theglobeandmail.com
BMO bullish on trade stocks, Scotiabank bearish on banks
BMO's Brian Belski predicts a second-half 2025 rally in undervalued Canadian trade-oriented stocks due to potential G7 trade deals and historically low positive profit updates following exporter caution stemming from tariff fears; Scotiabank, however, recommends an underweight position in bank stocks due to rising credit losses.
- How significant is the current underperformance of the export-oriented sectors, and what are its historical precedents?
- The underperformance of trade-oriented sectors like consumer discretionary and industrials reached extreme lows in February 2025, with year-over-year returns lagging significantly behind the S&P/TSX Composite. This underperformance, coupled with historically low positive profit updates, presents a potential opportunity for significant gains.
- What are the major risks or uncertainties that could impact the predicted rally in trade-oriented stocks, and how might these affect different market sectors?
- The upcoming G7 meetings present a key catalyst for this rally, as potential trade agreements could alleviate tariff fears and lead to positive surprises in corporate earnings. However, the wildcard remains the Trump administration's willingness to provide clarity on Canada/U.S. trade.
- What are the key factors driving BMO's prediction of a rally in trade-oriented domestic stocks in the second half of 2025, and what are the potential implications?
- BMO's chief investment strategist Brian Belski anticipates a significant rally in trade-oriented domestic stocks during the second half of 2025, driven by potential trade agreements at the G7 summit and the current undervaluation of these stocks due to cautious profit guidance from Canadian exporters.
Cognitive Concepts
Framing Bias
The article's headline and introduction emphasize the potential rally in trade-oriented stocks, giving prominence to BMO's positive outlook. Conversely, Scotiabank's more skeptical view on bank stocks is presented later and with less emphasis. This framing could disproportionately influence the reader towards a positive view of the trade-oriented stock market.
Language Bias
The language used to describe BMO's outlook is generally positive (e.g., "lucrative rally", "positive surprises"), while Scotiabank's view is characterized by more cautious terms (e.g., "underweight", "cut into profit margins"). While this difference reflects the differing perspectives, the choice of words could subtly influence reader perception towards BMO's more optimistic outlook. For example, replacing "collapsed" with "declined significantly" would offer a more neutral description of the earnings revisions.
Bias by Omission
The article focuses heavily on the opinions of BMO and Scotiabank strategists, potentially omitting other perspectives on the Canadian stock market and the impact of tariffs. The article also lacks detailed analysis of the methodology behind BMO's stock screen, which could influence the reader's interpretation of the recommended stocks. Furthermore, the discussion on AI omits counterarguments to the perspectives presented, which could lead to a biased understanding of the topic.
False Dichotomy
The article presents a somewhat simplistic eitheor choice between trade-oriented domestic stocks and Canadian bank stocks, without adequately exploring other investment options or strategies. This could lead readers to believe these are the only viable investment choices in the current market.
Sustainable Development Goals
The article discusses the potential rally in trade-oriented domestic stocks, which could lead to job creation and economic growth in the export sectors. Positive profit surprises are anticipated, suggesting an improvement in the economic outlook for these sectors. However, concerns about rising unemployment and potential impacts of tariffs on domestic economic growth also exist, adding complexity to the overall impact on decent work and economic growth.