A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
Canada's ratifying of the Trans-Pacific Partnership trade deal Monday is a huge deal for wide swaths of the domestic economy. Excellent coverage on what it means for Canadians comes from the Report on Business and well, a lot of other places. Economist Trevor Tombe has a nice outline for Macleans:
"The TPP will lower tariffs as well as lower non-tariff technical barriers almost across the board. There are far (far) too many changes to list. There are roughly 18,000 tariff lines in the United States that will change for TPP countries. Canada has even more, with about 19,500 tariff lines. In time, almost all tariffs on goods and services going in and out of these 12 countries will fall to zero.
Consumers are the big winners here."
"Why the TPP is such a big – and good – deal for Canada" – Tombe, Macleans
The ROB's summary is also very good: "The ABCs of TPP" – Report on Business
The domestic agriculture sector was front and centre during TPP negotiations and the ROB has, in my (maybe biased) opinion, the definitive report on the effects of the new deal on domestic farmers:
"On a purely net basis, to be left out of a signed deal would have been tragic for Canada's agricultural economy. Some sectors, such as processing, beef and pork will obviously gain, while others, such as the dairy industry, will face serious headwinds."
"TPP deal offers overdue opportunity for a new vision in agriculture" – Charlebois, Report on Business
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Reports from two major research houses imply that Canadian investors still looking for a bottom in resource prices should probably find something else to do before they run out of money:
"Crude oil and copper are unlikely to rebound because of excess supplies, Goldman predicts, and Morgan Stanley forecasts that weaker currencies in producing countries will encourage robust output of raw materials sold for dollars, even during bear markets. Citigroup says the sluggish world economy makes it 'hard to argue' that most prices have already bottomed."
Interestingly, Citi is also warning that "'Tactically, we think that investors should not be Underweight commodities." If investors believe Citi's view, they should sell resource stocks into the next significant rally and then forget about the sector for a few years.
"Commodity Collapse Has More to Go as Goldman to Citi See Losses" – Bloomberg
A related report from the ROB's Tim Kiladze highlights the dangers of debt markets for resource producers:
"Debt is rarely a problem until, suddenly, it is. And when it becomes a five-alarm fire, it often forces companies to sell assets – or themselves – in a fire sale. Suncor knows this, and that is why it is pouncing. The price offered for Canadian Oil Sands is cheap (far below the cost Suncor would have to pay if it went out and developed the asset now from scratch), but the target's shareholders have long known their company has serious balance sheet problems, and this may be the most elegant exit from their struggles."
"The trouble with debt: Commodity companies learn the hard way" – Kiladze, Report on Business
"Energy firms face tightening credit lines as oil slump drags on" – Tait, Report on Business
"Canada and the Oil Price Shock" – Sober Look
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David Woo, Merrill Lynch's head of currency research warns that the U.S. economy is "succumbing" to global deflationary pressures in a Bloomberg video interview. Mr. Woo mentions U.S. layoffs data which are approaching high levels last seen in 2011.
Uncomfortably, I wrote a column with the exact opposite view – that the U.S. rally remains intact – yesterday.
"What Credit Markets Are Telling Us About the Economy" – Woo, Bloomberg
"Blame Canada for signs of slowing U.S. growth" – Barlow, Report on Business
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Tweet of the Day: "@SBarlow_ROB PM Harper's strategy becoming clear. Call election early, wait until other parties run out of money, morph into Santa Claus" – Twitter
Diversion: This is tremendous: "Canadian shares Nobel Prize for physics over work on neutrinos" – Report on Business
Scott Barlow