Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
“The Q3/24 earnings season kicks off Aug. 22 with TD. “Big 5″ cash earnings are expected to be up ~3% y/y , reflecting mid-single-digit pre-tax pre-provision earnings growth coupled with still elevated but stable credit provisions. Our estimates contemplate some firming in Capital Markets/Wealth revenue, moderating expense growth with benefits from last year’s restructuring charges and mid-single-digit loan growth .
“Semis are the best performing group this year by far, up 46ppt, and are tracking a 36ppt EPS revision. Autos are down 17%, mostly from multiple compression … The S&P 500 ex-Magnificent 7 – or the S&P 493 – is now on track to grow earnings by 8% YoY in 2Q, marking the first quarter of growth for this cohort since 4Q22. But small caps remain in an earnings recession that began in 4Q22 with S&P 600 earnings down 11% YoY so far in 2Q.
“Systematic funds deleveraged sharply; are they done? Given the sharp rise in volatility, Vol Control , CTAs and Risk Parity funds have all delevered meaningfully. Indeed, VC equity allocation has fallen from c.110% to ~50%, while RP equity exposure is now near its bottom quartile. Similarly, CTAs have embraced the risk-off by cutting equity/commodity longs, while adding to bonds. Going forward, CTAs will likely continue to sell NKY & buy JPY under most market paths.
Wednesday’s Insider Report: Activist investor tops up his investment in this dividend stock that’s up over 35% in 2024
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