A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
A weak crude oil market and range-bound gold bullion price had me thinking that geopolitics was an overrated factor in recent market volatility. A six per cent plunge in London home prices, however, is changing my mind.
An influx of Russian and Chinese capital had been driving London housing prices to lofty, unaffordable heights but this trend appears to have come to an abrupt end in July. Bloomberg reports that prices fell 5.9 per cent – the largest decline since December 2007.
The Bank of England enacted restrictions on mortgages that did affect the housing market, but the news may also form a sign that the Chinese government's crackdown on corruption and capital flight is starting to bite. If so, it will cause some justifiable anxiety for those who are over-extended in Vancouver real estate.
"London home asking prices plunge most in more than six years" – Bloomberg
See also: "Chinese officials rush to sell luxury homes amid corruption crackdown" – Wall Street Journal
The end of the commodity supercycle continues as global mining firms look to sell assets bought in more optimistic eras. Rio Tinto PLC is "reviewing options" for a major copper property in New Guinea and BHP Billiton Ltd. is looking to spin off $15-billion in assets.
The question for Canadian investors is, why buy mining assets when insiders want to sell?
"Rio Tinto reviewing options for its controlling stake in Bougainville Copper" – WSJ
"New BHP Billiton $15B spin-off company for unwanted assets to set up HQ in Perth" – International Business Times
See also: "China faces buyer's remorse in Canada's oil patch" – Report on Business
Goldman Sachs economist Jan Hatzius is arguably the most respected sell-side economist in North America. In a recent report, Mr. Hatzius argued that a major sell-off in U.S. equities is unlikely because an important ingredient – credit growth – has not been apparent.
Personally, I would temper this conclusion by noting that the corporate debt explosion in recent years can be categorized as credit expansion and perhaps more importantly, the Federal Reserve's balance sheet expansion can also cause issues. Nonetheless, Mr. Hatzius' opinion shouldn't be taken lightly.
"Here's the simple reason we're probably not about to have another huge crash" – Business Insider
A video entitled "Humans Need Not Apply" is making the rounds among professional investors in New York. It is basically the Friday the 13th horror movie view of the future of employment which, because of technology, will really be the future of unemployment. I will leave it to viewers to decide whether it's prescient, or just scare-mongering.
"Humans need not apply" – Reformed Broker
Tweet of the Day from Irish portfolio manager @LorcanRk: "Please move calmly towards nearest emergency exit.. RT @FD: Oh, London asking prices drop 6 per cent. bloomberg.com/news/2014-08-1… "
Diversion: The best read of the weekend was this New Yorker article covering the bizarre world of pharmaceuticals, health risks and regulation through the lens of popular sleeping aids. It's not the usual "Bad Pharma" finger wagging – surprising, fascinating and more than a little unsettling.
The money quote: "My best estimate is that drugs like zolpidem are killing as many people as cigarettes."
"The Big Sleep" – New Yorker
Scott Barlow