Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
RBC Capital Markets head of global energy research Greg Pardy made only one change, removing BP PLC, from his Global Energy Best Ideas,
“In July, the RBC Global Energy Best Ideas List was up 0.5% compared to the iShares S&P Global Energy Sector ETF (IXC) which was up 1.5% and a hybrid benchmark (75% IXC, 25% JXI – iShares Global Utilities ETF) that was up 2.8% on a sequential basis. Since its inception in February 2013, the RBC Global Energy Best Ideas List is up 189.8% compared to the S&P Global Energy Sector ETF up 39.7%. We are making no additions to the RBC Global Energy Best Ideas list this month, however we are removing BP”
The list is now Chord Energy Corporation, ConocoPhilIips, ARC Resources, Topaz Energy, Tourmaline Oil, Canadian Natural Resources, MEG Energy, Obsidian Energy, Woodside Energy, Enerflex Ltd., Pason Systems Inc., SLB, Subsea 7, AltaGas Ltd., Pembina Pipeline Corp., Archrock Inc., Energy Transfer LP, Northland Power, Superior Plus and PG&E Corporation
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BMO chief economist Doug Porter found some good news in the GDP report,
“No one is going to mistake Canadian growth for a hot tamale—it’s still pretty chilly out there. But the economy is hanging in, grinding out underlying growth of just above 1 per cent. Notably, the highly cyclical goods-producing industries are showing some signs of perking up. For the first time in a year, these sectors reported a modest year-on-year rise in output in May. Meantime, the combined services industries are cooling, but still managed to churn out 1.4 per cent year-over-year growth. Looking back over the past 25 years, the stable services group has had median growth of 2.5 per cent (or about a point higher than now), while the volatile goods sector has seen typical gains of about 1.7 per cent (a bit more than a point above now). … what we just came through was very similar to the near-recession-misses in the early 2000s (tech wreck) and 2015-16 (oil price collapse). In all three cases, goods industries weakened, but didn’t plunge, and the services sectors managed to keep growing, just helping to avoid a full-on recession”
In a different part of the same report, however, BMO rates and macro strategist Benjamin Reitzes wrote “the ongoing caveat for Canadian activity figures is that population growth has been providing a big lift, masking more meaningful underlying softness. Indeed, looking at GDP per employed person, there’s been a consistent decline since Sept 2022″.
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Scotiabank strategist Simon Fitzgerald Carrier provided a succinct summary of global markets in July,
“Cooling U.S. inflation data has heightened investors enthusiasm for a first Fed rate-cut in September, triggering a widespread capital reallocation within the equity market. In fact, the biggest laggards YTD (i.e., rate-sensitive sectors, small caps, Value) enjoyed a major reversal at the expense of well-known leaders (i.e., Tech, Communication, Growth, mega caps). Still, the S&P 500 managed to end the month 1.1% higher, behind Europe (+2.0%) and Asia-Pacific equities (+1.7%). Overall, the MSCI ACWI increased 1.5%, with DM equities (+1.7%) slightly outperforming. In Canada, the TSX (+5.6%; +4.6% in USD) was among the leaders in July, as a second consecutive BoC rate-cut added fuel to Canadian equities. EM equities slipped -0.1%, as China dropped -2.3% amid continued economic weakness, while India climbed +3.9% after posting a +16.4% gain in H1. LatAm stocks (+0.9%) regained their footing, after tumbling 18% in the first half of the year. Colombia (+1.8%), Brazil (+1.2%), Peru (+1.3%) and Mexico (+0.5%) all advanced, while Chile (-0.5%) modestly retreated. Commodities & Dollar Lower. Commodities are kicking off the second half of the year on a negative note, as the Bloomberg Commodity Index plunged -4.5% in July "
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Diversion: “Rampant slaughter! Sexy armour! Tiger maulings! We bust the gladiator myths” – The Guardian
NEW* Market Factors newsletter: “The ‘amplification loop’ increasing risks for index investors” – Globe Investing