Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
The Globe and Mail published an extensive report on the potential economic and financial dangers surrounding Canadian household debt levels while the Fraser Institute presented research arguing that debt levels were no problem at all.
Rather than pick a side in this debate, I'll be watching the Alberta economy closely as a test case. The ROB's Michael Babad notes that new jobless claims for the province will be announced today and few expect good news in light of the weakness in crude prices and halted projects. If domestic debt is going to be a problem, it will very likely hit Alberta first.
"EI ranks swell in oil provinces" – Babad, ROB
On one hand it sucks that Luke Kawa has departed the ROB and headed to New York, but on the other he's spreading the gospel of Canada's global important-ness to a U.S. audience. Mr. Kawa lists "Six Reasons You Should Be Paying More Attention to Canada" for Bloomberg today (stealing one of my charts in the process, by the way). Reason No. 4 is that the Canadian economy is a litmus test for a post-commodity supercycle resource-based country:
"If the demand for oil sufficiently outstrips supply over the medium term – the opposite of the current situation – as global growth picks up steam, the lack of Canadian megaprojects will be a key contributor to that deficit.
As such, the stories of resource market dynamics of today and tomorrow will have an essential Canadian component – and that's not just for oil…
Canada, which possesses about 20 per cent of the world's freshwater resources, will be well-positioned to alleviate some global shortfalls in supply."
"Six Reasons You Should Be Paying More Attention to Canada" – Bloomberg
A Goldman Sachs report has uncovered the 100 top holdings of global hedge funds – a list worth perusing for investors in search of ideas. Activis PLC is a surprise at the top of the list, followed by Apple Inc., Facebook Inc., Canadian-headquartered Valeant Pharmaceuticals International Inc., and Microsoft Corp. Investors will need to do their own homework before buying any of the stocks in the report, but it seems like a good starting point.
"Goldman: These are the 100 Most Important Stocks to Hedge Funds" – Bloomberg
George Mason University professor Tyler Cowen posits that the global economy is in the midst of a "Great Reset," similar to the upheaval of the North American 1930s when the transition from predominantly agrarian economy to a manufacturing economy became a crisis:
"Such processes are scary because we may be watching the slow unfolding of a hand that, in its fundamentals, has already been dealt.
If a reset is underway, we might have to accept that public policy cannot reverse it easily. Once unsustainable economic structures begin to fail, it takes a significant improvement to make them viable again. Yet because of the difficulty of making major changes under our current political alignment, most new government policies today are no more than changes at the margin.
Perhaps the most basic problem is that it is difficult to be sure when a reset is underway, and it is harder yet to raise public alarm about changes that seem to be gradual and slow."
Many times in this links post, I present arguments that I find interesting, but might not believe. In this case, I very much adhere to Prof. Cowen's thesis. This time, the developed world economies are moving from a manufacturing base to a technological base, and having trouble.
"Don't Be So Sure the Economy Will Return to Normal" – Cowen, New York Times
See Also "Towards a New Golden Age" – Coppola, Pieria (June, 2014)
Tweet of the Day: "@katie_martin_fx Teacher regrets eating live hamster to show kids how precious life is upi.com/Odd_News/2015/… "
Diversion: I, for one, had no idea the U.S. Air Force had a secret space program. "The Air Force's Secretive Space Plane Just Launched Again" – Gizmodo
Scott Barlow