A specialist looks at a stock chart at the NYSE.Richard Drew/The Associated Press
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
Quarterly earnings results for U.S. multinationals are coming in thick and fast this morning and they are almost uniformly awful. Globally-facing companies with the highest sensitivity to non-U.S. growth and non-U.S. dollar sources of revenue are missing earnings expectations by big margins. Caterpillar Inc. was expected to announce profits of $1.55 per share, and missed by $0.20. Copper miner Freeport-McMoRan Inc. reported 0.25 per share, missing by a dime. United Technologies Corp.(exposed to China's economy through its Otis Elevator franchise and Carrier air conditioners) also missed growth expectations as did Microsoft Corp.and Procter & Gamble Co.
"Four stocks have hacked 97 points off the Dow" – Business Insider
"Caterpillar just delivered some terrible news for the global economy" – Business Insider
One of the most important investing questions as 2015 began was the extent to which the U.S. economy could continue to accelerate while the rest of the world slowed down. Today's report on U.S. durable goods orders, showing a 3.4 decline when growth of 0.3 per cent was expected, threw a big bucket of cold water on the optimistic view.
"Orders for U.S. capital goods fell in December for fourth month" – Bloomberg
The Ontario Securities Commission admonished real estate investment trusts for poor disclosure regarding the extent that operating cash flows, rather than borrowed funds, are supporting dividend payments. It's hard to know for sure, but I expect this was a shot across the bow and not an indication of widespread accounting shenanigans in the sector. Nonetheless, investors in REITs should revisit their holdings and reaffirm the financial health of their investments.
"REITs warned over failure to disclose shortfalls" – Report on Business
Bloomberg View columnist Megan McArdle turned her attention to the Canadian economy in an attempt to assess "How oily is Canada's housing bubble?" Personally, my view is that the surge in Canadian housing prices is more "rate-y" than oily as the domestic economy followed U.S. rate policy when higher levels of GDP growth made it unnecessary. Still, rising oil prices definitely played a major role in Alberta.
Ms. McArdle notes, "Edmonton, … does indeed seem to have its housing market pretty closely tied with the price of oil. (Calgary is also more closely tied to oil than the rest of the Canadian market.) Edmonton's housing market hasn't plummeted yet, but that may just be a natural lag as people adjust to the new normal – or wait for the bottom in order to find out what the new normal actually is.
On the other hand, some experts say that prices in Toronto will actually benefit, as lower oil prices boost U.S. GDP, and economic activity shifts eastward."
"How oily is Canada's housing bubble?" – McArdle, Bloomberg View
In a story that we can hope is not that applicable to Alberta, Business Insider underscores that "Things are bad in Texas."
"Things are bad in Texas" – Business Insider
Tweet of the Day: "@SirSteven: Beijing mayor says "Beijing is not a livable city." http://t.co/lA2PZLI7Mn … pic.twitter.com/6NT9UXTlrC '
Diversion: "Top 10 strange American habits incomprehensible to Chinese" – China.org
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Scott Barlow