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Thursday Nov 9/17

Post by Webscout » Thu Nov 09, 2017 10:59 am

Michael Lewis has identified another Big Short


SCOTT BARLOW
2 HOURS AGO
NOVEMBER 9, 2017 FOR UTOPIA
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web

Michael Lewis, author of finance crisis classic book The Big Short, has found another industry where he believes big trouble is ahead,

"The NFL has real business problems. The [head injury] issues… I'll give you the next short: the NFL."

There is no direct way I can think of to profit from the demise of football, but there may be some peripheral plays in publicly-traded advertising agencies and broadcasting.

"Michael Lewis, author of Moneyball: 'Short the NFL'" – Yahoo! Finance

=====

Bloomberg's Luke Kawa has a new column out with a sentiment that will have value investors pulling out what's left of their hair in frustration, "Buy the Bubbles or Get Left Behind,"

"A portfolio stuffed with allegedly over-inflated assets would have returned more than 120 percent so far in 2017, trouncing the S&P 500 Index and underscoring the challenge for investors facing a plethora of pricey securities.

"The hypothetical 'Bubblicious' portfolio includes Chinese real estate and internet names, a pair of U.S. tech behemoths, a cryptocurrency fund, the ETF industry, bonds that mature decades from now, and a dash of short volatility bets just to make things more interesting."

"In 2017, Investors Can Either Buy Bubbles or Be Left Far Behind" – Kawa, Bloomberg

=====

This may sound a bit harsh, but I don't have a lot of sympathy for investors who blindly invest in penny stocks with no revenue or profits and expect regulators to protect them from loss,

"The deal certainly raised some red flags. West High Yield filed a purchase and sale agreement that showed Gryphon Enterprises LLC as the buyer prepared to pay $750 million for West High Yield's main magnesium assets in British Columbia when the whole company was worth only $16 million. That price tag would have made the deal the fourth-biggest mining-asset sale this year globally -- underpinned by a company with no website, whose chief executive officer uses an AOL email address, and is based at a residential house built in 1992 in Swanton, Maryland.'

"Canada's 'Light Touch' on Penny Stocks Draws Ire as Deal Fails" – Bloomberg

=====

Maclean's investigates the extent to which Canadians can walk away from their mortgage if the housing market collapses,

"What is far less known is the fact that insolvency legislation in Canada supersedes a lender's right to sue a homeowner for a shortfall. In other words: if a homeowner who is unable to make mortgage payments files either a personal bankruptcy or a proposal in Canada, the shortfall (now unsecured) is included in the insolvency proceeding and fully dischargeable. It's the Canadian insolvency version of America's jingle mail."

"Here's how Canadians could walk away from their homes if house prices fall" – Maclean's

=====

Another day, another sign that video game stocks are printing money,

"Take-Two Interactive Software jumped 10.58 percent after the videogame maker offered a stronger-than-expected revenue forecast for the holiday quarter. That sparked a rally among its competitors, with Activision Blizzard surging 5.89 percent and Electronic Arts adding 2.19 percent."

"Wall Street hits high score as videogame makers rally" – Reuters

=====

Tweet of the Day: "@M_C_Klein Large electric vehicles are currently worse for the environment than small conventional cars vehicles over their expected life ft.com/content/a22ff8… " – Twitter (graphic)

Diversion: "Gene Therapy Restores Seven-Year-Old Boy's Skin in 'Major Biomedical Triumph'" – Gizmodo
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Market weakness a ‘dress rehearsal, not The Big One’

Post by Webscout » Fri Nov 10, 2017 6:59 am

Market weakness a ‘dress rehearsal, not The Big One’


SCOTT BARLOW
1 HOUR AGO
NOVEMBER 10, 2017 FOR UTOPIA
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web

Prominent and outspoken U.S. bond manager Jeffrey Gundlach put it succinctly during yesterday's equity market sell-off, tweeting, "Looking like JNK was right. Per usual".

