A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
No one blinks when thousands of Albertans are laid off because of a falling oil price but every job loss in the manufacturing sector – like those announced at General Motors Thursday – are viewed as a national tragedy. The tired politics of organized labour are no doubt the root cause of this phenomenon but it can't have escaped people's attention that it's virtually impossible to find a union member from a non-government industry that is not at least slowly dying.
None of this is to suggest that wealth redistribution shouldn't be a top priority for policy makers – in a globalized world where lack of consumer demand is the main economic dilemma, raising wages at the expense of capital is more important than ever.
But no matter who wins the next election, Canadians can hope we can transcend the ideal policy solutions for the year 1910 and recognize that the world has changed irrevocably. Canada's health care system is no longer a selling point for U.S. corporate investors and American population growth is all in states bordering Mexico where wages are a fraction of domestic labour costs.
For my money, the best policy outline is embedded in the work of three brilliant (and all female) economic thinkers, the LSE professor Carlotta Perez, the University of Sussex's Marianna Mazzucato and pundit Frances Coppola.
"GM to shed 1,000 jobs in Oshawa, invest $5.4-billion in U.S." – Report on Business
"Towards a New Golden Age" – Piera (Coppola, Perez)
A terrific post from the U.S.-based Econompic blog highlights the systemic dangers building because of the popularity of passive investing and exchange traded funds:
"In my view there are parallels to the prisoner's dilemma in that it is a rational choice for most individual taxable investors, but poor for investment returns/the economy as a whole…I do think it increases systematic risk due to the concentration of assets into so few products."
"Implications From the Rise of Passive investing" – Econompic
Hedge fund manager Conor Sen highlights three popular investment themes in his sector that are now, in his words, "dead." The market volatility in recent days has seen a reversal in all of the most popular investment strategies from the beginning of the year; short oil, long biotech and rising U.S. bond yields,
"The oil/dollar/bunds/bonds macro trade. This has been a gravy train for macro funds and CTA's since oil started going lower last summer. But oil bottomed in mid-March, and it appears the euro has as well (so much for all those $35 oil/85 cent EUR/USD forecasts). And now it looks like the global bond market mania has subsided for the time being."
"3 Dead Narratives" – Sen, Tumblr
It appears former U.S. Fed Chairman Ben Bernanke's irritation with the Wall Street Journal's editorial page has been building for some time. Mr. Bernanke responded to criticism in the Journal by throwing some pointed shots back at the paper:
"It's generous of the WSJ writers to note, as they do, that 'economic forecasting isn't easy.' They should know, since the Journal has been forecasting a breakout in inflation and a collapse in the dollar at least since 2006, when the FOMC decided not to raise the federal funds rate above 5-1/4 per cent."
"Bernanke's Latest Blog Post Takes a Brutal Shot at the Wall Street Journal Editorial Page" – Bloomberg
Diversion: "Get ready for summer's 30 biggest movie releases" – Vox