Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
The Wall Street Journal provided another installment in a series of stories chronicling the slow death of television as we know it. Quarterly profit results in the U.S. media space have been abysmal this earnings season – particularly at Walt Disney Co and its ESPN property - and Viacom was the latest victim.
"On Thursday, Viacom Inc., the owner of Nickelodeon and MTV, said its domestic advertising revenue fell 9% in the most recent quarter because of a decline in traditional TV ratings … Discovery Communications Inc.'s advertising revenue was about flat, while CBS Corp.'s fell 3%. At Walt Disney Co.'s ESPN, ad revenue also fell 3%. Ad revenue sank 14% in the U.S. at 21st Century Fox's television segment, which houses the Fox broadcast network, as viewership fell for 'American Idol' and 'The Following.'"
The trend is almost entirely generational – younger consumers have no patience for conventional programming.
"Ad Woes Pummel TV Firms" – Wall Street Journal
I'm certainly not expecting anything like the 2007-2008 financial crisis, but if there are to be structural issues in North American markets, corporate bonds are the most likely source in my opinion.
The Financial Times details the significant weakness in the U.S. high yield bond market Friday morning. The weakness in focused in mining and energy debt which strongly implies the trend will reach Canada at some point. Importantly, a recent report from BMO (not posted online, sorry) noted that liquidity in Canadian corporate debt markets remains healthy, but the slide in commodity prices makes trouble more likely in the months ahead.
"High Yield Bonds Living Up to Their Name" – Financial Times
Bloomberg detailed the terrible performance for global hedge funds focused on resource prices,
"The amount of money under management by hedge funds specializing in commodities stands at $24 billion, 15 percent below the peak three years ago, according to data from Hedge Fund Research Ltd.
The Newedge index, which tracks funds betting on natural resources, suggests managers have lost money for clients during much of the past four years."
"Hedge Fund Losses From Commodity Slump Sparking Investor Exodus" – Bloomberg
Energy pundit Vincent Piazza outlined some important structural changes in the U.S. market for natural gas. I haven't had a chance to dig in to the theory, but recognize it could be very important for the future of natural gas consumption (and production) in North America.
""When you think of the Appalachian area," Vince says, "Think of the Northeast Marcellus and then the Southwestern section of the Marcellus." There is some imbalance between the two — and so over the broader Northeast, you will continue to have intermittent, wide pricing differentials due to this imbalance.
There is, Vince says, a "structural, secular shift of significant capacity relative to the cyclical, season demand needs within the area.""
"$1 Natural Gas: Crazy Town?" – Bloomberg (video)
Tweet of the Day (from CNBC 's Carl Quintanilla, includes text from GS Research)" @carlquintanilla Goldman saying not-such-nice things about oil: risks "substantially skewed to the downside" (via @JackieDeAngelis) http://t.co/G8NwcKqpHQ "
Diversion: "The Cost of Vanity" – The Atlantic