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

The past week has seen so many apocalyptic pronouncements in the North American corporate bond sector, including mine, that I'm beginning to take the contrarian view that there must be a lot of opportunity. Corporate bonds have been a major driver of equity performance, providing funding for share buybacks in particular, and will be an important driver of investor returns in 2016. But in this Financial Times report, there's a quote from a prominent U.S. asset management firm that voices what can only be described as pure terror,

"'People are going to be carried out on stretchers,' said Laird Landmann, a senior bond fund manager at TCW, a Californian asset manager. 'When earnings are coming down, leverage is high and interest rates are going up. It's not good.'"

In my opinion, the most important factor for investors to follow is the extent to which the bond carnage extends outside of mining and energy, and to a lesser extent emerging markets debt issues. To date, that's where the vast majority of the problems have been.

"Corporate bond market hit by rates fears" – Wigglesworth, Financial Times
"The Stock Market Is Missing the Warning From Junk" – Wall Street Journal
"Has emerging market dollar debt peaked? A $9.8 trillion question " – Bank of International Settlements

Related: "The $49 Billion Debt Hangover" – Bloomberg


Prominent Canadian economist Ted Carmichael presents a solid argument that Canada likely remains in a recession despite the recent uptick in gross domestic product growth. Mr. Carmichael recently signed up with the C.D. Howe Institute's Business Cycle Committee, the domestic body that actually defines what a recession means for Canada,

"Evidence tips the scales in favour of judging that the 2015 downturn meets the 3 P's test: it is pronounced, particularly in the depth of decline of real GDI; it is pervasive, in that monthly real GDP, monthly real manufacturing and trade sales, and quarterly real GDI all experienced declines, only employment did not (so far); and it is persistent, in that quarterly GDI declined for three consecutive quarters, monthly GDP declined for six of the nine months months from January through September and remained well below the December 2014 peak level.

For this reason, I believe that, based on current evidence, a recession probably did begin in early 2015. I also think that it was a more serious recession than indicated by the decline in real GDP."

"Recession: A Made-in-Canada Definition" - Ted Carmichael Global Macro


OPEC, as expected, was no help to oil patch investors hoping for production cuts to support the commodity price. Investors often view OPEC as an all-seeing, all-knowing body with full control of global markets, but, lately, it appears that they are just as confused and cornered as the rest of the industry. Unable to reach a deal with members to share production cuts, OPEC leaders have more or less declared a free for all,

"'Why should OPEC alone sacrifice its part in the market,' Iraq's Oil Minister Adel Abdul Mahdi told reporters after the meeting. 'Americans don't have any ceiling, Russians don't have any ceiling, why should OPEC have a ceiling?'"

"OPEC Won't Cut Production to Stop Oil's Slump" – Bloomberg
"As Oil Keeps Falling, Nobody Is Blinking" – Wall Street Journal


Josh "The Reformed Broker" Brown quantifies what has become a clear trend is global markets – an incredible shrinkage in the size of the finance industry. There are a number of drivers for this including technology and a new, more restrictive regulatory environment, but I expect demographics is playing the largest role. The finnace industry grew fat as the Boomer generation waded through its pear saving, investing and spending years from 40 to 50, but now retirement means assets are beginning to be withdrawn from the markets.

" 10 Million Finance Jobs Lost Since 2000" – Reformed Broker


Tweet of the Day: On cost of housing per generation (chart), "@kimmaicutler Seems fair?… " – Twitter

Diversion: "Here's The Best Moments Of 2015's Movies In One Supercut" – i09

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