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

Further evidence that marijuana stocks are for trading, not investing, at current valuation levels,

“Today’s Ethereum is Tilray, a Canadian Cannabis company, which went public in July, and is already up close to 500%. This is sure to attract the same type of people looking to get in on the next big move … Tilray recently reported that quarterly revenues doubled y/o/y to $9.7 million. 100% revenue growth is great, but the thing is, it now has a market cap of $11 billion with $28 million in sales over the last twelve months. Macy’s also has a market cap of $11 billion, and it does $70 million in sales a day.”

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“Mania to Mania” – Batnick, Irrelevant Investor

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I’ve been waiting for domestic household debt levels to cause a negative shock to the domestic economy, and, according to BMO, that is now happening.

It is difficult to over-estimate the importance of this trend if it continues,

“Borrowing has cooled considerably, with overall household credit rising just 3.8% y/y in July, and mortgage balances outstanding up 3.7% y/y—marking the slowest growth in the latter since 2001, and a tad below total underlying income growth… slower consumer spending is also playing a role. Household consumption doesn’t get the headlines that housing receives, but it’s the much bigger driver of overall activity, and it has taken a notable step back this year. Auto sales are poised for their first annual decline since 2009. Real retail sales (chart) are on pace to rise little more than 1% in 2018 after last year’s near-6% spurt.”

“@SBarlow_ROB RELEVANT! (BMO): " The bigger picture, is that borrowing has cooled considerably, with overall household credit rising just 3.8% y/y in July, and mortgage balances outstanding up 3.7% y/y—marking the slowest growth in the latter since 2001"” – (research excerpt) Twitter

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The Canadian NAFTA negotiation team is quietly preparing the public for a "no deal' result, at least for the short term,

“In the face of mounting pressure to wrap up NAFTA negotiations by the end of the month, a senior source suggests Canada is comfortable with missing that deadline… In order for [a] Dec. 1 deadline to be met, a series of legal hurdles in the U.S. must be cleared first. The next step in that process is getting American lawmakers the text of a proposed agreement before Oct. 1, to begin a formal review. The source said Canada is willing to try to accommodate the timeline, but is prepared to keep talking past the end of this month.”

“Canada prepared to play deadline spoiler in NAFTA talks: source” – CBC

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I’ve had ongoing struggles convincing Canadian investors that the most important overall driver of resource-based profits and portfolio returns is Chinese economic growth. The Financial Times is reporting record lows in the pace of Chinese investment and that trend, if sustained, will cause a sharp drop in commodity-oriented returns,

“Chinese investment in houses, factories, railways and other fixed assets grew at the slowest pace on record last month, the latest sign of a weakening economy as China braces for the impact of US tariffs… Fixed-asset investment grew 5.3 per cent in the first eight months of the year, the lowest figure since at least 1995 and the fifth consecutive record low … ‘Overall, the economy kept decelerating in 3Q18, but it’s an exaggeration to call it ‘terrible’ and ‘collapsing’,’ Larry Hu, China economist at Macquarie Securities in Hong Kong, wrote on Wednesday”

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“China investment slowdown signals further weakening of economy “ – Financial Times (paywall)

“@Jeffrey_Black China's economic growth weakens on continued investment slowdown” – Bloomberg

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Tweet of the Day:

Diversion: “Because who doesn’t want to watch Paul McCartney deconstruct a dozen Beatles songs?” – A Journal of Musical Things

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