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

The biggest asset bubbles are well grounded in reasonable premises. The equity bubble in the 1990s was founded on the absolutely correct potential for technology to transform our lives. It reaches a point, however, where investment assets come in faster than they can be spent wisely, which is how we get megacap network equipment stocks trading at 150 times trailing earnings.

I don't think we're at the 'It's gonna blow!' stage for dividend and income stocks – valuations are not insanely stretched - but I also think the easy money has been made and it's time to steadily lighten up a bit. The risks were explained in an Institutional Investor post released over the weekend using Coca-Cola as an example,

"Coke's valuation of 25 [times trailing earnings] is very rich. Can this number go to 35 or even 50? Sure, why not? … But let's be clear: buying at these valuations is not investing, it's gambling… You are betting that the music will continue to play and interest rates will remain where they are, or that investors will continue to pay a lot for a little."

"The Dangers of Dividend Investing' – Institutional Investor

"Me Too!" – Aleph Blog

Along the same lines, a report from Bloomberg warns that longer duration global bonds (most investors own these through ETFs or other funds) are a 'powder keg',

" Investors seeking relief from central banks' zero-interest-rate policies have poured into government debt due in a decade or more, swelling the amount worldwide by a record $733 billion this year. It's more than doubled since 2009 to about $6 trillion… "Rates are rising from a very, very low base, which means there's lots of downside and very little upside" for bond prices, said Kathleen Gaffney, a Boston-based money manager at Eaton Vance Corp., which oversees $343 billion. She runs this year's top-performing U.S. aggregate bond fund and has reduced duration and boosted cash. "If you don't know how to time it, and I certainly don't, you just want to get out of the way.""

"Most Crowded Trade in Bonds Is a Powder Keg Ready to Blow" – Bloomberg

"The Scariest Chart For Bond Yields" – Bloomberg

Crude prices are lower this morning on news that Iran is seeking exemption from any OPEC plan to cap oil production,

"Falah al-Amiri, head of Iraqi state oil marketer SOMO, added that Iraq's market share had been compromised by the wars it has fought since the 1980s. "We should be producing 9 million (barrels per day) if it wasn't for the wars," he said."

"Oil prices under pressure as Iraq resists joining output cut" – Report on Business

See also " @Lvieweconomics WTI net LONG positioning is at its highest since mid-2014. #oil ' (chart) Twitter

Barclay's research provided a long and interesting report on the 'Rise of the Angry Voter'. Thankfully, Canada has yet to see this trend, but it is becoming a destabilizing influence in the U.S., Europe, and Africa,

" Barc's underlying contention is that the "biggest source of voter rage appears to be a sense of economic and political disenfranchisement due to imperfect representation in national governments and delegation of sovereignty to supranational and intergovernmental organizations." Apparently 16 of 17 parties Barc looked at demanded "greater protection of, or retaking of, national sovereignty."Taking back control is more universal a wish than you might have imagined. It doesn't make you very confident about globalisation's fate."

"The rise of the angry voter, charted" – Keohane, FT Alphaville

Tweet of the Day: "@NewtonGroupSM TSX fwd EPS and WTI expressed in C$ are in much better shape than a few months ago ' – (chart) Twitter

Diversion: "Mike Myers on Canadian identity, politeness, and our 'very thick' accent" – CBC

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 18/03/24 6:40pm EDT.

SymbolName% changeLast
KO-N
Coca-Cola Company
+0.42%60.13

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