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Top links: Mark Cuban predicts student debt meltdown

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

Few debates contain more foaming-at-the-mouth vehemence than the one around student loans. The weak U.S. employment market for non-graduates has amplified the importance of post-secondary education and American students are willing to borrow almost any amount of money to get through college. In many cases, the result is a crippling debt load with broad economic ramifications, like poor demand for housing.

Billionaire Mark Cuban believes that caps on student loans and subsequent university bankruptcies will be inevitable. "You're going to see a repeat of what we saw in the housing market: when easy credit for buying or flipping a house disappeared we saw a collapse in the price of housing, and we're going to see that same collapse in the price of student tuition, and that's going to lead to colleges going out of business."

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"Mark Cuban explains the student loan crisis in less than 90 seconds" – Fox News

A report in The Economist projects that the entire structure of global university education is about to change dramatically, and technology will change higher education in a similar way to how it has made life miserable for the broader media business. "The internet, which has turned businesses from newspapers through music to book retailing upside down, will upend higher education."

"Creative Destruction: A cost crisis, changing labour markets and new technology will turn an old institution on its head" – The Economist

In commodities markets, iron ore prices have stabilized after a miserable first half of 2014 but the Financial Times warns that the relief is temporary. A large supply glut persists, and inventory levels remain high.

"Surplus iron ore spells trouble for miners" – FTCommodities

The expanding "commodities as collateral" fraud investigations in China won't help. Trade finance – loans to import metals – is drying up as lenders attempt to find out whether the collateral behind their existing loans actually exists.

"Lawsuit Adds to Concern Over China Commodities Fraud" – New York Times

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At the same time, Credit Suisse reports that more of their institutional clients are looking to add commodity exposure in their portfolios. Reuters reports, "More investors plan to ramp up on commodities over the next 12 months after years of pessimism toward the sector, betting that the Iraq conflict will push oil prices higher while other commodities prices advance."

"More investors plan to overweight commodities" – Reuters

A New York Times column on hot streaks in sports has significant importance for investors. The normal human impulse to see patterns where none actually exist is, if anything, even more prevalent in investing than in basketball.

The Times' Carl Zimmer writes, "Dr. Wilke said that hot hands and hot outcomes both could have evolved from the same underlying rules of thumb for searching for food. By understanding their origins, we may be able to better understand the particular ways they influence our thinking today."

"Why We Persist in Seeing Streaks" – New York Times

Tweet of the Day: is from @amazing_maps RT @Amazing_Maps: Where people are moving to and from in the US and Canada – Twitter

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Diversion: "The right/left political divide is BS" – The Atlantic

Follow Scott Barlow on Twitter @SBarlow_ROB

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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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