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Scotia's top 10 investment themes for 2021 include 'the hunt for yield intensifies' – The Globe and Mail

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

The equity strategy team led by Hugo Ste-Marie at Scotia Capital published 10 Themes for 2021 – Unleashing Excess Cash Tuesday morning.

The top themes are,

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“1. Piles of stacked cash could soon turn into hot money. 2. Synchronized downturn, synchronized upturn 3. The road to US$200 EPS 4. Income scarcity: The hunt for yield intensifies 5. Bond yields: The great normalization 6. Go Global 7. Small could be big in 2021 8. Hard assets shining, CAD roaring 9. Sector rotation favors cyclicals 10. No Value left behind [and]11. Bonus – Capital markets spring back to life”

Here’s an excerpt from the section on yield scarcity,

“Interest rates on cash deposits and government bond yields should remain quite anemic next year. As traditional sources of income can’t fulfill their role anymore, the hunt for yield will likely intensify and investors will have to look for alternatives. Equities appear an obvious choice. After a challenging year, dividend growth should resume in 2021 on the back of improving profitability trends. Moreover, dividend yields have rarely been this attractive versus government bonds in over half a century”’

” @SBarlow_ROB Scotia: “10 Themes for 2021 – Unleashing Excess Cash” – (research excerpt) Twitter

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Morgan Stanley has updated its “Fresh Money Buy List” of top U.S. stocks picks, removing S&P Global Inc. because of “regulatory and/or policy restrictions”.

The remaining list consists of Ally Financial, Citizens Financial Group Inc., Walt Disney Co., Humana Inc., Johnson & Johnson, Linde PLC, Mastercard Inc., PVH Corp., and T-Mobile U.S. Inc.

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“@SBarlow_ROB MS drops S&P Global from its Fresh Money Buy List of U.S. picks” – (table, including performance) Twitter

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Also from Morgan Stanley, the technology and telecom research team led by Katy Huberty published a report outlining the bright outlook for 5G-related stocks and provided a list of stock ideas (my emphasis),

“We are buyers of stocks exposed to stronger than expected consumer 5G demand. Consumer smartphone purchase intentions are the strongest in recent history according to our AlphaWise survey of nearly 3,500 consumers in the US and China. The main driver is demand for 5G, which is now the primary reason consumers are upgrading in the US and China – a comparatively bigger catalyst than any other recent technology upgrade and a more bullish signal relative to investors’ more cautious stance. We highlight key takeaways across our global technology and telco services teams and recommend owning a group of stocks that we view best positioned for 5G infrastructure investment and smartphone demand upside.”

The top 10 5G-related stock ideas are Apple Inc., T-Mobile US Inc., Qualcomm Inc., Delta Electronics Inc., Samsung Electronics Co Ltd., Sunny Optical Technology Company Ltd., China Mobile Ltd., Taiwan Semiconductor Manufacturing Company Ltd., Murata Manufacturing Co. Ltd. and Ericsson.

“@SBarlow_ROB MS: Top 10 5G-related stock picks” – (table) Twitter

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New column from me: “What investors can learn from the top performing U.S. value stocks” – Inside the Market

Diversion: The Ringer’s panel rewatches and discusses the 1980s movie Wall Street – The Ringer (podcast)

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GM to Invest Nearly $800m for EV Output at Ontario Plant – Bloomberg

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General Motors Co. will invest nearly $800 million to bring production of the BrightDrop EV600 electric vehicle to its CAMI manufacturing plant in Ontario, Canada.

The investment will convert the factory into a large-scale electric delivery vehicle manufacturing plant to support GM’s timing to deliver the EV600 in late 2021, the company said in a statement. The agreement is subject to ratification with union Unifor and confirmation of government support.

GM on Tuesday announced the creation of a wholly owned company, BrightDrop, last week, with plans to supply battery-powered vans but also offers fleet-management services.

See more: GM Expands Plug-In Push to Delivery Vans, Ultra-Luxury Cars

The proposed investment would create Canada’s first large-scale commercial EV manufacturing plant, Ontario Premier Doug Ford and Minister of Economic Development Vic Fedeli said in a statement.

Separately, Ford Motor Co. reached a tentative contract agreement with Unifor in the latter half of last year, including plans to assemble five battery-powered models beginning in 2025 at the company’s Oakville, Ontario plant. The plant was at risk of closing because the Edge sport-utility vehicle made there has an uncertain future.

