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

The year has been depressing for both markets and global politics so it’s good to know there are still brilliant people working to make the world a better place. M.I.T.’s Technology Review detailed the most intriguing scientific developments of 2018 which includes biologists who may have paved the way for programmable cells to treat disease,

“The rewards should be huge. [Jackson] O’Brien and [Arvind] Murugan speculate that their molecular computer could have dramatic applications. They imagine a DNA origami pill that delivers drugs only when it receives a specific pattern of signals. For example, a cell’s inflammatory response and its adaptive immune response trigger different signal patterns of the transcription factor NFkB. A pill could be programmed to recognize just one of these and release its payload accordingly.’

The article also details major strides in the treatment of aging.

“The ten most intriguing stories of 2018” – M.I.T. Technology Review


Mark Dow is a hedge fund manager and former economist at the U.S. Treasury Department. His most recent blog post is a public service to investors everywhere, as it explains the ways in which the U.S. Federal Reserve did, and more importantly did not, boost asset prices,

“A bank can draw on its reserves to meet payments to other banks in the system, or, when necessary, get physical cash, but it can’t ‘lend them out’ to clients. Nor can it flood the equity or currency markets with them – contrary to the popular trope. They are not fungible in that way. Only the Federal Reserve can add or withdrawal from the system (with that small exception of physical cash). So, while the composition of reserves across banks can change, the aggregate level in the system cannot unless the Fed wants it to. This type of liquidity is exogenous; it’s all about the Fed…"

”Misunderstanding liquidity, misunderstanding QT” – Dow, Behavioural Macro


I am out of the market forecasting business more or less, but I do know that mining stocks are unlikely to recover when economic data from China looks like the latest release on manufacturing activity,

‘The official Purchasing Managers’ Index (PMI) – the first snapshot of China’s economy each month – fell to 49.4 in December, below the 50-point level that separates growth from contraction, a National Bureau of Statistics (NBS) survey showed on Monday. It was the first contraction since July 2016 and the weakest reading since February 2016.”

“China factory activity shrinks for first time in over two years, 2019 looks tougher” – Reuters


CIBC economists detailed the complicated interplay between the weakening Canadian dollar and domestic inflation,

“A rough rule of thumb from past studies suggests that a 10 per cent Canadian dollar depreciation boosts CPI by about a half per cent after four quarters. That’s roughly the drop we’ve seen in the Canadian dollar from a year ago (although less so against other majors) and with much of it quite recent, the impacts on CPI are partly still to come. But note that in this case, the Canadian dollar is reacting in part to the weakness in commodities, which particularly for energy, feeds into inflation in the opposing direction.”

“@SBarlow_ROB CM: CAD and inflation’ – (research excerpt) Twitter


Tweet of the Day: “@kevinmuir Most important chart right now. 2 year TIP yield. This is the after inflation yield that an investor can achieve (ie: the real yield) for next two years. For the first time in a decade, this yield is now firmly positive. Tough for risky assets priced for perfection to compete.” – (chart) Twitter

Diversion: This is the best movie list I’ve seen by a wide margin,

“ Best Movies of 2018” – Cinefix (video)

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