Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
CIBC analyst Bryce Adams previewed earnings for the mining sector and provided top picks,
“We expect our base metals and uranium coverage to report mixed results compared to Q2/24, as we expect stronger operational results to be offset by lower commodity prices. After three quarters we expect that our coverage universe will mostly achieve full-year guidance ranges. Average copper prices decreased 5% quarter-over-quarter to $4.18/lb in Q3/24 (vs. a $4.42/lb average in Q2/24), but have since rebounded to $4.33/lb … Significant events in Q3/24 include the restarts of the Palisades nuclear plant in Michigan and the Three Mile Island nuclear plant in Pennsylvania, as well as potential restarts of other decommissioned plants in the U.S. as indicated by the Biden administration, which we view positively for uranium macro momentum. As well, China announced a series of monetary stimulus steps that we view favorably for the property sector and near-term copper prices, although the alleged positive fiscal stimulus has yet to be quantified with regard to further boosting demand. We continue to rate Cameco, Denison, Capstone, Ero Copper, Hudbay and Teck as Outperformers within our coverage universe.”
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BofA Securities analyst Michael Widmer thinks gold is a safer investment than U.S. Treasuries,
“Fiscal profligacy is bullish gold 10-year real rates have historically been a critical gold price driver. Yet the correlation between the two assets has weakened: a decline in rates is still bullish, but higher rates do not necessarily put pressure on gold. This reflects a number of factors, not least concerns that fiscal policy in both the US and elsewhere may not be sustainable. Indeed, the Committee for a Responsible Federal Budget notes that the national debt is projected to reach a new record high as a share of the economy only three years from now, well within the next presidential term, pushing up interest rate payments as a share of GDP. In turn, this makes gold an attractive asset, so we reaffirm our $3,000/oz target. Indeed, with lingering concerns over US funding needs and their impact on the US Treasury market, the yellow metal may become the ultimate perceived safe haven asset”
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BMO economist Shelly Kaushik notes an ongoing glut in Toronto condo supplies,
“The CMHC’s housing completions data for September revealed that Toronto’s “apartment and other dwellings” (which includes—and, recently, has been driven by—condos) continue to slow after cresting in mid-2024. Clearly, the level is still elevated: aside from the recent peak, the number of completions (as measured by the 12-month moving sum, as in the chart) is at its highest since 2015. Even so, it looks like the slowdown is coming as the construction sector responds to soft market conditions. Despite torrid population growth and falling interest rates, affordability concerns and the investment arithmetic both remained strained. Add in a preference for larger/detached homes, the glut of existing condo supply, and the legacy of the work from home shift, and Toronto’s condo market will have trouble absorbing all this additional supply for a while yet”
“BMO: “Eyes (Still) on TO Condos”” – (excerpt, chart) X
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Diversion: “Tech’s Race to Go Nuclear Is Exciting. It’s Also Going to Be Really Frickin’ Hard” – Gizmodo
MARKET FACTORS: “High hopes become disillusion for AI investors. Plus, top-rated enhanced yield funds” – Investment Ideas