Fiat Chrysler Automobiles NV also agreed to spend between C$1.35 billion and C$1.5 billion on a new electric-vehicle platform at its Windsor, Ontario plant.

GM has deep roots in Ontario, having built over 20 million vehicles at its Oshawa plant since 1918. GM said last fall it will invest as much as C$1.3 billion ($997 million) to reopen its assembly plant in Oshawa under a tentative deal with Unifor.

(Updates with Ontario government comment and related EV pacts from fourth paragraph.)

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    Arizona Coyotes' Investment in Forwards Must Pay Dividends in 2020-21 – The Hockey Writers

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    It’s no secret that the offense hasn’t been the strength of an Arizona Coyotes team since…. well, ever. The ‘Yotes moved to the Valley of the Sun 25 years ago, and, since then, they’ve scored the second-fewest goals in the league, at 2.58 per game. They finished in the top-10 in goals only once, in 2001-02, and haven’t finished better than 20th in scoring since 2011-12.

    Until this organization is able to draft and develop top-tier talent on a regular basis, scoring is likely to be a problem, so they’ll need to continue winning games in the manner in which they did so in 2019-20 – with outstanding defense and goaltending, along with a scoring-by-committee approach at the other end.

    These efforts will be bolstered in 2020-21 if the Coyotes’ three highest-paid forwards – Clayton Keller, Phil Kessel, and Nick Schmaltz – are able to help out offensively on a regular basis. Across the NHL, there have been 379 different 60-point seasons from various players throughout the past eight years. Meanwhile, the only Coyotes’ skater to reach that mark since 2011-12 was Keller, in 2017-18. This needs to change in 2020-21, and Arizona’s highest-paid forwards need to be the ones leading the way.

    Coyotes Counting on Keller

    First and foremost in this group is the 22-year-old Keller, who has just wrapped up his entry-level contract and is now into his eight-year deal with an average annual value of $7.15 million. With the increase in pay comes an increase in expectations and responsibility, and Keller will need to reverse the trend in his play that has emerged over his first three years in the league.

    After a breakout rookie season in 2017-18 where Keller posted 65 points, hopes were high that the Coyotes had finally found the game-breaking forward that they’d spent the better part of the prior two decades searching for. However, Keller’s play declined in Years 2 and 3, as he posted 47 and 44 points, respectively, and failed to match the 23 goals or the 42 assists he recorded as a rookie.

    Clayton Keller must step up and be Arizona’s best offensive player in 2020-21. (Amy Irvin / The Hockey Writers)

    With star forward Taylor Hall now playing for the Buffalo Sabres, Keller is expected to lead Arizona’s offense in 2020-21. He’s fresh off of a solid performance in the Edmonton playoff bubble, where he posted seven points in nine games, and he collected two points in Thursday’s opening-night shootout loss to the San Jose Sharks, so there’s reason for optimism here.

    If Keller is able to produce consistent offense at even strength and help the team’s power play, the Coyotes should be in good shape and should be in the conversation for the West Division’s fourth playoff spot in May as the season winds down. If not, it could be a long year in Glendale.

    Schmaltz, Kessel Must Rebound

    While Keller is the main piece of the Coyotes’ forward group, Kessel and Schmaltz are not far behind. Arizona’s second and third-highest paid forwards, respectively, Kessel and Schmaltz had down years in 2019-20, but Kessel’s production was especially concerning.

    ‘Phil the Thrill’ endured an injury-plagued 2019-20 season, his first in Arizona. His ironman streak is now up to 845 games, but one could argue that he would have been better off sitting for a few games in order to recover from the various ailments he was attempting to play through.

    Phil Kessel Arizona Coyotes
    The Coyotes need Phil Kessel to return to his All-Star form this season. (Jess Starr/The Hockey Writers)

    At any rate, Kessel posted arguably his worst season as a pro last year, with just 14 goals and 24 assists, good for 38 points. This came after a three-year run in Pittsburgh where Phil racked up 244 points in 246 games. Obviously, this is a huge drop-off in production. While it’s true that leaving a team with Sidney Crosby and Evgeni Malkin would result in most NHL players seeing a decrease in offensive output, Kessel’s play fell off of a cliff last season in a development that few saw coming.

