Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
U.S.-based Business Insider cites analysts from Capital Economics who believe that the real estate rally in Vancouver "will end in tears",
"This is a bubble. A very big bubble. And it is going to end in tears," wrote Capital Economics' chief North America economist, Paul Ashworth in a note to clients. 'The Bank's claim that the risk of a housing downturn is small because there is little risk of either a spike in the unemployment rate or a jump in long-term interest rate risk premiums is naïve in the extreme,' he added. Plus, he pointed out that the gains in housing prices in these regions now "far exceed" those in the US at the peak of its housing bubble. "
For context, Capital Economics have been consistently bearish on Canada's economic prospects in general and Business Insider has a history of hyperbole, although they're not in the hysterical category with Zero Hedge.
"'This is a bubble. A very big bubble. And it is going to end in tears'" – Business Insider
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A terrific column by Bloomberg's Tracy Alloway argues there's only one economic policy where Millennials and Boomers can agree – they both hate negative interest rates,
"Citigroup Inc. Chief Economist Willem Buiter, who parses the deleterious effects of sub-zero benchmark interest rates on pension funds, life insurers, and, yes, intergenerational harmony in a research note published on Monday.While negative rates wreak havoc on old people's savings and pension plans, they can be even more problematic for young people who are left holding the bag of unsustainably generous benefit plans amid sluggish economic growth and newly-created austerity drives, he says."
The Venn diagram Ms. Alloway designed to summarize the theme is brilliant.
"Negative Rates Are the Tools of Our Elderly Oppressors" – Alloway, Bloomberg
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The divisively vicious and frequently dishonest Brexit debate can't end soon enough. Market are higher this morning after a small sample poll showed Remain taking a larger lead. Interestingly, the rally extended to Italian and Spanish government bonds, which suggests that these asset classes may be the ones to watch before and after Thursday vote, along with the pound.
The Quartz story "Nearly half of Europeans want their own referendum on staying in the EU" highlights the danger of the Brexit vote in that separatist sentiment could spread throughout the region. . Canadian investors should be reminded that domestic banks stocks sold off pretty hard during the 2012 European banking crisis so let's hope we're not heading that way.
"Italy's Bonds Advance With Spain's as Brexit Concern Fades" – Bloomberg
"@michaelbabad Why Ontario has the most to lose in this week's Brexit vote tgam.ca/EPIY $MACRO #cdnecon #brexit pic.twitter.com/pzCetV1R4u " – Twitter
"Pound Leaps Most Since 2008 as 'Remain' Recaptures Lead in Polls" – Bloomberg
"Gold Sinks Most in Month on Signs U.K. Turning Away From Brexit" – Bloomberg
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The U.S. oil rig count may have bottomed, suggesting more supply will limit upside in the commodity price,
"So far no U.S. producer that pumps more than 100,000 barrels per day (bpd) has gone bankrupt. The survival of these big producers partly explains why overall U.S. production has slipped only about 10 percent since peaking at 9.69 million bpd. Their agility - which required slashing costs in half while doubling down on improved techniques to squeeze more oil from each new well - is now allowing the industry to cautiously focus on growth again."
"With oil price near $50, resilient U.S. shale producers eye new chapter" – Reuters
"@C_Barraud #OOTT | #US #Oil Rig count may have bottomed in 2016. pic.twitter.com/ngWQoNaZed " – (includes chart) Twitter
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Tweet of the Day: "@NewtonGroupSM J.P. Morgan Summer Reading List lnkd.in/en5ZPxZ ' –Twitter
Diversion: "Cool View of a Pilot Pouring Water Upside Down While Doing a Barrel Roll in a Fighter Jet" – Sploid
Scott Barlow