Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web.
Financial Times' columnist Nick Butler outlines the 180 degree turn in the meaning of 'Peak Oil,'
"The concept of peak oil has therefore shifted from peak supply to peak demand… At [the current] pace, using a rough calculation, EVs [electric vehicles] might displace 1million b/d [barrels per day] of oil demand by 2025. Beyond that, the pace will depend on costs and regulation. Relatively rapid deployment could cut oil demand by over 2m b/d within 25 years. Fuel-efficiency standards for petrol-driven vehicles could displace even more. That sort of calculation is at the heart of peak oil demand forecasts. .. Cars and light vehicles, however, account for only one segment of oil demand… Freight transport uses some 16m b/d; aviation 5.8m b/d and petrochemicals another 11m b/d… [and] demand is growing rather than falling and that there are no obvious substitutes."
"Beyond peak oil" – Financial Times
"Oil Trades Near $50 a Barrel After Decline in U.S. Drilling" – Bloomberg
"Oil prices slip, but hold near recent highs" – Reuters
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A Bloomberg report highlights the recent trend of value investors throwing in the towel and buying momentum stocks with a 'what goes up must go up higher' strategy,
"Bargain shopping… has not been that great an investing strategy this year. The S&P 500 Value Index, which generally tracks beaten-up stocks, is up just 5 per cent this year. The S&P 500 Growth Index, on the other hand, is up 20 per cent… increasingly appears that the stocks investors are buying when the market dips in general are the stocks that have generally been going up, not the ones headed down."
"Bull Market Switches From Dips to Tips" – Gadfly
"@SBarlow_ROB Momo epidemic" – (chart) Twitter
"Tech Stocks as Career Obsolescence Insurance" – Reformed Broker
"Dumpster Diving for Stocks Is a Viable Strategy" – Bloomberg
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The U.S. Federal Reserve is expected to announce the beginning of a 'run off' in central bank stimulus. There are strategists like Citi's Matt King who believe the process will cause considerable market upheaval, particularly in riskier corporate debt and equity sectors, but as a Deutsche Bank research report highlights, we're in uncharted monetary policy waters and no one is confident about what will happen,
"[Our economists] anticipate three rate hikes in 2018 and expects the 10 year UST yield to rise to 2.75 per cent in Oct.-Dec. 2017 and 2.96 per cent in Oct.-Dec. 2018.
.. Meanwhile, our U.S. interest rate research team believes that 1) improved labour market conditions are unlikely to boost prices because the Phillips curve is not functioning and shows no sign of a recovery and 2) inflation equilibrium is low and could be closer to 1 per cent than 2 per cent. The team thinks the 10 year yield will fall to around 1.8 per cent, rather than rise toward 2.3 per cent. We (the global financial research team) have expected tricky movements with a downside bias in U.S. yields for now and upswing attempts toward the year-end. We expect volatility to increase towards September FOMC and think that upward pressure on too-low U.S. interest rates is likely to rise. "
"@SBarlow_ROB DB: no one has a clue what happens when CB stimulus reverses" – (research excerpt) Twitter
"Forget Default: Deutsche Reckons Debt Market Risk Lies Elsewhere" – Bloomberg
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The Bank of International Settlements – a frequently dour lot of economists in what is known as 'the central bank of central banks' – believes there could be up to $13-trillion (U.S.) more debt in markets than previously estimated. This will be fodder for the 'audit the Fed' crowd.
"Global debt may be understated by $13 trillion: BIS" – Reuters
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Tweet of the Day: "@LogicalAnalysis Most men in the U.S. and Europe could be infertile by 2060 weforum.org/agenda/2017/08…" – Twitter
Diversion: The Economists' Ryan Avent published 'Why do we work so hard?' discussing how, for many, working has become a psychological safe haven.