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‘Prepare now for the end of the bull market’

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

I was aware that individual investors were making up a smaller portion of daily trading volume, but JP Morgan's estimate that individual stockpicking accounts for only 10 per cent of trading surprised me,

"[JP Morgan analyst Marco] Kolanovic estimates "fundamental discretionary traders" account for only about 10 percent of trading volume in stocks. Passive and quantitative investing accounts for about 60 percent, more than double the share a decade ago, he said … JPMorgan believes the recent sell-off in technology stocks may have been related to quantitative and computer trading."

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"Death of the human investor: Just 10% of trading is regular stock picking, JPMorgan estimates" – CNBC


Crude prices are lower this morning on news that OPEC is producing more oil than expected despite Saudi Arabia's export cuts and International Energy Agency research predicting that the global oil glut will continue into 2018,

"'For total non-OPEC production, we expect production to grow by 700,000 bpd this year, but our first outlook for 2018 makes sobering reading for those producers looking to restrain supply,' the IEA said. 'In 2018, we expect non-OPEC production to grow by 1.5 million bpd which is slightly more than the expected increase in global demand.'"

"Oil supply seen outpacing consumption in 2018, demand to top 100 million bpd" – Reuters
"Oil From OPEC's Rivals to Exceed Demand Growth in 2018" – Bloomberg
"@chris1reuters World #oil demand growth trend is clear - it's heading lower - @IEA data " (chart) Twitter
"@georgikantchev Non-OPEC oil production to come back with a vengeance " – (chart) Twitter


Hedge fund manager Stephen Jen has a fascinating thesis on why global long-term bond yields remain stubbornly low (and bond prices extremely expensive),

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"China and other developing nations are accumulating wealth, but failing to create sophisticated local markets that feature their own risk-free instruments. That's left a dangerous reliance on U.S. Treasuries, according to Jen's argument, perpetuating a bond bubble and pushing investors into riskier assets."

I'm very interested to see reactions to this from prominent macro-based traders and investors and economists. There are A LOT of implications if Mr. Jen is correct.

"The Global Economy Is Rebounding, But There's One Big Problem" – Bloomberg


Ben Carlson of Ritholtz Wealth Management has some good advice,

"The time to prepare or adjust your expectations for market turmoil is before it occurs, not during or after the fact .. My fellow Bloomberg Prophets contributor Tim Duy went on record last week saying we may not see the next recession until late 2019 or early 2020 at the earliest. A recession is probably the highest probability event to put an end to this bull market, but it's worth noting that stocks don't need a recession for a meaningful correction. The S&P 500 has experienced double-digit losses one out of every five years going back to the 1930s during periods that did not see a recession."

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"Prepare Now for the End of the Bull Market" – Carlson, Bloomberg


Tweet of the Day: "@LJKawa It's official: Biggest two-day move in Canadian 2-year yields (%pts) since the BoC last *hiked* in 2010. " – (Chart) Twitter

Diversion: "What current technology trends are likely to be the most mainstream in ten years?" – Quora

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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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