Robert McWhirter's Top Picks: Magna International, Empire and Boyd Group
Last week Merrill Lynch quantitative strategist Savita Subramanian wrote that U.S. stocks are very attractive relative to bonds because the yield on the S&P 500 Composite Index is above the U.S. 10-year bond yield. Historically, 94 per cent of the time this has occurred stocks outperformed bonds by 23 per cent over the next 12 months.
This “buy stocks” strategy is supported from a technical analysis perspective. On Oct. 16, Eight Capital’s Tina Normann wrote that the first S&P 500 monthly moving average convergence/divergence (MACD) buy signal since 2016 suggests the 19-month high basing pattern should sustain well into 2020 and that there’s upside towards 4,000. This implies an over 30 per cent upside from the S&P from the Oct. 18 close.
Tina also expects copper and copper stocks will benefit from rising interest rates. We expect North American equities will move higher over the coming year.