Mr. Gundlach, founder of asset management behemoth Doubleline Capital, was referring to the SPDR Bloomberg Barclays High Yield Bond ETF (JNK) which provided a market warning with weak price action before equities headed south. For the short term, U.S. high yield "junk" debt will be an important indicator for investors,

"Bond Investors Suffer Hangover From a High-Grade Debt Binge" – Bloomberg

"@ReutersJamie Global debt is now around $150 trillion, with much of the post-crisis increase coming from soaring corporate debt. One to watch..." – (chart) Twitter

"US junk bond ETFs slide to seven-month low" – Financial Times

=====

Merrill Lynch called Thursday's equity market weakness as a dress rehearsal,

"'The recent pullback is a 'dress rehearsal' not the Big One,' BAML told clients, noting the fall had been preceded by 'insane gains' which had pushed for instance the value of U.S. tech firms and their U.S.-listed Chinese peers past the entire market capitalization of Germany's DAX index … A meltdown would "require recession risk or moves higher in wage inflation, bond yields and volatility or credit spreads.'"

"Stock market fall 'not the Big One', says BAML" – Reuters

=====

Crude is shrugging off the negative tone in equities this week,

"While prices eased during the week, record weekly U.S. oil production and a surprise increase in crude stockpiles weren't enough to peg back Monday's 3.1 percent surge… 'Geopolitical risks have taken center stage in the oil market again,' said Jens Naervig Pedersen, senior analyst at Danske Bank A/S in Copenhagen. 'The rising tensions between Saudi Arabia and Iran have raised concerns in the oil market of an imminent supply disruption.'"

"Oil Set for Best Weekly Run in Year as Saudi Tumult Roils Market" – Bloomberg

=====

Australian media is hammering Canadian diplomats for a last minute no-show at meetings surrounding the Trans-Pacific Partnership trade pact,

"CANADA has blown a trade pact with Australia and nine other nations out of the water after snubbing a leader's meeting and making a raft of last minute demands … A source close to the negotiations said there were 'a lot of very angry people, a lot of very pissed off leaders' at the meeting. 'The Canadians screwed everybody,' they said."

"Justin Trudeau snubs Malcolm Turnbull in no-show at APEC" – News.com.au

=====

A Merrill Lynch report discusses the economic consequences as young U.S. males drop out of, well … life,

"Prime-working age men – particularly young men – have failed to return to the labor force in contrast to women who have reentered. This likely reflects some cyclical dynamics, including skill mismatch and stagnant wages, but we also see secular stories at play such as greater drug abuse, incarceration rates and the happiness derived from staying home playing games. With the labor force participation rate among young men unlikely to rebound, the unemployment rate should fall further and cries of labor shortages will remain loud."

"@SBarlow_ROB ML: "Tale of the Lost Male" – (research excerpt) Twitter

=====

Tweet of the Day: "@TheStalwart It's pretty simple. In markets, optimism pays. In punditry, pessimism does. " – Twitter

Diversion: "[former Facebook executive] Sean Parker unloads on Facebook "exploiting" human psychology" – Axios
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China widens foreign access to its giant financial sector

Post by Webscout » Fri Nov 10, 2017 11:31 am

China widens foreign access to its giant financial sector
https://beta.theglobeandmail.com/report ... e36902659/
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Upcoming surge in shale oil production will be ‘biggest oil and gas boom in history’

Post by Webscout » Tue Nov 14, 2017 6:40 am

Upcoming surge in shale oil production will be ‘biggest oil and gas boom in history’


SCOTT BARLOW
31 MINUTES AGO
NOVEMBER 14, 2017 FOR UTOPIA
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web

The International Energy Agency is predicting that an upcoming surge in U.S. shale oil production will be the biggest increase in fossil fuel supplies in history,

"By 2025, the growth in American oil production will equal that achieved by Saudi Arabia at the height of its expansion, and increases in natural gas will surpass those of the former Soviet Union, the agency said in its annual World Energy Outlook. The boom will turn the U.S., still among the biggest oil importers, into a net exporter of fossil fuels."

This forecast is at odds with OPEC analysis predicting higher global oil demand and a roughly balanced oil market.

