Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
The combination of rampant speculation and flat crude prices means "something has to give" in energy markets, according to Bloomberg,
"At the start of February, speculators were betting a net 865 million barrels of oil across the market's two global benchmarks that prices would rise. As well as being a record, their bullish positioning expanded by 78 percent since just before the Organization of Petroleum Exporting Countries and 11 other producer nations pledged to cut global crude supplies. Benchmark prices rose about 20 percent over the same period… Unfortunately for the bulls, the oil market itself has fallen asleep after an initial surge."
"Frenzied Betting, Sleeping Market: Something Must Give in Oil" – Bloomberg
"US oil traders riveted by mystery bidding: Publication of data showing big crude stock increases prompts spurts of buying" – Financial Times
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Canada Goose and Snapchat are both announcing large initial public offerings and, as always, the first question investors should ask is "why are the current owners selling and willing to share the profits?"
I know of no issues with either deal. They could be great, but investors should always remember that the investment bankers involved are obligated to the issuing company to find the highest stock price possible, not motivated to provide a fair price to buyers.
I'm not sure it applies here, but the best policy for investors when their broker calls to offer shares in an initial or secondary offering is "what is your commission?" In general, broker commission is a lower percentage on deals that are attractive to investors – the bankers do not have to motivate them to push the stock.
"Canada Goose spreads wings with IPO" – Report on Business
"Snapchat parent Snap sees up to $22.2 billion valuation after pricing IPO at $14 and $16 per share" – CNBC
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Goldman Sachs is very bullish on base metals miners,
"Strong credit expansion [in China] has 'remarkably bullish' implications for the nation's metals-intensive industries as fixed-asset investment and manufacturing are poised to accelerate, the bank said in a report. New lending to the so-called old economy in December and January jumped by 1.1 trillion yuan ($160 billion) from a year earlier, equivalent to more than one and a half years of U.S. President Donald Trump's mooted infrastructure package, it said."
"Goldman Sees Metal Rally in Sight on Rerun of '08 China Stimulus" – Bloomberg
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Apple Inc. has struggled to produce a revolutionary product since the original iPhone yet Warren Buffett has just acquired a major stake in the firm. Apple, of course, has many of the hallmarks of a Buffett buy – enormous cash flow generation, extremely strong brand name recognition and a strong competitive position – but recent products like the Apple watch and Apple TV have disappointed.
"Apple Vowed To Revolutionize Television. An Inside Look at Why It Hasn't" – Bloomberg
"Warren Buffett Nearly Quadruples Stake In Apple" – Forbes
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Tweet of the Day: "@TomOrlik This could be a bigger challenge for China than Trump in 2017 - continued slide in property sales " – (chart) Twitter
Diversion: "Depression may be our brain's way of telling us to stop and solve a problem" – Business Insider
Scott Barlow