Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
In a terrific scoop for the Report on Business, Brent Jang reports that the Canada Mortgage and Housing Corp is set to announce its first "red alert" on the domestic housing market. It certainly sounds dramatic, conjuring images of cold war nuclear threats, but I'm not sure it has much in the way of short term implications beyond showing a federal united front in terms of policy.
This is not to say the announcement isn't important – it stokes the growing realization among home owners that the boom years may be over. The indicator to watch in the coming months is the savings rate. If Canadians become concerned that selling their home is not a sufficient retirement plan, higher savings and slower consumption growth will be a hurdle for overall economic expansion.
"CMHC to issue first 'red' warning for Canada's housing market" – Jang, Report on Business
"New Canadian housing rules start today: How they'll 'harden' the landing" – Babad, Report on Business
"The intended consequences of new housing policies" – CMHC CEO Evan Siddall, Report on Business
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Hedge funds and speculative investors are more bullish on the oil price than at any time since the big slide in the commodity price be3gan in 2014. On the other hand, the World Energy Council issued a report predicting that peak demand for oil, essentially the beginning of the permanent end for the era of fossil fuels, will occur in 2030,
"If rapid improvements continue in renewable energy, electric vehicles and other disruptive technologies, petroleum consumption will peak in 2030 and decline thereafter, according to a report from the World Energy Council…The plunging cost of renewable energy - with solar-module costs falling 50 percent since 2009 - is already upending the business model of utilities. Disruption could spread to the oil industry as electric vehicles become more economic than gasoline or diesel cars, potentially displacing millions of barrels of daily fuel use by the late 2020s. Projections for decades of demand growth that underpin investments in oil projects could be misplaced."
"Oil Speculators Most Bullish Since '14 After Wild Two Months" – Bloomberg
"What OPEC's Oil U-Turn Missed: Peak Demand Keeps Getting Closer" - Bloomberg
"@kmac Even @IEA 2015 WEO still way off base with solar ' – (chart) Twitter
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The most important question for portfolio strategy at the moment is whether to position for secular stagnation – continued sluggish growth and low interest rates – or to buy investment that will benefit from the inflationary effects of an accelerating economy. Merrill Lynch strategist Michael Hartnett is clearly on the inflation side,
"Michael Hartnett, BAML's chief investment strategist, notes the relative price of "real assets" (real estate, commodities, collectibles) to financial assets (bonds and equities) is at its lowest level since 1926…With global policy also showing signs of incrementally shifting towards less monetary and more fiscal stimulus, commodities, real estate & infrastructure will all be "direct beneficiaries", says Mr Hartnett."
"Time to buy 'real assets' in age of inflation – BAML" – Financial Times
"Bonds Selloff Spreads on Inflation Concern; Global Stocks Fall" – Bloomberg
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Tweet of the day: "@kadhimshubber The least and most popular trades by global active fund managers (UBS) " – Twitter
Diversion: You don't have to be a sports fan to find the ratings decline for the NFL interesting. In a new media world where NFL football isn't marketable, what is?
"The death of football, installment #1437" – Marginal Revolution
Scott Barlow