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‘The Wall Street Informant Who Double-Crossed the FBI’

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web

U.S. approval of the Keystone pipeline is the biggest story on an otherwise slow day for market news. Keystone is a clear positive for domestic oil stocks, but I don't expect a sustainable bump in stock prices in the near term. The revenue benefits are a long way away and obstructionism is likely to be intense.

"TransCanada gets presidential permit for Keystone XL" – Report on Business

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George Mason economics professor Tyler Cowen attempted to answer a question that's highly relevant to Canada's major urban centres, "will home prices and rents go up forever?"

"We live in a special time where clustered activities are unusually important for economic growth. Some activities, such as dentistry and cement production, don't cluster geographically very much, for obvious reasons. In contrast, finance (New York and London), information technology (the Bay Area), and entertainment (Hollywood and New York) are the most clustered. For whatever reasons, it makes sense to have many of the top decision-makers in one place… Leading cities have become so expensive in large part because two of these clustering sectors -- finance and information technology -- have been ascendant. There is no particular reason to expect those trends to continue forever, and that will bind rents in affected cities."

"Can rents in megacities keep on going up forever?" – BloombergView


Iron ore prices are sharply lower and the end of copper supply issues is, for some analysts, the beginning of the end for rally for the red metal too,

"The risk for bulls… though, is that all this focus on supply problems could be masking the fact that the copper market does not actually appear to be suffering from a problem with supply … Inventories of the metal in exchange-monitored warehouses tend to rise in the early months before being consumed as Chinese industrial activity climbs toward the middle of the year -- but the amount flowing in looks particularly acute this time around. Tonnage has risen more than 40 per cent this year, and earlier this month hit its highest levels since 2013."

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"Floating Copper Looks Frothy" – Gadfly


The U.S. House of Representatives votes on health care reform and this is notable for Canadian investors beyond our collective ethical disgust. A failure to pass the reform bill – which looks like the likely result – also casts doubt on the new administrations' ability to enact market-friendly corporate tax cuts and fiscal spending initiatives. As Bloomberg reports, this skepticism means that investors can toss out bullish strategist forecasts for 2017,

"'We can't recall a time when a change in leadership in Washington had the potential for such large and diverging effects on the U.S. economy,' Bank of America Merrill Lynch analysts said in a recent note…Strategists are thus doing their best to hedge their calls, with JPMorgan Chase & Co.'s equity outlook saying, 'Due to uncertainties, these impacts [Trump's campaign promises] are not incorporated into our base case earnings forecast until there is more clarity around which policies will be emphasized and/or are politically feasible.'"

"Wall Street's 2017 Forecasts Are Doomed If Trump Doesn't Follow Through On Campaign Promises" – Bloomberg


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Tweet of the Day: "@MAAWLAW "There's a lot more at stake in the auto sector trilaterally. [There's] a lot of Canadian parts investment in Mexico in particular." #NAFTA " – Twitter

Diversion: "'Bro, I'm Going Rogue': The Wall Street Informant Who Double-Crossed the FBI" – Bloomberg


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About the Author
Market Strategist

Scott Barlow is The Globe's in-house market strategist. He is a 20-year veteran of Canadian investment banks, including Merrill Lynch Canada, CIBC Wood Gundy and Macquarie Private Wealth (MPW). He was a highly ranked mutual fund analyst for 10 years and then, most recently, the head of a financial adviser support team at MPW. More


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