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Scott Barlow

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web

I really do not like days when politics moves markets, and I'm forced to hold my nose and wade into the angry cesspool that U.S. discourse has become.

But here we are.

The president-elect's press conference yesterday had two obvious market effects – a sharp sell-off in health care stocks centered on the biotech sector (Mr. Trump pledged lower government costs for pharmaceuticals) and a weakening U.S. dollar.

The Financial Times eventually cited experts warning that the current mix of policy uncertainty and nervous investors is a 'recipe for mayhem and anarchy' ,

"In politically-driven markets, the combination of an erratic PEOTUS and a market which leaps to conclusions and heads off down culs-de-sac with manic enthusiasm, is a recipe for mayhem and anarchy. There aren't very many dollar bears out there. I'm regularly being told I'm not bullish enough when I express a view that the dollar peaks on the 99th day of Trump. Well, all these bulls, myself included, are now being tested.

Rabobank's Michael Every says, "We can, I'm sure, expect many more such whipsaw trading sessions ahead in 2017 as markets try to work out what the Blankety Blank is going on."

"'Recipe for mayhem': Dollar backs down on scant detail from Trump" – Financial Times
"Stocks Fall, Dollar Weakens on Lack of Clarity on Trump's Stimulus Plans" – Wall Street Journal
"@econhedge @katie_martin_fx don't see prospects for tax cuts,dereg, infrastructure, repatriation relief being changed IN ANY WAY following the presser ' – Twitter
"Dollar Slumps, Bonds Rally as Trump Disappoints: Markets Wrap" – Bloomberg

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In a related story, HSBC senior economist Stephen King reminds investors that the first two years of the Reagan administration featured recessions.

"King: Reagan's Reflation as Market Guide for Trump" – (video) Bloomberg

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Crude prices are higher by about a percent and a half this morning on signs that OPEC nations are adhering to the production cut agreement and Chinese demand remains strong. The Financial Times however, warned that U.S. shale production is growing and is growing steadily more efficient and cost effective,

"[The result has been a stunning rise in output from the average US oil well. The total volumes have been significant enough to alter the world supply picture. This week the US government reversed its forecast of a decline in US crude output in 2017 and called for an increase "

"Oil rises on OPEC output cuts, China demand forecast" – Reuters
"US shale oil output remains resilient despite rig count fall" – Financial Times
"@SoberLook Chart: a big spike in US oil production" – Twitter

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Also from the FT (I know theres a lot of FT links today, but I promise you that's not by design – I'm well aware the subscription is expensive), a story touting uranium prices as a major beneficiary of the Trump administration, new that will be welcome in Saskatchewan,

"Mr Trump has voiced support for nuclear energy and has indicated he could expand the US's nuclear arsenal, threatening to reverse a decades-long push towards non-proliferation and arms reduction. "Uranium traders have lots of oil envy," says Roy Adams, who set up and ran uranium trading desks at Deutsche Bank and Lehman Brothers. "We think uranium — not crude oil — is unquestionably the most geopolitically sensitive commodity in the world."

"Uranium looms as big winner among resources under Trump" – Financial Times

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Tweet of the Day: "@MylesUdland Apple wants to offset slowing iPhone sales, the best business ever, with movie production, the worst business ever wsj.com/articles/apple… " – Twitter

Diversion: I found this a really interesting bit of economic history. The North American migration from rural to urban came with huge costs in terms of infant mortality, lifespan, and living standards,

"Human development is about more than incomes. Human development is about agency and the ability to choose a path for a better and more satisfying life. However, with agency comes opportunity costs … Peasants abandoned lower rates of infant mortality, lower overall rates of mortality, the lower levels of crowding and pollution, the lower food prices and the lower crime rates of the countryside in favor of the greater diversity of goods and services, the higher wages, the thicker job market, the less physically demanding jobs and the more secure source of income (although precarious, this was better than the volatile outcomes in farming). "

"Ten best papers/books in economic history of the last decades (part 2)" – Notes on Liberty

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