Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

Scotiabank strategist Hugo Ste-Marie presents a bullish view on gold that has implications for the Canadian dollar,

“Despite this year’s weakness, our colleagues from Scotiabank Economics and Fixed Income Currency and Commodities (FICC) continue to believe the path of least resistance for the U.S. dollar is down. Factors expected to push the U.S. dollar lower are diverse, but our colleagues emphasize the current worsening U.S. fiscal outlook. We won’t rehash their arguments, but we stress the following key point from their research: ‘The range of outcomes (for the USD/bond yields) is not only determined by the size of the fiscal deficit, but also by the sensitivity of yields and the dollar to those deficits.’ Put differently, the U.S. dollar and bond yields exhibit a nonlinear relationship with deficits, and if they are more sensitive to rising deficits this time, their response could be more extreme”.

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RBC Capital Markets analyst Bish Koziol looked under the hood of TSX index performance in August,

“The S&P/TSX Composite rose 1,305 points in August. The year-to-date gain for the benchmark now stands at 3,837 points. Materials and Financials were the largest contributing group s last month – rising 572 and 367 points respectively . Specifically, the Gold subsector contributed 517 points while the Banks added 430 points. TD Bank remains the largest individual point contributor year -to -date – adding 363 points . Alimentation Couche Tard became the largest negative contributor with a 5 3 – point decrease”.

The top performing S&P/TRSX Composite stocks were Toronto-Dominion Bank, Shopify Inc., Agnico Eagle Mines Limited, Royal Bank of Canada, Wheaton Precious Metals Corp., Barrick Gold Corp, Bank of Montreal, Kinross Gold Corp, Enbridge Inc, Franco-Nevada Corp, Canadian Imperial Bank of Commerce, Celestica Inc, Bank of Nova Scotia, Cameco Corp and Dollarama Inc. The laggards were Alimentation Couche Tard Inc., Canadian National Railways, TFI Intenational Inc., Teck Resources Limited, CGI Group Inc., Ivanhoe Mines Ltd., Descartes Systems Group Inc, Tourmaline Oil Corp, Restaurant Brands International Inc., Methanex Corp, Sun Life Financial Serv Canada, West Fraser Timber Co, Tilray Inc, Air Canada and Manulife Financial Corporation

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BofA Securities equity and quantitative strategist Savita Subramanian updated her top 10 picks for U.S. growth and value stocks.

The growth stocks are Allstate Corp., Axon Ent Inc., Gilead Sciences, Eli Lilly, Meta Platforms, Merck, TKO Group, Take Two Interactive, Warner Brothers and Welltower.

The value stocks are Aflac, Allstate Corp., Aptiv PLC, Haliburton Co., MetLife, Merck, Nucor, PG&E, Steel Dynamics and Synchrony Financial.

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BMO chief economist Doug Porter published some interesting details on public debt service costs,

“Perhaps lost amid the recent concerns about the backup in global bond yields is that there has actually been some encouraging fiscal news recently, at least in Canada. Ottawa’s latest Fiscal Monitor (released last Friday, just before a long weekend, and thus disappearing beneath the waves) revealed that public debt charges fell 9.6 per cent year-over-year in June, and were down 0.6 per cent year-over-year for all of Q2. That is a huge change from the 30-to-40 per cent year-over-year increases seen through 2022 and 2023 when rates were rising sharply and in the aftermath of the mammoth budget deficits of 2020/21. The combination of somewhat slower debt growth and, more importantly, much lower short-term rates have blunted the rise in interest costs. That’s the good news. The less-good news is that interest costs were still above $53 billion in the past year, more than double pre-pandemic levels”

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Bluesky post of the day:

Diversion: “Scientists Just Found Something Dark About People With AI Girlfriends and Boyfriends” – Futurism