Every day ROB Insight delivers exclusive analysis on breaking business news and market-moving events. Streetwise offers news and analysis on Bay Street and the world of finance. Inside the Market delivers up-to-the-minute insights on market news as it develops.
Here are our editors’ picks of some of the best reads available to Globe Unlimited subscribers this week.
U.S. consumers not getting with the program
The U.S. recovery continues to gallop ahead, with employers adding 1.5 million jobs so far this year. Car sales are up, a key ISM index has hit its highest level since being created in 2008, factory orders have gained and the second quarter turned in strong GDP growth. But there’s always someone to throw a damper on the party. HSBC’s chief U.S. economist – one of the few who made (mostly) the right call on America’s exit from its first-quarter slump – cautions that GDP expansion is unlikely to keep up its current pace. Why? In ROB Insight, Kevin Carmichael scans the skies for the one dark cloud on the horizon.
Oil speculators dash for the exits
U.S. hedge funds are quickly bailing out on their “long and wrong” speculative calls on crude, which has further accelerated the selloff in prices. The Net Long Futures Position on WTI has tumbled 25 per cent since the end of June, when speculation peaked, helping send the price down by more than five bucks. Now, we don’t like to gloat here at Inside the Market (well, okay, maybe just a little bit), but that scenario was just what Inside the Market’s Scott Barlow envisioned when parsing the data in early July. Here Mr. Barlow looks at how things unravelled and the prospects for further volatility.
The tough slog for banks operating stateside
Banks in the U.S. are lending more now that the economy is beginning to surge, but they’re finding it a challenge to get big returns from their loans. Desperate to put their deposits to work, many institutions are cutting their lending rates and thus crimping their returns. So Big Six banks operating there – such as BMO, TD and Scotiabank – are finding it a tougher slog to earn back some of the billions they’ve invested there. In Streetwise, Tim Kiladze examines the problems in the U.S. commercial lending market and points out the one bright spot for lenders.
Canadian businesses poised to invest
The condo cranes and house builders will be taking a bit of a breather soon, with residential building permits in June basically flat from the previous month, but all those workers and heavy equipment may not find themselves in a quiet patch. Non-residential building permits rocketed 32.5 per cent during the month and are up a whopping 42.4 per cent from a year ago. And earlier in the week, the Bank of Canada reported that as household debt growth continued to moderate, loans to businesses continue to enjoy strong growth. In ROB Insight, David Parkinson looks at both the credit conditions and building permits reports, and cautions that while a spending spree has yet to be unleashed, both factors bode well for a much-needed investment boom by Canadian businesses.
A rethink on dollar-cost averaging
One of the first things taught in Investing 101 class is the wisdom of dollar-cost averaging – the most prudent way to invest without getting stung by buying too high. But U.S. mutual fund and ETF giant has a different take, and one worth examining as the client-owned firm has built a reputation as a straight-talker. Its recent research into stock markets in the U.S., U.K. and Australia concluded that diving straight in with lump-sum investing bettered the gradual approach two-thirds of the time. In Inside the Market, Rob Carrick examines the proposition and outlines how an investor’s best approach may depend on the circumstances.
Not all oil patch M&A created equal
Mergers and acquisitions in the oil patch have been on a tear this year, but there’s been little comparison beneath the headline numbers of how regions and assets stack up against each other. In Streewise, Tim Kiladze looks at a recent report from RBC Dominion Securities that examined all the upstream M&A deals and then studied them to find common themes, revealing five key lessons from the boom.