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 conventional wisdom in global energy markets was that Iranian oil producers would slowly ramp up exports when trade sanctions were removed. According to Bloomberg, however, Iran has gotten a jump start and now has a considerable supply of oil stored and ready to put on the market the second sanctions are removed. This will do nothing good for the ongoing global supply glut:
"While estimates of the hoard by shipbrokers and government officials vary from as little as 7 million barrels to as much as 35 million, Barclays Plc and Societe Generale SA predict this crude would be first to be sold abroad if there's an agreement on Iran's nuclear program."
"Iran Has a Little Surprise for Oil Market" – Bloomberg
"China's crude storage nearly full, says Sinopec exec" – Reuters
Recent Report on Business addition Luke Kawa detailed economists' increasing pessimism on the Canadian economic outlook with help from TD and Standard Chartered Bank research, "The decline in the Canadian dollar is going to be very good news for manufacturers next year and the year after, but it's going to take some time to come through," [John Calverley, head of economics research with Standard Chartered Bank] said. "The immediate effect is a pickup in U.S. tourism, but that won't provide a big enough offset."
"Oil slump weighs on Canadian economy" – Kawa, Report on Business
The H.J. Heinz Co. acquisition of Kraft Foods Group Inc. is interesting on a number of fronts. The involvement of Warren Buffett is always good for generating interest, and the deal also highlights the attractiveness of steady cash flow from consumer staples stocks in a low interest rate environment.
But for me, the widespread change in developed market dietary habits – which provide the best potential growth prospects for the newly merged company – are the most fascinating aspect. The Financial Times reported only last week that the food industry has fallen massively behind consumer nutrition needs, "So tumultuous are the culinary times that some of history's most successful marketing organizations are admitting that they have lost touch with the people who buy their products. John Cahill, chairman and chief executive of Kraft, might as well have been speaking for the industry when he issued an extraordinary mea culpa this year as he cleaned his corporate house, saying goodbye to senior executives including his chief financial officer and adding a new 'vice-president of growth initiatives.'
"It's clear that our world has changed and our consumers have changed," Mr. Cahill said. "But our company has not changed enough."
"Heinz to buy Kraft in deal backed by Tim Hortons' owner and Buffett" – Report on Business, Reuters
"Here's what the mammoth new Kraft Heinz Company will look like " – Quartz
"Craft versus Kraft" – Financial Times
I suspect the domestic cable companies and the CRTC are on the verge of the biggest re-regulation of the industry ever. The reason? Cord-cutting is becoming a bigger trend in Canada, according to industry news site CARTT, "Canada's biggest four cable companies (Rogers, Shaw, Vidéotron, and Cogeco) combined lost 73,070 TV subscribers in their 2014 fiscal fourth quarters and 284,353 subscribers in their 2014 fiscal years.
The two satellite TV companies in Canada (Bell and Shaw Direct) lost a record 51,914 TV subscribers in their 2014 fiscal fourth quarters and 154,250 subscribers in their 2014 fiscal years."
In hearings last year, the CRTC noted that "over the top" services like Netflix were not yet taking much business away from the cosy Rogers Communications Inc., Bell Canada and Telus Corp. broadcasting tri-opoly, but would be forced to enact new regulation if they ever did. That time, it appears, is getting much closer.
"Canadian cord-cutting accelerated in 2014, but carriers are holding off OTT so far" – CARTT
See also: "Bell head meddled in news coverage " – Report on Business
Tweet of the Day (bad pun edition): "@mark_dow: Heinzsight is 50-50 Helluva Kerry trade, tho"
Diversion: "The mechanical television debuted 90 years ago. Its inventor was nuts." – Vox
Scott Barlow