Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
The size of the Fort McMurray fire expanded by a factor of between five and ten overnight and the scale of it now is scarcely believable. The first detailed estimates of economic and financial damage are being released now along with emotionally-wrenching stories of personal tragedy and memories lost that will be covered elsewhere in the paper. From the Wall Street Journal,
"No oil operations reported fire damage, but their efforts to protect themselves led to a reduction of at least 645,000 barrels a day, or almost one-quarter of Canada's 2.5 million barrels in total oil sands production."
"Forest Fires Cut Into Canadian Oil Production " – Wall Street Journal
"Amid Fort McMurray's heartbreak, estimates of rising economic toll" – Babad, Report on Business
"Insurers brace for big damage from Fort McMurray fires" – CTV News
"Alberta Wildfires Set for Largest Canadian Disaster for Insurers" – Bloomberg
"How big is the Fort McMurray fire?" – Macleans
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TD's currency strategist warned yesterday that the loonie is likely to head lower as the domestic economy slows but Royal Bank's new Canadian equity strategist and Gluskin Sheff economist David Rosenberg published far more optimistic views on domestic assets.
RBC's Matthew Barasch writes, "We believe the end of the five-year period of underperformance of the S&P/TSX is at an end. The combination of higher oil prices, government stimulus, accommodative monetary policy, a favourable technical set-up and an economy that is on firmer footing should help to drive strong absolute and relative performance into 2017."
David Rosenberg is cautious overall but has a similarly optimistic view for Canadian stocks, "The federal fiscal stimulus hasn't even been rolled out yet and already the Canadian economy is about to post a first-quarter gross domestic product growth performance in excess of a 3 per cent annual rate – which compares with 0.5 per cent in the United States and 2.2 per cent in Europe."
"@SBarlow_ROB RBC's new Canadian equity strategy is bullish on TSX, expects it to outperform SPX pic.twitter.com/2FB27yHgjl " – (includes research excerpt) Twitter
"Rosenberg: Three key market conclusions and how portfolios should be positioned for them" – Inside the Market
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Warren Buffett is obviously one of the best stockpickers of all time, but it's useful for investors to think of Mr. Buffett as the world's best stock avoider first. A Friday report from Bloomberg's Gadfly site helps explain,
"[Buffett's] magic lies not so much in picking the best stocks as in avoiding the worst ones. Of the companies in the S&P 500 with a positive P/E ratio, for example, 43 have a return on equity less than 3 per cent, and those 43 companies have an average P/E ratio of 62! … Sidestepping those bad stocks has historically paid off. A simple 50-50 blend of the MSCI USA Value Index and the MSCI USA Quality Index has beaten the S&P 500 with less risk."
As Mr. Buffett's colleague Charlie Munger famously said (I'm paraphrasing here), they didn't succeed by doing smart things, they succeeded by not doing dumb things.
"Does Buffett Really Love the S&P 500?" – Gadfly
" @TMFHousel Buffett's qualitative business metric. Love this: pic.twitter.com/di9vA4ht3f " – Twitter
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The U.S. employment data is being released as I'm typing. Looks like a big miss – 160,000 new jobs when 200,000 was expected. As Reuters reports, the U.S. job market, and by extension the world's largest economy, is at a crossroads. We've been waiting years for U.S. employment growth to translate into higher wages and consumption and improvement, while there, remains slow.
"U.S. job market at a crossroads?" – Reuters
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Tweet of the day: "@TheStalwart There've been some major redemptions from the world's biggest junk bond ETF bloomberg.com/news/articles/… " – Twitter
Diversion: "Kentucky Derby Picks for the Value Investor" – Bloomberg
Scott Barlow