"IEA Sees Shale Surge as Biggest Oil and Gas Boom in History" – Bloomberg

"Global oil demand to withstand rise of electric vehicles: IEA" – BNN

"@JavierBlas2 #Oil Watch: @IEA cuts 2017-18 demand outlook and says crude hasn't found a floor at $60 a barrel " – (research excerpt) Twitter

"@Ole_S_Hansen Diverging 2018 #oil outlooks: IEA less optimistic on demand growth. Opec less optimistic on non-Opec supply growth #oott " – (table) Twitter

=====

I don't really believe that the rise of ETFs and passive investing will result in a global market blowup. But, history does show that major changes to market structure can cause upheaval – the crash of '87 is most often attributed to the rise of 'portfolio insurance' that became wildly popular at the time.

The Financial Times quotes an investor as calling ETFs "a black hole,"

"Christopher Harvey, a senior analyst at Wells Fargo … argues that the impact of passive equity funds is 'beginning to resemble the footprint left by quantitative easing'... passive equity funds have "morphed into a type of black hole. Money goes in and stocks never come out." In other words, the more money goes into ETFs the fewer natural sellers there are in the market, helping buoy prices."

"Scarcity, not Trump, is fuelling market's thunderous bull run" – Wigglesworth, Financial Times

=====

A report from Bespoke Investment Group cites an investor survey showing a surprising degree of pessimism,

"Individual investors are now the least bullish they've been on the year ahead for stocks in the history of Yale's survey. Back in March, individuals were the most bullish they've been since January 2004. Institutional investors are more bullish than individual investors, but their reading is now all the way back down to levels seen prior to the post-Election spike at the end of 2016."

"@SBarlow_ROB

Bespoke: Investors might be more skittish than we thought" – (excerpt) Twitter

=====

Tweet of the day: "@NewtonGroupSM Are Junk Bonds Sending a Signal? buff.ly/2zXGxKU " – (chart) Twitter

Diversion: "An American Tries to Figure Out the Tragically Hip" – A Journal of Musical Things
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WED-Nov 15/17

Post by Webscout » Wed Nov 15, 2017 8:26 am

Mining and energy investors need to start watching China immediately


SCOTT BARLOW
3 HOURS AGO
NOVEMBER 15, 2017 FOR UTOPIA
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web

We know from website traffic statistics that Report on Business readers aren't interested in the Chinese economy at the moment, but for investors in mining and energy stocks, I don't think they have a choice unless they want to risk having their portfolios blindsided.

Commodity prices are lower across the board Wednesday morning on signs that China's leadership is shifting economic focus away from infrastructure development and real estate development,

"The Bloomberg Commodity Index extended declines after sliding the most in six months on Tuesday. Futures in China also plunged in overnight trading. Concern is increasing that demand will weaken as the world's second-biggest economy dials back amid a pledge by President Xi Jinping to focus on the quality of expansion rather than the pace of it. Nickel, iron ore and oil all dropped, and shares of resources companies slipped."

"Fear of Glut Grips Commodities as Xi Shifts China Economic Focus" – Bloomberg

"China's Commodity Beast Enters Hibernation" – Gadfly

"Commodities extend losses as traders take profits after weaker Chinese data" – Financial Times

"China's Indicators Point to Slowing Economy" – Wall Street Journal

=====

Macquarie analyst Viktor Shvets is concerned that central banks are withdrawing monetary stimulus before the global economy can sustain growth without it,

"Our key concern is the impact of liquidity withdrawal and persistence by CBs in trying to raise cost of capital, irrespective of evidence that neither supply nor demand can support higher rates. If we take CBs' rhetoric at face value, it is likely that liquidity injections could compress by more than US$1 trillion in '18, turning negative in '19. While CBs promise to be careful, this is a fundamental shift, akin to mixing combustible elements, with highly unpredictable results … We remain convinced that there is no evidence of sustained private sector recoveries."

