Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
There are two topics guaranteed to come up at any gathering of 40-something Torontonians lately, the real estate market and The Tragically Hip. In the latter case, the deeply saddening peculiarities of the final Hip tour are providing a stern lesson in the economics of scarcity.
The CBC reports this morning that fans of the band are upset that scalpers dominated ticket pre-sales and that's fair enough. The problem is that the fair market price for a ticket here – the highest price at which the Air Canada Centre would be full for both concerts – is at least five times, and maybe as much as ten times, the face value (in my estimation) – the scalpers are highly motivated.
You can argue that this is unfair, and that local and federal police should crack down on scalping, but that too is a cost in terms of the number of people and hours authorities would have to dedicate to the task (and the opportunity cost of pulling public employees away from what they were already doing).
The point is that the cost of market mispricing will inevitably be felt somewhere.
"Tragically Hip ticket profiteers leave faithful fans fuming" – CBC
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Here and abroad, the outlook for economic growth is not great. TD economist David Tulk calls the forecast for second quarter gross domestic product growth 'ugly',
"'I don't expect great things from the energy sector and investment more generally,' said David Tulk, chief Canada macro strategist at Toronto-Dominion Bank's TD Securities unit, who predicted GDP could shrink by as much as 1 per cent in the April-to-June period. 'The second quarter is going to be very ugly, there's no two ways about it.'"
More broadly, the OECD noted significant concern about the global economy,
"The Paris-based organization amplified its call for governments to stimulate their economies by expanding investment and implementing policies that fuel competition, increase labor mobility and strengthen financial stability. 'The need is urgent,' OECD chief economist Catherine Mann said. 'The longer the global economy remains in the low-growth trap, the more difficult it will be to break the negative feedback loops,' she added."
"Second-Quarter Canadian GDP Looks Grim and It's Not Just Oil" – Bloomberg
"OECD Warns on Global Economy Risks" – Across the Curve, Wall Street Journal
"Stocks, Oil Fall as Manufacturing Data Underwhelm; Bonds Climb" – Bloomberg
"OECD Chief Gurria Says World Recovery Failing to Pick Up in 2016" – Bloomberg
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Many of the risks for global growth center around China, the world's second largest national economy, where credit market stress and a U.S. central bank hiking interest rates has the potential to create a perfect storm,
"'The internal and external factors combined will certainly add pressure to the money market in June, driving interest rates higher,' said Liu Dongliang, a Shenzhen-based senior analyst at China Merchants Bank Co., the nation's sixth-largest lender. 'We're not optimistic about the bond market in the short term.'
"Any cash crunch would aggravate a rout in bonds that led to 190.6 billion yuan ($28.9 billion) in canceled sales this quarter, making it harder for issuers to refinance a record amount of maturing debt … 'The economy is still on a fragile footing and the authorities have ample tools to inject liquidity,' said [DBS Bank Ltd strategist Eugene Leow], 'A sharp interest-rate spike would be detrimental to the economy.'"
"Double Blow for China Banks as Fed Worry Meets June Cash Crunch" – Bloomberg
"Stocks Start June Lower on Concerns About China, Commodities" – Wall Street Journal
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Tweet of the Day: "@DavidKeo Aaaaand it's gone... From $4.5 Billion To 0: Forbes Revises Estimated Net Worth Of Theranos Founder Elizabeth Holmes forbes.com/sites/matthewh… " – Twitter
Diversion: "This Bizarre Gunshot-Plugging Device Just Saved Its First Life" – Gizmodo
Scott Barlow