A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Domestic and U.S. employment data were released Friday, and Canada’s was terrible, at least on the surface. A loss of 51, 600 domestic jobs was announced when a gain of 5,000 was expected. In the U.S. , the addition of 201,000 new jobs exceeded consensus estimates of 190,000.
We’ll need to see some detailed analysis of the Canadian data before panicking.
Morgan Stanley analysts predict a new data-centric era of technological development and have selected the stocks they believe will benefit most,
“Every 10 years a new computing cycle emerges, increasing access to compute by ten-fold. Today we are at the beginning of a new cycle centered on data technologies like AI, IoT, and Automation which provide businesses real productivity growth. ... A trend that is beginning to play out is investment in technology to drive value in the form of improved cost structure and/or incremental revenue streams. Indeed, many of the top 10 largest alpha generators 2018 YTD – Amazon, Netflix, Adobe, Mastercard, Boeing, Nike, United Healthcare – tell a compelling technology narrative.”
The investment team have chosen 26 stocks they believe will benefit most from the new trend. The list includes tech giants like Amazon.com but also some non-tech companies like Deere and Co., Nike Inc. and Intuitive Surgical Inc.
“@SBarlow_ROB MS on new investment trends in tech” – (research excerpt) Twitter
“@SBarlow_ROB MS stock picks for new tech. there's 26, not 10” – (stock list) Twitter
Bill Parcells was an old school, results-oriented NFL football coach who used to tell his players “Don’t tell me about the labour pains, just bring me the baby.” This is more or less how I feel about the NAFTA negotiations at this point. They are clearly important, but posturing and misinformation are part of the process and following day to day is problematic,
“'Final' Canada trade issues unresolved as talks push on” – Reuters (video)
“Canada's Freeland cites NAFTA progress, but slams U.S. metals tariffs” – Reuters
CBC reports that the domestic economy is about to slow whether NAFTA gets done or not,
“'Our research finds that even with a NAFTA deal in place, the long-desired rotation in growth towards exports and business investment will be sluggish and won't offset the coming slowdown in household spending and housing activity,' [Royce Mendes, senior economist at CIBC Capital Markets] said in a note on Thursday … 'As we've stated before higher interest rates [won’t necessarily] break consumers' backs. With the unemployment rate expected to hover around six per cent over the next couple of years, households, in general, should be able to service their debt loads,' Mendes said. 'It will, however, leave fewer dollars for discretionary purchases.'”
“Canada's economy is set to slow down even with a NAFTA deal, economists say” – CBC
I have some quibbles with the FT’s Friday column “The next financial crisis won’t come from a ‘known unknown’” by Robin Wigglesworth. Metaphorically speaking, I don’t think it matters where the spark comes from when there’s a gas leak in the building – the results are the same. Still, an interesting piece for those with access to the pink paper,
“Think of the last crisis. Property experts could see there was a housing bubble — in fact prices peaked in 2006, well before the crisis erupted. But they didn’t appreciate how securitisation had revolutionised the loan market. Bankers and investors didn’t know — or care — how far underwriting standards had eroded, while policymakers were blind to how the financial economy could rip through the real one.”
““The next financial crisis won’t come from a ‘known unknown’”” – Financial Times (paywall)
Tweet of the Day:
Diversion: “6 performances that explain Burt Reynolds” – Vox