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.
Bitcoin becoming not-so-funny money
Bitcoin has been on a tear of late, hitting record levels this week, and with both the U.S. and Chinese government sending signals they have no plans to clamp down on the virtual currency, it’s beginning to look more and more like a legitimate financial instrument. But why would anyone invest in the stuff? In ROB Insight, Anna Nicolaou examines the trends that are driving its value.
Four factors fuelling consumer discretionary stocks
One of the brightest spots on U.S. equity markets this year has been the consumer discretionary sector, with all five groups within that sector – automobiles, durables and apparel, media, retailing and consumer services – outpacing S&P 500 performance. And the good news is expected to continue, writes Stephanie Chan in Inside the Market, An RBC market strategist explains four reasons the rally is likely to continue for the next two years.
High-frequency trading? That’s so yesterday
Numbers from the most recent quarter suggest high-frequency trading may be on the wane in Canada, writes Boyd Erman in Streetwise. Although the data was collected from a relatively small sample, the Investment Industry Regulatory Organization of Canada found that of the traders surveyed, their share of total equity volume traded fell to 16 per cent from 22 per cent in the first half of the year. The proportion of HFT trading value dropped to 24 per cent from 32 per cent, and the share of overall trades slipped to 35 per cent from 43 per cent in the earlier period.
Retailers desperately seeking Christmas
Chains Sears Canada, J.C. Penney, and Staples this week joined the parade of retailers posting weak earnings. Last week it was grocers Loblaw and Metro along with titan Wal-Mart disappointing investors. Already-modest sales growth forecasts in the U.S. have been trimmed, and so now retailers are pinning hopes on the holiday season that kicks off on Black Friday. But even here, writes David Parkinson in ROB Insight, the outlook is mixed, with some players warning of hot competition threatening to hurt performance, while others expecting a much merrier Christmas.
How to survive a zombie market
So after that brutal recession, the markets are poised for the long-delayed bounce-back any time now, right? Er, maybe not, says a growing chorus of commentators that includes Princeton economist Paul Krugman. The flood of QE is merely keeping the last business cycle on life support, explains Scott Barlow in Inside the Market, and a new cycle of expansion has yet to find its gear. The best bets may be non-cyclicals, such as health-care providers, consumer staples and utilities. But in general, what we've got to look forward to is a decade or more of default, restructuring, lower spending, wealth redistribution and asset price declines offset by government spending. Enjoy.
TransCanada no longer just a Keystone story
While TransCanada is as keen as ever on developing its Keystone XL pipeline to carry oil sands crude to U.S. markets, its budget reveals it’s being careful not to keep too many eggs in that basket. The company reiterated plans this week to dole out $29.5-billion in capital expenditures over the next three years, with $5.4-billion or 18 per cent devoted to Keystone. As Tim Kiladze notes in Streetwise, in 2011 Keystone accounted for $7-billion or 58 per cent of TransCanada’s $12-billion growth plans. A major reason for the reweighting is the company’s investment in its Energy East pipeline to carry oil to refineries in Saint John.