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.
Can we afford a basic personal income?
Switzerland plans a referendum on whether the country should pay everybody – working and unemployed – 2,500 Swiss Francs ($3,000) every month. A universal basic income (UBI), it’s argued, will keep everyone out of poverty and benefit the economy in general, and even right-wing think tanks in the U.S. believe there’s a strong case to be made for scrapping the current welfare system and funnelling the money into a UBI. There are structural challenges, to be sure, Anna Nicolaou points out in ROB Insight, but if masses of people can be lifted out of poverty without distorting the job market, it’s a debate worth having.
Boutique dealers facing ‘existential’ crisis
Small Canadian brokerage firms are struggling for survival after a third straight year of tumbling profits, says the Investment Industry Association of Canada (IIAC). While their larger brethern are doing much better – operating profits have risen 43 per cent in the last five years – the smaller dealers have seen earnings plummet 67 per cent over the same period, Boyd Erman writes in Streetwise.
Five ways to win in a volatile market
Goldman Sachs’ chief strategist thinks a 10-per-cent drop in the S&P 500 is on the horizon. If he’s right, investors will want to know where they’ll get the best bang for their buck at the end of a correction. Higher-quality stocks, even those with limited upside, is the way to go, says Scott Barlow in Inside the Market. Using the S&P Quality Rankings System, Mr. Barlow identifies five stocks trading at below-average valuations that investors should consider.
Bank of Canada puts rate cut on the table
The Bank of Canada’s take on inflation is usually buried somewhere near the bottom of its monetary policy statement. But it’s now floated to the top – the second paragraph, to be precise – implying its concern about slowing inflation has now knocked household debt worries off the top perch. But the statement’s biggest surprise appears near the end, David Parkinson writes in ROB Insight. After maintaining its current interest rate 27 times in a row, bank watchers looking for signals as to when interest rates will begin to rise got a big shock: The bank is now saying that its new concerns are affecting the direction of the next rate move, meaning interest-rate cuts are now on the table.
Preferred shares poised to be multi-billion-dollar baby
This week Royal Bank of Canada became the first domestic lender to offer a special type of preferred share that converts into common equity during a catastrophic crisis. The deal, originally for $200-million, sold out quickly, and was ultimately up-sized to $500-million. The success of the offering, writes Tim Kiladze in Streetwise, has prompted Moody’s to estimate that more than $20-billion worth of these shares will eventually hit the market.
Neil Young’s harangue no solo act
While the rock superstar’s high profile ensures his attacks on the oil sands are heard, his critics try to paint him as a know-nothing celebrity. Enter Jeremy Grantham, chief investment strategist at global asset manager GMO. Although he has a bullish view on the resource sector, Mr. Grantham makes the case against long-term investment in the oil sands, David Berman writes in Inside the Market.