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The Superstar Economy: Part 3

The US stock market’s record 50 percent valuation premium versus the non-US stock market is pricing generative AI to do through the next decade what the Web 2.0 network effect did through the last decade. But this is a huge ask, as it will be very difficult for the Web 2.0 superstar companies to become generative AI superstar companies, assuming there are indeed any lasting generative AI superstar companies. We go through the main long-term investment implications.

Counterpoint by Dhaval Joshi
NFIB Survey Points To Softening Demand
On the surface, the Tuesday release of the NFIB Small Business Survey indicated resilience among small businesses. The headline index appreciated to 89.7 from 88.5, upending expectations of a moderation to 88.2.  However, the marginal improvement has not…
Daily Insights
Canadian Stocks At Historical Discount Vs The US
Canadian equities have lagged their US counterparts for over a decade. Sector composition largely explains this underperformance. Banks and natural resources stocks are overrepresented in the TSX while the US stock market is replete with technology and…
Daily Insights
Has The Excess Savings Tailwind To Consumption Already Faded?
Emergency pandemic policies elongated the lag between Fed rate hikes and an observable slowdown in the economy. Notably, fiscal transfers and constrained consumption options endowed households with more than $2 trillion of savings they would not otherwise…
Daily Insights
US Economic Surprise Index Points To Lower Bond Yields
The US Citi Economic Surprise Index has recently dipped below zero, indicating that US economic data releases have been disappointing expectations. Most notably, the ISM Services PMI started contracting in April against anticipation of a faster pace of…
Daily Insights
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Biding Our Time

We marked the first X on our Equity Downgrade Checklist and the latest JOLTS, Employment Situation and SLOOS releases brought us closer to ticking some others. We remain tactically neutral on equities but expect that we will underweight them as excess savings are further depleted, leading labor market indicators continue to soften and consumer credit performance continues to fray.

US Investment Strategy by Doug Peta
Do Interest Rates Influence The Performance Of Value Vs Growth?
The idea that rising interest rates benefit value at the expense of growth has become consensus amongst market participants. The rationale is simple: Most of the cashflow that shareholders will receive from growth stocks are farther into the future than…
Daily Insights
US Jobless Claims Surprise To The Upside
US initial jobless claims increased from 209 thousand last week to 231 thousand, surpassing expectations of 212 thousand. Moreover, continuing claims also surprised to the upside, increasing from 1.768 million to 1.785 million. Nearly half of the rise in…
Daily Insights
A Jobs Recession Without An Economic Recession?
According to BCA Research’s Counterpoint service, it is possible that there will be a jobs recession without an economic recession in the US, as happened in 2001. The Fed is “trying to cool demand and work with what’s happening on the supply side”. So how…
Daily Insights
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Four Contentious Claims

In this week’s report, we defend four out-of-consensus claims. Claim #1: Underlying inflation in the US is not reaccelerating. Claim #2: The US labor market is set to weaken abruptly. Claim #3: The S&P 500 will drop to 3700 in 2025. Claim #4: Japan is not in danger of a currency crisis.

Global Investment Strategy by Peter Berezin

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