Gold is the most crowded trade, say global fund managers
Daily roundup of research and analysis from The Globe and Mail's market strategist Scott Barlow
BofA Securities strategist Michael Hartnett summarizes his monthly survey of global fund managers and finds, among other things, that gold is the most crowded trades according to money managers,
'Investor sentiment recovers to pre-Liberation Day 'Goldilocks bull' levels as trade war & recession fears abate; cash level drops to 4.2 per cent (was 4.8 per cent in April) but not worrying low … Investor UW [underweight] in US$ largest in 20 years … Biggest summer pain trade is long the buck … Global growth expectations improve but still weak (net 46 per cent); big reversal in recession odds (net 42 per cent 'likely' in April to 36 per cent 'unlikely' in June); 66 per cent expect soft landing (8-month high - 16 per cent = no landing, 13 per cent = hard landing); One Big Beautiful Bill to increase U.S. growth say 33 per cent vs 81 per cent to increase U.S. deficit; investors say corporate balance sheets in best health since Dec'15, and most since Jul'13 want companies to return cash to shareholders. On Returns, Risks, Crowds: best performing asset next 5 years … 54 per cent say international stocks, 23 per cent U.S. stocks, 13 per cent gold, 5 per cent bonds; expectation of higher bond yields most since Aug'22; most crowded trades…long gold (41 per cent), long Magnificent 7 (23 per cent), short US$ (20 per cent); #1 tail risk still trade war recession, but down from 80 per cent in April to 47 per cent'
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Purpose-built rental housing construction is supporting the real estate construction sector,
'Canadian housing starts continue to hold up despite weak buyer demand. Starts for homeownership and condos have trended at around 110k annualized units (seasonally adjusted) so far this year, which is down more than 20 per cent from recent norms through 2022 and 2023. Purpose-built rental starts, however, have filled the gap, also trending at right around 110k annualized units so far this year. In fact, the longstanding gap between ownership/condo starts and purpose-built rental starts has now closed. The supply-demand dynamic for the rental market— a sudden cooling of immigration-led demand, but long lead times on supply—is likely to pressure rents down in the year (or more) ahead. At the same time, this does little to alleviate shortages of family-sized single-detached housing, especially in the major cities'
'BMO: Purpose-built rental construction holding up the sector' – (research excerpt, chart) Bluesky
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Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, respects strong technicals but does not love the longer-term market outlook,
'Survey-based sentiment suggests ample room for equities to climb the 'wall of worry,' and better financial conditions have helped normalize implied stock volatility, fueling the rally. Market-leadership factor composition suggests a tilt toward economic reacceleration and upside surprises. Tactically, we must respect these technical … Not only has reduction of tariff and tax policy uncertainty been limited, but geopolitical risks have persisted, as the labor market hints at a turn. We also remain skeptical that improved operating margin leverage is imminent. Last week, we outlined potential contours of a new bull case dependent on 'ooking through' 2025 and faith in capex-fueled productivity gains. That remains plausible, but for now we are proceeding with caution given limited visibility. Consider increasing active stock-picking, as the passive index undergoes compositional rotation, with the Magnificent Seven no longer a correlated block. Use risk-asset repricing to rebalance and position for potential 5–10-per-cent U.S. equity returns amid more volatility, higher real rates and a weaker U.S. dollar, noting this isn't the time to count on valuation expansion. Add diversifying positions in international equities, commodities and hedge funds. Energy/energy infrastructure is our most favored tactical long recommendation. Overweighting short-to-neutral-duration investment grade and municipal bonds still makes sense'
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Bluesky post of the day:
Diversion: 'AI transforms new drug development with simultaneous analysis of 21 chemical reactions' – Phys.org
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