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Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

BofA Securities’ widely-followed monthly survey of portfolio managers uncovered a bullish market mood where institutional investors are switching quickly from growth to value stocks (my emphasis),

“Investor sentiment bullish as vaccine hopes induce strong “buy the reopening” trade; bulls adding exposure in consumer, commodities, EM (60% say EM best performer in ’21);… bears note cash levels fall to 4.0%, triggering an FMS [fund manager survey] Cash Rule “sell signal” … asset allocators underweight cash first time since May’13; … net 89% expect stronger growth in ’21; record 87% expect higher long-term yields … highest allocation to EM [emerging markets] since Nov’10 … Dec FMS contrarian trades: we say sell the vaccine 1Q21; contrarian AA [asset allocation]trades are long cash-short stocks, long US$-short EM; contrarian equity trades are long energy/staples-short tech/industrials.”

“@SBarlow_ROB BoA: “FMS [fund manager survey] investors rotate to value & EM and out of cash & US this month” – (chart) Twitter

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BMO economist Priscilla Thiagamoorthy details a sharp improvement in Canadian household debt finances,

“A StatsCan report on Friday showed the debt-to-disposable income ratio fell 1.2 ppts to a not seasonally-adjusted 170.9% in Q3. Meanwhile, the hot residential real estate market helped pull down the ratio of debtto-assets to 16.6%, the lowest since 2006Q1. For every $1 of debt, households now have $6 of assets.”

“@SBarlow_ROB BMO: Cdn household debt ratio improves sharpish” – (research excerpt, chart) Twitter

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Writing for the Financial Times, former PIMCO co-head Mohamed El-Erian outlined the biggest risks for investors in 2021 (my emphasis),

“The longer [the new wave of COVID-19] continues, the greater the risk of “scarring” that erodes longer term growth… While investors will continue to surf a highly profitable liquidity wave for now, things are likely to get trickier as we get further into 2021. Central banks’ deepening distortion of markets will be harder to defend in a recovering economy amid rising inflationary expectations. As welcomed as this recovery will be, it is unlikely to be sufficient to fully offset the impact of corporate bankruptcies or the detrimental effects of higher inequality. Investors might rue the day they ventured into asset classes far from their natural habitat that lack sufficient liquidity in a correction… There are two risks, and not just for markets. First, what is desirable may not be politically feasible, and second, what has proven feasible is no longer sustainable.”

“The risks that investors should prepare for in 2021” – Financial Times (paywall)

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Newsletter: “Top picks to ride the next surge in mining stocks” – Globe Investor

Diversion: Ten-year old Nandi Bushell’s online drum war with Foo Fighters’ Dave Grohl has been one of the nicest stories of this difficult year. There are new developments,

“Musical prodigy Nandi Bushell got a new drum kit from Lenny Kravitz and Nate Smith” – A Journal of Musical Things

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