Last One for the Day I don’t see a lot of BofA Securities research that focuses directly on Canada, but Ohsung Kwon’s The bull case remains intact: Stay long Canada over US report released Monday is a notable exception,
“The BoC has paused its tightening cycle at 4.5 per cent vs. house view of 5-5.25-per-cent terminal rate for the Fed, which translates to a lower discount rate for Canadian equities. The BoC is clearly being more cautious given the slowdown, which also lowers the risk of a housing crisis, which has been a major bear case for Canada. With a lower discount rate and the risk premium already largely pricing in recession risk (more below), we believe TSX multiples are at trough levels at just 13 times forward P/E, in line with the Tech Bubble low relative to the S&P 500′s 17 times … Commodities are on the rise again amid China reopening. Tight inventories and limited supply response suggest the commodity markets can remain tight for longer (house view: copper $10,000 per ton by 4Q23, Brent $100 per barrel on average in 2023). We believe the commodity upcycle in the 2020s is still playing out following years of underinvestment, which should support the TSX over the S&P 500 … The TSX is pricing in much more risk than the S&P 500″