A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Ahead of the U.S. China meeting at the G20 Saturday, TD research warned that the expected ceasefire result would not impress investors for too long.
That’s exactly what happened as U.S. markets opened strong Monday and steadily slid lower through the day.
Merrill Lynch research published a report outlining what investors should expect from markets in the coming weeks,
“The Xi-Trump meeting at the G-20 summit in Osaka proceeded largely as expected. Most importantly, additional tariffs were delayed indefinitely, but there was no rollback of earlier measures… stepping back, we see several reasons for concern. First, there are still 25% tariffs in place on $250bn of Chinese exports to the US, and (on average) almost 20% tariffs on $110bn of US exports to China. Tariff termites have been eating away at growth in China and its trading partners … the US still has a long to-do list on trade. We expect a deal with China later this summer, but it could take a large market correction to get there.”
“@SBarlow_ROB ML: post-G20 road map” – (research excerpt) Twitter
“'We are already in the midst of a cold war': CIBC's Benjamin Tal on global trade” – BNN Bloomberg
“@SBarlow_ROB NBF: "U.S.-China truce does not equate to end of trade war"’ – (chart) Twitter
“ ‘I don’t believe there will be a deal’ between US and China, says Republican senator” – CNBC
Citi strategists removed Blackrock Inc. from their top U.S. stock picks and posted the remaining recommendations.
The list is shockingly small at six stocks – General Mills Inc., Ameriprise Financial Inc., Cigna Corp., Reata Pharmaceuticals Inc., Invitation Homes and General Motors Co.
“ @SBarlow_ROB Citi U.S. focus list is really small” – (table) Twitter
Longer-term readers will be aware that I view U.K.-based Citi credit strategist Matt King as one of the most interesting thinkers covering debt markets.
Mr. King’s most recent report backed this up,
“If the real purpose of a central bank is to protect the purchasing power of savers’ money, then they have failed: loaves of bread and other items in the CPI basket may be affordable, but housing and pensions for a great many people are not … The bursting of these bubbles has caused the last few recessions, but in each case the bubble was ultimately resolved by the taking on of still more debt. That each bubble ultimately proved vulnerable at successively lower levels of real interest rates is therefore not a bug, but a feature. it seems highly likely that the next recession will also be caused by a sell-off in asset prices.”
“@SBarlow_ROB From C, echoing a @TheStalwart tweet earlier: “The bursting of [asset] bubbles has caused the last few recessions, but in each case the bubble was ultimately resolved by the taking on of still more debt” – (research excerpt) Twitter
I’m running out of room, but this FT Alphaville (free to read with registration) report on how music rights are becoming increasingly attractive as a dividend-yielding asset, was really interesting,
“Thanks to the smooth cash flows provided by streaming, mechanical music rights are becoming increasingly appealing financial assets. In the UK, for instance, an investment trust called Hipgnosis has raised £356m with the aim of offering “pure-play exposure to songs and associated musical intellectual property rights”.
“Taylor Swift and the triumph of capital” – FT Alphaville
Tweet of the Day:
Diversion: “Report: Jony Ive checked out at Apple years ago” – Fast Company