    As with Keller, though, Kessel got out to a good start in 2020-21, scoring the biggest goal of his Coyotes tenure with 3.2 seconds left in the third period on Thursday at Gila River Arena:

    When it comes to Schmaltz, the Coyotes are looking for consistency from him this season. Acquired from the Chicago Blackhawks on Nov. 25, 2018, in the trade that sent 2015 third-overall pick Dylan Strome to the Windy City, Schmaltz is in his third year in Arizona. He enjoyed a brief run of success in 2018-19 after coming over from Chicago, posting 14 points in his first 17 games in the desert (a 68-point pace) before going down with a knee injury on Dec. 30, 2018.

    Coyotes Need Consistency from Schmaltz

    Last year, Schmaltz posted 45 points in 70 games, which is fine and equates to a 52-point pace over a full 82 games, but he was invisible for large parts of the season. In a 16-game stretch between Nov. 7 and Dec. 6, Schmaltz scored only once to go with five assists, while in 18 games from Jan. 7 to Feb. 17, the Madison, WI native endured a seven-game scoring drought while posting just a single goal along with four helpers.

    Nick Schmaltz Arizona Coyotes
    Nick Schmaltz will need to be more consistent going forward in Arizona. (Jess Starr/The Hockey Writers)

    These offensive downturns were offset by two 13-game hot streaks where Schmaltz averaged better than a point per game. From Oct. 10 to Nov. 5, the 24-year-old collected 4 goals and 10 assists, while from Dec. 8 to Jan. 4, Schmaltz scored twice and added 13 helpers, for a combined total of 29 points in 26 contests.

    Unlike the rest of his teammates, Schmaltz did not have a chance to build upon his regular-season performance in the Edmonton bubble, as he was the recipient of a questionable hit from noted Vegas Golden Knights’ tough guy Ryan Reaves in an exhibition game between the two Pacific Division rivals on July 30. Schmaltz suffered a head injury on the play and missed both the qualifying round against the Nashville Predators as well as the first-round series against the Colorado Avalanche.

    In 2020-21, Schmaltz will need to become a more consistent scorer in order to avoid being labeled as a “streaky” player, as was the case with many Coyotes players in the past, most notably so for winger Radim Vrbata, who was notorious for going long stretches without scoring before coming out of seemingly nowhere to dominate the opposition and light up the scoresheet.

    Radim Vrbata, Arizona Coyotes
    Radim Vrbata was notorious for his streaky play at the offensive end of the ice. (Amy Irvin / The Hockey Writers)

    For example, over the final 41 contests of the 2013-14 campaign, Vrbata had a three-game heater where he collected five assists, which was followed by a stretch where the veteran posted six points in 18 games, which was immediately followed by a six-point outburst across four games, which was then followed by a season-ending cold streak with a goal and four assists in 16 games.

    In order to live up to his $5.85 million salary over the next six seasons, Schmaltz must avoid becoming just another skilled but streaky NHL forward. Obviously, it’s unrealistic to expect Schmaltz to consistently score 15 points in 13-game stretches throughout the year (as discussed above), but the potential is there for the former first-round pick to be a 60 to 70-point player in the league. It’s why the Coyotes gave him a $41 million contract extension, and it’s time for him, along with Keller and Kessel, to step up and be difference-makers for Arizona in 2020-21.


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    Turkey announces $18.5 billion public investment programme for 2021 – The Journal Pioneer

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    ANKARA (Reuters) – Turkey has announced a 2021 public investment programme worth 138.5 billion lira ($18.53 billion), with communication and transportation projects receiving the largest allocation of the investment funds.

    The programme, published in the Official Gazette late on Friday, set aside nearly $6 billion for public investments in the transportation and communication sectors in 2021, and another $2.6 billion for education projects. Other investment areas include manufacturing, health, agriculture, tourism and energy.

    Under the programme, Turkey’s Transport and Infrastructure Ministry will receive some $2 billion, while the State Hydraulics Works (DSI) will receive $1.8 billion and the Highways Directorate $1.75 billion.

    President Tayyip Erdogan, who has been in power for nearly 20 years with five consecutive election victories, had until 2018 enjoyed steady annual growth of around 5% fuelled by cheap foreign credit and “mega projects” ranging from bridges and tunnels to highways, hospitals and other construction.

    (Reporting by Tuvan Gumrukcu and Ebru Tuncay; Editing by Kirsten Donovan)

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