A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
The Windsor Star reports that the Ontario government has pledged $385-million in assistance to Ford Motor Co. and the feds are considering matching the investment. The project, an expanded engine plant in Windsor, is expected to result in between 400 to 1,000 new jobs, which makes the taxpayer bill roughly $1-million per new job.
Voters looking for the appropriate level of outrage need to make two determinations. One, does the use of taxpayer funds on this scale make economic sense? The math is likely on the side of subsidies here. Even if it takes 30 years, the governments will likely get their money back and more importantly, we'll avoid seeing the economy of western Ontario turn into a smouldering crater that results in even higher levels of taxpayer support.
The second question is more difficult and, in the end, not really answerable: Is the money better spent elsewhere? The discussion will only become more intense as the crisis-era bailout deals between Canada and major auto makers have to be renegotiated in 2015 and 2016.
Ford Engine investment a "game changer" – Windsor Star
Kia Said to Announce New Auto Plant Tomorrow in Mexico – Bloomberg
I've written a lot lately about the promising long-term growth fundamentals for global agriculture companies but a Wall Street Journal report suggests I should have waited before suggesting investment in the theme. The story notes that China's grain stockpiles are at record levels and the country is not currently struggling to meet the higher protein demand caused by a rising standard of living. (Rule of thumb is that each pound of meat requires three pounds of grain.)
Too Much of a Good Thing: China Grain Stores Bursting at the Seams – WSJ, China RealTime
China Agri-Industries issues profit warning – FastFt (subscription required)
See also 'Water reservoir levels rising in India after scary lows 'till mid-July" – Twitter
The South China Morning Post provides some startling statistics on China's effects on the Vancouver housing market. Ian Young writes, "A study released last week… concluded that 33.5 per cent of all houses sold by Macdonald Realty in the City of Vancouver last year (178 out of the 531) went to buyers with …mainland Chinese names."
What's more, those homes sold for an average of $2.07-million (Canadian) (HK$14.7 million), compared to the overall average of $1.44 million, meaning that likely-Chinese buyers represented 48 per cent of the detached housing market in dollar terms.
New evidence of the Chinese role in Vancouver's housing market – South China Morning Post
The Pragmatic Capitalism suggests that the term "passive investing" shouldn't exist. Cullen Roche writes, "there is nothing in the world of investment products that allows you to be a pure "passive indexer." That is, the ONLY pure indexing approach is buying the Global Financial Asset Portfolio and taking "what the aggregate market gives you." This portfolio isn't available though."
I think Mr. Roche overstates his case, but it's also true that investors need to keep in mind that equity benchmarks like the S&P/TSX composite are actively managed – stocks are kicked out and added every year based on set criteria. The real mystery is how the index committees keep beating Ivy league, highly paid portfolio managers.
It's Time to Eliminate the Term "Passive" Investing – Pragmatic Capitalism
Tweet of the Day:
@ReutersChina Chinese boy implanted with 3D printed vertebra: youtu.be/83ytVGxcWl8
Diversion: Just Six Months After the Olympics, Sochi Looks Like a Ghost Town - Gizmodo
Scott Barlow