A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web
The Motley Fool Canadian site – usually a lot less frivolous and more useful for stock investors than the name implies – might be stretching this comparison between bitcoin and marijuana stocks a bit.
However, marijuana stocks have at times shown a disregard for valuation levels and regulatory risks that investors should be aware of,
"analysts have noted that both the cryptocurrency segment and the cannabis industry are exhibiting concrete signs of overvaluation, creeping into bubble territory. With companies such as Aurora Cannabis Inc. (TSX:ACB) more than doubling over the past month (a 137% gain at the time of writing), and other major Canadian producers such as Canopy Growth Corp. (TSX:WEED) increasing 37%, and Aphria Inc. (TSX:APH) increasing 56% over the past month alone, it can be hard for investors to ignore such massive returns in such short amount of time."
"Bigger Bubble: Cryptocurrencies or Cannabis?" – Motley Fool
"It Looks Like Nobel Economics Laureates Don't Like Bitcoin" – Bloomberg
"Bitcoin Is a Delusion That Could Conquer the World" – The Atlantic
Canadian investors holding stocks sensitive to the domestic economy should be watching weakening retail sales data closely. At some point, the extreme household debt levels will crimp aggregate spending and with 47 per cent of mortgages renewing at higher rates in the next 12 months (according to BMO research), the pressures on consumers are building,
"Statistics Canada releases third quarter output data Friday that's likely to show the economy's strong run of growth is over. The increase in gross domestic product probably slowed to less than a 2 percent annualized pace between July and September, economists predict, less than half the rate in the first six months of this year."
"Big-Spending Canadians Take a Breather to Ease Economy's Growth" – Bloomberg
Oil prices remain stronger after OPEC announced the continuation of production cuts through 2018. The longer term view for crude remains a topic of debate and energy consultancy group Platts hosted a discussion of the "peak demand by 2030" argument,
"Developing nations are one of the central deciders of the peak oil demand debate" – Platts
"Oil prices rise after OPEC extends output curbs " – Reuters
Mohamed El-Erian wrote a must-read (in my opinion of course ) column on the potential risks of passive investing in a major market correction. Mr. El-Erian is not alarmist, recognizing the benefits of ETFs, but it's better to read this now and be prepared than after something bad happens,
"The more this non-bank "liquidity transformation" spreads via open-ended funds and ETFs, the greater the risk that the implicit promise of such investing -- of being able to reposition portfolios quickly and at reasonable bid-offer spreads -- becomes more tenuous should markets hit a big bump. In the process, the potential threat of contagion increases because history suggests that when investors lack liquidity in the products they wish to dispose of, they will feel compelled to sell other holdings."
"The Risky Lure of Passive Investment Proxies" – El-Erian, Bloomberg View
Tweet of the Day: "@LJKawa This [U.S.] Retail Rally Is Looking an Awful Lot Like Short-Covering bloomberg.com/news/articles/… " – Twitter
Diversion: "JPMORGAN: Here's what you should be reading, listening to, and visiting in 2018" – Business Insider