A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
The majority of the world's economically-sensitive stocks, including resources, are dependent on one of two growth stories – China and a recovery in the U.S. housing market. Both, unfortunately, are flagging badly.
Walter Kurtz of the highly informative Sober Look blog details the perfect storm that has brought growth in the U.S. housing market to an abrupt halt – low housing affordability, lack of demand and tightening credit standards.
The Financial Times' Alphaville blog (registration required) details China's "New Normal" of slower growth and highlights the ominous phrase, "China's situation is, to some degree, similar to the post-Lehman [Brothers] U.S.: rising public debt, declining private sector leverage."
China continues to stockpile oil, so crude prices have remained stable. But for other cyclical sectors like copper and iron ore miners, as well as global industrial companies focused on emerging markets infrastructure, the short-term outlook is becoming increasingly grim.
A documentary being released in the U.S. this week alleges that the processed food industry, in combination with government corruption and the sugar industry, is creating "one of the greatest public health epidemics of our time."
As an exhaustive 2013 Credit Suisse research report highlights, sugar-related companies are increasingly being compared to the 1970s-era tobacco companies, profiting at the expense of customer health.
The "sugar as tobacco" meme is not just a topic for the Life section. The issue is particularly important for any investors in global snack and beverage companies, and potentially also for health-care stocks.
Again from Sober Look, Mr. Kurtz warns of the potential effects of Basel III bank regulation on both government and corporate bond markets. In the past, major banks would step in and buy bonds during major market downdrafts. The new regulations have made that more difficult, but the holders of high-yield corporate bonds – and they are legion – are unaware their safety net has been taken away.
Additional Links:
"This is still the graph that scares me" – Seeking Alpha. A look at U.S. wages growth and consumer spending.
"The Extraordinary Science of Addicitive Junk Food" – New York Times. An article from February 2013, which includes details of a secret meeting of snack food CEOs.
Diversion: "Why humans got so much taller" – The Atlantic. Napoleon, by the way, was average height for his time.
Follow Scott Barlow on Twitter at @SBarlow_ROB.
Scott Barlow