gauging by their return to near highs and the outperformance of small caps & equal-weighted S&P. If that’s true, the main risk for equities this week is a hot NFP that reprices short-term rates higher “.
Any non-consensus number seems like it will be a problem.
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Diversion: “CIA May Have Derailed Research Into ‘Havana Syndrome’” – Gizmodo