A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web
Bitcoin and other cryptocurrencies, industrial metals and silver are all getting hit Tuesday morning, and I suspect this is all related.
Bloomberg's Luke Kawa pointed out that the MSCI World (equity) Index is more overbought now than at any time since 1987, and investors are rapidly pouring assets into the Blackrock's iShares USA Momentum Factor ETF (which buys stocks with the best price momentum.)
It looks very much like markets got ahead of themselves and some froth is now burning off after a solid year to date ramp up. The good news is that, where the sell-off is merely technical, things should settle down.
"Investors Place Record Bet that Market Winners Will Keep Winning" – Bloomberg
" Copper Falls Most in 6 Weeks as Metals Rally Starts to Give" – Bloomberg
"Bitcoin Tumbles 20% as Fears of Cryptocurrency Crackdown Linger" – Bloomberg
"2018's unbridled stock surge may signal the 'overshoot' phase of this bull market is underway" – Santoli, CNBC
Related: "No, Ripple Isn't the Next Bitcoin" – M.I.T. Technology Review
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An informative report from Morgan Stanley details the importance of crude futures markets, which are 50 times the size of physical trade, in determining the oil price,
"The 'paper' oil market is 50x the physical market: As a starting point, consider this: world oil consumption is ~98 mb/d, but the barrels that leave the country in which they are produced - i.e. the internationally traded market - is just ~43 mb/d. At the same time, oil futures trading in Brent and WTI alone adds up to ~2,000 mb/d. In short, the 'paper' oil market is roughly 50x larger than the physical market. Financial in- and outflows can drive the market away from long-run marginal cost for some time.
"The current level of backwardation in oil futures curves is still a relatively recent phenomenon. If this persists for an extended period, we expect it will continue to attract inflows into the futures market. As these flows can be much larger than physical flows, this should drive oil futures prices higher during the course of this year."
"@SBarlow_ROB MS: Oil futures market, 50x size of physical, to drive crude prices higher" – (longer research excerpt) Twitter
"Brent oil falls by $1 but demand underpins near $70/barrel" – Reuters
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I am only starting to work my way through those of these I didn't read at the time. I am particuolarly interested in "Five-Year Expected Returns 2018-2022: Coming of Age", and "Artificial Intelligence: It's Not the Future, It's Now (Capital Group)",
"The Top 20 Investment Papers of 2017" – Savvy Investor
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Business Insider torques up the headline, as is their want, but this Goldman Sachs list of fastest growing companies is a worthwhile starting point for further research. ConocoPhilips is the #1 pick and Adobe Systems is an interesting pick,
"These 13 stocks will see profits explode higher in 2018" – Business Insider
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Tweet of the Day: "@RateSpy "Based on the economic environment alone, the case for higher interest rates in Canada is airtight."—@scotiabank gbm.scotiabank.com/scpt/gbm/scoti " - Twitter
Diversion: "Why it is so perilous to mess with the price of bread" – Macleans
Scott Barlow