Skip to main content

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

Credit Suisse chief global strategist Dr. Walter Edelmann and team have released their market forecasts for the next five years while helpfully providing a scorecard for their extended projections five years ago (they got emerging markets and bond markets right while underestimating U.S. equities). The report is titled Opportunities in a low rate world.

The overall theme is to stick with equities as bond yields slowly drift higher in the coming years and reduce returns for fixed income and, to some extent dividend equity-buying, investors,

Story continues below advertisement

“Gradually rising bond yields imply that investors in government and investment grade bonds are likely to be left with a very meager return outlook… A low rate world implies that equities offer attractive excess returns (risk premia) over both cash and government bonds. Expected returns are in the high single-digit range. They are lowest in Switzerland and the USA at 6.8% and highest in the UK at 9% … Real estate is set to continue to benefit from the low interest rate environment … Australia, the USA and Canada … t with potential growth rates of around 2%. While Australia and Canada can still rely on positive contributions of a growing workforce, potential growth in the USA is based almost entirely on gains in productivity.”

“@SBarlow_ROB CS: Opportunities in a low rate world” – (research excerpt) Twitter

“ @M_PaulMcNamara Hunt for yield in odd places goes on. Massive oversubscription for Ukrainian (demand 5 times amount offered) and Serbian (3x) bond auctions” – Twitter

***

I can’t remember anything like this happening before but multi-billionaire hedge fund manager Ray Dalio has published an essay called The World Has Gone Mad and the System Is Broken. The argument is difficult to refute in an era of negative bond yields,

“Money is free for those who are creditworthy because the investors who are giving it to them are willing to get back less than they give. More specifically investors lending to those who are creditworthy will accept very low or negative interest rates and won’t require having their principal paid back for the foreseeable future… The reason that this money that is being pushed on investors isn’t pushing growth and inflation much higher is that the investors who are getting it want to invest it rather than spend it. .. the prices of financial assets have gone way up and the future expected returns have gone way down …“

I recommend reading the piece in its entirety.

Story continues below advertisement

“The World Has Gone Mad and the System Is Broken” – Ray Dalio

***

Bloomberg reports that Chesapeake Energy , “Epitome of America’s Shale Gas Boom”, is worried about going under,

“Reflecting growing pain across the energy sector, the Oklahoma-based company’s shares and bonds tumbled Tuesday after it said it may not be viable as a “going concern” if low oil and natural gas prices persist. The warning came just over an hour after the company posted a wider-than-expected loss for the third quarter”

“Epitome of America’s Shale Gas Boom Now Warns It May Go” – Bloomberg

“@SBarlow_ROB C: "“an extinction threat hangs over Global E&Ps” – (Citi research excerpt) Twitter

Story continues below advertisement

***

Diversion: (small sample size but still interesting), “Screen time might be physically changing kids’ brains” – M.I.T. Technology Review

Tweet of the Day:

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter