A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web
'It's the economy, Stupid' was a rallying cry for Bill Clinton's first presidential campaign but Richard Bernstein, who I've called the best strategist working, turns this on its head a bit in a recent research report. After warning investors bluntly with 'Politics: Ignore it,' he writes,
"Profit cycles are more important than economic cycles because profits, and not GDP, are the heart of equity investing. When one is a partial owner of a company, as one would be when holding the stock of a company, then one's sole concern is the profitability of their company and not the economic output of the entire country… profit cycles [are] the essential factor behind size, style, sector, country, and asset rotation…Most investors focus on economic cycles and, as a result, can miss significant investment opportunities."
"The 3 Ps: politics, profits, and probabilities." – RB Advisors
The Value Walk site posted a report with a title that will be music to most Calgarians' ears, 'The Entire Oil Sector Is Screaming: 'Buy Me!' ',
"When I read lots of energy stories with a uniformly grim outlook, like… 'Andy Hall Is The Latest Victim Of Fake News,' 'How A Bathtub Can Explain The Current Oil Market,' 'Absolute Return Partners March 2016 Letter: If Only We Could Blame China,' 'Goldman: Assume Low Volatility Lasts For At Least One Year,' 'HSBC: Why Oil Stocks Will Slump This Year,' …it's just a reminder that sentiment is as important as fundamentals (maybe more so)… And by that measure, the entire oil sector is screaming: 'Buy me!' "
I'd be careful with this view, with is mostly contrarian and doesn't mention valuations, but still a useful reminder about investor sentiment.
"The Entire Oil Sector Is Screaming: 'Buy Me!' " – Value Walk
See also: "IEA says OPEC compliance with oil cuts at lowest in six months" – Reuters
"Canadian Oil Patch Losing Loonie's Cushion as Poloz Lifts Rates" – Bloomberg
I haven't listened to this Bloomberg podcast yet, only read the summary, but I expect the title will get GTA readers' attention,
"You Just Missed Your Chance to Get Rich on Toronto Real Estate" – Bloomberg (podcast)
A new book attempts to uncover a full explanation for why no bankers went to jail after the financial crisis. The sentence in bold (my emphasis) rings true based on my experience in the industry,
"There are various plausible explanations for this. Edwin Sutherland, the sociologist who coined the phrase "white-collar crime," argued in 1940 that such criminals "are oriented basically to legitimate and respectable careers," and their social class molds the law's administration "to its own interests." One result is that white-collar malefactors are often just on the right side of the law, however outrageous their behaviour."
"Here's Why White-Collar Criminals Often Go Free" – Bloomberg
This is the read of the day for me, but since it's straight economics and readers tend to avoid that, I've put it lower in today's post,
"15 Things global macro investors should have learned from the financial crisis and its aftermath" – Dow, Behavioural Economics
Tweet of the Day (explaining index hugging): "@RyanPKirlin Common refrain from financial advisors I speak with: "I don't get more money for outperforming 2%. I get fired for underperforming 2%." – Twitter
Diversion: "The 18 best TV shows airing right now" – Vox