The U.S. economy shows signs of extending its nine-year expansion with the help of tax cuts and strong business and consumer confidence.
But both the longevity of the expansion and the apparent limited slack in the labour and product markets suggest the current pace of growth is probably not sustainable in the medium term.
The current cyclical expansion is 110 months old and will be the longest on record if the economy is still growing in July 2019.
While longevity alone is not a good predictor of cyclical turning points, with most financial and economic indicators close to multi-decade highs, the balance of risks is shifting. And that points to challenging times ahead for investors.
-- John Kemp, Reuters
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Stocks to ponder
Cronos Group Inc. (CRON-T). Cronos, one of many high-flying cannabis stocks, lost nearly 30 per cent of its value on Thursday after becoming the latest target of U.S. short-seller Andrew Left of Citron Research. Mr. Left said Cronos has failed to say just how large its provincial distribution agreements are, as opposed to competitors such as Canopy Growth Corp. and Tilray Canada Ltd., which quantified deals with British Columbia and Quebec in news releases earlier this year. Mr. Left cited unnamed sources who said Cronos’s “agreements are so small they could never justify the premium investors are paying for the stock.” David Milstead reports (for subscribers).
Cogeco Communications Inc. Scott Barlow has chosen Cogeco Communications as his focus chart this week, primarily because the volatility in the telecommunications market segment has increased significantly over the past year and it’s worth a closer look. Read more in this week’s edition of most overbought and oversold stocks.
Why this is no time to panic over emerging markets
The worst thing about investing in emerging markets is the headlines. News that Argentina bumped interest rates to 60 per cent on Thursday to stop a free fall in the peso, coupled with the sickening descent of the Turkish lira in recent weeks, is enough to make even hardened investors question the wisdom of venturing outside the cozy confines of North America. But if you believe in the fundamental appeal of emerging markets, this isn’t the time to panic. For starters, both Argentina and Turkey are little more than rounding errors in the widely used MSCI Emerging Markets Index, a barometer of stock market performance in 24 developing countries. Ian McGugan explains why it’s not time to press the panic button (for subscribers).
Potash prices are perking up, but Canada’s big fertilizer giant isn’t the best way for investors to cash in
Perky potash prices have prompted more investor interest in the moribund sector this year, but Nutrien Ltd. is not poised to benefit as much as its international peers, because it has ceded its status as the best pure-play choice for fertilizer investors. The news over the weekend that an Indian potash-supply contract came in US$50 a tonne higher than before and roughly US$10 a tonne above expectations, caused a pop in Nutrien shares this week. They’ve risen just more than 2.9 per cent through Thursday’s trading. Mosaic Co. Inc. however, has jumped 5.7 per cent this week on the news. That underscores that Nutrien, formed by the merger of Potash Corp. of Saskatchewan Inc. and Agrium Inc., no longer offers the best upside when prices are rising, as they are today. David Milstead reports (for subscribers).
Why this $50-billion fund manager thinks the bull market has another 12 to 18 months to go
The bulls are on an amazing run. Earlier this week, the S&P 500 closed at its fourth straight record high. Last week, this became the longest bull market in the history of the index – at least by some measures. For many people, that raises alarms. We all remember the devastating consequences of the crash of 2008 – it’s been imprinted on our psyches. Brent Joyce doesn’t share those views. The chief investment strategist at GLC Asset Management Group, which oversees more than $50-billion on behalf of its clients, believes that while the S&P bull is getting long in the tooth, it has another year to 18 months to run. And when it ends, it will be with a “garden variety recession,” rather than the cataclysmic economic seizure we experienced in 2008, which almost led to the collapse of the world financial system. Gordon Pape explains (for subscribers).
How Canadian investors could be putting themselves at risk by flocking to bond ETFs
Nowhere have the transformational changes brought on by the rise of exchange-traded funds been more apparent than in the bond market. ETFs have expanded the reach of retail investors to previously inaccessible markets by offering a low-cost way to access wide swaths of global fixed income, all in a vehicle that trades and behaves just like a stock. But there are important differences between fixed-income ETFs and the underlying bonds they hold that might not be so apparent to many ETF converts, according to a recent report from TD Economics. Tim Shufelt reports (for subscribers).
Even when you do it right, you can invest for a decade and lose money
Ian McGugan takes a look at two different investors -- one starting in 1962 and investing for 20 years and one starting in 1980 -- to see what their returns looked like, and they couldn’t be more different. He explains why in the ROB Magazine story and what the lessons are for the investors of today. (for subscribers).
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Compiled by Gillian Livingston