Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BofA Securities quantitative strategist Nigel Tupper’s most recent research report had enough fascinating statistics that I wrote an entire newsletter top about it (link below),
“Breadth has been narrow in the last 3 years, with only four stocks contributing half of the return of the MSCI ACWI Index. This is lower than the 20-year average, in which only 54 stocks have accounted for half of global equity market returns. When market breadth is narrow, a view on the stocks driving index returns arguably becomes more important than country, sector, or style allocation … We note some stocks have been dominant contributors consistently for an extended period. For example, Apple has been a top 3 contributor to equity returns in 14 of the last 20 years. NVIDIA has been top 3 contributor in 3 of the last 4 years … The top contributors twenty years ago have not been among the top-contributors in recent years, as shown in the chart below. Exxon Mobil and GE were among the top-three contributors during 2004-2014, but not among the top-three contributors in the last seven years … Over [the past 20 years], the top-contributors have been Apple, Microsoft, Amazon, TSMC, JPMorgan Chase, Exxon Mobil, UnitedHealth, Home Depot, and Eli Lilly [they accounted for 27 per cent of MSCI ACWI returns for the period].
“These four stocks account for 50% of world market returns over the past three years” – Barlow, Inside the Market newsletter
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BMO senior economist Erik Johnson notes that despite numerous reports to the contrary, electric vehicle sales remain strong,
“Through 2024H1, U.S. alternative fuel new vehicle sales were up 20.6% y/y [year-over-year]. Here’s the full scorecard for year -to -date sales: Electric (BEV [battery electric vehicle] + PHEV [plug-in hybrid electric vehicle] ) +8.6% y/y . Battery electric +2.5% y/y . Plug-in hybrid electric +34.0% y/y. Hybrid electric +35.6% y/y. The relatively poor showing for BEVs is a red herring —Tesla sales are down an estimated 9.6% y/y while sales ex -Tesla are up more than 33% y/y. So, the headline figure is more a statement on Tesla (roughly 50% market share) than it is of the broader EV market. Across brands, Cadillac saw sales skyrocket more than 4.5 times with the introduction of the Lyriq. Kia also saw its sales more than double from last year, and strengthening Mach -E and F -150 Lightning volumes helped Ford’s BEV sales jump nearly 72% y/y. Bottom Line: Alternative fuel vehicles continue to pique consumers’ interest despite ongoing affordability challenges”
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Andrew Gilmour, author of The Burning Question: Climate and Conflict, wrote an essay for the Financial Times,
“Our responses to climate change, via the energy transition, can also generate conflict, and in ways we haven’t yet begun to address … Whatever happens in western Europe and North America will almost certainly be dwarfed by outcomes in countries like Iraq, Libya and Nigeria. Already deeply affected by climate change and conflict, their economies are dominated by fossil fuels (over 89 per cent of exports in all three) … The Democratic Republic of Congo, which has experienced waves of violence for decades, has 70 per cent of the world’s reserves of cobalt and the seventh largest reserves of copper — both essential for batteries. Armed groups fight over control of the mines and use the revenues to prolong conflict, while the mining is often carried out under brutal conditions … It is imperative to avoid tackling climate change in ways that unwittingly increase risks of violent conflict. But that’s where we are headed unless every aspect of the transition is guided by more conflict-sensitive approaches”
“Risks of violent conflict will rise as the green transition picks up speed” – Financial Times (paywall)
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Diversion: “The Best TV Shows of 2024 (So Far)” – The Ringer