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Scott Barlow

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web

Boris Johnson announced he will not seek the leadership of the U.K. conservative party this morning in clear defiance of the "you broke it, you bought it" shopping mall rule and one of the most venal displays in the already-foetid history of politics.

As entertaining as Britain's real-life re-enactment of House of Cards is, however, for domestic investors it's just a sideshow. The more important story of Italian bank stress has been elbowed out of media coverage.

I noted previously that economic and market developments in the U.K. only really matter to Canadians to the extent they spread to the continent. The primary short-term risk to Canadian portfolios is financial stress emanating from Italy and pressuring our bank stocks. Thursday, Italian bank stocks dropped sharply after German chancellor Angela Merkel (a rare leader who is actually leading at the moment) threw cold water on the country's appeal to support their banks financially. If Canadian bank stocks are weak today, this will be the reason why.

"Italian banks dive as Merkel dismisses bailout hopes" – FastFT
"Italy's Longshot Bank-Bailout Bid Last Chance to Stop Crisis" – Bloomberg
"Brexit vote puts the heat on Italian banks" – The Economist
"Boris Johnson Says He Isn't Seeking to Replace British Prime Minister David Cameron" – Wall Street Journal
"Why Canadian banks are getting hit hard by Brexit" – Barlow, Inside the Market (June 27, 2016)

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I was a mutual fund analyst for 10 years, but my knowledge of the industry could be dated. Still, news that Canadian regulators are considering a ban on trailer fees, while clearly client friendly, could result in a decision marking the final nail in the coffin for a number of non-bank asset management companies, financial planners, and brokers.

"Regulators move closer to ban on mutual fund fees" – McFarland, Report on Business

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"After Brexit, everyone's a gold bull" tweeted Bloomberg's Thomas Biesheuvel, as an introduction to a report highlighting increased price targets for bullion,

"Goldman raised its three-, six- and 12-month targets by $100, seeing prices at $1,300, $1,280, $1,250 over those periods, according to a report received on Monday. Morgan Stanley also increased its forecasts, citing risks from Brexit, the Fed's languishing rate hike cycle as well as a benign inflation environment."

As it happens, I also wrote about gold yesterday (in print today), quoting bullish views from hedge fund multi-bazillionaires George Soros and Stanley Druckenmiller.

"Brexit Vote Sees Stampede by Banks Into Higher Gold Targets" – Bloomberg
"A bet on gold is a bet against the equity bull market" – Barlow, Inside the Market

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Deutsche Bank analysts are concerned about the lack of policy response to Brexit in the U.K.,

"Despite one of the steepest declines in GBP vs. USD post war, the Bank of England has not taken or announced any action to defend sterling at any particular level. EU leadership remains rigid about the concerns of leave voters in the UK and elsewhere. This lack of effort to mitigate damage and risks leaves us quite worried. We reiterate our Next 5%+ likely S&P price move as Down and cut our S&P targets for 2016 & 2017 ends by 50 points to 2150 & 2350. "

"@SBarlow_ROB DB: "lack of effort to mitigate damage and risks leaves us quite worried. " pic.twitter.com/jP93T29r5n ' – (includes research excerpt) Twitter
Related: "The science of why people insist on making idiotic choices" – Quartz

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Tweet of the Day: "@tbiesheuvel Commodities just had their best quarter since 2010 bloom.bg/2950L4N pic.twitter.com/jPUdXJJbuO " – Twitter

Diversion: "Historic Holocaust Escape Tunnel Discovered in Lithuania" – Gizmodo

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