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

Goldman Sachs’ short-term forecast for the loonie is bluntly pessimistic,

“Investors should bet on declines in the loonie against the U.S. dollar and the yen as the Bank of Canada may soon join other central banks in a dovish shift… “Unlike most of its G-10 peers, the BOC has not signalled a readiness to ease policy – but we think that shift will be coming soon,” the strategists wrote. “As an open economy with a substantial commodity sector, any further weakness in global growth should eventually weigh on Canadian output.” … “We set our trade target at [C$0.7352] and stop at C$0.766] ” the strategists wrote. “Short CAD may also be paired with long JPY” in part for more direct exposure to weaker global growth.”

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“Short the loonie before Bank of Canada policy shifts: Goldman” – BNN Bloomberg

“Bank of Canada rate cut coming in October amid trade woes: BMO” – BNN Bloomberg

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U.S. earnings growth has been mediocre in 2019. Analysts tend to resist lowering full year forecasts by pushing the expected growth into the fourth quarter until actual results force them to drop estimates. This process is already taking place according to the Financial Times and this will eventually threaten stock values,

“Analysts have pared profit expectations for U.S. companies by the most in three years as the trade war with China and a dimming economic outlook weigh on earnings and expansion plans. Companies in the S&P 500 index will increase profits 2.4 per cent on a per-share basis this year, down from the 7.7-per-cent growth expected at the start of the year, according to FactSet data. The 5.3-percentage-point drop in full-year earnings expectations marks the largest decline on a year-to-date basis since 2016.”

“Outlook for U.S. corporate profits dims as trade war bites” – Financial Times (paywall)

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U.S. shale oil producers are about to start sending more crude to a market that’s been roughly balanced in terms of supply and demand,

“This month marks a big change for the industry with the start of the Plains All American Pipeline’s Cactus II, a 670,000 barrel a day pipeline, connecting the Permian Basin to Corpus Christi, Texas, and from there to the world. That pipeline, and another, named Epic, are just the start, with more to follow… the world is now well supplied, and even more U.S. oil could help depress prices, especially if the trade wars continue to suppress demand… According to Citigroup, the new pipelines could help grow U.S. oil exports from the current 3 million barrels a day by 1 million barrels more by year-end and another million barrels next year. Exports have already grown by an average 970,00 barrels a day this year over last year.”

“The U.S. is about to send a lot more oil into an already oversupplied world market” – CNBC

“Oil extends gains after an industry report shows a bigger-than-expected drop in American crude inventories” – Bloomberg

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Tweet of the Day: “@EconguyRosie We now have had three months of a 3-mo/10-yr yield curve inversion. The track record this has had in predicting recessions: 100%” – Twitter

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Diversion: “Hollywood doesn’t adjust the box office for inflation, but if it did, these would be the top 10 highest-grossing films of all time in the U.S.” – CNBC

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