Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
Today's headline arises from two recent research reports, the first by Credit Suisse entitled "Appetite for Disruption," which predicts which market sectors are most at risk from government regulation and technology. The strategists recommends "'cheap undisruptables' with high quality and momentum: We find 25 Outperform-rated companies globally including Reckitt Benckiser, Orange, UnitedHealth, Vantiv, China Resources Gas, Murata and Sekisui House."
The report also provides a list of companies to avoid, "Expensive, with a risk of disruption and low quality: We highlight 20 companies globally, including AstraZeneca, Smith & Nephew, Netflix, Falabella, Global Logistic Properties, Cathay Pacific, Eisai and Nomura."
The second report from Goldman Sachs is more short term focused, identifying companies most at risk if the CBOE Volatility (or VIX) index rises,
"given the uncertainty around both policy and growth at this juncture, this week we look at what assets might be most "fragile"… at an asset class level, both credit and FX seem the most vulnerable by most metrics. In addition, at an individual asset level, German and UK rates and the S&P 500 appear most vulnerable."
"@SBarlow_ROB I'll allow it" – (CS research excerpt) Twitter
"@SBarlow_ROB GS: sectors most at risk of volatility increase" – (research excerpt) Twitter
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Prime minister JustinTrudeau was provided some assurances on upcoming trade negotiations in a meeting with Blackrock Group LP's Stephen Schwartzman, an advisor to president Trump,
"Canada has a "very special status" and is unlikely to be hit hard by changes the United States wants to make to the NAFTA trade accord, the head of a business advisory council to U.S. President Donald Trump said on Monday…"I don't think he should be enormously worried because Canada is held in very high regard," he said, referring to Trudeau."
"Stephen Schwarzman made his remarks after addressing Canadian Prime Minister Justin Trudeau and his cabinet."
"Canada has 'very special status,' not a NAFTA target: Trump adviser" – Reuters
"Trump team's NAFTA message to Canada: Don't worry" - BNN
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WTI crude is trading 35 cents higher to $53.10 per barrel at time of writing. As for the commodity price outlook, The University of Oxford's Institute for Energy Studies is not overly optimistic,
"Even without the OPEC-non-OPEC output cut agreement in November 2016, the three-year long price fall would eventually have come to a halt and stabilized at close to $41/b in 2017 based solely on market forces. The agreement, however, helped accelerate the price recovery by stabilising the oil price near $50/b. That said, the current price at above $50/b already incorporates the bulk of the expected gains from the full enforcement of the production cuts and reflects the positive shift of market sentiment that has been building-up in anticipation of the implementation of the output cut agreement. Thus, for the next year, the oil price path is more sensitive to downside risks depending on the discipline of OPEC and non-OPEC oil producers. In fact, for the price recovery to be sustained in 2017, OPEC efforts must be met by favourable market conditions in the form of an unexpected surge in global oil demand"
"Oil Price Paths in 2017: Is a Sustained Recovery of the Oil Price Looming? " - Oxford Institute for Energy Studies
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Tweet of the Day: "@sanderwagner 49m Our brain is constantly occupied with figuring out the social hierarchies surrounding us nature.com/articles/s4156… ' – Twitter
Diversion: This isn't overly diverting, but George Mason economics professor Tyler Cowen presented an unsettling theory behind the new president's 'alternative facts' initiative,
"Trump specializes in lower-status lies, typically more of the bald-faced sort, namely stating "x" when obviously "not x" is the case. They are proclamations of power, and signals that the opinions of mainstream media and political opponents will be disregarded. The lie needs to be understood as more than just the lie. For one thing, a lot of Americans, especially many Trump supporters, are more comfortable with that style than with the "fancier" lies they believe they are hearing from the establishment. For another, joining the Trump coalition has been made costlier for marginal outsiders and ignoring the Trump coalition is now less likely for committed opponents. In other words, the Trump administration is itself sending loyalty signals to its supporters by burning its bridges with other groups."
"Why Trump's Staff Is Lying" – Cowen, Bloomberg Breaking Views
Scott Barlow