Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
New York-based RB Advisors is concerned about another lost decade for U.S. equities,
“The current speculative environment seems to increasingly resemble the Technology Bubble of 1999/2000. Leadership is narrow, valuation dispersions are massive, relative strength and momentum are the primary drivers of performance, and investors are shunning diversification to take impulsive near-record portfolio risk. All bubbles eventually burst, and the bursting of the Tech Bubble led to the so-called lost decade in equities during which the S&P 500 provided negative returns for a decade …The possibility of another lost decade in equities and the broad range of investment opportunities outside the Magnificent 7 leads us to position our portfolios with significant diversification … The bubble today isn’t being inflated by stories of the internet, but by a similar story about the exciting future of artificial intelligence (AI) … The relative performance between the NASDAQ 100 and the Russell 2000 is as extreme as it was during the Tech Bubble … Diversification is the key to avoiding another lost decade”
RB Advisors was founded by former Merrill Lynch U.S. quantitative strategist Richard Bernstein, who made his reputation by betting against the late 1990s tech bubble.
“How to avoid another lost decade in equities” – RB Advisors
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BMO senior economist Sal Guatieri noted the effects of immigration on Canada’s median age and the housing market,
“StatCan reported that the median age of Canada’s population fell for a second straight year in mid -2023, only the third decline in the past half century. There are now as many people above 40.6 years of age as below. The decline in the median age is despite the fact there are now more persons aged 65 and older than under 18 for the first time ever. The reason, of course, is the generally younger age of international migrants. That’s why Millennials are now the largest generation, outnumbering Boomers for the first time. They are currently between 28 and 43 years of age —i.e, the prime age of first -time homebuyers. Immigration, demographics, prospective rate cuts —all suggest the housing market may be down but it’s not out”
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Nvidia posted results underlining its ridiculous growth rate thanks to artificial intelligence (AI).
BofA analyst Vivek Arya emphasized growth in AI inference – the actual application of AI programs to produce new information rather than training the programs with pre-existing information – as a major positive change for the company,
“Perhaps the most important new datapoint in NVDA’s earnings call was that AI inference contributed nearly 40% of AI computing mix in FY24/CY23. AI inference is correlated with revenue bearing AI which is supposed to be more competitive, as opposed to AI training which NVDA already dominates. Second, we highlight the company’s positive commentary around tight supply, low China dependence (only mid-single digit percent of data center sales versus 20%-25% prior to restrictions), new pipeline, rising sovereign demand for AI among others. Overall, we raise CY24/25 EPS by +13%/15% vs. prior to $23.11/$29.59. We raise our PO to $925 (from $800) on unchanged 31x CY25 PE. Note, as data center growth remains robust from multiple demand drivers, we raise our l-t EPS target (CY27E) to roughly $45 from $40 prior. Next catalyst is NVDA’s GTC (3/18), where we could get incremental price and/or performance details on attractive pipeline (B100, x100, GB200, BlueField products, etc.). Reiterate Buy”
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Diversion: “How to Watch Today’s Attempted Moon Landing Live” – Gizmodo