A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web
The financial media meme this morning is "the death of the bond market has been greatly exaggerated" and ignores the fact that it was the media stoking alarm in the sector at the beginning of the week.
There's been very little market volatility or changing of trends in the past year and, whether they admit it or not, I think the about-face in tone shows that market writers are getting bored,
"This isn't the bear market you're looking for: McGeever" –Reuters
"Death of Bond Bull Market Exaggerated as Volatility Signals Calm" – Bloomberg
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National Bank economists Stéfane Marion and Matthieu Arseneau went with a "man bites dog" approach by arguing that the record totals of domestic household debt are no big deal for the economy,
"'After controlling for fundamentals such as employment, population growth, housing tenure, immigration, education and the solidity of the welfare system, our analysis suggests that the ratio of household debt to disposable income in Canada is relatively conservative," Marion and Arseneau wrote. "This probably reflects the cumulative effect of all actions taken to date to mitigate the vulnerability of the financial system to household indebtedness.""
"Canada's Household Leverage Isn't Abnormal, National Bank Says" – Bloomberg
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Happy news for investors in mining and energy,
"China Sets New Records for Gobbling Up the World's Commodities" – Bloomberg
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The Economist highlights the difficulties that Statistics Canada is having estimating the size, and potential growth, of the domestic marijuana market,
"Parliament's budget office made a first stab at estimating the size of the market: it guessed that in 2018 Canadians would spend C$4.2bn-6.2bn ($3.4bn-5bn) on cannabis, or about 0.2% of GDP. That is a little less than they spend on beer. Before incorporating its estimates into national accounts, StatCan has to figure out how much existing activity, such as electricity used by illicit "grow-ops", is being used in the cannabis economy."
'Measuring Canada's cannabis economy" – The Economist
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There is considerable conflict – bullish versus bearish- in the news flow from U.S. high yield debt markets and this suggests that if we are going to get market volatility, this might be where it starts. High yield bond prices have historically been extremely sensitive (negatively) to rising interest rates and government bond yields,
"Energy Junk Bonds Near Record as Oil Price Turbocharges Rally" – Bloomberg
"@LJKawa High-yield jitters? Cumulative outflows from HYG + JNK top $1 billion on Thursday, the most since Oct 2016." – (chart) Twitter
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Diversion: "The 25 most influential books ever written about business" – Business Insider
Tweet of the day: "@SallyPancakes Someone lost $143 million on a single trade at JPMorgan $JPM" – Twitter
Scott Barlow