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Asset prices are more useful than opinions.

Following Monday’s Turkey tantrum in global markets, two diametrically opposed headlines appeared this morning. CNBC published " ‘What happens in Turkey won’t stay in Turkey’: Why this debt crisis could be different” and the FT’s free to read (readers have to register, but I couldn’t recommend it more highly) Alphaville site published “Turkey contagion fears are overblown.”

This thing, where credible financial news sources present drastically different conclusions, can be frustrating but it happens all the time.

It’s tempting for investors to read both pieces above and draw a conclusion right away, but this is a bad idea and not even necessary in my opinion. My strategy in these cases is to attach the opinions to an asset price and see who’s right over time.

For Wednesday’s Report On Business, I wrote a column arguing that the oil price will provide an accurate gauge of whether financial stress spreads from Turkey into the broader emerging markets asset class.

Future demand growth for oil is almost entirely a developing world phenomenon. The International Energy Agency estimates that China and India on their own will account for almost 50 per cent of the future increase in crude consumption. The oil price is therefore very sensitive to changes in demand forecasts in the emerging markets.

If market weakness begins to move through the developing world, this will include depreciations in local currency values. Because oil is priced in U.S. dollars, crude gets more expensive as the currency falls, and this threatens demand levels. So I expect that the intensity of contagion concerns to be reflected in the oil price – the more worried global investors become about emerging markets assets, the lower the crude price should go.

This is just one example of attaching opinions to market prices, a practice I recommend.

-- Scott Barlow, Globe and Mail market strategist

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Stocks to ponder

ATS Automation Tooling Systems Inc. (ATA-T). This company will be reporting its quarterly earnings results on Wednesday. Last quarter, the company reported earnings results that handily beat the Street’s expectations, sending the share price soaring 11 per cent that day. The stock has a history of spiking higher after reporting its earnings, rallying four of the past five quarters. Headquartered in Cambridge, Ont., ATS provides automation systems and services to customers across various industries such as life sciences, consumer products, electronics, food and beverage, chemicals, transportation and energy. Jennifer Dowty reports (for subscribers).

Viemed Healthcare Inc. (VMD-T). This company is on the cusp of appearing on the positive breakouts list (stocks with positive price momentum) with its share price trading just below its record high and the stock’s market capitalization just below the $200-million screening threshold. This stock has delivered a stellar 104 per cent return to its shareholders year-to-date and the sole analyst who covers this company anticipates the stock could rally a further 53 per cent over the next year. Trading volume is relatively low, which can create share price volatility. Headquartered in Louisiana, Viemed is a provider of respiratory care home medical services with operations in 24 U.S. states. Jennifer Dowty reports (for subscribers).

The Rundown

Marijuana stocks plummet in wake of Ontario’s private-sector sales delay

Shares of Canada’s cannabis companies fell sharply on Tuesday morning as investors reacted to news that Ontario will initially limit sales of the drug when it becomes legal on Oct. 17. Ontario had previously planned to open government-run stores in October. The new Doug Ford government, however, has decided to allow the private sector to operate stores but not until next spring. The government does plan to sell cannabis online starting in October. David Ebner reports (for subscribers).

How much bite do FAANG stocks have?

Gordon Pape takes a look the latest results from Facebook, Apple, Amazon, Netflix and Google (Alphabet) to give a reality check as to whether they warrant their current stock prices. This isn’t like the dot-com boom and bust, he says.

Why are Canadian small-cap stocks missing in action?

Most commentary about the U.S. stock market has an understandable focus on the big-cap technology stocks that dominate the major indexes, so many investors are probably unaware of a quiet revival in the small-cap sector recently. During the 12 months to Aug. 10, the Russell 2000 Index, a broad measure of U.S. small-cap stocks, is up 22.7 per cent compared with a gain of 16.2 per cent for the big-cap S&P 500 Index. But the Canadian market indexes are sending the opposite message: the big-cap S&P/TSX Composite Index is up 8.3 per cent in the past 12 months, while the S&P/TSX Small Cap Index is up only 4.7 per cent and the S&P/TSX Venture Composite Index is actually down 8.6 per cent over the same period. So, are Canadian investors missing the boat, or is there some other explanation for the divergence in small-cap index returns? Robert Tattersall takes a look at the sector.

Top Links (for subscribers)

Seven deadly market themes

Trump serious about September tariffs that would ‘devastate’ Ontario economy

Others (for subscribers)

Tuesday’s analyst upgrades and downgrades

Tuesday’s Insider Report: Companies insiders are buying and selling

Monday’s analyst upgrades and downgrades

Monday’s Insider Report: Companies insiders are buying and selling

Others (for everyone)

Warren Buffett’s investing continues to evolve even at 87

Electric car bets boosting nickel demand, Nornickel says

Currency markets are ‘hidden thorns’ for stocks in full bloom

Canadian ETFs: July’s launches and terminations

Number Crunchers (for subscribers)

Seeking Canadian wealth creators, with an eye on volatility

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What’s up in the days ahead

It’s been a very painful four years for shareholders of AutoCanada, which last week reported dismal quarterly results. Are brighter days ahead? David Berman will share his thoughts.

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Compiled by Gillian Livingston

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