A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
Three stories this morning all point to a secular growth story in agricultural, soft commodities.
The Atlantic's online finance magazine Quartz details the rapidly rising Chinese demand for food and predicts a "global factory farming boom." The story refers to an study predicting that in the next 15 years, China's food imports will add up to a third of the entire globe's agricultural production.
Importantly, the trend is somewhat immune from a slowdown in the Chinese economy. Government reforms are focused on increasing household consumption while lowering dependence on construction and infrastructure development.
"China's growing food demands stoke fears of a global factory farming boom" – Quartz
Kevin Ferry of Cronus Futures is expecting a sharp rise in North American corn prices because of meteorological factors. He writes, "Take a look at the midwest. The flooding from Nebraska to Minnesota has reached record levels. Corn popped on two good sessions to end the week. As we signaled to begin the year, we are looking to spend the Summer buying corn and selling bonds."
Historically, Canadian investors have benefitted from rising corn prices through fertilizer stocks. But because of lower global potash prices, this is now more difficult. It's early yet, but investors should watch agricultural equipment stocks like Caterpillar Inc. instead of fertilizers.
"Corn" – Kevin Ferry, Contrarian Corner
The South China Morning Post reports that the head of a state-owned Chinese copper producer has jumped to his death in an apparent suicide. The report alleges that a corruption investigation into the company's operations had begun.
The corruption crackdown is quiet but pervasive in China as the government seeks to remove powerful political road-blocks that are in the way of economic reform. Peking University professor Michael Pettis – who's been more right on China than almost any expert in the last two years – believes the initiative is part of a "second liberalization" in the country's economy that will eventually lead to another, more sustainable growth surge.
"Head of China's state-owned copper firm jumps to his death after corruption allegations" – South China Morning Post
"China's quiet revolution is more important than economic data" – ROB Insight
In case we needed a reminder that the self-destructive aspects of investor psychology never change, the FT details the worldwide frenzy for any investment where the Investment Banker pitch deck includes the word "disruptive." Please don't fall for this.
"Investors manic for 'disrupter' stocks" – Financial Times (registration required)
Tweet of the Day is a brilliant bit of tongue in cheek prognostication on this morning's U.S. GDP report from The Economist's @ryanavent: "Revisions to show U.S. economy vanished entirely, population reverted to hunting, gathering in Q1."
Diversion (this is idiotic on so many levels): "The Worst Idea ever for an iPhone Case" – Gizmodo
Follow Scott Barlow on Twitter @SBarlow_ROB
Scott Barlow