A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
Thursday's rally in oil was sparked by reports from Russia that the country's oil producers were willing to sit down with OPEC to discuss production cuts. Friday, however, Russian officials appeared to be dismissing the validity of the rally entirely,
"Mikhail Leontyev, spokesman for state-controlled Rosneft, told the FT that 'nothing new has happened' to suggest a coordinated production cut is more likely, writes Jack Farchy in Moscow. "'Consultations with Opec happen all the time. All positions are well known, they have not changed in any way,'" he said. 'Everything is possible in theory. It was possible a year ago, a month ago. Nothing new has happened. This frenzy is idiotic. It stems from the fact that people can't read.'"
"This frenzy is idiotic' says Rosneft after oil rally" – FastFT
Global markets are rallying Friday after the Bank of Japan kinda sorta cut interest rates into negative territory – there are tiers of the financial system that will get negative rates and others that won't, which makes things confusing. Investors are clearly treating the news as positive but others, citing the 5-4 vote on the rate decisions by BoJ officials, see it as a sign of central bank desperation.
"Here's What Wall Street Is Saying About the BOJ's Introduction of Negative Interest Rates" – Bloomberg
"Central Banks Intensify Negative Campaign in Hunt for Inflation" – Bloomberg
"How much yen can you fit in a cubic metre?" – Keohane, FT Alphaville (free to read with registration)
Related: "China floods banks with record amount of cash" – Financial Times
There are no guarantees in investing but a massive jump in spending on cybersecurity is as close as it gets. Reuters reports that HSBC's IT network was hacked overnight and the company has suspended online banking operations.
There can be little doubt that HSBC and other (maybe all) global banks will spend a lot more on cybersecurity going forward. I'm desperately looking for the companies selling security software that will benefit most – the portfolio of the PureFunds ISE Cyber Security ETF is where I'm looking, but there are some constituents with terrible stock performance in there and the choice is not obvious.
The other issue here is the rising financial and market risk represented by hackers, as if we didn't have enough to worry about.
"HSBC says internet banking services down after cyber attack" – Reuters
The most immediate risk to North American portfolio, in my opinion, is the U.S. corporate bond market. Bloomberg has another update Friday after a series of reports that were in Thursday's links post.
Amazon.com Inc., the dominant positive influence on U.S. markets in 2015, reported a 22 per cent revenue gain after the close yesterday, but the stock got drilled in after-hours trading,
"Both its net income and revenue figures missed analysts' estimates. The news wasn't all bad. The rate of revenue growth slowed a bit from the three months ended in September but was still an impressive 22 percent. Amazon's operating profit margin was plump by Amazon standards at 3.1 percent, a level it hasn't reached in years. Revenue increased at a quicker rate than operating costs for the fifth consecutive quarter. "
Diversion: A breakthrough in schizophrenia research underscores the incomprehensible complexity of the human brain,
"But what is the biological role of C4 in the brain? The gene clue would have been wholly perplexing, McCarroll says, were it not for groundbreaking 2007 work by Beth Stevens, who today runs a laboratory at Boston's Children's Hospital. The C4 gene participates in what's known as "the complement cascade," a process by which the immune system marks tumors, viruses, or dying human cells for elimination and removal. What Stevens, along with Stanford biologist Ben Barres, found was that the complement cascade also plays a novel role in brain development early in life. Specifically, the system helps to "prune" unneeded or unused synaptic connections, sculpting the brain into a more efficient structure."
"Immune System Offers Major Clue to Schizophrenia" – M.I.T. Technology Review