"@SBarlow_ROB Macquarie is worried about 2018" – (research excerpt) Twitter

"Top central bankers vow to talk investors out of easy money" – Reuters

=====

Gadfly details how desperately Canadian oil companies need access to global markets,

"Heavier, higher in sulfur and far from the American refineries on the Gulf Coast optimized to take it, Western Canada Select crude oil tends to trade at a discount to West Texas Intermediate. It also trades at a discount to Mexican Maya crude … the discount of WCS versus Maya usually reflects the extra cost of piping those Canadian barrels south, roughly $7 to $10 a barrel. Recently, though, the spread has blown out … the bigger issue is that Alberta's production is outpacing its pipelines. And the problem will get worse before it gets better: Futures imply average spreads of about $17 a barrel over the next two years."

"Forgot About Keystone? Canada's Oil Majors Haven't" – Gadfly

=====

I don't have space here to explain why, but these two charts worry me,

"@SoberLook Chart: High-yield debt diverging from equities ($SPY vs. $HYG) " – Twitter

"@SBarlow_ROB GS: Low leverage outperforming. My subconscious is telling me to be worried, but not telling me why yet" – Twitter

"@FerroTV JNK close to erasing 2017 advance" – Twitter

=====

Tweet of the Day: "@M_C_Klein SF Fed says "easy money has been made" on US stocks frbsf.org/economic-resea… " – Twitter

Diversion: "What did 17th century Food Taste Like?" – Res Obscura
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One in two Canadians is a bundle of nerves about money

Post by Webscout » Thu Nov 16, 2017 1:05 pm

One in two Canadians is a bundle of nerves about money
https://www.theglobeandmail.com/globe-i ... e37000024/
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Biz Wax/Investing/Economy (BIE)

Post by Webscout » Mon Nov 20, 2017 6:54 am

These are hedge fund managers’ favourite stocks


SCOTT BARLOW
41 MINUTES AGO
NOVEMBER 20, 2017 FOR UTOPIA
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web

Citi's chief equity strategist, Montreal's own Tobias Levkovich, published a report detailing the most widely held stocks among global hedge funds. The first three stocks on the list – Alphabet Inc., Facebook Inc. and Microsoft Corp – aren't a big surprise. It's most likely these are the stocks managers are terrified not to own or risk underperforming their benchmarks.

There are a number of surprises on the list including Altaba Inc., NPX Semiconductors NV, Time Warner Inc. and MGM Resorts International.

"@SBarlow_ROB Citi: most widely held stocks by hedge funds" – (full table) Twitter

=====

Dramatic proclamations get all the attention - "The end of the oil age!", "Huge crude scarcity by 2022!" – but a Bernstein analyst, using the history of rubber production, expects a 'muddle-through' type future for oil demand. Apologies for the long excerpt, but it was my favourite read of the weekend by a big margin,

"Rubber is the story of an incumbent technology that, for all its excesses and booms and busts (just like my industry), still shares and competes in a market with a disruptive technology… Look to rubber. Look to hydropower. Look to coal and the pace of its death. Look to diesel and gasoline competing. Look to the whaling industry. Look to guano (if you like rubber you'll love bird feces!). Energy and raw materials and extractive industries are different from cameras, smartphones, chip design, and social trends. And the more that investors can accept that, the more willing they might be to consider that, although in the long run the oil sector will be dead (as Keynes pointed out, this is true for all of us), and in the short run the oil sector is hated, it's always the muddy middle where the money is to be made."

"@SBarlow_ROB ibid " – (research excerpt) Twitter

"Norway's $1 trillion oil fund is planning to get out of oil" – Quartz "

"Oil eases as traders and investors grow edgy ahead of OPEC" – Reuters

"Oil demand: Beware the gap" – Petroleum Economist

=====

The Economist reports that for U.S. marijuana producers, "Canada is where the money is,"

"Investors remain skittish about the [marijuana] industry, and accessing American stock markets is onerous. Instead, firms are moving north to Canada, listing themselves on Canadian stock markets to raise capital, and then investing the funds in American companies. One such company, iAnthus Capital Holdings, has raised nearly $50m says Hadley Ford, the co-founder. Mr Ford, a Wall Street veteran, found the northern relocation curious at first, but eventually adjusted. "It's like what John Dillinger said when asked about why he robbed banks," he says. "'That's where the money is.'"

