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

Morgan Stanley chief economist Chetan Ahya described in detail why the Federal Reserve has become increasingly sensitive to global economic growth when deciding monetary policy,

“[U.S.] trade/GDP ratios have risen from 18% in 1980 to nearly 30% in 2018, while financial linkages (in the form of external assets and liabilities) have also risen from below 50% of GDP in 1980 to almost 300% in 2018…. multi-national companies have increasingly sourced a rising share of their profits from overseas markets, with the share of overseas income almost doubling from about 10% of GDP in 1980 to over 20% currently. Second, the influence of the rest of the world (ROW) has increased over time. The ROW’s share of global GDP in purchasing power parity terms has risen, while that of the US has declined from 22% in 1980 to 15%.”

Global data is still deteriorating, particularly in Asia. Overnight, trade activity in Singapore – an important trading hub for the region – were reported well below expectations.

Growth statistics for the domestic economy remain strong but historically the S&P/TSX Composite has been highly correlated with global trade activity.

“@SBarlow_ROB MS: Why the Fed is increasingly concerned about global growth” – (research excerpt) Twitter

“Singapore exports drop most in six years as electronics slump” – Reuters

“Trade war starting to show up in the credit market?” – Bloomberg


Tokyo-based Nomura strategist Masanari Takada does a great job following global speculative asset flows, providing data on algorithm-driven Commodity Trading Advisor (CTA) fund trading. Mr. Takada’s Wednesday report suggests CTAs are taking profits while most investors chase the rally,

“We see an interesting supply-demand pattern emerging among speculative players. Some trend-following investors that got in early in the present round of stockbuying have begun to defensively lock in profits; here, we are referring specifically to ultra-short-term traders as tracked by the NEIXSTTI (the SG Short-term Traders Index) and CTAs. From the other direction, discretionary investors that sat out the recent market gains (referring here to equity long/short funds and global macro hedge funds) are tentatively increasing their net long exposure, acting on the fear of missing out (FOMO) in a subdued but visible way.”

“@SBarlow_ROB Nomura: CTAs selling in to FOMO bid” – (research excerpt) Twitter


The digital world is not environmentally friendly.

“Out of sight, out of carbon-footprint mind. And that, by and large, is the problem with the digital economy. Since we can’t see or feel the pollution emanating from our selfies and videos streams, there’s a perception these services are boundless… digital technologies now emit 4 per cent of greenhouse gas emissions, which is more than civil aviation. Glaringly, they add, this share could double from now to 2025 because the energy consumption required for digital technologies is increasing 9 per cent a year. A helluva a lot of that growth is related to video streaming.”

“The extinction rebellion should not be streamed” – Kaminska, FT Alphaville (free to read with registration)


Tweet of the Day: “ @jsblokland Are corporate #earnings on the brink of a collapse? Semiconductor sales suggest 'yes'!” – (chart) Twitter

Diversion: “Your Smart Toaster Can’t Hold a Candle to the Apollo Computer: Despite what everyone says about the power of modern devices, they’re nowhere near as capable as the landmark early NASA system.” – The Atlantic