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A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web

Deutsche Bank analyst Michael Hsueh turned cautious on the loonie on concerns that the domestic currency will be “prone to being swept along in the current of easier policy.”

The report is titled Flu season comes to Canada, implying that global monetary easing is contagious,

“The [Bank of Canada’s] tone has changed meaningfully … this will tend to put CAD on a more defensive footing going forward. CAD will be more sensitive to poor data than good data as we adjust away from a “firmly on hold” policy mindset, with asset manager long positioning also still a factor … For CAD strategy, an unconditionally long CAD orientation is undermined, and a more tactical approach now makes sense, as the ingredients for either a macro/policy dislocation from the US or a concerted USDCAD breakout are less apparent."

Easier monetary policy and lower interest rates depress currencies by making local bond yields less attractive to foreign investors.

“@SBarlow_ROB Deutsche Bank on CAD: "there is now more of a sense that Canada is prone to being swept along in the current of easier policy"” – (research excerpt) Twitter

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In case Deutsche Bank’s forecast for the loonie has investors leaning towards buying U.S. equities, Merrill Lynch global economist Ethan Harris’s view suggests they not do that,

“On a negative note … US Regime Indicator and the European Composite Macro Indicator all deteriorated further in October. On the other hand, the GLOBALcycle, BofAML Global Industrial Momentum Indicator and BAC credit and debit card spending data all suggest signs of stabilization”

Mr. Harris’s analysis suggests that the global economy – which slowed well before U.S. growth – is starting to recover while American data continues to weaken.

“@SBarlow_ROB ML's Harris: "the Global Wave, the US Regime Indicator and the European Composite Macro Indicator all deteriorated further in October"” – (research excerpt) Twitter

See also: “Wall Street’s leading stocks reveal investor caution” – Reuters

“Korea’s Export Slump has Bottomed Out... Global Trade will Follow Suit” – Pantheon Macroeconomics

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I was very impressed with Morgan Stanley strategists Andrew Sheets and Michael Wilson for their accurate predictions for market volatility in 2018.

This year, however, both have remained bearish while markets continued to climb – even though their warnings about a significant U.S. profit growth slowdown were accurate.

Over the weekend, a member of Mr. Sheets team – Serena Tang - predicted an upcoming decade of poor investors returns but at this point, I’m not sure how to put Morgan Stanley’s forecasts in context relative to more bullish outlooks (my emphasis),

“How to navigate asset allocation when the traditional 60/40 equity/bond portfolio expected return is close to a century low. At the point of no return? Low growth, low inflation expectations and low yields contribute to low long-run nominal expected returns compared to history. We expect US stocks and USTs to see 4.9% and 2.8% each year respectively over the next decade, driving expected returns for a traditional 60/40 equity/bond USD portfolio close to a century low

“@SBarlow_ROB MS: "expected returns for a traditional 60/40 equity/bond USD portfolio close to a century low"”- (research excerpt) Twitter

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Newsletter: “The (surprising) 19 stages of wealth” - Globe Investor

Diversion: “ The Causal Effect of Cannabis on Cognition” – Marginal Revolution

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