"The price of cannabis is falling, suggesting a supply glut" – The Economist

=====

Gadfly's David Fickling was entertainingly harsh on Rio Tinto's management while providing a warning for investors in lithium miners,

"Rio Tinto Group isn't one of those companies[ that's good at acquisitions]. Indeed, it's hard to find an acquisition since its 2000 takeover of Australian iron ore miner North Ltd. that's not been a top-of-the-market catastrophe. That should make investors nervous about the prospect that a big new lithium deal could be forthcoming."

"Rio Tinto's M&A Madness" – Gadfly (Bloomberg)

=====

Tweet of the Day: "@RateSpy It's been decades since Canadians renewed mortgages at considerably higher rates " – (chart from DBRS) Twitter

Diversion: "Love and Respect For the Movies We Outgrew" – Film School Rejects
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Today-Tuesday Nov 21/17

Post by Webscout » Tue Nov 21, 2017 8:10 am

‘Risks are to the downside’ for Canadian economy in 2018


SCOTT BARLOW
1 HOUR AGO
NOVEMBER 21, 2017 FOR UTOPIA
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web

Merrill Lynch economist Carlos Capistran begins his 2018 growth forecast for Canada by explaining why the domestic economy grew twice as fast as expected in 2017 – basically a recovery in capital expenditure in the energy sector and stronger-than-expected global growth.

Mr. Capistran sees a 2.1-per-cent domestic expansion in 2018 but warns the risks are to the downside,

"The main external risk is US withdrawal from the North America Free Trade Agreement (NAFTA)… We see the chance of the US withdrawing from NAFTA as one in three, but the probability will increase if the Trump Administration does not pass tax reform, in our view… [If NAFTA is terminated] we estimate a 10% drop in Canadian exports to the US will lower GDP growth by 210bp.. The main domestic risk is the potential impact of higher interest rates on the balance sheet of highly indebted households, which can decelerate consumption more than we expect."

"@SBarlow_ROB ML: For Canadian economy 'risks are to the downside'" – (research excerpt) Twitter

"'Investors should protect themselves against NAFTA termination risk'" – Babad, Report on Business

See also: "Goldman 'Pretty Optimistic' for 2018 Despite China Debt Unknowns" – Bloomberg

=====

Merrill Lynch is also out with its oil price forecast for 2018,

"Global crude oil prices, particularly Brent, have firmed up more than we expected and we see Brent crude oil averaging $60 in 4Q17 and $56.50/bbl in 1H18, compared our previous forecasts of $54 and $52.50/bbl, respectively ... Our revised global oil supply and demand forecasts point to a sizeable deficit in 2017 of -230 thousand b/d and a more balanced market in 2018 "

"@SBarlow_ROB ML: Oil Outlook" – (research outlook) Twitter

=====

Bloomberg reports on a big jump in electric vehicle sales, thanks primarily to China,

"Sales of battery electric vehicles and plug-in hybrids exceeded 287,000 units in the three months ended in September, 63 percent higher than the same quarter a year ago and up 23 percent from the second quarter, according to a report released Tuesday by Bloomberg New Energy Finance. China accounted for more than half of global sales as its market for electric cars doubled amid government efforts to curb pollution."

A lot of these Chinese cars are powered by coal-generated electricity, but it's progress nonetheless.

"Global Electric Car Sales Jump 63 Percent" – Bloomberg

=====

RBC is out with its Canadian market strategy for the coming year, but I didn't find "bullish on banks, cautiously optimistic on energy" to be all that helpful. If that's what they see, however, the lack of drama in the projections are not their fault,

"@SBarlow_ROB RBC recommended positioning for 2018 in Canada. Like banks, cautious on oil sector" – (research excerpt) Twitter.

