A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
Report on Business' Jeffrey Jones suggested the highly interesting prospect of an avalanche of merger and acquisition deals in Canada's oil patch. Mr. Jones writes that there is an ongoing game of chicken between buyers and takeover candidates where potential acquirers want to watch for more corporate suffering and lower stock prices while asset sellers are hoping for a rebound,
"There could be a shift to more unsolicited deals, as well-funded players and private-equity funds see opportunities amid the downturn. 'We haven't seen much yet, but when you have these periods of radical dislocation and balance-sheet pressure, those are some of the ingredients to hostile [bids]'"
"In staring contest over oil-patch assets, is it time to blink?" – Report on Business
There is huge tension in energy markets between the declining U.S. oil rig count – which suggests oil supply cuts – and the actual U.S. production levels which continue to climb towards 10 million barrels per day despite fewer rigs. Bloomberg provided a helpful animated video to describe how this is possible – much of the answer surrounds much higher operational efficiency in new wells.
"The price of oil is down, so why is production still going up?" – Bloomberg
There are increasing signs of a cash crunch in China. The government's efforts to curb rampant credit growth without causing a hard economic landing will require some considerable policy stickhandling skills in the weeks ahead.
"'The market is in front and monetary policy is behind the curve,' [China International Capital Corp. analysts Chen Jianheng] said. 'Such slow and delayed easing makes capital outflows as hard to deal with as inflows were when the yuan was appreciating. This gives funds enough time to build up their positions, which will continue to restrain funding conditions in China.'"
"China central bank told to get ahead of curve by money markets" – Bloomberg
See also: "China's economy can still blindside Canadian portfolios" – Barlow, Report on Business
I'm not sure where the anti-Millennial meme came from, but it was in full force yesterday. The Washington Post more or less called American Millennials idiots and then the Millennial Invest blog goes out of its way to say they suck at investing, too.
"Millennials are notoriously skeptical of the market, but have started dipping their toes in with stocks that they know and love. Unfortunately, these stocks are priced to do poorly. Millennials should embrace value investing, but value stocks are no fun. Returns earned from value stocks, however, are quite fun indeed."
Aside from the generational warfare, the post is an interesting look at the most widely-held stocks by the younger generation of investors.
"Why the grandpa portfolio will crush the millennial portfolio" – Millennial Invest
Writing for the Cato Unbound site, Megan McArdle provided some fascinating perspective on historical changes in standards of living. In the end, median wages are useful but entirely insufficient in determining average wealth levels.
"But I think this list illustrates the poverty of trying to measure living standards by staring at median wages. Many of the changes of the last century show up in that statistic, but others, like the time no longer spent plucking chickens, or the joys of banishing lye from the pantry, appear nowhere. Nor do the changes in job and family structure that have made the lives of people who are indisputably vastly materially richer than my young grandparents were, nonetheless feel much more precarious. We look into the numbers and think we're seeing hard facts. But in fact, like someone reading tea leaves, we are projecting our intangible impressions onto an ambiguous picture."
"It's complicated. But hopeful." – McArdle, Cato-Unbound
Tweet of the Day: An amazing chart on relative performance of U.S. and European market. "@auaurelija Relative stocks behave best #EUR #USD http://t.co/Bclc4vCcM6
Diversion: "Mobile phone data reveals humanity's reproductive strategies" – M.I.T. Technology Review
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Scott Barlow