A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
The CBC's Don Pittis wrote a strong column describing why a virtual money printing machine like Bank of Nova Scotia would lay off 1,000 employees when they could easily afford to keep paying them.
The main problem is systemic, in my opinion. It's easy to point at BNS management and call them heartless but in truth management has very little choice. They have a legal responsibility to shareholders to maximize profits and no official duty to help out with national employment levels. I'm not defending BNS either, it's just that this is the system we have. To change things, the rules have to be changed, which is a much more complicated matter.
"Why Scotiabank is cutting jobs while earning billions: Don Pittis" – Pittis, CBC
Fortune.com presented a survey of prominent financial figures that is both entertaining and highly useful. The magazine asked each to recount the best advice they ever got from a mentor and the results provide great hints on both business and personal life.
I was particularly struck by General Electric executive Beth Comstock's story on dealing with criticism, "the best advice is often the most painful advice, and you have to trust the person who's giving it to you. When you get criticism, ask yourself if it's relevant. In this instance the reason it hurt so much was that my boss was right."
"The best advice I ever got" – Fortune
The FX research teams at Nomura, Morgan Stanley and HSBC have presented in-depth looks at the recent U.S. dollar rally in an attempt to predict how far the greenback can rise. The answer is "probably less than you think."Alphaville's Dan McCrum summarizes, "Here and now, we have four solid reasons for broad based dollar strength: growth is decent; interest rates along the curve are higher than those in main trading partners; the valuation alchemy is good; external balances are not at the crazy levels where they come up in conversation on television news all the time.
But, remember, the U.S. has a no-nothing do-nothing congress. Fiscal policy was actually expansive in the Reagan 1980s, so monetary policy tightened faster and further than it is likely to this time around."
"Moving on up now, can the dollar break free?" – FT Alphaville
Share buybacks have been a huge contributor to U.S. market performance in recent years. The Harvard Business Review provides an excellent discussion on when buybacks are a good idea for investors and when they're a waste of corporate funds. Investors, including myself, often lumped all buybacks together and this piece shows clearly why that's a bad idea, "Corporate America's track record buying in stock is just horrendous. It's terrible. We are now again approaching a peak of buyback activity, no matter how you measure it. The prior peak occurred in the second half of 2007, the last market peak. The trough in corporate buyback activity? Early '09. So, kind of a perfect contra-indicator for the stock market.
Not surprisingly, many studies have shown that buybacks don't produce great returns. But there are very different approaches to buybacks, and they produce very different outcomes."
"When Stock Buybacks Are Not a Waste of Money" – Harvard Business Review
Reuters notes that more than 40 per cent of China's arable land has been degraded by pollution or poor farming practises. I continue to believe that water treatment will be an extremely profitable investment theme in the coming decade for similar reasons, but I'm not convinced the time is right to start investing in related stocks. The biggest problem is that worldwide, governments subsidize the cost of water which removes the immediate need for conservation.
"More than 40 per cent of China's arable land degraded" – Reuters
Tweet of the day: "@ivanthek Gold looks a lot better in Ruble terms."
Diversion: An amazing array of mechanical tricks makes this apartment seem much larger. But I can't help thinking if someone can afford all these devices, they can probably afford to move to a larger apartment.
"This tiny apartment hides so many tricks to make it feel so much bigger" – Gizmodo
Follow Scott Barlow on Twitter @SBarlow_ROB
Scott Barlow