Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
As if the U.S. election wasn't sordid enough, the country's military and defence stocks – a sector I've only half-jokingly called a put option on humanity – is among the market's top performers. Lockheed Martin had a terrific day yesterday and has gone from $80 to $250 since 2013. In addition, Northrop Grumman reported blowout earnings early Wednesday morning with a 16.7-per-cent year-over-year jump in profits.
"Northrop Grumman profit rises 16.7 percent" – Reuters
"@nicoleusinclair Wow - what a move in Lockheed Martin $LMT today. And look at that five year chart of the stock. Straight up amid sequestration " – (chart) Twitter
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An informative feature by Financial Times writer John Authers describes in detail how an aging western world population is pushing interest rates and global economic growth lower. The conclusions suggest a "lower for longer" environment in terms of growth and bonds yields for the foreseeable future,
"The new Fed paper suggests that 'demographic factors alone account for a 1.25 percentage point decline in the natural rate of real interest and real gross domestic product growth since 1980.' This is a huge claim, as it implies that demographics — rather than fiscal or monetary policy, technology or other changes in productivity — are responsible for virtually all of the decline in economic growth over the past 35 years."
"Demographics and markets: The effects of ageing" – Authers, Financial Times
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Crude prices are sharply lower this morning as volatile conditions for investors in the sector continue. There is one subsector of the oil industry, however, where profits have been heading straight higher,
"Big traders such as Glencore, Gunvor, Mercuria, Trafigura and Vitol racked up near-record trading results in the year as volatile markets presented lucrative opportunities to buy cheap crude, store it and sell it at a higher price. The big five have captured a greater slice of the market, the report finds, squeezing out smaller rivals and starting to match the trading volumes handled by some of the world's biggest oil companies such as BP, Total and Shell."
"Oil traders tighten grip with 5-year profit surge" – Financial Times
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There are conflicting reports in recent days on the "robots will take all our jobs" theme. FT Alphaville's enviably brilliant Izabella Kaminska presented the 'don't worry about it' view,
"UBS say there's little evidence of new manufacturing techniques or new competitive advantages driving a major import substitution in developed markets … 'If the manufacturing of certain goods had shifted back to the developed world we would have expected to see a clear decline in the imports of these goods relative to their domestic production. Both at an aggregate level and by drilling down into individual goods categories we find little evidence of import substitution.'"
At the same time, however, Wired magazine reported on a successful test of its self-driving trucking service,
"At 12:30 am, after leaving the brewery in Fort Collins and merging onto Interstate 25, an Otto driver punched a switch labeled 'engage,' and, once sure autonomous mode had, in fact, engaged, climbed out of his seat. He buckled the safety belt behind him, to keep the warning chime from driving him crazy as the truck trundled 120 miles south to Colorado Springs."
A truck that drives itself is in every way a giant robot, and a distinct threat to employment in transportation sectors.
"The robot revolution may be exaggerated, globalisation edition" – Kaminska, FT Alphaville
"Uber's self-driving truck makes its first delivery: 50,000 beers" – Wired
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Tweet of the Day: "@ukarlewitz This chart is not scary " - (chart re corporate debt) Twitter
Diversion: "A British sci-fi writer made a series of utopian predictions 100 years ago and was right about nearly all of them" – Quartz
Scott Barlow