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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

In one of the most jaw-dropping corporate statements I've ever heard, Royal Dutch Shell made a forecast of a much, much different variety of peak oil – a peak in crude demand that signals a terminal decline in the petroleum age, and one that might start as early as 2021,

"'We've long been of the opinion that demand will peak before supply,' [RD Shell] Chief Financial Officer Simon Henry said on a conference call on Tuesday. 'And that peak may be somewhere between 5 and 15 years hence, and it will be driven by efficiency and substitution, more than offsetting the new demand for transport.'"

The Bloomberg report on the statement notes that Exxon Mobil has a much rosier forecast for the industry, predicting a 20-per-cent increase in global demand before 2040.

"Energy Giant Shell Says Oil Demand Could Peak in Just Five Years" – Bloomberg
"The New Geopolitics of Declining Oil Demand" – Wall Street Journal
"Weaker dollar lifts oil prices from five-week low" – Reuters

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In related news, a massive U.S. inventory build caused a sell-off in WTI prices Wednesday.

"Oil Falls on 'Most Bearish Report of All Time'" – Wall Street Journal

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The U.S. dollar is lower, gold climbed above $1300 and the U.S. election is almost certainly to blame,

"'If Donald Trump is elected next week, we think gold can go anywhere shy of $1,400,' Wayne Gordon, executive director for commodities and foreign exchange at UBS Group AG's wealth-management unit, said in a Bloomberg Television interview. 'If Hillary Clinton is elected, we think gold can probably fall by $20, $30. So the clear skew in this trade is to the upside.'"

"Trump Angst Sets Gold Price on Windy Road Toward $1,400 an Ounce" – Bloomberg

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I've not heard of U.K.-based Michael Ashton before. He is "Managing Principal at Enduring Investments LLC, a specialty consulting and investment management boutique," according to his website, but, if he is correct about future inflation, it's going to become a big part of my job to convince Canadian investors of the big increase in portfolio risk it would cause,

"What is really amazing to me – and I've written about it before! – is that 10-year inflation expectations can be so low when actual levels of inflation are considerably above 2%. While headline inflation oscillates all the time, thanks to volatile energy (and to a lesser extent, food) markets, the middle of the inflation distribution has been moving steadily higher. Median inflation (see chart, source Bloomberg) is over 2.5%. Core inflation is 2.2%. 'Sticky' inflation is 2.6%... investors are now recognizing the likelihood that the inflation dynamic has changed and inflation is not going to abruptly decelerate any time soon."

For now, suffice it to say that the majority of domestic investment portfolios are not prepared for inflation pressures.

"Why Are Inflation Expectations Rising?" – Ashton, E-piphany

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Credit Suisse strategist Andrew Garthwaite, who is frequently ranked as the No. 1 global strategist in the Institutional Investor survey, also warns of higher yields and inflation, but believes equity markets can remain resilient to higher rates until the U.S. ten-year Treasury yield reaches 2.5 per cent.

"@SBarlow_ROB Research Read of the day (Garthwaite): "what to do with bond proxies?"" – (Research excerpt) Twitter

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Tweet of the Day: "@BuzzFeedNews This is the moment outside Wrigley Field when the Chicago Cubs won the #WorldSeries " – (video) Twitter

Diversion: The mathematical basis for music, "Sonic Geometry The Language of Frequency and Form" – Youtube

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