Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
Bloomberg's Luke Kawa posted a chart showing that selling of the U.S.-traded MSCI Canada ETF has been the heaviest since the oil sell-off began in 2014.
On its own, this wouldn't be a deal – a bit of investor nervousness doesn't have to lead to a market sell-off, and could be a buying opportunity – but Societe Generale foreign exchange strategist Kit Juckes also noted that the loonie was the weakest major currency against the greenback over the past 10 days,
"the weakest currency of all over that period is the Canadian dollar. If anything, USD/CAD looks too low relative to short-dated yield spreads, at the same time as looking too high relative to oil prices (and too high on valuations but that won't matter). The Bank of Canada left rates on hold yesterday and the policy statement, while dovish, was no more so than universally expected. "
The list of potential reasons for the skittishness on Canadian assets includes a potential rate increase by the Federal Reserve (which would boost the USD against the loonie) , the continuing oil glut that threatens crude prices, and profit-taking on Canadian bank stocks.
"@LJKawa MSCI Canada ETF hasn't seen outflows like this since oil was cratering in late 2014" – (chart) Twitter
"SocGen on the CAD (via @kitjuckes )" – (research excerpt) Twitter
Related: "Cyclical or defensive stocks? How your strategy hinges on economic growth forecasts" – Barlow, Inside the Market
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The good news for domestic investors today is that yet another bank reported strong quarterly earnings and raised the dividend. This time it's TD,
"TD (TD.TO) said earnings per share in the first quarter ended Jan. 31 rose to $1.32, compared with $1.17 a year ago. On an adjusted basis, TD earned $1.33 per share. Analysts had on average forecast earnings of $1.27 per share during the quarter, according to Thomson Reuters I/B/E/S…TD increased its dividend by $0.05 compared with the previous quarter to $0.60 and announced plans to buy back 15 million of its common shares."
"TD closes big banks' earnings with profit beat, dividend boost" – BNN
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West Texas Intermediate crude price is 1.4 per cent lower at time of writing. There are two current issues for the commodity price at present. One, weekly U.S. Department of Energy reports on U.S. oil inventories continue to signal rising inventories. Two, crack spreads – the average amount of profits refiners make on each barrel of oil – continue to fall. Refiners are likely to buy less oil in the future as their profit margins decline.
"Oil prices under pressure after historical high for U.S. crude stocks" – Marketwatch
"Five Things You Need to Know to Start Your Day" – Bloomberg (includes energy commentary)
"@OilSheppard Opec has a crack problem: US refining margins tank, RBOB -2%. "Crude oil cannot rally against the gasoline crack," @petromatrix says #OOTT" – Twitter
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CNBC reports that U.S. insiders are dumping stocks at a frantic pace,
"Chief executives and other corporate insiders are selling stock hand over fist now that the quarterly earnings season is over, a report from Vickers Weekly Insider shows. Transactions by insiders are restricted around a company's report. 'Insider selling has jumped again, and this time to levels rarely seen,' analyst David Coleman wrote in Monday's note. In the last week, insiders' sale transactions on the NYSE outnumbered their purchase transactions by more than 11 to 1, according to Vickers, a publication of Argus Research. The 11.47 reading is 3.5 standard deviations above the mean, according to Coleman."
"Company insiders are dumping stock at levels 'rarely seen,' report indicates" – CNBC
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Tweet of the Day: "@SBarlow_ROB "This map shows the most popular routes for private jets" #finance #feedly businessinsider.com/knight-frank-w… " – Twitter
Diversion: "Classified documents reveal Canada's planned response to 9/11-style attack" – CBC
Scott Barlow