Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
The U.K. is heading to the polls and this has global markets trading thinly but sharply higher.
Media regulations mean that no exit polls can be released until 5:00 p.m. ET, but there are reports that hedge funds, having commissioned their own pollsters, are getting an early look with results pointing to a win by the Remain side.
Broadly distributed media polls show a virtual dead heat, but markets seem to be betting heavily on a "Remain" win. U.S. bookmakers reflect a more than 80-per-cent probability of "Remain" winning.
Two other reports place the Brexit debate along with the rise of Donald Trump into a broader context of anti-globalization. Quartz writes,
'Both Trump and the vote leave campaign challenge the long-held establishment belief that free trade benefits everyone, and those benefits will eventually trickle down to everyone.
Trump says the economy is in such bad shape because "stupid politicians have made stupid trade deals." [Boris] Johnson has said if Britain were presented with the deal it has with the EU today, it would be "deranged" to take it."
"Sleepless in the City Lets Traders Bet Billions on Brexit Result" – Bloomberg
"What Donald Trump and Brexit have in common" – Quartz
"No One to Trust: the Anger That Connects Brexit, Trump, Le Pen" – Bloomberg
"@pwaldieGLOBE Implied probability of a British vote to remain in the EU has jumped to 86%, says Betfair " – Twitter
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Blackberry Inc.'s adjusted results showed flat year-over-year profits but unadjusted results showed a huge loss,
"Fiscal first-quarter earnings per share, excluding some items, broke even, compared with the average analyst estimate of a loss of 7 cents. Net loss in the quarter of $670 million reflected a $501 million impairment charge, a $57 million goodwill impairment charge and a $41 million writedown of inventory and other charges."
"BlackBerry Misses Sales Estimates After Smartphone Writedown" – Bloomberg
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Short-seller Jim Chanos is disgusted with Elon Musk's decision to have one of his non-cash flow generating businesses, Tesla Motors, buy another in Solar City. Mr. Chanos called it "corporate governance at its worst," but, as his fund holds short positions in both stocks, he is not unbiased. Mr. Chanos tells CNBC,
"'The combined market drop in the value of both companies is more than the equity value of the deal itself — which means that Tesla shareholders think SolarCity shares are essentially worthless,' Chanos said. 'Finally, it is hard for me to believe that this deal was not being contemplated when Tesla, and Mr. (Elon) Musk himself, sold shares just a few weeks ago.'"
"Chanos: 'Brazen' SolarCity deal is 'corporate governance at its worst'" – CNBC
"Musk's SolarCity Bid a Rare Time Investors Don't Buy His Vision" – Bloomberg
"Tesla-SolarCity Success Depends on Battery Technology That Doesn't Yet Exist" – M.I.T. Technology Review
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For macroeconomic perspective, I've rarely seen a more informative interview than ETF.com's talk with hedge fund manager and former Treasury Department economist Mark Dow, who notes that structural issues were apparent in North America well before the financial crisis,
"If you ask three people what secular stagnation is, you're going to get three different opinions. But for me it's very simple: The potential growth rate of the economy, post-crisis, is much slower than it was precrisis … There are demographic, technological and globalization trends below the surface that we papered over for a long time with credit growth. Median income hasn't been good for a long time in the U.S., but we didn't notice it because we had access to credit. Our growth numbers were faster as a result, and we felt richer. But the underlying growth rate was deteriorating.
"Why has it been deteriorating? Because the baby boomers were getting older and they weren't as productive. The labor force was shrinking. The effect of women coming into the labour force had maxxed out. China joined the WTO. And all of a sudden it was like a huge supply shock to the labour market."
"Mark Dow's Emerging Market Sweet Spot" – ETF.com
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Tweet of the day: @kevinmilligan Reminder: Canadian social security contributions (like CPP premiums) are about HALF the OECD average. pic.twitter.com/wK65A6QdcY " – Twitter
Diversion: "Fried Chicken Was Very, Very Different in the 1700s" – Sploid
Scott Barlow