A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
A Sanford Bernstein report on the energy sector has bad news for the U.S. economy and good news for Canadian oil producers. Sanford Bernstein has calculated that a third of all U.S. shale production is not economically viable if the West Texas Intermediate crude oil benchmark price falls to $79 (U.S.) per barrel.
This means that there is a floor on North American crude prices – a fall below $80 would stop production in many cases, and falling supply eventually would support the price. This price support is good news for Canadian oil producers who would be challenged by $75 or $70 oil.
"$79 oil = No shale boom" – Bloomberg
See also: "Triple whammy looms for China's oil refiners as crude plunges " – Bloomberg
Economics professor Daniel Drezner lays out the five most important questions for the global economy. The piece is definitely worth reading in full, but this part stood out:
"The default assumption that most economists make is that the developing world in general, and the BRICS in particular, will converge towards the affluence level of the developed world. This might not be the case however. As Barry Eichengreen and Donghyun Park and Kwanho Shin have observed in a series of articles, there is a very real 'middle income trap' that can lead to a serious growth slowdown in the advanced developing countries."
"Five known unknowns about the future of the global economy" – Drezner, Bloomberg
Business Insider's Sam Ro highlights Goldman Sachs research arguing that the recent downdraft in global equities was caused by a slowdown in corporate share buybacks, "'Most companies are precluded from engaging in open-market stock repurchases during the five weeks before releasing earnings,' [Goldman's David] Kostin notes. 'For many firms, the beginning of the blackout period coincided with the S&P 500 peak on September 18. So the sell-off occurred during a time when the single largest source of equity demand was absent.'"
I'm not sure if I completely buy this – there were huge moves in U.S. bond markets just ahead of the S&P 500 and TSX market downdrafts that had nothing to do with share buybacks. The post does, however, indicate the importance of low corporate lending rates – borrowed funds, not profits, are used for share repurchases – to equity market performance.
"Goldman: We're blaming the stock market sell-off on a pullback in buybacks" – Business Insider
The Atlantic's Derek Thompson's coverage of the media industries is unparalleled in my opinion and recently, Mr. Thompson has been following a story that will eventually be big news in Canada – the replacement of cable television with Internet streaming.
Last week, U.S. networks HBO and CBS announced they will provide streaming services like Netflix that bypass cable. I have no doubt that in the wake of this news, domestic telecom companies like Rogers Communications and Bell are already lobbying the CRTC to make sure this trend doesn't spread to Canada. It's early days yet, but over time, streaming technology has the potential to turn cable companies into the modern equivalent of buggy whip manufacturers.
"First HBO, Then CBS: The cable bundle is slowly coming apart " – The Atlantic
Tweet of the Day: "@s1moncox China's growth is unusually weak, but it is also better balanced than it has been for a long time. pic.twitter.com/kuZSnDiYwn "
Diversion: "Paralyzed man walks again after cell transplant" – BBC
Follow Scott Barlow on Twitter @SBarlow_ROB
Scott Barlow