Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web.
The Federal Reserve will announce their plans for monetary policy Wednesday. Expectations point to no change in the target rate, but the beginning of a "run-off" for the giant hoard of fixed income the central bank purchased through quantitative easing. As always, the preview to read is from Bloomberg's Matthew Boesler,
"Fed to Pack Up Crisis Tool, Debate Next Hike: Decision-Day Guide" – Bloomberg
Related: "The investor scare story I didn't write" – Barlow, Globe Investor Newsletter
"How Do Central Banks Shrink Their Balance Sheets?" – Business Week
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National Bank economists warned that domestic manufacturing data pointed to a slowdown in the Canadian economy for the third quarter, but also noted that the factors behind the weakness might be temporary,
"The Canadian factory report was weaker-than-expected, although it has to be said that much of the damage was due to the transportation sector (mostly autos). Excluding transportation, factory sales were actually up 0.4% during July. Shipments of autos and parts were hurt by weak exports to the U.S., although a rebound in activity stateside ─ U.S. auto assemblies reportedly bounced back in August - suggest July's drop may be temporary."
"@SBarlow_ROB NBF: Manufacturing data indicates weaker Q3 Canadian GDP growth" – (research excerpt) Twitter
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Citi research published their list of top picks in U.S. equities. The stocks include Google parent company Alphabet Inc. and Cisco Systems, but a separate Citi report argues that it's too late for investors to buy technology stocks because of high valuations. These kind of conflicting thoughts aren't uncommon in big research houses, but they're still confusing.
"@SBarlow_ROB Citi's top U.S. stock picks" – (table) Twitter
"@SBarlow_ROB Citi: Too late to buy tech" – (chart) Twitter
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The always-brilliant FT Alphaville detailed academic research arguing that earnings, as currently calculated, are a poor guide to stock valuations,
"The 30-year pattern of the gains from the earnings growth investment strategy is depicted in Figure 2. Again, the deterioration of gains from perfect growth prediction is evident. Clearly, the problem lies with reported earnings, not in the way investors use them. Simply put, earnings no longer reliably reflect changes in corporate value and are thus an inadequate driver of investment analysis."
"Where we're going, we don't need profits" – Scaggs, FT Alphaville (free to read with registration)
See also "Going off gold [standard] did the opposite of what many people think" – Klein, FT Alphaville
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Tweet of the Day: "@chris1reuters #Oil stocks declining as demand rises, says ANZ "We see OECD inventories falling to 5-year average by end Q2 2018" – (chart) Twitter
Diversion: As I've written previously, CRISPR is the technology that worries me most. And by a wide margin,
" Genetic Engineering Holds the Power to Save Humanity or Kill It" – M.I.T. Technology Review
Scott Barlow