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

Michael Batnick, director of research at Ritholtz Wealth Management, provided a timely update on the investor cliché that markets "always climb a wall of worry."

Mr. Batnick annotates a chart of the S&P 500 rally with every period when it looked like a good time to flee equities and go to 100-per-cent cash – except the rally always continued,

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"We've seen a thousand versions of this chart, but we haven't seen the opposite, one that plots all of the positive developments over the last nine years. So I decided that would be fun to create, but I quickly realized, as I stared blankly at the screen, that coming up with this list was much harder than I thought it would be. This reminded me of something Bill Gates said: 'Headlines, in a way, are what mislead you, because bad news is a headline, and gradual improvement is not.'"

"Gradual Improvements Go Unnoticed" – Batnick, The Irrelevant Investor


All recent signs point to Sears Holdings being in deep trouble. Management released a statement Tuesday admitting "substantial doubt exists related to the company's ability to continue as a going concern" and further reports indicate that vendors are reluctant to do business with Sears because they're worried about getting paid,

"The managing director of a Bangladesh-based textile firm said his company is using only a handful of its production lines to manufacture products for Sears' 2017 holiday sales. Last year, nearly half of the company's lines in its four factories were producing for Sears. 'We have to protect ourselves from the risk of nonpayment,' said the managing director, who declined to be identified for fear of disrupting his company's relationship with Sears."

I don't usually feature news on individual companies – it often only matters to the minority who hold the shares – but Sears' struggles are indicative of financial stress in retailers that has widespread implications, for mall operators and online shopping as just two examples.

"With Sears' future in doubt, vendors begin pulling back" – Reuters
"Sears and Kmart might not have enough money to stock their shelves" – USA Today

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A Bloomberg feature highlights poor working conditions for employees in U.S. manufacturing. The story is relevant to the Canadian economy as it indicates the competition-related difficulties domestic exporters endure because they can't treat their workers as poorly, or pay them as little, as U.S. firms do.

"Inside Alabama's Auto Jobs Boom: Cheap Wages, Little Training, Crushed Limbs" – Bloomberg


A terrific Goldman Sachs chart posted on Twitter shows the shale oil feedback loop that prevents the commodity price from significant rallies. The key point,

"shale productivity is increasing by 3-10 per cent per year, driving the oil breakeven [price] from $80 per barrel to $50 per barrel."

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"@tracyalloway OPEC's problem, in a single chart. Goldman illustrates the feedback loop preventing oil prices from moving higher:" – (chart ) Twitter
See also: "Oil Price Forecasts Falling on Shale Revival, OPEC Uncertainty" – Bloomberg
"Oil Rises as U.S. Fuel-Supply Drop Counters Crude-Stockpile Gain" – Bloomberg


Tweet of the day: "@scanlime An AI class in school left me with the professor's mantra: "AI" is an name for algorithms that don't work, aren't provable, but we use them. " – Twitter

Diversion: "Why Americans have come to worship their own ignorance" – Macleans


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About the Author
Market Strategist

Scott Barlow is The Globe's in-house market strategist. He is a 20-year veteran of Canadian investment banks, including Merrill Lynch Canada, CIBC Wood Gundy and Macquarie Private Wealth (MPW). He was a highly ranked mutual fund analyst for 10 years and then, most recently, the head of a financial adviser support team at MPW. More


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