A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web.
Investors wondering about the risks of rising bond yields to their equity portfolios will be happy Deutsche Bank analysts published Four ways bond yields affect stocks (my emphasis),
"Bond yields up, stocks down. That casual logic during this month's market turbulence seemed relatively simple. But consider that bond yields and U.S. equity valuations saw a positive correlation in the three decades to 1997 … from an inflation perspective, our analysis shows that investors should embrace firms that are relatively less capital intensive (e.g. in technology or healthcare) … Care should also be taken with so-called 'bond proxies,' which have seen their leverage triple relative to the market. Investors have rewarded the use of debt to pay dividends, but rising yields have begun to force change and high-dividend payers have underperformed since the bond yield nadir in 2016."
"@SBarlow_ROB DB: 4 Ways bond yields affect stocks " – (research excerpt) Twitter
Citi economists found the release of Canada's federal budget largely a non-event where growth is concerned,
"Overall, the new policy initiatives in the 2018 Budget include a number of important measures but in aggregate, are unlikely to have a large macroeconomic impact."
"@SBarlow_ROB Citi: important initiatives in budget, little macro impact" – (research excerpt) Twitter
"Federal budget highlights: Twelve things you need to know" – Report on Business
"Video: Seven ways the federal budget will impact your wallet" – Macleans
The ROB's Tim Shufelt notes that a strong TSX earnings season hasn't done much to support stock prices,
"Fourth-quarter reporting season has just passed its halfway point, with total profits posted by Canada's largest public companies on track for close to a 20-per-cent increase over last year… "There just isn't a lot of interest in Canadian stocks," said Ryan Bushell, president and portfolio manager of Toronto-based Newhaven Asset Management Inc. "But I see a lot of return potential in the Canadian market. It's kind of like a bunch of coiled springs." "
"Even a heck of a good earnings season isn't igniting the TSX" – Shufelt, Inside the Market
Ritholtz Wealth Management head of research Michael Batnick straddles the line between self-help and financial planning with Why Doesn't More Money Make Us Happy?,
"Dan Gilbert, social psychologist and author of Stumbling on Happiness showed that people who recently became paraplegics are just as happy one year later as people who won the lottery. Relative to where we thought our happiness would be after winning the lottery, we adjust downward, and relative to where we thought our happiness would be after losing our legs, we adjust upward… More money doesn't provide more happiness because just like buying a fancy car, we overestimate how happy we'll feel when we finally get it. It's an internal 'buy the rumour, sell the news' event."
"Why Doesn't More Money Make Us Happy?" – Batnick, Irrelevant Investor
Tweet of the Day: "@rshotton Steve Jobs: 'Creativity is just connecting things' " – (quote) Twitter
Diversion: "Tech companies should stop pretending AI won't destroy jobs" – M.I.T. Technology Review