Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
The headline in the Bloomberg story "Brexit Is a Lehman Moment for European Banks" is too strong in my opinion.
For Canadian equity investors, however, the notion is worth considering because of the proven sensitivity of domestic bank stocks to European financial crises. This is particularly the case now with signs that the Canadian consumer is tapped out on debt, provisions for loan losses are rising and banks are struggling for profit growth,
"America sorted its banks out swiftly after the 2008 credit crisis. Balance sheets were recapitalized, the value of distressed assets was written down and the new regulatory framework was put in place. Europe didn't do the same. It should now seize this second chance that fortune has dropped into its lap - otherwise, it risks turning the Brexit crisis into a financial catastrophe."
"Brexit Is a Lehman Moment for European Banks" – Bloomberg
"Brexit Exposes Eurozone's Weak Spot: Italy's Banks" – Wall Street Journal
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The CBC's Don Pittis has stuck his neck out by arguing that Canada's "smart money" is investing in the housing market,
"There are increasing signs that the smart money from around the world and from right here at home thinks that in the current climate, real estate remains a good investment. And as long as that is so, house prices will stay strong."
In 2013 the most prominent academic on housing prices, Yale professor Robert Shiller, disagreed with reference to the U.S. housing market,
"Housing traditionally is not viewed as a great investment. It takes maintenance, it depreciates, it goes out of style. All of those are problems. And there's technical progress in housing. So, new ones are better... "So, why was it considered an investment? That was a fad. That was an idea that took hold in the early 2000's. And I don't expect it to come back."
"Why smart money is still investing in Canadian houses: Don Pittis" – CBC
"Robert Shiller's Devastating Takedown Of Housing As An Investment Will Have You Renting For The Rest Of Your Life." – Business insider (October, 2013)
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Two reports imply short-term hurdles for the oil price. In the first case, a surge in U.S. gasoline inventories is threatening refinery demand for crude,
"Refineries across the nation are operating full-out and imports are pouring into the East Coast, boosting gasoline supplies to a record. At the same time, consumption has turned out to be less robust than thought. That's weighed on prices, threatening to stem oil's rebound from a 12-year low."
Secondly, Morgan Stanley issued a research report predicting higher U.S. shale oil production in the second half of 2016.
"Oil Rally Threatened as Gasoline Supply Surge Swamps U.S. Demand" – Bloomberg
"Is America's Thirst for Oil Just an Illusion?" – Gadfly (Bloomberg)
"@chris1reuters #Oil drilling rising in most productive #shale areas, says @MorganStanley forecasts U.S. output recovery in H2 #OOTT pic.twitter.com/B7J9bzuUuV - (includes chart) Twitter
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Tweet of the Day: "@owasow "In our collective nostalgia, we forget how boring, regimented & antisocial manufacturing jobs tend to be." bv.ms/1O6DSk4 " – Twitter
Bonus Tweet of the Day: "@SBarlow_ROB More ML on Canada "Outlook: marginally worse than before" pic.twitter.com/HOS90j2pQT " – Twitter (including research excerpt)
Diversion: "Watch the Construction of the Panama Canal Expansion in This Timelapse" – Gizmodo
Scott Barlow