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‘President Oprah’ trumps toothless state of the union address

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web

U.S. president Donald Trump's speech to a joint session of Congress was Tuesday night, but I'm so repulsed by the endless drama surrounding Mr. Trump that I didn't watch it.

The consensus view is that the speech was more presidential than we've seen so far. For investors, the key point was the reiteration of a $1-trillion infrastructure spending program which has S&P 500 futures sharply higher this morning.

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There were, however, no details given on the spending plan which faces significant opposition from the Republican Congress, who control the government purse strings and are very much against deficit spending. Mr. Trump has previously stated that the spending will involve private investment but this too has issues and there are no concrete plans.

For the media, the big news this morning is that Oprah Winfrey told Bloomberg she is re-thinking her previous vows never to run for president. The prospect of Ms. Winfrey squaring off against Donald Trump is the figurative holy grail for every journalist on the planet.

"Main themes of Trump's speech to Congress" – Reuters
"Trump's Address to Congress in Three Minutes" – Bloomberg Video
"TSX set for rally after Trump speech, dividend stocks may lag on rethink of Fed rate timing" – Shufelt, Report on Business
"Math Will Kill Trump's Infrastructure Plan" – BloombergView
"Trump's Softer Tone Masks Hard Road Ahead for Agenda in Congress" – Bloomberg
"Oprah Says She's Rethinking If She Could Be President" – Bloomberg (video)


The Gadfly site argues that the recent rally in mining stocks will be short-lived, collapsing under the weight of upcoming debt issuance and over-investment,

"At BHP Billiton Ltd., Vale SA, Rio Tinto Group and Anglo American Plc, combined net debt fell by almost $15 billion between June and December, compared with a $3.7 billion reduction across the previous three-and-a-half years. Free cash flow in the December half rose more than sevenfold from a year earlier, to its highest level since 2011. Capital spending dropped to the lowest point in a decade… But make no mistake: Should commodity prices remain buoyant, this [debt] party will be back on in a year or so… The allure of expensive projects has dimmed of late, but it will inevitably shine again."

"How Miners Will Fall Off the Wagon" – Bloomberg Gadfly

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The maddeningly brilliant Izabella Kaminska from FT Alphaville recently noted that white collar workers have as much or more to worry about than blue-collar workers where technology is concerned.

This thesis was firmly supported by news from JP Morgan, where new software has replaced hundreds of thousands of hours of legal work.

"The program, called COIN, for Contract Intelligence, does the mind-numbing job of interpreting commercial-loan agreements that, until the project went online in June, consumed 360,000 hours of work each year by lawyers and loan officers. The software reviews documents in seconds, is less error-prone and never asks for vacation."

Lawyers have reasons for alarm here but I think the accountants are more threatened. They will argue that 'accounting is more art than science' and a machine can't do it, but creative accounting is not exactly cheered by investors or tax agencies.

"JPMorgan Software Does in Seconds What Took Lawyers 360,000 Hours" – Bloomberg

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Tweet of the day: "@IvanTheK Spoos [S&P 500 futures] +15 on lack of policy details." – Twitter

Diversion: "The Surprising History of Canada's Most Iconic Designs" – Wired

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