A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
The Ashley Madison scandal is generating a lot of understandable salacious interest, but the underlying lesson is that anyone motivated to obtain any of our personal information likely already has it in their possession.
Ashley Madison is a website dedicated to arranging extra-marital infidelity. The company's records were hacked, and now all the personal client information is available online. There are already reports of public figures named, and their spouses being notified and harassed on social media.
This is only the latest breach of security, and there are many that are far more alarming. Domestically, hacking group Anonymous has announced they now hold sensitive government information. In the United States, hackers have stolen personal information from millions of government employees. Perhaps most alarming, the Chicago Mercantile Exchange announced that its network had been breached in 2013.
I assume that billions of dollars are being spent upgrading security for all of the world's databases because if not, the potential for a truly malicious attack on markets or government is becoming more real by the day.
"Early Notes on the Ashley Madison Hack: Welcome to the first day of the rest of your internet" – The Awl
"The Ashley Madison hack, explained" – Vox
"What's in the Ashley Madison database that hackers released online" – Quartz
"CSIS website falls victim to yet another cyberattack" – CBC
"CME Hack Draws FBI Probe While Renewing Market Structure Anxiety" – Bloomberg (2013)
Brenda Kelly, Head Analyst for U.K.-based London Capital Group, writes a highly informative market summary each morning, distributed by email. Wednesday's was particularly good, highlighting commodity markets and rising global disinflationary pressures,
" With commodity prices in freefall and UK headline inflation edging up to 0.1% y/y in July, there is a degree of concern that higher interest rates will happen sooner rather than later which is also providing a barrier to any upside. But the gain in inflation ultimately reflected higher prices in transport services, clothing and footwear and are thus likely to be a temporary respite… With oil prices continuing to look soft, the idea that disinflation is 'transitory' may be wholly incorrect. It looks like the BoE is going to let the Fed take the monetary tightening pioneer moniker. Presently a mere 5 stocks are trading in the green on the FTSE."
"Save time analysing the markets" (email sign-up) – LCG
The last 15 years has seen a remarkably strong correlation between the MSCI Emerging Markets index and the S&P/TSX Composite. The TSX's heavy weighting in commodities – which remains despite the dismantling of mining and energy stocks – has been highly sensitive to changes in emerging markets' resource-intensive economic growth.
With this is mind, the Financial Times column "Hey, EM: where's the structural reform?" is invaluable to domestic investors. David Lubin, head of emerging markets economics for Citi writes,
"the 2000s wrapped [emerging markets] countries in the warm embrace of rapid Chinese growth, plenty of external financing, and unusually strong import growth in the developed world. So, structural reform was crowded out by an intellectual emphasis on the central importance of balance sheets, aided by an exceptionally friendly world economy… Now that the global economic temperature is much colder, what we're learning is that having a strong sovereign balance sheet is at best a necessary – but not a sufficient – condition for enjoying stable growth.
"Hey, EM: where's the structural reform?" – Lubin, Financial Times
Tweet of the Day: This is U.S. data but has clear implications for Canada. "@ReformedBroker Since 1990... Median home price: up $40,000. Median income of first-time buyer: up $2000. See the problem? http://fortune.com/2015/08/18/young-people-can-afford-homes-they-just-dont-want-to-be-homeowners/
Diversion: "US Navy SEALs conquer fear using four simple steps" – Quartz