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Inside the Market Cannabis sales to exceed hard liquor sales by 2020: CIBC

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

Oil prices and the Canadian dollar are lower Tuesday morning as markets await the U.S. president’s statements on Iranian trade sanctions at 2:00 p.m. ET,

“‘Until we get more clarity on Trump’s intentions, we are unlikely to get further upside on crude,’ said Virendra Chauhan, oil analyst at Energy Aspects in Singapore. ‘If we assume he goes back to 2012 sanctions, we estimate a loss of 0.4 million barrels a day of Iranian supply based on recent Iranian export numbers. Anything larger than this will be bullish,’ he added.”

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“Oil backs off 2014 highs ahead of Trump Iran decision” – Reuters

“@vsualst Canadian dollar experiencing a buy-on-rumour/sell-on-rumour-of-news effect this morning, falling sharply ahead of likely re-imposition of Iranian sanctions” – (chart) Twitter

“6 questions about the Iran deal you were too embarrassed to ask” – Vox

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CIBC analysts released a report predicting that marijuana sales will outstrip liquor sales – and close in on spending levels equal to wine - by 2020,

“We believe that by 2020, the legal market for adult-use cannabis will approach reach C$6.5-billion in retail sales. For context, this is greater than the amount of spirits sold in this country … as part of the shadow economy becomes legitimate business, we estimate private firms will generate near $1-billion in EBITDA”

“@carlquintanilla “We believe that by 2020, the legal mkt for adult-use cannabis will approach $6.5b in retail sales. For context, this is greater than the amount of spirits sold in this country, and approaches wine in scale.” -- Canada’s CIBC “ – (research excerpt) Twitter

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UK-based energy giant Shell appears to have had enough with Canada for the time being,

“Royal Dutch Shell PLC is selling its 8-per-cent stake in Canadian Natural Resources Ltd. in a $4.3-billion secondary offering that ranks as one of the largest-ever Canadian share sales.

The sale, priced at US$34.10 a share, came as U.S. crude oil rose above US$70 a barrel for the first time in 3½ years. The sale price for the stock is 2.9 per cent below Canadian Natural’s closing quote on Monday, according to the term sheet..”

“Shell selling stake in Canadian Natural Resources for $4.3-billion” – Report on Business

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Two months ago there seemed to be a consensus strategist view that the market rally was in its final late cycle stages. Recently, however, a number of analysts are backtracking, arguing that we’re actually still in a mid-cycle environment with plenty of runway ahead. Merrill Lynch quantitative strategist Savita Subramanian writes,

“Our US regime model places us firmly in mid cycle. Revision ratios are similar to levels in 2004. After years of earnings growth driven by cost-cutting/efficiency gains, top-line has materialized. Today, sales revisions are outpacing EPS revisions, also typical of mid-cycle. And despite that analysts have aggressively increased expectations, corporates are guiding abovethose revised numbers. The recent jobs report suggests a gradual path of Fed hikes.And, important for the economy, corporates are finally starting to spend: the most prevalent guidance from companies around tax reform proceeds is “more capex”.”

“@SBarlow_ROB ML: It’s mid-cycle, not late cycle” – (research excerpt) Twitter

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Tweet of the Day:

Diversion: “Tracking Gas Prices and Fuel Efficiency of Cars to Determine What Era of American Drivers Got the Most Bang for Their Buck” – Chester Energy and Policy

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