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Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

BMO chief economist Doug Porter assessed the extent of economic pain from high gasoline prices on Canadian consumers,

“The Canadian-wide average price for regular gasoline pushed above $1.80/litre on Monday, up from around $1.60 a week ago, and just over $1.40 in late 2021. How much this dings Canadian consumers depends heavily on how long it persists (not to mention where prices eventually top out). But to put some frame of reference around these figures: Canadians spent roughly $12.6 billion on transportation fuels & lubricants in 2021Q4. With prices averaging about $1.45 in Q4, this implies total fuel consumption of just over 8.6 billion litres, or 2.9 billion per month. If current prices hold, this would imply an additional outlay on gasoline of just over $1 billion per month. Personal disposable income was $1.425 trillion in Q4 of last year (annualized), or $119-billion per month. So, the extra gasoline costs will absorb about 1% of disposable income at current prices. The good news is that the excess savings cushion was ~$300 billion.”

“BMO: How painful exactly are high gas prices to Canadian consumers?” – (research excerpt) Twitter

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Citi economist Nathan Sheets published Looking through the Fog: Some Early Thoughts on the Implications of Russia-Ukraine Tensions for Global Growth,

“The range of possible outcomes for the global economy remains wide and depends critically on the persistence of the challenging situation in Ukraine. If the tensions are prolonged or escalate further, the markdowns to this year’s growth outlook may need to be denominated in percentage points. Alternatively, if the stresses ease in coming months, there may be scope for the global economy to bounce back and, perhaps, even make up some lost ground ... While the envelope of outcomes is large, we see two sources of support for global growth—first, China’s commitment to economic stability (consistent with its recently announced 5.5% growth target for this year) and, second, the strength of the U.S. labor market. ... As we assess the macroeconomic implications of these tensions, the channels of transmission that we expected to be in play — rising commodity prices, increased market volatility, and flagging sentiment—have all been at work. We are also seeing intensified pressures on supply chains and mounting concerns about credit losses. Underlying all this, there has been an upsurge in pure uncertainty—a foreboding sense that more bad news is likely in store… beyond the immediate effects of this episode, we also see reasons for concern about its longer-lived footprint on the global financial system — As we have seen, sanctions can have powerful economic and financial effects. But we also worry that, over the medium term, aggressive sanctions may prompt countries, especially those that fear that they may eventually become targets, to diversify their reserves and transactions into currencies beyond the dollar.”

“From Citi’s “Looking through the Fog: Some Early Thoughts on the Implications of Russia-Ukraine Tensions for Global Growth” – (research excerpt) Twitter

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Michael Batnick, the director of research at New York-based Ritholtz Wealth Management LLC, noted that “tech stocks are getting vaporized.”

“Amazon fell 5.6% today, wiping out all the gains going back to July 2020. Netflix and Facebook are trading at the same level they were at in 2018. The three strongest names in the group, Apple, Google, and Microsoft, are finally losing their bids. All are in correction territory. The amount of market cap that’s being sucked out of these names is without precedent. The seven biggest stocks in the United States are $3 trillion lower today than they were at their combined peaks … Facebook has shed more market cap than any other stock in the world. $567 billion wiped out.. PayPal is the 20th biggest company in the S&P 500 and has the ignominious honor of losing more market cap than all but 7 companies. A 70% decline in seven months for a mega-cap company is really something else … It’s hard to find a lot of positives to say about the current market environment, but I’ll try anyway; These businesses are cheaper today than they were a year ago. Okay, that’s all I got for now.”

“There’s Blood in the Streets”- Batnick, Irrelevant Investor

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Diversion: “How Confidence Became a Cult” – The Atlantic

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