Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
U.S. indexes – the Nasdaq in particular – are likely to open lower this morning after Apple Inc. released a disappointing (yet not terrible) set of quarterly earnings results after the close Tuesday,
"[Apple ] shares dropped to $121 after the company released its results on Tuesday, from $130.75 at the close… the company forecast revenue of $49 billion to $51 billion, missing analysts' average estimate of $51.13 billion according to Thomson Reuters I/B/E/S."
"Apple gives weak forecast, shares fall nearly 7 percent" – Reuters
Geroge Pearkes from Bespoke Investment Group tweeted a helpful roundup of U.S. analyst reactions – including Morgan Stanley and Goldman Sachs - to Apple's results here.
The Wall Street Journal detailed Apple's huge role in driving index performance in "Apple's Earnings Matter Even More Than You Think",
"the stock comprises about one percentage point of the S&P 500′s 3.5% gain for this year (before Tuesday's selloff). It is also, due to its massive profits and market-cap weighting within the index, the largest single contributor to S&P 500 profits. By a long shot."
""Apple's Earnings Matter Even More Than You Think" – Wall Street Journal
The painful slide in commodity prices is negatively affecting all global currencies with significant resource connections, not just the loonie,
"The Federal Reserve chair's determination to raise U.S. interest rates this year has seen the currencies of New Zealand, Australia, Canada and Norway underperform their developed-market peers in the past three months. The kiwi has lost 14 percent in that time, or more than the other three combined."
"Commodity Rout Extends to Currencies Led Lower by Kiwi to Loonie" – Bloomberg
Hank Paulson – Treasury Secretary during the early severe stages of the financial crisis – warned of more problems for China's economy in a column for the Financial Times,
"No advanced economy has achieved high-income status — something to which China aspires — with a closed financial system that misallocates and misprices capital. Chinese reformers undoubtedly understand how to create a modern financial system; policymakers have studied this inside out. They have the blueprint in hand, but need to act on it boldly and quickly. If China is to have a well functioning and stable capital market — which can also help to protect investors, particularly unsophisticated individuals — it needs to allow best-in-class financial institutions and professionals, irrespective of national origin, to serve Chinese investors. In my experience, joint ventures simply do not work for global financial institutions."
"Let China's markets speak truth to power" – Paulson, Financial Times
The ROB's Carrie Tait performs a public service by explaining why, with oil price so much lower relative to 2014, domestic gasoline prices remain high,
"benchmark price for oil is about 50 per cent lower than it was this time last year, but the median price of gasoline across Canada is down only 11 per cent…"The exchange rate relative to the United States creates much higher pump prices," said Michael Ervin, president of the Kent Group Ltd.'s consulting division…Refining margins vary across North America depending on the quality of feedstock. Refineries processing heavy oil, for example, are generally less profitable than those with access to light crude. Across the board, however, Canadian refineries are posting healthy results."
"Loonie largely to blame for lofty gas prices in Canada amid oil drop" – Tait, Report on Business
Tweet of the Day is from Mohamed el Erian: "@elerianm "Slowdown in emerging market growth...is finally percolat[ing] through to labour markets." @FT http://t.co/cwSkttKDWT http://t.co/YT6Kx1nvF7
Diversion: "The top 10 most beautiful looking movies of all time" – Sploid . I would add Wong Kar-wai 's "In the Mood for Love" .
Scott Barlow