Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
Cloud computing is the best investment theme for the next three years in my estimation but, as always with these things, there's a catch. The good news is that the theme is secular – significant revenue growth will likely happen no matter what happens to the global economy. Goldman Sachs predicts a quadrupling of sector sales growth,
"We created a public cloud forecast based on a bottom-up analysis of the market. Our forecast assumes the public cloud market is $32-billion in CY16, and we forecast this to quadruple over the next four years to $137-billion in CY20."
The argument against corporate migration to the cloud has been security concerns, that the netowrk could be hacked. But anyone using this argument now has to believe that the CIA is stupid. The intelligence agency moved to a cloud network build by Amazon in 2013.
The catch for investors is that the dominant stocks in the cloud computing industry – Amazon, Google, VMWare and Microsoft – are not cheap. I will be looking for peripheral plays.
"@SBarlow_ROB GS expects public cloud revenue to quadruple in next 3 years" – (research excerpt) Twitter
"The Details About the CIA's Deal With Amazon" – The Atlantic (July 2014)
"@SBarlow_ROB !!?!?!? "[Cloud] industry reached a tipping point in 2013 with the CIA selecting Amazon to host its private cloud" (GS Jan '15) – ( research excerpt) Twitter
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A Reuters poll of oil experts indicates that the crude price will not rise above $60 in 2017,
"'We expect the deal to only be partly implemented, many of the non-OPEC countries are likely to renege as are many of the smaller OPEC members, but cuts should still be large enough to help rebalance the market,' said Capital Economics analyst Thomas Pugh … However, an increase in U.S. shale production, a stronger dollar in the wake of expected interest rate hikes by the U.S. Federal Reserve and easing of geo-political tensions in Libya and Nigeria could limit any major gains in oil prices, they added."
"POLL-Oil in 2017 seen capped below $60/barrel by strong dollar, U.S. shale" – Reuters
"Shale Drillers Promise No 2017 Binges as Oil Hangover Eases" – Bloomberg
"Oil prices steady as rise in U.S. inventory slows upswing" – Reuters
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CBC's Don Pittis looks at the five factors that will determine Canadian home prices in 2017. These are: U.S. interest rates, domestic economic growth, foreign investment, construction activity, and government regulation. The last of these is most interesting for me,
"A wild card in the housing market is how governments react to changes in real estate prices. No matter how strong their stated commitment to market forces, as we've seen at both the federal and provincial levels, governments are willing to meddle when they get blamed for prices that are unaffordable.
"The trouble is a sudden change in rules, such as the tax on foreign buyers in Vancouver, can cause equally sudden distortions in the expected path of house prices. If prices were to begin to fall, inevitably governments could become worried about the impact on the wider economy, in which real estate has become a reliable driver of jobs and growth."
"Real estate up, down or flat? 5 factors that could affect home prices in 2017: Don Pittis" – CBC
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Tweet of the Day: "@business Here are the world's best and worst performing assets of 2016 bloom.bg/2isIwuq " – (includes chart) Twitter
Diversion: This is unbelievable and terrifying. A dam in Iraq could fail at any time, threatening the lives of over one million people.
"A BIGGER PROBLEM THAN ISIS? The Mosul Dam is failing. A breach would cause a colossal wave that could kill as many as a million and a half people." – New Yorker
Scott Barlow