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.
Traders look to get wired
High-speed traders pocket their profits through arbitrage - by exploiting the tiny differences in stock prices that briefly pop up between markets. And as Michael Lewis' new book Flash Boys shows, there’s a lot of money to be made by being first. So it should come as little surprise that there’s a growing call on Bay Street to establish a link of microwave towers between Hogtown and the Big Apple. In Streetwise, Boyd Erman writes about the chats he’s had with people connected with the TMX and the moves afoot to make it happen.
Mutual funds’ diminishing returns
Last year Canadian mutual funds posted gains that were something to brag about, with two-thirds of actively-managed equity funds beating the TSX composite by a pretty healthy margin: the funds rose by an average of 19.1 per cent (after fees) compared with the index’s 13-per-cent advance. So, over the long term, those sort of returns could really add up. But in Inside the Market, David Berman goes over some number crunching of five-year returns that demonstrate that’s not the case.
Business sentiment may keep a lid on rates
The spring Business Outlook Survey from the Bank of Canada finds that Canadian companies generally are optimistic about continued sales growth and are operating closer to full capacity than they were in late 2013. Even hiring plans are at their highest level in nearly two years. The long-beleaguered export sector is what’s driving these sentiments, but the outlook for shopping at home is decidedly more downbeat, with the business community signalling the greatest problem lies with the domestic consumer. In ROB Insight, David Parkinson examines the implications for central bank policy, and why even higher inflation and growth and a tighter output capacity will likely not be enough to prompt the bank to start raising interest rates.
Watsa keeps the faith in BlackBerry
Fairfax Financial chief Prem Watsa is warning that it will all “end in tears” for investors in big tech names – including Facebook and Twitter – because of the “extraordinary speculation” that is driving their stock prices. The famous contrarian is known for buying into distressed companies and racking up spectacular profits in the process. And as for his eyebrow-raising foray into the ailing BlackBerry, Mr. Watsa is as confident as ever. In Streetwise, Jacqueline Nelson outlines why he is pessimistic about equities in general, his concerns about debt and overleveraging, and the “monstrous bubble” that is the Chinese real estate market.
The Contra Guys find a good fit
A venerable Canadian clothing seller – one that has established an enviable reputation for raising dividends – has struggled with a recent downturn in sales and profits, prompting it to slash its payout by 75 per cent. In Inside the Market, the Contra Guys Ben Stadelmann and Benj Gallander examine what’s behind the slump, the prospects for the retail stalwart, and why they think the stock is now a good bet.
Why are CEOs running for the hills?
More chief executive officers are deserting their posts now than since the eve of the financial crisis, according to a recent survey of U.S. companies’ announcements, SEC filings and news. The trend may well be a harbinger of an earnings slump, or worse. In ROB Insight, David Parkinson sifts through the numbers and looks at what’s driving the rush to the exits.
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