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‘The stock market is now 35% passive and 65% terrified’

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

I don't think many investors would have guessed that OPEC production cuts would be the catalyst for sustained weakness in the crude price, but here we are,

"Oil headed for the longest run of weekly losses since August 2015 as OPEC member Libya restored production just as the surplus in the U.S. showed few signs of abating … 'There is really no bullish twist to the latest U.S. data,' said Michael Dei-Michei, head of research at Vienna-based consultants JBC Energy GmbH. 'Implied crude production seems to have moved upwards at a rather rapid pace, U.S. gasoline demand has taken a turn to the downside just as the summer driving season starts and total U.S. oil stocks have not drawn for two weeks.'"

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For what it's worth, I still think the short term course of oil prices is dependent on the futures curve.

"Oil Set for Longest Run of Weekly Losses Since 2015 Amid Glut" – Bloomberg
"The Forward Curve for Oil Prices Suddenly Looks Awful for OPEC" - Bloomberg
"Global oil markets expected to tighten in third quarter 2017, then loosen through 2018" – Energy Information Agency
"In latest sign of crude glut, ageing supertankers used to store unsold oil" – Reuters

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Business Insider explains why hedge fund manager Kyle Bass is shorting Chinese assets, and makes a compelling argument as to why he'll lose on that bet,

"'Guys like Kyle Bass sees China as a commercial financial system. It's not,' said Lee Miller, founder of China Beige Book, a private firm that collects Chinese economic data. 'Foreign exchange reserves aren't even full fire power, there's $800 billion more in the banking system at the government's disposal.'

"'All their banks are insolvent technically, but that doesn't mean the system can't support them,' he said."

"Kyle Bass still doesn't understand why he's getting smoked in China" – Lopez, Business Insider

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Ritholtz Wealth Management's Josh Brown produced an entertaining rant on the slow death of the asset management industry,

"The stock market is now 35% passive and 65% terrified. There has never been an asset bubble in which the industry that catered to that asset didn't participate. Wall Street has never had an extended bull market during which everyone spent the entire time worrying.

"Can you imagine a real estate boom where the brokers and mortgage people stood on the sidelines, forlorn and only taking part out of obligation? Unheard of. Until now. Job insecurity will do that to people."

"I'd like to solve the puzzle, Pat" – Brown, Reformed Broker

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This headline needs little explanation,

"In China, a Store of the Future—No Checkout, No Staff" – MIT Technology Review

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Tweet of the day: "@NewtonGroupSM Bloomberg: BofAML sees U.S. automotive downturn that's likely "more swift and material than expected" – Twitter

Diversion: This story is insane,

"A two-year investigation by BuzzFeed News has now uncovered explosive evidence pointing to Russia that the police overlooked. A massive trove of documents, phone records, and secret recordings shows Young was part of a circle of nine men, including the exiled oligarch Boris Berezovsky, who all died suspiciously on British soil after making powerful enemies in Russia… British police declared the deaths of all nine men in Berezovsky's circle non-suspicious"

"From Russia With Blood" – Buzzfeed

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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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