Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BMO chief investment strategist Brian Belski is expecting a period of TSX outperformance of the S&P 500,
“As we have discussed in recent comments, the current pace of US stock market gains is not likely sustainable – especially over the next few months. As such, there is an increasing risk of more stagnant US equity market returns over the near term. ... When we examine a potential deceleration of upward momentum in the U.S. stock market, our work shows Canada can still post solid returns AND outperform the U.S. during more rangebound U.S. markets. In fact, our work shows there are many areas within the Canadian equity market that are poised for a strong catch-up trade. This is particularly relevant given our view that North American equity market performance is likely to continue to broaden and Canada remains well-positioned from a valuation and fundamental standpoint. As such, we believe the TSX is likely to outperform near term even if US equity markets exhibit more tempered returns over the next few months”
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Citi analyst Max Layton believes a “second secular bull market” has begun in copper,
“Copper’s second secular bull market this century (approximately 20 years after the first) is being driven by booming Decarbonization-related demand growth (Renewables, Grid, and EVs), with a new and exciting (notably US-centric) AI/Datacentre kicker … We turned tactically bullish copper in December 2023 having been near-term bearish or cautious since May 2022. As of our March 18 quarterly outlook we believe copper’s second secular bull market this century is taking hold, 20 years after China urbanization and industrialization-led secular bull market, and after having been muted by cyclical weakness for the past 18 months. As a result, we recommend consumers urgently hedge their copper exposure over the next 3 years or risk up to $320 bn of cost increases, and investors build long exposure in the coming months or risking missing out. We think sub-$9,500k/t is ‘cheap’ on a 6-to-24-month view. We see prices trending higher to average $10k/t by Q4 2024 and $12k/t in 2026 in our base case. We think the recent rally has further to run near-term and revise our 0-3mth pt. price higher to $9,700/t (from $9,200/t)”
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BofA Securities analysts joined the bullish chorus on copper and recommends Canadian miners,
“Tight copper mine supply is increasingly constraining refined production and copper demand is steady, driven by energy transition tail winds. BofA Commodities see copper rising to $12,000/t or $5.44/lb for 2026E. We materially increase Pos [price objectives] for most of our copper coverage. Raise FCX [Freeport McMoran Inc.] to Buy (PO to $59) given high quality copper leverage, robust and rising free cash flow, and material gold revenue (15 per cent of total). Raise HBM [Hudbay Minerals Inc.] to Buy (PO to C$12.25 ($9)) on robust near-term free cash flow, a smoothed longer-term copper production profile (post acquiring Copper Mountain), debt deleveraging, material gold revenue (27% of total), and an attractive valuation. We reiterate Buy ratings on Ivanhoe Mines (IVN), Lundin Mining (LUN), and Teck Resources (TECK) and increase the POs to C$21 ($15.50), C$18.50 ($13.50, SEK 144), and C$88 ($65), respectively. IVN and TECK are 2024 top copper equity picks”
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Diversion: “Cultivating Minds: The Psychological Consequences of Rice versus Wheat Farming” – Marginal Revolution