A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Citi strategist Robert Buckland notes that investors have not been participating in the 2019 equity market rally with new funds, and this sets the stage for a sharp rally,
“Market Up Despite Outflows — Global equities are up 11% ytd despite a further $31bn net outflows. If outflows turn into inflows, this could add further momentum to the rally. Selling DM, Buying EM — In 2018, EM equity funds saw investor buying despite DM fund selling. This trend has continued in 2019, with EM seeing $23bn inflows while DM saw $54bn outflows. Brexit Capital Flight — The initial market reaction to Brexit was to sell UK equities and buy gilts. However, investors are now selling both”
“@SBarlow_ROB C: 'Flowless rally' sets stage for more upside” – (research excerpt) Twitter
“@SBarlow_ROB C: maybe cash actually IS on the sidelines this time” – (research excerpt) Twitter
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BMO economist Benjamin Reitzes calls Canadian household debt a “lasting constraint” on domestic economic growth after Thursday’s report on national credit,
“Canada’s Q4 national balance sheet accounts release was full of juicy headlines: record debt-to-income ratios, slumping net worth, rising government and business debt ratios, and a near-record debt service ratio. The latter is the focus here, with that ratio just 0.01 ppts from the high hit in 2007. There are a few clear messages: 1) Barring a significant tax cut or increase in government transfers, consumer spending isn’t going to be the driving force behind GDP growth for some time…potentially a very long time”
“@SBarlow_ROB BMO: Cdn HH debt a 'lasting constraint' on GDP growth” – (research excerpt) Twitter
“ ‘You may not be as rich as you think’: Canadian families face a long road back to financial health” – Babad, Report on Business
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There has been a distinct rise in criticism of technology lately, both as an industry and potential investment destination.
Richard Bernstein, founder of RB Advisors, was among the first prominent strategists to go negative on tech stocks in the 1990s when he was the chief quantitative strategist for Merrill Lynch.
His most recent report provides some market history,
“We recently received an email inviting us to a webinar titled ‘How to Position Portfolios for the “New Economy.’ Anyone who lived through the late-1990s Tech Bubble is probably now cringing. It’s hard to believe that the Tech Bubble burst 19 years ago (NASDAQ’s bubblerelated peak was March 2000), but George Santayana’s famous quotation unfortunately seems to sum up the current environment, ‘Those who do not learn history are doomed to repeat it.’ … Our bearish views on Technology in the late-1990s were based on the simple fact that return on capital is highest when capital is scarce. A mad rush to invest in anything (tulips, gold rush, technology stocks, housing, etc.) means that the longer-term investment returns will likely be subpar … We significantly lowered our exposure to technology at the beginning of the year (from roughly 26% to about 11%) because Technology has historically been among the most cyclical sectors, and tends to underperform when profits cycles decelerate.”
“Doomed to repeat the Tech Bubble?” – RB Advisors
“Anti-tech sentiment and ‘Why the future doesn’t need us’” – Barlow, Globe Investor
“ Our Bond villain technocracy” – (podcast) FT Alphaville
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Tweet of the Day:
Diversion: “Teens and Young Adults Are More Depressed Now Than in the Mid-2000s” – Gizmodo
Scott Barlow