Scotiabank’s research team is arguing that Canadian consumers are far more resilient than the consensus believes, and this sets up a significant number of promising TSX investment opportunities.
The analysts grant that higher inflation and mortgage renewals at higher rates will hurt consumer spending - but there’s a limit. Scotiabank forecasts spending to rise 2.2 per cent in 2023, close to consensus estimates, but expectsFinancial services analyst Meny Grauman believes Canadian banks are roughly fairly valued at present, and favours TD Bank and Bank of Montreal for their defensive characteristics.
Out-of-consensus forecasts get attention and Scotiabank analysts, economists and strategists did an excellent job stating their argument with painstaking detail in the research report. Investors should remember that most analysts disagree with them, at least for now. The report makes monthly retail sales figures even more important to follow – the longer they stay strong, the more compelling Scotiabank’s predictions will become.