A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
I can't tell you which direction, but energy stocks are likely to make a sharp move at 10:30am eastern time this morning, after the U.S. Department of Energy publishes its weekly report on crude oil inventories.
In recent weeks, the inventory numbers have gone from being just another data point to an all-important announcement. Currently at record levels, the amount of stored oil in the U.S. is a measure of the current oil glut that is depressing the North American commodity price. Analysts are expecting a build of 3.7 million barrels.
"U.S. rig count falls, oil production still rising. For now" – Barlow, Inside the Market
The Financial Times attempted to throw cold water on the notion of a new era of oil abundance by noting that outside the U.S. , energy production hasn't been all that great:
"If we strip out the impact of rising production from U.S. shale oil, the global crude oil supply actually declined by around 1m b/d [in 2014], to 72.6m b/d from 73.5m b/d."
I don't find this article entirely convincing. The shale boom is another example of technology triumphing over scarcity. There's no reason to think, for instance, that Petrobras' mismanagement of the enormous deep water reserves off the Brazilian coast will last forever. Once that ends, it could open up another source of global energy supplies. Alternative energy sources like solar are also spreading rapidly in many regions.
"U.S. shale oil boom masks declining global supply" – Financial Times
The energy sector is an area where technology has been extraordinarily successful but batteries are an area where human ingenuity has, so far, failed miserably. The Massachusetts Institute of Technology Review published a fascinating report on why battery technology – arguably the biggest hurdle in the way of both solar power and electric vehicle ubiquity – has not advanced,
"One difficult thing about developing better batteries is that the technology is still poorly understood. Changing one part of a battery – say, by introducing a new electrode – can produce unforeseen problems, some of which can't be detected without years of testing."
"Why we don't have battery breakthroughs " – MIT Technology Review
Tony Yates is an economics graduate student at the University of Bristol and an increasingly influential voice in the field. Tuesday, Mr. Yates wrote a post using the work of MIT economist Daren Acemoglu to assess Greece's economic strategy.
Prof. Acemoglu, author of Why Nations Fail, believes that a country's economic success is driven by efficient and trustworthy political, economic and social institutions.
I am endlessly fascinated with Prof. Acemoglu's work amid growing signs that developed world populations are rapidly losing faith in financial, political, and cultural leadership. Approval ratings for politicians, notably U.S. Congress continue to plummet as corporate legislative capture becomes impossible to ignore. The financial crisis destroyed much of the general trust in the fairness of the financial system and even doctors aren't safe – the anti-vaccination movement proves significant segments of the population don't believe them anymore either. In media, the Brian Williams scandal was described by one tweeter as a "bank run" on confidence in the fifth estate.
In short, although it's a slow moving phenomenon, I think the declining faith in major institutions is among the biggest threats to developed world stability.
"Greece, Acemoglu and Robinson" – Yates, Long and Variable
Financial pundit and author Patrick O'Shaughnessy argues that for smaller portfolios, buying cheaply valued equities is the path to portfolio underperformance. This idea is sure to enrage value investors across the planet.
"I also ran concentrated portfolios of the most expensive stocks by book/price and was very interested to find that for the 5 and 10 stock versions, the expensive portfolios outperformed the cheap ones."
"The very cheapest stocks do very badly" – Millennial Invest
Tweet of the day: "@mashable Here's why the Amazon Echo blew our minds: http://mashable.com/2015/02/10/amazon-echo-review/?utm_cid=mash-com-Tw-main-link pic.twitter.com/YLRC7dDvW0"
Diversion: "How cities decide what to do with snow" – Gizmodo
Follow Scott Barlow on Twitter @SBarlow_ROB
Scott Barlow