Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
Donald Trump clawed to power on the back of growing populist mistrust of the wealthy 1 per cent, government, academia and media. This makes the start of the annual Davos schmoozefest, with its money-cloistered elites and fawning coverage, comically out of step with the zeitgeist.
It is relevant that Chinese leader Xi Jinping is attending the conference for the first time in defence of free trade and globalization, while the U.S. president-elect plans protectionist legislation. Clever pundits will note the irony of this while we roll our eyes.
The main speakers at Davos got everything wrong last year, and the odds of anything important coming out of this one are infinitesimally small.
"The defeat of Davos: Are the global elite in retreat?" – BBC
"Top-down solutions from Davos elite out of step with populist anger: Don Pittis" – CBC
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The U.S. dollar headed sharply lower after the president-elect tweeted that he was unhappy with the strength of the greenback. Reports also arose that Mr. Trump's support for a border tax on U.S. imports was also fading.
In economic terms, Mr. Trump has been consistent in his support of slowing imports and a "made in the USA" strategy, but this will likely improve impossible without a sharply higher U.S. dollar.
Also, I strongly suspect this 'policy statement by random tweet' will lose its ability to move markets in the coming months as major investors focus on actual laws in congress.
"Dollar Drops on Trump Comments as May Boosts Pound: Markets Wrap" – Bloomberg
"Trump's Trade Plan Is a Looming Disaster" – Bloomberg (editorial board)
"Dollar slips as Trump says currency is 'too strong'" – Financial Times
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A recent survey indicates Canadians are becoming increasingly pessimistic on the domestic economy. Importantly, I have tried and failed in the past to find any correlation between consumer sentiment and spending – sentiment is a lagging indicator at best – so this pessimism might be temporary,
"The share of those expecting a contraction in the next six months rose to 32.1 from 30, the highest level since April. The share of those expecting the economy to strengthen fell to 20.8 from 23.
"The two-week decline in confidence is at odds with the latest trade and labor data, as well as the Bank of Canada business outlook survey, Bloomberg economist Robert Lawrie said. 'This disconnect might suggest households' growing impatience with the speed of the fiscal stimulus as well as increased uncertainty during the formation of the new U.S. administration,' Lawrie said."
My suspicion is that a toppy housing market is to blame for consumer anxiety,
"Canadian home prices rose in December at the slowest pace in two years, adding to evidence the nation's housing market is cooling … With Toronto and Victoria the only pockets of strength, the data suggest recent steps by policy makers to curb demand are working… Even Toronto seems to be cooling. Prices advanced 0.8 percent in December, after a 0.9 percent gain in November. That's about half the 2016 average monthly pace of 1.6 percent."
"Fears of Contraction Extend Slide in Canadian Consumer Sentiment" – Bloomberg
"Canada Home Prices End 2016 With Slowest Gain in Two Years" – Bloomberg
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Tweet of the Day: "@IEABirol Peak #oil demand is not on the horizon due to rising oil use in ships, trucks, planes & the chemicals industry #wef17 ' – Twitter
Bonus Tweet of day (parody account): "@DavosDeville Top of the WEF agenda this year is the rise of populism, which is what we have agreed to call ingratitude. " - Twitter
Scott Barlow