Top Links: The best investment sector is ‘none of the above’

Share

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web

Markets, virtually all of them, are taking a beating Monday morning. Goldman Sachs strategist David Kostin, rather than suggesting bargain hunting amidst the volatility, are listing "none of the above" as the best asset class for investors to look at,

"S&P 500 index will end 2016 at 2100, reflecting 4-per-cent downside and a flat [second half] price return. Downside risks: (1) Sentiment Indicator; (2) Election uncertainty; (3) Mixed economic data; (4) Negative EPS revision risk; (5) High valuation."

Mr. Kostin's report was not as pessimistic as the above suggests, as he suggests stocks with dividend growth, high Sharpe ratios, high domestic U.S. sales and rising profit margins should continue to outperform.

"@SBarlow_ROB "None of the Above". Can't accuse GS of churning advice I guess pic.twitter.com/HIp3xMQr88 ' – (research excerpt) Twitter
Related: "Deutsche Bank: An 8-10% Selloff 'Looms' As Volatility Returns to U.S. Stocks" – Bloomberg

=====

Former PIMCO co-head Mohamed El-Erian adds to Goldman's "don't buy the dip" sentiments by suggesting markets are at an important inflection point where central banks begin withdrawing stimulus,

"It is unlikely that fundamentals will improve significantly any time soon. International Monetary Fund Director Managing Director Christine Lagarde signaled last week that the IMF is again likely to revise downward its forecasts for global growth, …Those, like me, who worry about an excessive decoupling of stock prices from fundamentals also feel that the dominating impact of liquidity may be changing and potentially waning. This is particularly the case for central banks, whose market intervention is evolving because of a change in what former Fed Chairman Ben Bernanke described as a "benefit, cost and risk" equation.""

"This Market Selloff May Be Different" – El-Erian, Bloomberg
See also: "Will interest rates ever rise? Not immediately—but perhaps sooner than you'd think" – George Magnus, Prospect Magazine
"Goldman: We've Reached 'Maximum' Bullishness and That's Bad News for U.S. Stocks" – Bloomberg

=====

Commodity markets are also under severe pressure and OPEC isn't helping,

"OPEC raised its forecast of oil supplies from non-member countries in 2017 as new fields come online and U.S. shale drillers prove more resilient than expected to cheap crude, pointing to a larger surplus in the market next year. Demand for crude from the Organization of the Petroleum Exporting Countries will average 32.48 million barrels per day (bpd) in 2017, OPEC said in a monthly report on Monday. That is down from the previous forecast of 33.01 million bpd."

"OPEC points to larger 2017 oil surplus as rivals keep pumping" – Reuters
"Oil falls as U.S. drills more" – Reuters
"@tbiesheuvel Ugly day for commodities. Copper hits two-month low bloom.bg/2cPy8i8 pic.twitter.com/RQ7fkU0IW8 " – (includes chart) Twitter

=====

Tweet of the Day: @LadyFOHF Eric Peters is at it too: "never in history have both bonds and stocks been this expensive simultaneously" pic.twitter.com/F1H5kFuW63 " – Twitter

Diversion: A New York Times report strongly implies the over-use of insulin and a potential treatment for diabetes that's under-utilized,

"Before You Spend $26,000 on Weight-Loss Surgery, Do This" – New York Times