A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
"Eye of the hurricane' is too evocative as a metaphor (and also presupposes another big investing storm approaching, which may or may not be true), but markets are definitely in a holding pattern where investors are looking for stabilization but also signs to sell more holdings.
Emerging markets currency weakness is real and problematic as it could cause capital flight out of the developing world and create more instability, and weaker than expected China data is a major concern for commodities.
National Bank believes that Turkey’s problems are not over,
“While the lira’s 50% or so depreciation since last year is astounding, this is relatively small compared to prior currency crises. Recall that Mexico saw its peso slump more than 80% against the USD during the 1994-1995 crisis while Malaysia had its ringgit lose over 75% during the Asian financial crisis of 1997-1998. What did those two economies have in common? Large current account deficits.”
“@SBarlow_ROB NBF: Turkey's currency woes not over” – (research excerpt) Twitter
“Commodities just dropped into a chasm, and climbing out may be tough” – Bloomberg
“Copper enters a bear market, raising red flag about a possible global economic slowdown” – CNBC
Emerging Market Contagion – Macro Tourist
“Commodities prices tumble in China” – Financial Times (paywall)
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BMO economist Doug Porter sees stabilization in the domestic housing market,
“most measures of national prices seemed to hit on near-stability in the summer, with very small gains reported in both the MLS Home Price Index (or HPI, +2.1% y/y) and average transactions prices (+1.0% y/y). Those two are charted next door, while other measures like the new home price index (0.8%, for June) and the Teranet Index (1.8%), said much the same thing. Serenity now.”
“@SBarlow_ROB BMO; 'Serenity now' in Canadian housing market” – (research excerpt) Twitter
“Canada’s housing market scores first annual price gain in months” – Babad, Report on Business
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The past decade has been dominated by consumer-oriented technology, like social media and online shopping and media content. My hope is that the recent volatility in FAANG stocks is indicative of a rotation to business-oriented technology, like Artificial Intelligence and cloud computing, which, instead of being a giant and often frustrating time suck, increases economic productivity.
(re-disclosure: I own Red Hat Inc. in my personal account).
Cisco Systems’ strong earnings report might be a sign this evolution in tech focus could be underway,
“Cisco, like other legacy technology companies, has been launching new products focused on high-growth areas such as cyber security and Internet of Things to cushion sluggish demand in its traditional routers and switches business. “We’re seeing the returns on the investments we are making in innovation and driving the shift to more software and subscriptions,” Chief Financial Officer Kelly Kramer told analysts on a post-earnings call.” .. Shares rose 6.1 percent to $46.53 in extended trading as the company also highlighted improving subscription-based revenue.”
“Cisco's software push fuels quarterly beat, strong forecast” – Reuters
“Cisco is soaring in the pre-market” – Bloomberg
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Tweet of the Day:
Diversion: “Seth McFarlane sings Cyndi Lauper songs in Family Guy voices” – Journal of Musical Things
Scott Barlow