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. Insight the Market delivers up-to-the-minute insights on developing market news.
Here are our editors’ picks of some of the best reads available to Globe Unlimited subscribers this week.
Serious luxury, serious returns
The abysmal returns in gold et al would be a lot easier to stomach if you had hedged your luxury investments with a few finished goods. And no, we don’t mean fancy handbags, but the serious stuff, such as Manhattan penthouses, Swiss ski chalets, or ancient Chinese paintings. Coutts, Britain’s banker to the aristocracy, has put together an Objects of Desire index comprising 15 such asset classes that examines their performance since 2005, Carl Mortished writes in ROB Insight. While the MSCI All Country Equity index advanced 53 per cent over the period, the Coutts index jumped 82 per cent, led by classic cars and vintage watches, which soared by 257 per cent.
The best barometer of TSX performance
Over the medium term, the shape of the Canadian yield curve has reliably predicted the two-year performance of the TSX benchmark index. And that barometer may also be signalling risk for Canadian equities in 2014, Scott Barlow says in Inside the Market. If a pullback in stimulus by the Fed bumps up two-year bond yields, and Canadian yields follow in their current, a flatter yield curve will call for a more cautious position on domestic stocks.
Base metals now mining’s best bet
As we mentioned above, precious metals are so yesterday, with both gold and silver losing much of their lustre. Base metals are now the mining industry’s best hope, writes Tim Kiladze in Streetwise. A U.S. recovery should stoke demand for copper, whose inventories, along with zinc’s, are relatively tight, helping to support their prices. And because most base metals miners saw their valuations shrink last year, the fundamentals indicate they could be poised for a rebound.
What’s behind Canada’s productivity gap?
There’s been no shortage of theories as to why Canadian productivity rates consistently lag those of the U.S. Two new studies from Statistics Canada suggest it may be to do with size – not just on a national level, but in terms of individual businesses, David Parkinson writes in ROB Insight. Smaller enterprises simply can’t compete with big companies when it comes to productivity, and a much higher proportion of them contribute to overall GDP in Canada than they do south of the border.
Don’t pop any corks on Venture index
Just as one swallow does not a summer make, the recent rally in the TSX Venture index may well be short-lived, says David Berman in Inside the Market. The index has plummeted more than 60 per cent since 2011, taking it close to the lows of the 2008 financial crisis. Some investors are placing a bet that the worst is behind us, with exploration companies being among the top movers in recent trading. But bear in mind there have been several false starts before, and unless mining activity gains some serious traction, the three-year slump will continue.
Private equity to shine in 2014
Private-equity-backed buyouts gained traction last year, racking up their biggest numbers since the financial crisis, and the recovery is set to shift up another gear in 2014, Boyd Erman writes in Streetwise. The industry is growing more confident on news of successful deals, and fundraising was up by double-digits in 2013, with cash sitting on the sidelines waiting to be deployed.