A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
Last week, prominent scholar David Shambaugh predicted the collapse of communist rule in China and, predictably, was immediately rebutted. This all seems like the usual academic bickering until a report arose Wednesday from the South China Morning Post – a Hong Kong based publication that should not be confused with the gossip magazines at the grocery checkout – that President Xi had abruptly restructured the personal security for himself and prominent staff.
The inner working of Chinese politics are famously opaque and Byzantine and this could be nothing. But the report clearly implied that the president – amid a massive corruption crackdown against his strongest, wealthiest political adversaries – was concerned about his personal safety all of a sudden.
The economic data released Wednesday will do little to stem rumours of instability. Retail sales, industrial production and fixed asset investment were all reported well below consensus expectations.
Canadian readers are no longer that interested in China news, despite the country's role in dragging the domestic economy out of the financial crisis with explosive resource demand. It is still however, the world's second largest economy and significant upheaval would be a major issue for our cyclical economy.
"The endgame of Communist rule in China?" – (summary) Marginal Revolution
"Sorry, America: China is NOT going to collapse" – The National Interest
"Is Xi Jinping protecting himself from an internal threat?" – South China Morning Post
"Economists react: China data paint gloomy picture" – WSJ, China Realtime
See Also: "For Chinese economy, strengths are now weaknesses" – New York Times
Royal Bank CEO David McKay announced a bullish view on Canadian real estate Tuesday in a reminder that the answer to investment questions is all about how they're framed. Mr. MacKay cited his belief that supply and demand dynamics in Canadian housing are in line and affordability ratios provide no hint of problems.
Canadians concerned about the outlook for home values are focusing on the record levels of domestic household debt as a percentage of GDP and disposable income. Again, it's all about what questions you ask.
"RBC CEO David McKay bullish on Canadian housing" – Report on Business
Richard Bernstein has long been my pick as the best market strategist working (although admittedly I'm biased by a five year period when I worked at the same firm). In a recent report for the firm he founded, Richard Bernstein Advisors LLC, Mr. Bernstein noted, "Investors apparently still don't fully understand the deflation of the global credit bubble, and continue to focus on credit-related asset classes."
In other words, the market sectors that benefitted from the credit boom before the crisis – emerging markets, commodities, hedge funds and REITs – are not recovering any time soon. The report included a compelling chart that he posted on Twitter here.
"The Dollar isn't the Peso anymore (Part II)" – RB Advisors
Greek leader Alexis Tsipras accused Germany of dodging World War II reparation payments to his country during a speech Wednesday and "said he would support parliamentary efforts to review the matter." This will no doubt enrage the Germans and it's hard to see any point to this line of rhetoric unless Greece wants out of the European monetary union.
"Germany used legal tricks to avoid WW2 reparations: Greece" - Reuters
Diversion: Tragic, riveting, poignant – a young, terminally ill neurosurgeon meditates on the passage of time.
"Before I go" – Stanford Medicine
Follow Scott Barlow on Twitter @SBarlow_ROB
Scott Barlow