A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
Cenovus Energy Inc. became the latest domestic oil producer to cut capital spending plans this year, in this case by $700-million. The trend makes it clear that the economic pain of lower oil prices will be concentrated outside of the industry itself. While producers slash costs to protect profit margins, construction contracts will be cancelled and retail spending will slow because of layoffs.
"Cenovus slashes 2015 spending by additional $700-million on low oil" – BNN
University of Alberta professor Andrew Leach warned investors that the fallout from the ongoing drubbing in energy markets could be worse than the financial crisis.
"I now wonder if, for three key reasons, this oil crash could be more painful for Alberta than 2008-2009 was. First, while the oil price drop to date has been smaller than the drop in the lead-in to the Great Recession, I think the drop from expectations has been larger.
"Second, this time we had no run-up of any importance before the fall, so corporate balance sheets and government budgets won't have the luxury of a buffer.
"Finally, I think the nature of both the crash and the circumstances in Alberta's oil sands sector before and during the crash should give us pause."
"Why this oil crash could be worse for Alberta than the one in 2008" - Macleans
See Also: "The oilmageddon of 2015" – ARC Financial Corp
The news from U.S. earnings season is a lot more positive this morning after Apple Inc.'s $3.06 earnings per share figure blew past consensus expectations of $2.60. The company sold more than 30,000 iPhones per hour for the quarter, a mind-boggling pace. Also, Boeing Co. reported a solid 19 per cent year over year growth in profits despite the depleted value of foreign currency revenues.
"Apple iPhone sales trample expectations as profit sets global record" – Reuters
"Boeing's profit rises on higher deliveries" – Reuters
Analysts at The Vampire Squid are an increasingly dour lot lately. Days after predicting that oil prices would fall to $30, the Goldman Sachs research department predicted that commodity prices would be the worst performing asset class in the next three months, trailing equities, bonds and credit.
There is, however, a glimmer of optimism as they forecast that "commodities will leapfrog equities as the best performing asset class over 12 months, returning 10 percent."
"Goldman sees commodities as worst pick before year-end rally" – Bloomberg
Tweet of the Day: "@katie_martin_FX Greek markets today. *high whistle* http://t.co/cjU9v2DJLZ"
Diversion: How many of your co-workers are "every day sadists"? – Quartz
Follow Scott Barlow on Twitter @SBarlow_ROB
Scott Barlow