A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
U.S. employment data was reported Friday morning.
Data showed 263,000 new jobs were created in April. The Street had expected 190,000.
***
Warren Buffett’s investment style has evolved before. He began with a rigid Benjamin Graham-based focus on balance sheet assets but over time, his investment process moved to a cash flow-oriented growth at a reasonable price approach.
Even with that precedent in mind, Mr. Buffett’s announcement that Berkshire Hathaway is acquiring a position in Amazon.com, a stock with a trailing price to earnings ratio of 83.5 times, comes as a bit of a shock to valuation conscious investors,
“Warren Buffett said Berkshire Hathaway Inc has bought shares of internet retailing giant Amazon.com Inc for the first time, though he has not been the one doing the buying, “Yeah, I’ve been a fan, and I’ve been an idiot for not buying,” Buffett told CNBC… In February, Buffett called acquisition prices “sky-high for businesses possessing decent long-term prospects.””
“Buffett says Berkshire Hathaway, finally, has invested in Amazon.com: CNBC” – Reuters
“Buffett finally embraces Amazon as Berkshire acquires stake’ – BNN Bloomberg
“@SquawkCNBC Warren Buffett tells @BeckyQuick why Berkshire Hathaway bought shares of Amazon” – CNBC/Twitter
“Look more closely, and there’s a lot to like in Berkshire Hathaway and the aging Warren Buffett” - McGugan, Globe Investor
***
CMHC has lowered the danger level on domestic housing prices to ‘moderately vulnerable’ after recent price declines,
‘For the first time in 2.5 years, Canada Mortgage and Housing Corporation has rated the housing market as only moderately vulnerable, indicating the hot conditions characterized by bidding wars and sky-high prices may be cooling off a little. In its quarterly Housing Market Assessment, CMHC found that inflation-adjusted average price fell by 5.4 per cent in the fourth quarter of 2018 compared to the same period in 2017… "Housing markets are trending toward more balances, so we don't see that as an issue. In fact, that's a desired outcome," [Patrick Perrier, deputy chief economist,] said. "What we want is a soft landing rather than a crash landing. This is why this is the outcome we are looking for."
“Canada's housing markets not as vulnerable as prices fall more than 5%, CMHC report” – CBC
“National housing market vulnerability improving, CMHC says” - Report on Business
“Vancouver home sales slump to 24-year low as prices continue to fall” - Report on Business
***
TD analysts have some bad news for domestic oil investors,
“TD economists Omar Abdelrahman and James Orlando said they expected the price gap between West Texas Intermediate (WTI) and Western Canadian Select (WCS) to increase to US$15 to US$20 by the end of 2019. The differential currently stands at nearly US$11. “With respect to Canadian benchmarks, all signs point to a widening of the WTI-WCS differential in the medium term,” the report on Thursday said. “This forecast reflects longstanding transportation issues, the fading impact of the [Alberta] curtailment plan, and the recent drop in crude-by-rail shipments.”
“Canadian crude's discount to widen back up to US$20 this year: TD” – BNN Bloomberg
“Oil falls on surging U.S. output, set for weekly decline” – Report on Business
***
Citi economist Cesar Rojas sees a stabilization in global growth but believes it’s too early to call for a turning point,
“GDP growth increased for only 33.6% of the economies we cover in Q4-18, the lowest since 2012. Our new indicators show that the slowdown turned more synchronized across a wide range of real activity, sentiment, and financial data, … Our Citi Coincident Indicator for Global Growth (CIGG), a real-time proxy for global growth highly correlated with global real GDP growth, suggests that the global slowdown continued in early 2019… (leading) indicators of global growth suggest a mixed picture, which corroborates our view of stabilization in global growth with no clear evidence of a turning point yet.”
“@SBarlow_ROB C: global growth stabilizing, no turning point yet” – (research excerpt) Twitter
***
Tweet of the day:
Diversion: “Dept. of Uh-Oh, college and mobility edition” – Marginal Revolution
Scott Barlow