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‘Silence of the bulls’ highlights growing portfolio manager pessimism

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

Merrill Lynch’s monthly survey of global portfolio managers was titled The Silence of the Bulls and it underscored a growing sense of trepidation among professional investors,

“Bulls silenced, not routed: risk assets can bounce, but SPX 2550-2850 range holds Cash jumps from 4.6% to 5.0% (Exhibit 1), equity hedging levels @ 18-month highs… …18-month lows in FMS global growth & profit expectations, equity allocations… …and record # investors say companies excessively levered”

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The report underscored that only 18 per cent of managers believed the market had peaked, so there’s that.

“@SBarlow_ROB ML: ‘The Silence of the Bulls’” – (research excerpt) Twitter

See also: “@SBarlow_ROB CS: “we are less upbeat about global growth prospects for the rest of the year than we were a few months ago.” – (research excerpt) Twitter

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The inter-provincial battle over pipelines is getting uglier as Alberta drafts legislation to give British Columbia their fossil fuel-free future much earlier than they planned for,

“Alberta is handing itself the power to restrict fossil-fuel shipments outside the province, a move designed to raise the spectre of soaring fuel prices in British Columbia in an escalating political showdown over the expansion of the Trans Mountain pipeline to bring oil sands bitumen to the Pacific coast…Premier Rachel Notley says her province might use the legislation if Kinder Morgan Inc. kills its plans for the $7.4-billion pipeline expansion.”

“Alberta’s Notley threatens to restrict oil exports to B.C. amid pipeline dispute” – Report on Business

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The TSX has very little in the way of large cap technology companies so investors might have missed this very important story about the intensifying trade war in the sector,

“There’s one crucial bit of the tech industry where American regulatory sheriffs are still very much at the front of the posse: telecoms equipment. In the latest twist, the Commerce Department has cut off Chinese equipment maker ZTE Corp’s access to chips and optical components made by U.S. suppliers… This is a trend. Last month, the Federal Communications Commission proposed a ban on U.S. mobile operators using government subsidies to buy equipment from the likes of ZTE and Huawei Technologies Co. Ltd. Under government pressure, AT&T Inc. and Verizon Communications Inc. have abandoned plans to sell Huawei-made handsets. The Chinese company is blocked from federal tenders.”

These policies will annoy the Chinese no end as they look to implement their ‘Made in China 2025’ which aims to be self-sufficient in technology.

“ZTE Shows U.S. Has the Stomach for One Big Tech Fight” – Gadfly

“What happens to ‘Made in China 2025’ as trade war fears grow” – South China Morning Post

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The Financial Times warns that dividend paying stocks are underperforming, and this may continue as bond yields rise,

“The S&P Dividend Aristocrats index … has generated a total return of about 440 per cent since the bull market for stocks began in March 2009 … This year the aristocrats index has fallen 2.2 per cent… dividends.

Part of the explanation is that holding cash has become a more viable investment decision. As the Federal Reserve tightens policy, the rise in yields for short-dated government bills — seen as cash-like instruments because they can be sold very quickly — has for the first time in a decade become an attractive element for portfolios.”

“Is trouble looming for US dividend aristocrats?” – Financial Times (paywall)

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Tweet of the Day:


Diversion: “9 quotes that famous people didn’t actually say” – Business Insider

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