A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web
The International Energy Agency (IEA) is out with a "feast, then famine" multi-year outlook for oil supply,
"U.S. oil output has resumed sharp growth over the past year and is expected to rise by 2.7 million barrels per day (bpd) to 12.1 million bpd by 2023, as growth from shale fields more than offsets declines in conventional supply… Oil production growth from the United States, Brazil, Canada and Norway will more than meet global oil demand growth through 2020, the IEA said, adding that more investment would be needed to boost output after that."
"IEA sees U.S. oil output surge stealing OPEC share in next five years" – Reuters
"IEA warns of oil supply crunch after 2020" – FastFT
"Record oil output from US, Brazil, Canada and Norway to keep global markets well supplied" – (full annual report) IEA
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The U.S. announcement of ridiculous trade sanctions is the most important story this week, but nothing official has happened yet. Everything's subject to change, as noted in a quote right out of a Thomas Pynchon novel from Commerce Secretary Wilbur Ross,
"'What [the president] has said he has said. If he says something different, it'll be something different.'"
"Trump Advisers Fervently Defend Tariffs (Unless They Change, That Is)" – NY Times
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Reuters is reporting that while there will be no tariff exemptions for countries like Canada, individual businesses will be able to apply to ignore the whole added tax thing.
"Trump trade adviser sees business exemptions for new tariffs" – Reuters
"No break for Canada on tariffs unless 'fair' NAFTA struck, Trump warns" – Report on Business
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I should cite CNBC's Michael Santoli more often. His most recent column explains why most economists and strategists believe we are in the eighth inning of the market rally (at least) and what this means for investors,
"The general sense among professional investors and economists was that the cycle is mature, perhaps entering the latter stages, but not set to end imminently… Time-tested gauges of growth cycles say there's plenty of runway ahead for the [U.S.] economy. Charles Schwab chief investment strategist Liz Ann Sonders notes the Index of Leading Economic Indicators has returned to record highs. After it climbs above the prior cycle's peak, a recession has been, on average, years off. .. Schwab's Sonders says: 'A trigger for this expected higher volatility — and more frequent pullbacks/corrections — could be tied to coming liquidity 'squeezes' courtesy of a more hawkish Fed this year, tighter monetary policy by global central banks, more stimulative fiscal policy, and even higher oil prices. Volatility spikes don't tend to signal finales to expansions; but they do tend to signal late-cycle conditions.'"
"Bull market turning 9 years old this week not near an end yet, despite some recent bumps" – Santoli, CNBC
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I posted three research excerpts from Merrill Lynch chief quantitative strategist Savita Subramanian over the weekend, covering the importance of valuations to long-term portfolio performance, the historical connection between rising interest rates and higher equity prices, and the strength of current U.S. corporate profit growth,
"@SBarlow_ROB ML: Rising rates drove stocks higher 90% of the time" – (excerpt) Twitter
"@SBarlow_ROB ML: Long term, valuation is almost all that matters" – (excerpt) Twitter
"@SBarlow_ROB ML: Record EPS revisions suggest strong near term returns" – (excerpt) Twitter
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Tweet of the Day: "@mark_dow To recap: Tariffs impact the inflation level, not the inflation rate (except that initial time). Huge difference from a monetary policy perspective." – Twitter
Diversion: "The Winners and Losers of the 2018 Academy Awards" – The Ringer
Scott Barlow