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Top Links: A return of income trusts would be generational warfare

Globe and Mail columnist Scott Barlow.

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

The Report on Business published a solid argument for the return of income trusts written by contributor James Scarlett. The idea is interesting because lying just beneath the idea is the intensifying generational warfare between millennials and boomers.

Income trusts would be a huge benefit to a significant aging cohort desperate for income streams. It would be terrible for younger generations, whose long-term prosperity is dependent on corporations investing for the future, and employment growth by extension.

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A related story adds more colour to Citi's alarming new report on unfunded government pension obligations in the developing world. In describing the report, the New York Times Dealbook site writes,

"Twenty countries of the Organization for Economic Cooperation and Development have promised their retirees a total $78 trillion, much of it unfunded, according to the Citigroup report. That is close to twice the $44 trillion total national debt of those 20 countries… Governments have promised much more than they can most likely pay to current and future retirees, without revealing the disparity to investors who bought government bonds and whose investments could be at risk."

"It's time to revisit income trusts while avoiding their worst excesses" – Scarlett, Report on Business

"Study Finds Public Pension Promises Exceed Ability to Pay" – Dealbook

Bank of Montreal chief investment strategist Brian Belski published a report advising clients to buy technology stocks,

"We do not believe the relatively poor performance is a reflection of any fundamental problems with the [technology] sector…heightened concerns about the global economic environment, investors have used technology's strength over the past few years as an opportunity to take profits in an uncertain environment… [we] recommend that investors use the sector's recent weakness as an opportunity to add exposure within portfolios, and especially for [Apple Inc., Cisco Systems Inc. , Facebook Inc. and Alphabet Inc.]"

"@SBarlow_ROB BMO's Belski: time to buy tech' – (research report excerpt) Twitter

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Streetwise reporter Tim Kiladze notes that TransCanada Corp's giant $4.2-billion bought deal to fund its planned acquisition of Columbia Pipeline Group could set records for scale. The deal is interesting in itself, but I'm more interested in the bought deal as an indicator of domestic investor risk tolerance. Some larger bought deals, notably Fairfax Financial , have met with tepid investor demand and it will be interesting to follow this one.

"TransCanada's massive financing set for Canadian record on heavy demand" – Kiladze, RoB Streetwise

Alphabet Inc. (the former Google) is reportedly attempting to sell Boston Dynamics, its robotics business because it's unprofitable. For me, this is a sign that the 'robots are taking our jobs' meme is overrated.

"Alphabet is reportedly selling its robotics subsidiary Boston Dynamics because it's not making money" – Quartz

University of Western Ontario economics professor Michael Moffatt provided a useful preview of the upcoming federal budget. Mr. Moffatt's primary interests include 'realistic' economic forecasts, food rebates, elimination of import tariffs (his favourite hobby horse), tax simplification, immigration reform, details on a potential guaranteed income program and a commitment to better economic data.

"Eight things to watch for in the budget (beyond the deficit's size)" – Moffatt, Canadian Business

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Tweet of the Day (from an emerging markets bond portfolio manager): "@BTabrum Brazil is exciting enough, but throwing Google translate into the mix gives a nice absurdist spin. " – Twitter

Diversion: A feature article on the campaign manager for Jeb Bush's failed presidential bid provided terrific insight into the compelling and volatile U.S. political race,

" Debriefing Mike Murphy " – Weekly Standard

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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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