Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Reuters energy specialist John Kemp noted that the U.S. diesel shortage is easing:
“Distillate fuel oil inventories increased by 3 million barrels in the six weeks between Oct. 7 and Nov. 18, according to the U.S. Energy Information Administration (EIA).The increase was small but runs against the normal trend for a drawdown at this time of year and indicates high prices and a slowing economy are starting to rebuild inventories… Distillate inventories have not increased at this time of year since 2008, when the financial crisis was pushing the economy further into recession. Stocks are still 21 million barrels (-16% or -1.25 standard deviations) below the pre-pandemic five-year seasonal average. But the deficit to the seasonal average has narrowed from 34 million barrels (-24% or -2.05 standard deviations) on Oct. 7.”
“U.S. diesel shortage starts to ease” – Reuters
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BMO economist Robert Kavcic predicts that wage growth in Canada is just getting started (my emphasis):
“Contract negotiations are making headlines in a number of sectors/regions now, and suffice it to say that the volume has only just started to turn up on this front. Wage settlements tend to follow the path of inflation in Canada, as one would expect. But, because existing contracts take time to expire, and it takes time for inflation expectations to set in, the process is somewhat slow moving. As the chart shows, it seems like the best fit between wage settlements and inflation comes with a roughly three-year lag, so the recent bout of price pressure is going to be pushing up wage demands for some time yet… "
“BMO: “Wage Demands Just Warming Up”” – (research excerpt) Twitter
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The Financial Times wondered whether nuclear energy is set for a comeback, but not in a way that will benefit Canada’s uranium production:
“It might look pie-in-the-sky to some, but others hope that thorium, a radioactive element found on dark sandy beaches around the world, could one day power a potent new generation of small modular nuclear reactors. Enthusiasts say these will be much smaller, safer and cheaper than today’s giant nuclear plants, which can cost up to £1bn ($1.2bn) to decommission over decades, according to the energy think-tank Ember. Danish modular reactor start-up Copenhagen Atomics has applied for government funding in the UK to start commercial production of nuclear energy from the (ambitious) target of 2028 … The International Energy Agency’s base scenario for the world reaching net zero carbon emissions by 2050 envisions spending on nuclear power more than doubling by that date.”
“Time to start betting on a nuclear renaissance?” – Financial Times (paywall)
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Diversion: “Mercedes-Benz to introduce acceleration subscription fee” – BBC
Tweet of the Day: “Our Fear & Frenzy Sentiment Index, incorporating 11 of the well-known equity markets sentiment indicators, is inching towards ‘Frenzy.’” – Twitter