A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Morgan Stanley’s chief investment strategist Ruchir Sharma really, really doesn’t want the Federal Reserve to cut rates on Wednesday, and wrote a column for the New York Times to make this clear,
“Cutting rates could hasten exactly the outcome that the Fed is trying to avoid. By further driving up the prices of stocks, bonds and real estate, and encouraging risky borrowing, more easy money could set the stage for a collapse in the financial markets. And that could be followed by an economic downturn and falling prices — much as in Japan in the 1990s. The more expensive these financial assets become, the more precarious the situation, and the more difficult it will be to defuse without setting off a downturn… Easy credit could not force over-indebted Japanese consumers to borrow and spend, and much of it ended up going to waste, financing “bridges to nowhere” and the rise of debt-laden “zombie companies” that still weigh on the economy.
“Why We Should Fear Easy Money: Cutting interest rates now could set the stage for a collapse in the financial markets” – New York Times
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CIBC interest rate strategist Ian Pollick warned Canadians about an extremely busy, potentially volatile week ahead,
“Canadian data risks are skewed to the downside this week - negative GDP is a possibility and our trade balance is likely to slip back into a deficit position … In Canada, we'll get the May GDP report … and the international merchandise trade report (Friday). GDP is expected to gain a small 0.1%, with recent activity indicators (wholesale, retail) highlighting some potential deceleration from the strong April report. CIBC Economics is looking for no growth during the reference period, reflecting a likely decline in oil production (due to maintenance shutdowns) that should offset any acceleration coming from housing-related activity. The margin could be quite slim to keep growth from contracting in May.”
Mr. Pollick is much more bullish for the economy in the months ahead.
“@SBarlow_ROB CM: "Canada - Caution: Extreme Week Ahead"” – (research excerpt) Twitter
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The pictures from the Fortnite World Cup are unbelievable to me, with the stadium that hosts the U.S. Open for tennis full of fans watching live video gaming.
The winner took home US$3-million out of a total purse of $30-million and two Canadians split C$2.4-million.
I’m still trying to figure out how to enlarge my portfolio with this trend, and haven’t come up with a stock representing a clean play.
“ U.S. teen wins $3 million at video game tournament Fortnite World Cup” – Reuters
“Canadian teen Hayden Krueger wins $1.2M in Fortnite World Cup” – CBC
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Brian Madden from Goodreid Investment Counsel appeared on BNN Bloomberg to analyze dividend stocks to make sure the payouts are sustainable. The main headings are corporate debt maturities, credit covenants, dividend history, and profit growth,
“How safe is that dividend?” – BNN Bloomberg (video)
See also: “Why this portfolio manager is selling Canadian stocks” – BNN Bloomberg (video)
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Tweet of the Day:
Diversion: “The 101 people, ideas and things changing how we work today” – BBC