A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Morgan Stanley strategists Michael Wilson and Andrew Sheets have most accurately forecast the market environment in 2018, as I’ve noted previously. Mr. Wilson’s most recent report shows a very definitive tone, and I’ll leave it to readers to judge whether it’s warranted or a sign of overconfidence,
“Rallies should be sold until the liquidity picture improves, valuations compress further or 2019 earnings estimates are reduced … Our primary concern remains liquidity. We have been suggesting the Fed and other central banks are tightening much more than most market participants and commentators. More importantly, the markets seem to agree and have been quietly revolting all year. Now that these revolts have reached the shores of the US and the large cap tech stocks, more people are paying attention. We don't think the revolts will stop until central banks pause or at least signal they are concerned.”
“@SBarlow_ROB MS is, well, ... blunt "Rallies should be sold until the liquidity picture improves, valuations compress further or 2019 earnings estimates are reduced." – (research excerpt) Twitter
“@SBarlow_ROB MS: "BIG 3 Global Central Bank Balance Sheet Growth is Falling Fast and Should be Negative by January" – (chart) Twitter
“@SBarlow_ROB MS clarifies they don't see end of secular bull market, just near term cyclical bear” – (research excerpt) – Twitter
“@SBarlow_ROB Nomura: "Probability of global stock market turning to a bear market is increasing" – (research excerpt) Twitter
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Crude prices have gotten caught up in broader market volatility. The rising local costs of fuel in the emerging markets is threatening global oil demand growth to the point where a 2019 supply glut is expected in some quarters,
“Major emerging Asian economies such as India and Indonesia have been hit hard this year by rising crude oil prices, which despite declining this month are still up by about 15 percent since the start of 2018. Fuel import costs have been pushed up further by a slide in emerging market currencies against the dollar, denting growth and even triggering protests and government fuel price controls in India… “There are two downward pressures on global oil demand growth [ said IEA chief Fatih Birol]. One is high oil prices, and in many countries they’re directly related to consumer prices. The second one is global economic growth momentum slowing down.”
“High oil prices hurt consumers, dent fuel demand: IEA chief” – Reuters
“Hedge fund BBL goes bullish on diesel, bearish on oil for 2019” – Reuters
“Hedge funds cut bullish bets on oil to lowest for over a year: Kemp” – Reuters
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Tweet of the Day:
Diversion: “The Top 100 Albums Of The Quietus' Existence, As Picked By tQ’s Writers” – Quietus
Scott Barlow