Investors may be too pessimistic about growth

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In my Thursday Howe Street interview with Jim Goddard, I recap our latest US and Canadian market comments. For regular readers of those reports, the interview covered familiar territory. We also dug into the question of the marijuana legalization roll-out which covered a bit of new ground (click here to listen to the interview).

The interview starts off with a challenge for listeners as we jump right into a discussion about bond yields, not the most exciting topic for many investors. However, the importance of long-term yields cannot be ignored. As we discussed in our recent post The elephants driving US bond yields, American insiders are signalling that bond yields are more likely to move up than move down.

In Canada, insiders are suggesting that investors are too pessimistic towards global growth. Two factors that could rekindle Canadian growth-sensitive stocks include:

  1. China stimulus
  2. A more dovish Fed.

Unfortunately, as we wrote in our Canadian market report earlier this week, a sustained rally in stock prices is not baked into the cake and we will have to keep a watch on the INK Canadian Insider Index's relative performance against the S&P/TSX 60 for clues as to the durability of recent gains.

Finally, we tackle the question of marijuana roll-out where I echo comments made earlier this week in our article Will pharma stocks keep flying? Generally, pot stocks that make our screens tend to be small and internationally focused. One reason for the lack of enthusiasm for Canadian-focused firms may well be the unimpressive marijuana legalization roll-out in some provinces.

Of course, there can always be exceptions, and readers of our morning report Monday saw one Canadian wholesale player that has made our screens.

INK morning and Canadian market reports are available on this website to Canadian Insider Club members.

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