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A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.

Markets looked to continue on strong late week results until technology earnings spoiled the party. International Business Machines Corp., among Berkshire Hathaway Inc.'s largest holdings, posted a wretched set of quarterly results and sent the stock almost nine per cent lower in pre-market – taking Dow Jones Industrial index futures with it. A sharp decline in revenues from emerging markets was to blame for the shortfall.

In technology, the weakness sin was not confined to stodgy IBM. German software provider SAP AG posted decent results but slashed its growth forecast. Corporate spending is shifting to cloud computing, which reduces short term revenues for SAP.

"IBM shares are tanking" – Business Insider

"SAP cuts forecast as cloud shift weighs on profit" – Bloomberg

There is positive news out there. Richard Bernstein, former chief investing strategist for Merrill Lynch and founder of Richard Bernstein Advisors, cites a laundry list of reasons for investors to stay bullish. They include strong U.S. employment data, the consumption benefits of falling gasoline prices, declining mortgage rates and the continued strength of what Mr. Bernstein calls "America's industrial Renaissance."

Mr. Bernstein is particularly optimistic about U.S. small cap stocks which are less sensitive to slowing global economic activity.

"Volatility update" – Richard Bernstein and Associates

The sharp drop in crude oil prices caused a helpful surge in industry coverage over the weekend. The Brookings Insitute provided a detailed overview of the causes of commodity price weakness. Outside of the obvious culprits – rising U.S. oil production and falling European demand – the report cites the following additional factors:

"Unexpected resumption of oil production in Libya, Nigeria, South Sudan and Iraq…. Increasing energy efficiency, a response to three years of oil prices in excess of $110 per barrel, which, in turn, had an impact and continues to impact long-term global demand."

"Why oil prices are in a free fall" – Brookings Institute

In addition, the Financial Times' Alphaville blog's Izabella Kaminska goes "next level" on energy industry analysis, breaking down the Goldman Sachs Group Inc. view of the oil sell-off with some extremely interesting observations about the effects of the futures curve:

"This is not the oil market price crash you're looking for. Move along, move along. The curve should not be in backwardation. It should be in lovely yield-generating contango. Why is the market being such a fool?

More specifically in the words of Goldman: stop pricing spot markets based on expectations and messing with carry. If prices are to go down, they should at least be encouraging oil to be stored and/or hedged at a reasonable rate."

"Oil sell-off, the Goldman view" – FT Alphaville (registration required)

The New York Times' Dealbook blog highlighted the importance of the severe downdraft in U.S. bond yields last week. In effect, investors should expect sharp moves in credit markets because large banks, because of regulation, are no longer acting as intermediaries to slow volatility, but standing out of the way and letting them move. The Dealbook report notes that the market action Wednesday was "similar to the move that occurred when Lehman Brothers collapsed…. [and] the plunge in the Treasury yield could be a sign of structural weakness in the market."

"Seeking a cause after a benchmark bond's unnerving move" – NYT Dealbook

See also "Lack of secondary market liquidity exacerbates sell-off" – Euromoney

Highly respected Citigroup credit strategist Matt King is surprised equity markets held in as long as they did with central banks no longer provide as much support to asset markets. With the Fed taper continuing, this is a trend for investors to watch,

"For over a year now, central banks have quietly being reducing their support. … much of this is down to the Fed, but the contraction in the ECB's balance sheet has also been significant. Seen from this perspective, a negative reaction in markets was long overdue: very roughly, the charts suggest that zero stimulus would be consistent with 50 basis points widening in investment grade, or a little over a ten percent quarterly drop in equities. Put differently, it takes around $200-billion per quarter just to keep markets from selling off."

"It takes $200-billion per quarter to feed the machine" – FT Alphaville (registration required)

Tweet of the day: @BloombergNews Here's a list of break-even points for America's biggest shale-oil regions: bloom.bg/ZymnAb pic.twitter.com/mfmy4LJZ3z

Diversion: "The self-driving race car" – Jalopnik

Follow Scott Barlow on Twitter @SBarlow_ROB

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