=====

Tweet of the Day: "@LizAnnSonders In an Internet minute...(make that 452,001 Tweets sent) " – (graphic) Twitter

Diversion: "Dazzling Origami Creatures Designed To Impress" – News of the Month
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Investing-Rules of Thumb are Worthless

Post by Webscout » Fri Nov 24, 2017 7:40 am

Investing-Rules of Thumb are Worthless
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CDN-Retail Sales

Post by Webscout » Fri Nov 24, 2017 7:41 am

Retail sales rise less than expected in September; auto sales fall
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Retail Sales Disappoint Again as Canadian Growth Slows
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Dow Jones Industrial Average crosses 24,000 on Nov. 30.

Post by Webscout » Thu Nov 30, 2017 2:22 pm

U.S. markets pass another milestone, as investors remain fearless

Dow Jones Industrial Average crosses 24,000 on Nov. 30.

BRENDAN MCDERMID/REUTERS
LANDON THOMAS JR.
THE NEW YORK TIMES NEWS SERVICE
PUBLISHED NOVEMBER 30, 2017
UPDATED 15 MINUTES AGO
Propelled by enthusiasm for tax cuts, robust corporate earnings and a global economy with few weak spots, the Dow Jones industrial average blew by the 24,000 milestone on Wednesday for the first time.

In a year of stock market records, hitting the 24,000 mark is not the most historic. Yet the ease with which the barrier was cleared – the Dow closed up 332 points at 24,272 or 1.4 per cent – highlights the extent to which investors are willing to look past political uncertainty and pricey stock valuations and bet that the market will keep going up.

This was the fifth 1,000-point milestone for the Dow this year, first hitting 20,000 on Jan. 25. The latest large round number, 24,000, came barely a month after the previous milestone.

These thresholds have been secured – with the Dow up nearly 28 per cent so far this year – with virtually no sharp sell-offs.

This week's rally was propelled in part because of strong economic signals that show consumer confidence at a nearly 17-year high and promising results from retailers in the thick of the holiday shopping season. And it wasn't just the Dow. The Standard & Poor's 500 index closed at 2,647 on Thursday and the Nasdaq composite was up 0.8 per cent to 6,879.

DOW INDUSTRIALS24,272.35+6,444.11 (36.15%)
PAST THREE YEARS
DEC. 1, 2014
17,776.80
NOV. 30, 2017
24,272.35
SOURCE: BARCHART
For the month, the Dow is up 3.8 per cent, the S&P gained 2.8 per cent and the Nasdaq added 2.2 per cent.

Market experts say one of the distinguishing features of this long run, which started in March, 2009, is its ability to keep climbing a so-called wall of worry. Investors have suffered numerous frights, such as Britain voting to leave the European Union, geopolitical fears in North Korea and continuing political turmoil in Washington, but they have jumped back into the market after each stumble.

Ed Yardeni, an independent stock market strategist, has identified 58 of these small panic attacks since 2009. This year, he has not seen a single one.

"This is starting to feel like a melt up," Mr. Yardeni said, describing a feverish state of a bull market when investors discard all fears. "The market has climbed a wall of worry, but now it seems as if there is nothing to worry about."

And that, Mr. Yardeni said, is when you have to worry the most. Times such as these are when investors, no longer cautious and discerning, are especially vulnerable to negative surprises.

So far this year, there have not been many.

The VIX index, a gauge of expected stock market volatility in the future, rose Thursday but was still trading at just more than 11 – near its recent lows.

The latest missile scare from North Korea, coming after so many previous flare-ups, has been largely ignored.

Instead, investors ranging from sophisticated hedge funds to small retail accounts have chosen to focus on the tax cut package moving through Congress this week. Its centrepiece is a major reduction in taxes for corporations, which would be a boon to profits – and therefore share prices.

More than anything, investors have been inspired by a global economic boom – encompassing Europe, Asia, emerging markets and the United States – coupled with little sign of inflation.

Traditionally, bull markets come to an end when, after a sustained period of growth, inflation forces central banks to raise interest rates.

