Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web.
Some of the world's largest and most prominent hedge funds are voting with their feet – selling equities and going to cash ahead of an expected interest rate hike by the U.S. Federal Reserve,
"The value of Stan Druckenmiller's disclosed U.S. equity holdings dropped 41 per cent to $868 million, according to a filing from the billionaire's family office. The listed holdings at Louis Bacon's Moore Capital Management fell 39 per cent to $1.65 billion, while at David Tepper's Appaloosa Management, they dropped 30 per cent to $2.82 billion.
Some of the most closely watched money managers are retreating from U.S. stocks after the market has more than tripled from its 2008 low. Druckenmiller, who produced average annual returns of 30 per cent from 1986 through 2010 at his Duquesne Capital Management, told an investor conference earlier this month that his outlook on equities could turn negative."
Ok, this is only the view of a few managers who could be wrong. But Druckenmiller, a George Soros protégé and a feature of the famed Market Wizards books, is not someone who's views should be dismissed out of hand.
"Druckenmiller, Bacon Among Top Managers Cutting Back U.S. Stocks" – Bloomberg
In a somewhat related story, Merrill Lynch research reports that bullish bets on the U.S. dollar represent the most crowded trade on the planet. The risk is that we've reached a point of euphoria where the greenback is concerned and it has nowhere to go but down. As Sir John Templeton famously said, ""Bull markets are born on pessimism, grown on scepticism, mature on optimism and die on euphoria." For what it's worth, I personally don't think the dollar has reached a cyclical peak yet, but we'll see.
"If you can be short dollar when all men doubt you" – Keohane, FT Alphaville
"Dollar Climbs to 7-Month High as Inflation Seen Endorsing Fed" – Bloomberg
Glut or no glut? A Reuters report highlights strategists' views that the oil market is over-supplied and the commodity price will remain low,
"Analysts said that despite the Paris attacks and French retaliation against Islamic State (IS) in Syria, prices would remain low for the rest of the year and into 2016 as oil markets stay oversupplied. Production in 2015 will outpace demand by 700,000 to 2.5 million barrels per day, according to estimates.
"Today, it's back to the drawing board. The market is still oversupplied and yesterday was an adjusting of positions after these dreadful events," PVM Oil Associates analyst Tamas Varga said.
"Unless the geopolitical tensions, which have obviously risen since Friday, are going to be manifested in physical supply destruction in the Middle East, I think sentiment should remain more bearish than bullish."
Today, however, I presented analysis by Morgan Stanley energy strategist Adam Longson suggesting that the oil glut is significantly overstated and global oil markets are much closer to a balance between supply and demand than recent headlines indicate.
"Brent oil eases as focus returns to global oversupply" – Reuters
"Is the oil glut overstated? This strategist thinks so" – Barlow, Inside the Market
Canada's world renowned housing bubble may be falling apart province by province,
"The national average sale price climbed 8.3 per cent in October from a year ago, according to new figures from the Canadian Real Estate Association, but excluding the Greater Toronto and Greater Vancouver areas, it increased by 2.5 per cent. "There was an even split between the number of markets where sales posted a monthly increase [over September] and those where sales declined," CREA noted. The average residential sale price dropped in five of 10 provinces from a year ago, with Alberta and Saskatchewan among those markets seeing declines.
"Canada's hot housing market days may be numbered," said economist Diana Petramala of TD Economics in a research note, adding that "we continue to anticipate a sharp moderation in housing activity next year as interest rates head higher."
"Days of scorching housing market 'may be numbered'" – Report on Business
Tweet of the Day: "@LizAnnSonders Capitulation in North Dakota pic.twitter.com/Y9GukIUIXQ " – Twitter
Diversion: "What ISIS Really Wants" – The Atlantic
Scott Barlow