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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

Credit Suisse' Andrew Garthwaite, one of the world's top market strategists, wrote a list of surprises for 2017 that contains some ugly predictions for investors.

The two that jump out are:

- "The S&P hits 2,500 before falling back to 2,000."

- "US 10-year Treasury yields hit 4%."

The latter, of course, would present a miserable environment for the many holders of dividend-paying equities.

There are potential surprises that Canadian investors will find more welcome, including: "The oil price hits $75pb by end 2017."

Click here for full list "@SBarlow_ROB This is a rather ugly set of 'Surprises for 2017' from Garthwaite ' - Twitter

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George Mason University economics professor Tyler Cowen makes the unpopular argument that the global 1 per cent have done a lot of good.

For what it's worth, I agree with the premise – I believe globalization has been tremendously positive. It's just that the benefits were poorly distributed and that needs to be fixed.

"The wisdom behind globalization isn't a belief that it will be steered by very wise elites. Rather, most economic processes show elements of convergence, stability and mean-reversion, without anyone planning them … I'm not saying that all is well, as I see significant possibilities for instability in the current political configuration. But the elites have in fact been working at their job, and now it is up to voters to catch up in their understanding."

"Globalization and Davos Man are underrated" – Marginal Revolution

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The Macro Man blog covers the factors driving the loonie in great detail, charting our currency's relationship with individual commodities and interest rates.

"CAD-USD commodity correlations" – Macro Man

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Canadian concerns about potential trade disruptions have centered around a border tax on goods exported to the United States in recent days.

Merrill Lynch provided a helpful outline of how these taxes would work and what effects they may have (although there was not enough focus on Canada). Importantly, Mr. Trump himself has registered concerns with this tax, which is favoured in the House of representatives,

"International tax law does give an advantage to countries that rely more on consumption taxes than income taxes. Some proponents of border adjustment argue it would dramatically reduce the trade deficit; others argue that it would have no impact as a stronger dollar would offset the tax benefit. We argue that a small reduction in the deficit is likely … Most discussion of the proposal ignores the likely response of other countries."

"@SBarlow_ROB ML: 10 Thoughts on border taxes" – (research excerpt) Twitter
Related: "Trumphoria interrupted, but not ended" – Financial Times

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Bloomberg's Erik Hertzberg argues that the Bank of Canada should be concerned about domestic employment,

"It's time to tap the brakes on any new-found optimism about Canada's workers … Wage growth has slowed since the start of the year, rising just 1.5 percent from a year earlier. That's far below the long-run average of 2.7 percent growth … Of the 214,100 jobs created in the last year, 72 percent were part-time positions ... The total number of hours worked by permanent employees is grinding lower and is up an average of just 0.17 percent in the second half of 2016 from a year earlier. That's the weakest half year for growth in hours since the 2009 recession."

"Three Charts That Show Poloz's Worry About Canada's Labor Market" – Bloomberg

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Tweet of the day: "Royal LePage sees surge of interest in Canadian real estate from Americans" – Twitter

Diversion: I really enjoy these short Cinefix videos. There are a bunch of them on Youtube. "10 of the Most Gorgeous Uses of Color in Film" – Sploid

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