A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
Citi analysts are touting what they call the "world's most contrarian trade" – selling U.S. bank stocks to buy European bank stocks,
"European banks have never traded this cheap relative to U.S. banks, according to an equity research team at Citi … [Citi sees] risks declining with quantitative easing continuing, lower sovereign risk, lower bank risk, benign commodity markets and more 'synchronized' growth across the globe. It acknowledged headwinds, but explained there were also signs of improvement such as loan growth and improving returns."
Buying European bank stocks is not a trade I would recommend – I don't know enough to give an opinion either way at the moment – but I can point out there are so really juicy yields in the sector.
"Citi just went overweight on what it describes as the 'world's biggest contrarian trade'" – CNBC
It is a measure of the respect held for hedge fund manager Ray Dalio (multi-billionaire founder of Bridgewater Associates) that he was asked to speak to an audience of central bankers on the state of the financial system and global economy. Mr. Dalio made a number of interesting claims,
"We see an intensifying financing squeeze emerging from a combination of slow income growth, low investment returns and an acceleration in liabilities coming due both because of the relatively high levels of debt and because of large pension and health care liabilities … Holders of debt believe that they are holding an asset that they can sell for money to use to buy things, so they believe that they will have that spending power without having to work. Similarly, retirees expect that they will get the retirement and health care benefits that they were promised without working. So, all of these people expect to get a huge amount of spending power without producing anything. At the same time, workers expect to get spending power that is equal in value to what they are giving. They all can't be satisfied."
I highly recommend reading the entire article,
"Remarks at the 40th Annual Central Banking Seminar" – LinkedIn
Goldman Sachs continues their bearish view on oil prices this morning, warning that a "wall of new supply" will keep the commodity price below $55 per barrel,
"Global oil markets are set to remain 'very oversupplied' in 2017 amid the return of disrupted output in Nigeria and Libya, resilient U.S. shale production and the start of major projects commissioned over the past 10 years, Goldman's head of commodities research Jeff Currie said."
"Wall of Supply' to Block Oil Rally at $55, Goldman Sachs Says" – Bloomberg
I'll just link to this excerpt, it might be too "inside baseball," but I don't think I've ever seen the threat to incumbent media as succinctly defined as in this excerpt from the Financial Times' Simon Kuper.
"@estherbintliff Brilliant @KuperSimon on journalism and how to cope when robots take your job ft.com/content/ed2085… " – Twitter
Tweet of the Day: "@morganhousel The most overlooked trait of investing success. collaborativefund.com/blog/the-most-… " – (link and excerpt) Twitter
Diversion: "Golf Balls Are Basically Indestructible" – Sploid