MATHIEU BELANGER/Reuters
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
The management team at Valeant Pharmaceuticals International Inc. have clearly had enough of the growing skepticism about the health of the balance sheet and the sustainability of its growth strategy. The company announced a press conference for June 17 that it says will "refute recent misleading assertions made by Allergan, Inc. and others."
John Hempton is one of the skeptics, although he is willing to hear Valeant's side of the story. In an otherwise even-handed commentary, Mr. Hempton wrote, "If the GAAP accounts are the beginning and end of the story then Valeant is headed for bankruptcy. It has large and increasing losses and $17-billion in debt."
"Valeant Facts" – FT Alphaville (registration but not subscription required)
Former Pacific Investment Management Co. LLC co-kingpin Mohamed El-Erian warned investors to reduce portfolio risk in his weekly Financial Times column. In his view, the market has rekindled its romance with The Great Moderation of easy money and shallow downtowns and, as a result, asset prices have climbed to levels that under-estimate investment risk.
Mr. El-Erian sees ominous signs of the 2005 to 2007 period ahead of the financial crisis in terms of "excessive and irresponsible risk taking."
"It's time to take some chips off the table, says Mohamed El-Erian" – FT (subscription may be required)
Bloomberg has released its annual guess at the world's strongest banks. Hong Kong-based Hang Seng bank is number 1, and Canada's Desjardins Group is, surprisingly, close behind at number 2. Canadian Imperial Bank of Commerce is ranked 15 and Royal Bank of Canada is listed at 18.
"Hang Seng Bank Tops List of Strongest Lenders" – Bloomberg
Bloomberg Businessweek posted an interesting report on commercial real estate with important implications for Canadian investors. The story attempts to uncover why the U.S. commercial real estate market avoided the tumult of the residential sector during the financial crisis. It presents evidence that, by enforcing market discipline, the real estate investment trust sector had the most positive influence. Extended to Canada, this point of view will assuage fears of an approaching bust in the domestic commercial real estate market.
"Why Didn't Commercial Real Estate Boom and Bust Like Housing?" – Bloomberg Businessweek
Fantastically-named Texas oil billionaire T. Boone Pickens believes that the tragic disintegration of Iraq will result in $200 (U.S.) per barrel oil. Mr. Pickens has been fond of exaggeration in the past, so I'll let readers decide for themselves.
"Without Iraq's oil, prices could hit $150-$200: Pickens" – CNBC
Tweet of the Day from energy strategist Gregor MacDonald: "Coal once again fasting growing fossil fuel, +3.05 per cent in 2013 per @BP_plc | Also, coal again increases its global share of total use to 30 per cent." – Twitter
Diversion: Crazy person jumps from speeding truck into 328-foot-deep gorge – Wired
Follow Scott Barlow on Twitter at @SBarlow_ROB.
Scott Barlow