Now, with inflation relatively stagnant and the lingering anxieties of the 2008 financial crisis fading, investors are not ready to contemplate the end of the party.

"I used to call my clients fully invested bears," Mr. Yardeni said. "Now they are giddy bulls – how could they not be?"
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10 Things Investors Can Expect in 2018

Post by Webscout » Wed Jan 10, 2018 11:36 am

10 Things Investors Can Expect in 2018
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Hype Meets Reality as Electric Car Dreams Run Into Metal Crunch

Post by Webscout » Thu Jan 11, 2018 9:56 am

Hype Meets Reality as Electric Car Dreams Run Into Metal Crunch
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Housing Canada-Real Life Ratio -FYI

Post by Webscout » Fri Jan 12, 2018 9:22 am

Housing Canada-Real Life Ratio -FYI
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The markets appear to be burning off some froth

Post by Webscout » Tue Jan 16, 2018 1:32 pm

The markets appear to be burning off some froth
Scott Barlow
SCOTT BARLOW
PUBLISHED JANUARY 16, 2018
UPDATED 2 HOURS AGO
Special to Utopia
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web

Bitcoin and other cryptocurrencies, industrial metals and silver are all getting hit Tuesday morning, and I suspect this is all related.

Bloomberg's Luke Kawa pointed out that the MSCI World (equity) Index is more overbought now than at any time since 1987, and investors are rapidly pouring assets into the Blackrock's iShares USA Momentum Factor ETF (which buys stocks with the best price momentum.)

It looks very much like markets got ahead of themselves and some froth is now burning off after a solid year to date ramp up. The good news is that, where the sell-off is merely technical, things should settle down.

"Investors Place Record Bet that Market Winners Will Keep Winning" – Bloomberg

" Copper Falls Most in 6 Weeks as Metals Rally Starts to Give" – Bloomberg

"Bitcoin Tumbles 20% as Fears of Cryptocurrency Crackdown Linger" – Bloomberg

"2018's unbridled stock surge may signal the 'overshoot' phase of this bull market is underway" – Santoli, CNBC

Related: "No, Ripple Isn't the Next Bitcoin" – M.I.T. Technology Review

=====

An informative report from Morgan Stanley details the importance of crude futures markets, which are 50 times the size of physical trade, in determining the oil price,

"The 'paper' oil market is 50x the physical market: As a starting point, consider this: world oil consumption is ~98 mb/d, but the barrels that leave the country in which they are produced - i.e. the internationally traded market - is just ~43 mb/d. At the same time, oil futures trading in Brent and WTI alone adds up to ~2,000 mb/d. In short, the 'paper' oil market is roughly 50x larger than the physical market. Financial in- and outflows can drive the market away from long-run marginal cost for some time.

"The current level of backwardation in oil futures curves is still a relatively recent phenomenon. If this persists for an extended period, we expect it will continue to attract inflows into the futures market. As these flows can be much larger than physical flows, this should drive oil futures prices higher during the course of this year."

"@SBarlow_ROB MS: Oil futures market, 50x size of physical, to drive crude prices higher" – (longer research excerpt) Twitter

"Brent oil falls by $1 but demand underpins near $70/barrel" – Reuters

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I am only starting to work my way through those of these I didn't read at the time. I am particuolarly interested in "Five-Year Expected Returns 2018-2022: Coming of Age", and "Artificial Intelligence: It's Not the Future, It's Now (Capital Group)",

"The Top 20 Investment Papers of 2017" – Savvy Investor

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Business Insider torques up the headline, as is their want, but this Goldman Sachs list of fastest growing companies is a worthwhile starting point for further research. ConocoPhilips is the #1 pick and Adobe Systems is an interesting pick,

"These 13 stocks will see profits explode higher in 2018" – Business Insider

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Tweet of the Day: "@RateSpy "Based on the economic environment alone, the case for higher interest rates in Canada is airtight."—@scotiabank gbm.scotiabank.com/scpt/gbm/scoti " - Twitter

Diversion: "Why it is so perilous to mess with the price of bread" – Macleans
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