Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
The RBC mining and materials equity team upgraded base metals stocks to “overweight” and published their top ideas for the first quarter of 2024,
“Our view: For Q1/24, we upgrade Base Metals & Energy Transition Metals to Overweight, upgrade Diversified/Bulks commodities to Overweight, maintain our Overweight rating on Precious Metals and Uranium, and reiterate our neutral view on Fertilizers. We are making two additions to the Best Ideas Portfolio and five deletions — we are adding Vale and Sandfire Resources and removing Pan American Silver, Ecora Resources, Norsk Hyro, Mineral Resources, and South32. The Q4/23 portfolio was up 14.9% outperforming the MSCI Benchmark up 12.0 per cent”
The companies on the list are now CF Industries, Nutrien, Capstone Copper, Hudbay Minerals, Sandfire Resources, Ivanhoe Mines, Pilbara Minerals, Adriatic Metals, Hochschild Mining, G Mining Ventures, Gold Fields, Northern Star Resources, De Grey Mining, Agnico Eagle, Royal Gold, Cameco, NexGen Energy, Vale, Champion Iron, Glencore, Teck Resources, and Anglo American.
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BofA Securities investment strategist Michael Hartnett wonders how investors can believe Federal Reserve rate cuts are imminent,
“Only 5 times in last 90 years has Fed cut rates with core CPI (3.9 per cent) more than the [unemployment]-rate (3.7 per cent), cuts triggered by war (1942) or recession (1969, 1974, 1980, 1981), but neither in 2024…why Wall St soooo risk-on … At least until weak US$ says ‘policy mistake’ or U.S. labor market transitions to redundancies (-ve payroll) … Geopolitics inflationary … Transit volumes through Red Sea/Suez Canal down 35-45 per cent past 4 weeks … Red Sea 12 per cent of world trade, 30 per cent of container traffic) … Global freight rates up 120 per cent past 6 weeks … We like bonds (shorter-duration given policy risk), as well as bullion (the U.S., dollar will weaken); case for bonds … Equity-like returns without equity-like risk … Handy at a time when ‘soft landing’ slam-dunk consensus, and world growth so dependent on US consumer”
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RB Advisors deputy chief investment officer Dan Suzuki continued to flesh out the firm’s belief we are at a ‘once-in-a-generation’ inflection pointy for investors,
“Market leadership tends to change in response to structural shifts in the macroeconomic fundamentals. The global economy is currently undergoing major inflections across inflation, interest rates, globalization, corporate profitability, demographics and government balance sheets. When coupled with the prevailing bifurcation of sentiment and record market concentration, the current juncture may offer investors a once-in-a-generation opportunity to rebalance portfolios. Just as in the wake of the Internet bubble, what part of the market you own could mean the difference between another lost decade of returns for crowded and expensive assets or very attractive returns or assets where capital is truly scarce. With all eyes on US large cap growth stocks and disinflation beneficiaries, we see bigger opportunities in international, small caps, value stocks and inflation beneficiaries”
“What does a once-in-a-generation investment opportunity look like?” – RB Advisors
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
