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Investors should ‘stop worrying and learn to love oil’

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

When allegations emerged that Toronto-Dominion Bank was pressuring their sales force arose, it was surprising that the other major banks didn't sell-off at the same time.

There was little fear that TD's alleged tactics could be present at their competitors (to the extent that there's competition within an oligopoly, of course). This period might be over after further digging by the CBC,

"Employees from all five of Canada's big banks have flooded Go Public with stories of how they feel pressured to upsell, trick and even lie to customers to meet unrealistic sales targets and keep their jobs. The deluge is fuelling multiple calls for a parliamentary inquiry, even as the banks claim they're acting in customers' best interests. In nearly 1,000 emails, employees from RBC, BMO, CIBC, TD and Scotiabank locations across Canada describe the pressures to hit targets that are monitored weekly, daily and in some cases hourly. 'Management is down your throat all the time,' said a Scotiabank financial adviser. 'They want you to hit your numbers and it doesn't matter how.'"

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Domestic investors trust the banks a lot.

"'We are all doing it': Employees at Canada's 5 big banks speak out about pressure to dupe customers" – CBC


Oil prices are stable at time of writing ahead of the U.S. Department of Energy's weekly report on crude inventories at 10:30. Citi and Goldman Sachs both published positive reports on the outlook for the sector,

"OPEC's output cuts aimed at easing a global glut are "real" and is cleaning up the market, analysts including Seth Kleinman wrote in a report dated March 14. While prices have dropped recently amid rising U.S. inventories and drilling activity, investors should take advantage of the slide because the Saudis are likely to defend prices this year, according to the bank. The bank's comments are similar to Goldman Sachs Group Inc., which called for investors to be patient and said they should go, or stay, long on oil."

"Citi Tells Investors to Stop Worrying and Learn to Love Oil" – Bloomberg
"Oil Gains on U.S. Supply as IEA Says Time Needed to Drain Glut" – Bloomberg
"OPEC and US shale drillers seem back at the brink of war" – Quartz
"Big energy fears peak oil demand is looming" – Financial Times


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Federal Reserve chair Janet Yellen is expected to announce an interest rate increase at 2:00 p.m. ET today, and, as usual, Bloomberg's Matthew Boesler wrote the preview to read,

"Beyond the expected announcement Wednesday of a quarter-point hike in the U.S. central bank's benchmark rate target, to a range of 0.75 percent to 1 percent, investors will be looking for whether policy makers change their forecasts for the rest of 2017 and beyond… In her press conference, Yellen will probably face questions on whether this week's rate increase marks a pivot toward a faster pace of tightening.

"Yellen's job at the press conference will be to emphasize the 'gradual' part, of their rate projections, said Roberto Perli, a partner at Cornerstone Macro in Washington and former Fed economist. As for explaining tightening now rather than waiting until later in the year, 'it is better from their perspective to take the opportunity when they have it, when they are confident about the prospects for the economy,' he said."

"Fed to Hike But Avoid Signaling Faster Pace: Decision-Day Guide" – Boesler, Bloomberg
"Hedge Funds Piling Into Treasury Short Bets Could Be Let Down by the Fed" – Bloomberg
"@UpshotNYT: Why Fed's era of easy money is finally drawing to an end. " – Twitter
"@tracyalloway Goldman's Jan Hatzius says Fed has fallen behind the curve - current policy is the most dovish deviation since 1970s. " – (chart) Twitter


Tweet of the Day: "@jason_kirby Stephen Jarislowsky has a warning for Toronto and its massive housing bubble " – Twitter

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Diversion: Malcolm Gladwell is interviewed by economics professor Tyler Cowen. There are a number of great quotes including Mr. Gladwell's irritation at Harvard University, saying "[Harvard is] in the luxury handbag business. They're not in the education business. "

"Malcolm Gladwell Wants to Make the World Safe for Mediocrity" – Medium

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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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