A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Merrill Lynch has published their widely-read summary of their monthly survey of global portfolio managers. Highlights include,
“Average cash balance falls 0.2ppt to 4.6% this month, showing improved risk appetite; investors’ allocation to cash falls 4ppt to net 40% overweight … Net 30% of hedge fund investors surveyed say they are net long equities, the lowest level since December 2016 … A slowdown in China (30%) leads the list of biggest tail risks cited by investors, followed by a trade war (19%), which had topped the list for the previous nine months; third on this month’s list is a corporate credit crunch (10%)”
Merrill’s strategist Michael Hartnett provided the following summary, “'The pain trade for stocks is still up,' said Michael Hartnett, chief investment strategist. ‘Despite rising profit expectations, lower rate expectations and falling cash levels, stock allocations continue to drop. There is simply no greed to sell in equities.’”
The term “pain trade” refers to the market direction that would cause the most portfolio managers to underperform.
“@SBarlow_ROB ML FMS summary” – (research excerpt) Twitter
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Vitol, the world’s largest oil trader, estimates that global oil demand will keep climbing for 15 years before a final peak,
“Vitol said it recognized the trend toward alternative energy sources and was investing in technologies that may form part of the energy transition. “We anticipate that oil demand will continue to grow for the next 15 years, even with a marked increase in the sales of electric vehicles, but that demand growth will begin to be impacted thereafter,” it said.”
“Vitol's 2018 volumes rise, sees oil demand growing for 15 more years” – Reuters
“Canada's Alberta increases crude output limit for May and June” – Reuters
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I had thought the federal budget to be released today would be full of spending for everyone in an effort to distract attention from the SNC-Lavalin shenanigans but Bank of Montreal thinks spending will be restrained,
“Ottawa's shift back into deficit over the past three years has been noteworthy, moving from what was effectively a balanced budget in 2015, to an $18.1 billion shortfall currently expected for FY18/19… Ottawa is hardly in bad shape. Meantime, Ottawa has held to its promise of keeping its new fiscal anchor, the debt-to-GDP ratio, steady (it is actually on pace to dip for a second straight year)… Ottawa will likely prioritize program spending over tax relief. The recent chatter has centred on areas such as expanded universal pharmacare, skills training, measures for seniors, and support for housing affordability…. these measures could be ‘selling features’ in the budget that come with a small immediate dollar figure attached to them—on the last point, we suspect Ottawa will not want to run even deeper deficits at this stage.”
“@SBarlow_ROB BMO preview of federal budget:” – (research excerpt) Twitter
“Canada’s Upcoming 2019–20 Federal Budget … To Spend or Not to Spend?” – Scotiabank
“Federal budget 2019: Five things to watch for today” – Report on Business
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Tweet of the Day:
Diversion: “Psychiatry’s Incurable Hubris” – (book review) The Atlantic
Scott Barlow