Consumer Discretionary
Highlights Portfolio Strategy The rally in the S&P restaurants index has run its course and a profit recovery is fully discounted. Lock in profits and downgrade to neutral. Intensified inter-industry competition, the onslaught of online retailers and a rebounding U.S. economy are stiff…
Highlights The U.K. and EU may get a technical divorce, but the underlying economic and financial relationship may not end up changing dramatically - which is good news for the pound in the long term. Our 6-12 month preference for currencies is euro first, pound second, dollar third. The euro…
The S&P hotels index has gone vertical since our upgrade to neutral in November of last year. Worryingly, sector valuations appear misleadingly attractive (second panel) as forward earnings revisions have spiked much faster than the index, leading to some concern about analyst overenthusiasm…
GAA DM Equity Country Allocation Model Update The model has increased its allocation to Netherland, Italy, France and Germany, the underweight in Australia is also reduced by half. All these are financed by a large reduction in the U.S. overweight, mostly due to the change in liquidity and…
Media shares have been under pressure of late, as a flare up in cord cutting worries and related concerns about TV ad spending. While these structural headwinds will likely remain intact for the foreseeable future, cheap valuations amidst positive cyclical signs suggest that a contrarily…
Highlights Portfolio Strategy Upgrade capital markets stocks to overweight and put them on the high-conviction list. Capital formation is poised to accelerate in the second half of the year. Our Indicators suggest that demand for media services will continue to improve. Stay overweight both…
While homebuilders are discounting selling prices in order to move new product, underscoring that high lumber prices represent a drag on profit margins. The opposite is true for home improvement retailers. Industry sales are running at a healthy single-digit clip, well above the rate of overall…
Homebuilding relative performance is pulling back from the top end of its trading range, and there are low odds that it can exit this lateral pattern for the foreseeable future. The introduction of U.S. tariffs on Canadian lumber imports will keep lumber prices elevated, adding to the cost of…
Highlights Portfolio Strategy Any advance in Treasury yields should be gradual and more reflective of an improving global economy than it would be restrictive for equities. Book profits in homebuilders and downgrade to neutral. Rising lumber prices will do more harm than good. In contrast,…
U.S. vehicle sales have slowed markedly in recent months, disappointing more buoyant forecasts. While auto stocks reflect this weakness, there appears to be lingering optimism that auto parts makers will have a better fate: auto parts stocks have diverged positively from auto stocks. However, a…