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Scott Barlow

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

Bloomberg reports that "[oil companies] in 2015 discovered only about a tenth as much oil as they have annually on average since 1960." This sets the sector up for a "glut now, scarcity later" forecast that implies all investors have to do is be patient.

It might not, however, be that clear cut. One of the main reasons oil companies found less oil is that they weren't looking. Falling profits resulted in most producers slashing investment budgets and firing geologists. Global oil demand continues to climb and there likely will be a period of higher commodity prices and production shortfalls, it's just not clear how long that will last.

"Oil Discoveries at 70-Year Low Signal Supply Shortfall Ahead" – Bloomberg
"Oil market rebalancing could take until end 2017: Shell" – Reuters
"Cost reductions help US shale oil industry pass first real test" – Financial Times
"@Mark_J_Perry ENERGY MILESTONE: Consumer spending on energy lowest in US history as % of Total Consumer Spending @EnergyTomorrow pic.twitter.com/FbIBPLfXLP ' – Twitter (chart)

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Bank of Nova Scotia became the latest domestic bank to report bigger profits than analysts expected, boosted by foreign earnings,

"Scotiabank, Canada's third largest lender by assets, reported a profit of more than $1.9-billion, up 6 per cent, in its fiscal third quarter. After making some one-time adjustments, the bank's profit was $1.54 a share, topping analysts' expectations of $1.48 a share and making Scotiabank the fifth consecutive bank this reporting season to exceed estimates. "

"Scotiabank hikes dividend as profit hits $1.9-billion, energy losses fall" – Berman, Report on Business
"BRIEF-Scotiabank reports Q3 EPS c$1.54" – Reuters
"Why are hedge funds shorting Canadian bank stocks so confident?" – Barlow, Inside the Market (Aug. 26)

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The Financial Times' essential series on problems in global pension funds concludes with a look at some of ways different countries have tried to adapt to difficult conditions. The report lauds Canada's system, while noting it doesn't help the private sector very much.  But I found the section on the Netherlands most interesting,

"Most employees are required to make significant contributions to defined benefit schemes, typically organised on an industry-wide basis. Regulators have imposed conservative funding assumptions, but there is also flexibility to cut benefits, as many did after the 2008 financial crisis, to reflect losses.

"Such safety valves provide a different tension, between the young and the old. 'The big problem is, having this collective set up it's unclear who owns the fund,' says Ilja Boelaars, an economist who has campaigned for reform. Young members are pitted against old when it comes to questions about risky investments, or whether to raise benefits now, creating danger of a future shortfall."

"Pension disappointment: National solutions to a global problem" – Financial Times

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There are no shortage of Chicken Little 'the sky is falling!' commentary on the Canadian housing market lately. I'm trying to be careful about which to include to avoid alarmism, until alarmism becomes appropriate.

"Canada's housing market nears 'extreme bubble,' warns ex-Lehman Brothers trader" – Global News

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Tweet of the Day: "@SBarlow_ROB Gene Wilder - Young Frankenstein (1974) - Puttin' on the Ritz #RIP youtube.com/watch?v=w1FLZP… ' – Twitter

Diversion: "Why Race Relations Got Worse " – J.D. Vance (author of Hillbilly elegy) , National Review