Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
Global portfolio managers will have positioned their funds according to their 2017 outlook by the end of the months.
Clear trends are emerging, notably a flood of assets out of bond markets and in to U.S. equities. Investors shouldn't follow these trends blindly in light of recent poor performance of active managers, but the information is useful as a gauge of conventional financial wisdom. Jefferies Research summarizes the moves,
"Liquidation among global bond markets remained intact (latest 8-14 Dec: -US $4.4bn; past 7 weeks: -US$38bn) while that among US-related bonds resumed ahead of the widely expected 25 bps hike in the Fed funds target rate by FOMC lately. US municipal and government bonds were the ones facing significant withdrawals. Commodities (latest: -US$1.2bn; past 5 weeks: -US$10bn) has also been the other asset class experiencing steady withdrawals led by gold and energy… equities have also been witnessing significant injections (latest: US$21bn; past six weeks: US$64bn). Notably, US and Japanese equities have been the biggest beneficiaries and recorded US$65bn and US$19bn inflows over the past six and five weeks respectively' "
"@SBarlow_ROB Find flows from Jefferies. I'm bit surprised by liquidation in commodities " – (research excerpt) Twitter
See Also "@SBarlow_ROB Bernstein: "Last 2 months have pushed many PMs who were in Quality trade into a loss-making position for year" – (research excerpt) Twitter
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Here's a list of U.S. stocks investors should avoid. Morgan Stanley reported on the companies with the largest unfunded pension liabilities. The companies the most underwater in funding their pensions are Gannett Co., Aerojet Rocketdyne , Allegheny Technologies and (surprisingly) Tenet Healthcare. General Motors is also high on the list.
"@SBarlow_ROB MS: S&P companies with most underfunded pension liabilities" – (full list) Twitter
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The U.S. trade weighted dollar has reached 14 year highs. This has significant implications – weaker earnings for U.S. stocks with foreign revenues and investment flows out of emerging markets for another. The Financial Times has the details,
"Sharp climbs in the greenback have consequences for the rest of the world, representing a de facto tightening in credit conditions for the global economy. In recent days, the International Monetary Fund has repeated that it is taking a close look at the direction of the dollar and any risks it could pose for financial stability.'
"US dollar hugs 14-year highs' – Financial Times
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Also from the FT, Dan McCrum wrote an excellent tongue-in-cheek column on the fine art of market forecasting,
"Remember also how pushing any idea that is too radical is to tell fellow professionals they've been doing their jobs wrong which, much like bringing up religion at a dinner party, is hard to do with charm.
"Safety lies in shared responsibility, with larger institutions offering an ever evolving proliferation of forecasts with room for careful dissent. "It's not our house view, but . . ." is a popular formulation.
"Then there are the bolder calls needed to preserve or, in a riskier move, develop a reputation as a contrarian. Investors have an advantage here as they can warn the sky is falling — reassuring clients who want to know their money is in safe hands — while being more circumspect with management of the portfolio for which they will be judged."
"How to craft a bold market prediction" – McCrum, Financial Times
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Tweet of the Day: "@robgillezeau I'm looking to buy my first home in Victoria and would benefit from this, but it's an absolutely atrocious piece of public policy. ' – Twitter
Diversion: "Trump's 17 cabinet-level picks have more money than a third of American households combined" – Quartz
Scott Barlow