Daily roundup of research and analysis from The Globe and Mail\u2019s market strategist Scott Barlow<\/p>\n
Megacap tech stocks increase pace of investment <\/p>\n
It\u2019s full steam ahead for chip stocks, as Citi analyst Christopher Danely outlines in a report called AI Party Continues As Alphabet, Microsoft, and Meta Raise Capex,<\/p>\n
\u201cYesterday after the close, Alphabet raised their 2025 capex by $7 billion, from $85 billion to $92 billion at the midpoint. Meta also raised the midpoint of their capex by $2 billion, from $69 billion to $71 billion and stated that 2026 capex will be notably larger than 2025. Microsoft\u2019s September quarter capex came in $4.6 billion ahead of consensus and expects it to increase in F2Q26 as well. We would note that Alphabet, Meta, and Microsoft all expect 2026 capex to rise from 2025 levels, and Citi expects cloud data center capex to grow 24% YoY in 2026. This should be positive for AI-exposed stocks such as AVGO, AMD, MU, and NVDA\u201d<\/p>\n
Natgas rally delayed <\/p>\n
The mid-term outlook for natural gas remains positive but RBC Capital Markets natural gas and gold strategist Christopher Louney is cautious in the near term,<\/p>\n
\u201cWe think the structural upside narrative is still skewed more in the latter half of our forecasts next year, with the obvious weather risks potentially skewing prices beyond our more conservative base case outlook in the interim. Why are we still cautious? At this point, in our view, winter forecasts do not give us a high level of conviction that a cold winter is upon us and, based on what we have seen so far (NOAA 3 -month outlooks, medium -term forecasts, Li Ni\u00f1a, etc.), there\u2019s the potential that the narrative we saw this injection season (some notable extremes but still disappointing gas burn on average) could play out over the course of this withdrawal season \u2013 even if that is not a given. Beyond that, how exactly this withdrawal season plays out will determine much for 2026, particularly ahead of more structural themes that are set to dominate the rest of the decade. Once we get through the remainder of this year, we think that natural gas prices [based on Henry Hub pricing in the U.S.] will average in our middle -to -high scenario range in 2026, i.e., $3.49 -4.85\/MMBtu on average\u201d<\/p>\n
Ex-U.S. returns not as good as they look<\/p>\n
Jefferies strategist Christopher Wood makes the interesting observation that non-U.S. markets are rising primarily because of multiple expansion,<\/p>\n
\u201cIt is only fair to point out that the US continues to report better earnings growth than other markets. Thus, the 2025 consensus earnings growth forecast for MSCI USA is now 13% compared with 4% for MSCI AC World ex-US. On a longer term basis, MSCI USA 12-month forward EPS has outperformed MSCI AC World ex-US 12-month forward EPS by 151% since the start of 2011. This is another way of saying that the outperformance of Europe, Japan and emerging markets this year has so far been driven by multiple expansion. The MSCI Europe, Japan and Emerging Markets 12-month forward PE ratios have increased by 14%, 13% and 20% respectively year-to-date to 15.2x, 16.6x and 14.3x, up from 13.4x, 14.7x and 12x at the end of 2024. By contrast, MSCI USA 12-month forward PE is up \u201conly\u201d 8% from 21.9x to 23.7x. Meanwhile, data compiled by Jefferies\u2019 Quantitative Strategy team shows that forward EPS has contributed 11.1 percentage points, or 61%, to the S&P 500\u2019s 18.1% total return in US dollar terms year-to-date. While forward PE multiple expansion accounts for 43%, 59% and 57% of the US dollar returns in MSCI Europe, Japan and Emerging Markets year-to-date\u201d<\/p>\n
Bluesky post of the day<\/p>\n
https:\/\/bsky.app\/profile\/tonytassell.bsky.social\/post\/3m4dbdcq7c22f<\/a><\/p>\n Is it really a bubble? very interesting @tobyn.bsky.social blog for @alphaville.ft.com on some research by Goldman on valuation comparisons including this chart on individual stocks. Hard to believe a bank – Ind Bank of Japan – reached a 24mth forward pe of 154 times www.ft.com\/content\/e655…<\/p>\n [image or embed]<\/a><\/p>\n \u2014 Tony Tassell (@tonytassell.bsky.social<\/a>) October 29, 2025 at 6:44 AM<\/a>Diversion<\/p>\n