Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
Fears regarding the financial health of Deutsche Bank got European bank stocks bludgeoned at the open overnight, dredging up never-really-dormant memories of the financial crisis and a subsequent wave of Chicken Little "the financial sky is falling' sentiment.
I'll link to stories detailing what's going on with Deutsche below, but I think investors are looking for perspective this morning. I'll start with European bank analyst Dan Davies, who wrote a blog post and a number of useful tweets in the early hours. Mr. Davies notes that "I think the most important thing to focus on is that of Deutsche's many problems, none relate to their assets ... This is very important because it means their collateral is good; there's actually a lot less uncertainty than most similar cases."
"Is it a crisis now? Not yet." – Davies, Medium
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The pseudonymous portfolio manager Macro Man wrote a post that, for me, provided the most even-handed perspective,
"This is not a Lehman moment and will not become a Lehman moment. For one thing, there is a veritable ocean of liquidity available today through various programs (LTROs, etc.) that were not in place during 2008 … However, there is a pretty wide gulf between 'not Lehman redux' and 'pony rides and lemonade for everyone.' Just because DB isn't Lehman doesn't mean that a failure wouldn't hurt, particularly given that other banks are looking ropy on their own accord."
"DB: end of the beginning or beginning of the end?" – Macro Man
"Deutsche Bank has credible liquidity shock absorbers" – Reuters Breakingview
"Why Deutsche Bank's Shares Are at a Record Low: QuickTake Q&A" – Bloomberg
"Concern Over Deutsche Bank's Health Shakes Markets' – NYT Dealbook
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For almost three years, the investment sectors I've liked best are cloud computing and (non-biotech, due to valuations) health care. In the former case, Google announced a re-branding and restructuring of their rapidly growing cloud business,
"'We are closing the gap incredibly fast' with competitors, Greene, a former CEO of VMware who joined Google last year to ramp up its cloud business, told experts and journalists at an event. Analysts say Google trails Amazon and Microsoft in market share but is gaining under Greene. Although the business is not big enough to break out separately in its quarterly earnings statement, Google reported a 33 percent surge in 'other revenue' in its most recent quarter, which analysts said was probably due largely to gains in cloud computing."
"Google rebrands cloud business, adds more artificial intelligence" – Reuters
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Energy consultancy Wood Mackenzie believes that OPEC's announced production limits, if actually followed, will have a meaningful positive impact on crude prices.
"@JavierBlas2 If fully implemented, @WoodMackenzie sees #OPEC cuts having a meaningful impact on physical #oil balances next year #OOTT pic.twitter.com/WmDnyRlxrJ " – (including chart) Twitter
Related: "@alexlongley1 A record 3.5 billion barrels worth of oil futures traded yesterday, all thanks to OPEC. It's a night record too #OOTT " – Twitter
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Tweet of the Day: "@PolemicTMM Deutsch Bank. It's a spectator sport that is unlikely to injure the crowd." – Twitter
Diversion: "Where does Canada's accent come from? " – BBC
Scott Barlow