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A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web

The Bank of Canada releases its decision on interest rate policy Wednesday, but no change is expected.

The statement could be market moving, however, if governor Stephen Poloz finally recognizes economic hardship in Alberta,

“It’s Bank of Canada day! We’ll get the policy announcement at 10 am, with no rate hike expected. The focus will be on the Bank’s tone as the backdrop since October has changed materially. Oil prices have come down sharply (though WCS rebounded this week on the Alberta production cuts), production cuts will weigh heavily on Q4 & Q1 GDP growth, the Fed has turned more dovish and the latest domestic data have softened. All of that points to a more cautious tone, but that doesn’t mean the Bank won’t reiterate its goal of getting to neutral, though, at a minimum, the timeline has shifted. We’ll be watching for any hints on whether a January hike remains a good probability’

“@SBarlow_ROB BMO: BoC preview” – (research excerpt) Twitter


Tuesday’s market action was unpleasant.

A look at the weakest sectors saw industrials and financials at the bottom of the pack, suggesting that trade concerns (which affect foreign revenue for industrials) and a flattening yield curve (banks like steeper yield curves which make loans more profitable) were both to blame for the selling,

“U.S. yield curve reflects fundamental investor mindset shift” – Reuters

“9 reasons that people are giving for the stock market selloff” – Bloomberg

“US stocks can't sidestep trade tensions” – FT Alphaville

“ Here's what a yield curve inversion means for markets and the Fed, according to a strategist” – (brief video) Bloomberg

“ Bank stocks fall the most since June 2016, enter bear market” – CNBC

“Does the Yield Curve Really Forecast Recession?” – Federal Reserve Bank of St Louis


Merrill Lynch has released its outlook for global markets in 2019 and the mood in the research department remains grim for the short term,

“The bear market vibe at the end of 2018 is expected to continue, with asset prices finding their lows in the first half of the 2019 once rate expectations peak and global earnings expectations trough; however, BofA Merrill Lynch also forecasts a record high peak in earnings for the S&P 500 next year and plenty of upside potential for investors who make volatility their new best friend. … Global profit growth declines: Earnings growth is expected to decline sharply next year, from >15 percent to <5 percent on a year-over-year basis. The BofA Merrill Lynch Research team is bearish stocks, bonds, and the U.S. dollar; bullish cash and commodities; and long on volatility. We expect to turn tactically risk-on in late spring, but to start 2019 with a bearish asset allocation of 50 percent stocks, 25 percent bonds and 25 percent cash.”

“BofA Merrill Lynch 2019 Market Outlook: From Peak to Trough, the Market Unfriends Stocks and Bonds, Likes Volatility, and Swipes Right on Cash” – Bank of America Newsroom


Tweet of the Day:

Diversion: Keep your keys away from the front door, car thieves have new methods “Auto theft on the rise in Toronto area, and a security expert thinks he knows why” – CBC

Newsletter: “ Why we may not foresee a bear market until it’s too late” – Globe Investor

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