A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web
The FANG stocks have been driving positive U.S. market performance, and many portfolio managers who's job depends on returns staying close to the index were forced to hold them. Now we're at quarter-end and it's entirely possible that these managers aren't comfortable reporting that hugely expensive stocks, like Amazon.com, Facebook Inc. and Nvidia Corp. (I know NVDA is not in FANG, but its performance has been ridiculous until lately), are in their top holdings, and have sold their positions down, causing the technology sell-off.
It's also the case that technology stocks were getting stretched on valuations and had a correction coming. We'll have a better idea on whether this is a tech bear market or correction after the first two weeks of July.
"Nasdaq dives in another violent fit of volatility" – Report on Business
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David Rosenberg is bullish on domestic banks on the belief that the tide is turning for Canadian equities,
"Weakness in commodity prices, particularly oil, along with fears of an overheated property market and the potential fallout from troubles at Home Capital Group Inc. were the main reasons for Canada's weakness. Now, some commodities are rebounding, house prices are cooling, consumers are continuing their free-spending ways, and Warren Buffett just bought a stake in Home Capital.
"All of this is prompting strategists to predict a bit of a rebound for Canada. David Rosenberg, chief economist and strategist at Toronto-based wealth management firm Gluskin Sheff + Associates Inc., sees the S&P/TSX gaining 5 percent over the next six to 12 months, though he believes financial stocks could double that return, particularly if the Bank of Canada starts to raise interest rates as signaled."
"How Investors Should Handle Cold Stocks in Canada's Hot Economy" – Bloomberg
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The reflationary Trump Trade faded but talk of higher interest rates and bond yields is again dominating the economic media. Report on Business writer Ian McGugan presents a solid argument that the issue this time is financial conditions, not inflationary pressures,
"The unspoken reason central bankers are suddenly keen to hike interest rates" – Report on Business
" Four Missing Pieces in the Puzzle of Poloz's Shift to Rate Hawk" – Bloomberg
"@katie_martin_fx BAML: "Two ways to cure inequality...make the poor richer...or you can make the rich poorer...Fed/ECB now tightening to make Wall St poorer"" – Twitter
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This overview of energy markets is excellent (in my opinion, of course),
"A second issue relates to the overemphasis on needing to reach the five-year average on total stock levels as a decisive signal that the elusive rebalance point has been reached. In a growing market, the five-year average is always going to be skewed to the low side. … U.S. production has increased, takeaway infrastructure and changing refinery feeds have necessitated the construction of additional storage along the entire supply chain. In addition, the global oversupply situation has produced a variety of arbitrage opportunities and tanker movements throughout the world … So even in the most transparent system, underlying system changes tend to mask what's taking place on a real-time basis, making estimates even more complicated."
"Bulls and Bears Converge: Sentiment Shifts and Misperceptions in the Oil Market" – Center for Strategic and International Studies
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Tweet of the day: "@amberkanwar #5things as economists stampede to another side of the room #cad $JPM $C $HCG.to $WBa $RAD $FRED $SPLS - (short video from BNN's Amber Kanwar) Twitter
Diversion: "The "Progressive Liberal" Is Maybe The Perfect Wrestling Heel" – (NSFW language warning) Deadspin
Scott Barlow