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Oil prices ‘like hanging a steak in front of starving people”

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

Bloomberg details the frenzy of activity in U.S. shale oil production this morning in no uncertain terms,

"'Everyone is so hungry,' said Joseph Triepke, founder of the industry research company Infill Thinking in Dallas. 'It's like we're hanging a steak in front of a bunch of starving people.' … That services companies are hopping again with crude worth half what it was three years ago is thanks in large part to technological advances that help explorers to find more pockets of petroleum riches, and to drill faster and frack smarter."

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"The Shale Industry Is Scrambling to Catch Up to Its Own Boom" – Bloomberg
See also: "IEA Sees Oil Investment Revival After a Two-Year Rout" – Bloomberg
"Why a sharp move lower in oil prices could be imminent" – Barlow, Inside the Market
"IEA: Oil investment drought threatens price surge" – Financial Times

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There have been a serious of allegations in recent days that, even for the most ardent Milton Friedman free market fan, suggest that the economic balance has shifted too far towards corporate interests and hubris.

The latest charges against Facebook imply particularly egregious actions. The BBC was investigating Facebook's filters that prevent posting and distribution of child pornography. The broadcaster alleges that when they confronted Facebook with evidence that the filters were ineffective, an executive reported the BBC to the police for possessing the photos.

Prominent U.S. investor Jeff Macke – formerly a frequent and entertaining guest on CNBC – also tweeted out what he described as members of the 'IBanking hall of shame'.

"Facebook failed to remove sexualised images of children" - - BBC
"@JeffMacke $FIT The IBanking Hall of Shame2: Fit insiders sell $400m of stock at $29 in November 2015. Co implodes 2 months later. Off 80% since. " – Twitter
"@JeffMacke $GPRO New lows on looming cash crunch. GoPro off 89% since secondary raised $100m for co, $700m for insiders ibankcoin.com/jeffmacke/2016… " – Twitter
"What's in your chicken sandwich? DNA test shows Subway sandwiches could contain just 50% chicken" – CBC

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Hedge funds are increasingly positioned for a sharp fall in global equity markets and this can be viewed as positive or negative for investors depending on their point of view. A contrarian would point out that hedge funds have increasingly struggled for performance in recent years so their bearishness could be a positive sign for stocks. On the other hand, there is ample data to support short term market pessimism.

"Based on buying and selling in 2017, managers have stopped loading up on bullish positioning. They've also become less reliant on U.S. stocks by selling economically sensitive bank shares and materials like copper, data compiled by Credit Suisse Group AG show. What are they buying? Gold."

"Hedge Funds Gird for Stock Selloff as Valuations Rattle Nerves" – Bloomberg

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Tweet of the day: "@amberkanwar Canada sticks out like a sore thumb in OECD report on stretched housing markets with highest house price-to-rent ratio ' – Twitter

Diversion: "Here's Why Engines Are Making Planes Slower Now Than 50 Years Ago" – Jalopnik

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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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