A daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BMO chief economist Doug Porter notes that Canadians are spending more on services, less on housing-related expenses,
“One of the biggest drivers of the upside surprise in Q3 GDP growth was a 28% surge in consumer spending on services. This reflects the further re-opening of much of the country during the late summer, with further gains probable in Q4. The rotation out of goods still has lots of room to run, as spending on services was still 4% below pre-pandemic highs. (This, in a group that tends to grow 2% per year; so it’s still about 8-9% below trend.) On the flip side, the sector that had seen the biggest bounce in the past year — residential construction— corrected further, and heavily. Each of its three components fell sharply in Q3: new construction, reno activity, and home sales. Still, it remains above trend and seems to have perked back up again recently.”
“BMO: Canadian spend less on housing, more on services” – (research excerpt) Twitter
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Citi analyst Pierre Lau estimates the growth of solar power installations and provides top picks in the sector,
“Citi forecasts that new global solar installation capacity will accelerate 22.2% year-over-year to 165GW in 2022E, assuming lower polysilicon prices by then due to new production capacity, particularly in China. This would stimulate demand. Annual global solar capacity installation will keep rising, to 225GW in 2025E on our estimates, fueled by governments’ efforts at cutting emissions. Our global solar sector top picks are Sungrow and Flat Glass in China; SEDG and FLNC in the US; as well as Solaria Energia in Europe … The US is an important solar market, representing 10-15% of the total global solar installations annually and has typically been behind just China and Europe in terms of annual capacity growth over the past 10 years. In 2020, ~19 GW of solar generating capacity was installed within the US, and we expect the US installed solar capacity to grow at a ~19% CAGR [compound annual growth rate] through 2026″
“‘Citi forecasts that new global solar installation capacity will accelerate 22.2% yoy to 165GW in 2022E’” – (research excerpt) Twitter
“Rising sun: renewables to dominate new power capacity through 2026 –IEA” – Reuters
“Renewable energy pace must double to limit global warming, IEA says” – Financial Times (paywall)
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Morgan Stanley economist Christopher Collins’ forecast for Canada features a stronger loonie,
“We see real GDP growing by 4.3% in 2022 and 3.5% in 2023. On a quarterly basis, that would mean real GDP is on track to reach its pre- COVID-19 (4Q19) level in 4Q21 and its pre-COVID-19 trend GDP in 2Q23 … We expect the Bank of Canada to hike rates beginning in April. We expect another hike in June, before slowing the pace of rate hikes to every other meeting beginning in July when we expect the BoC will terminate the reinvestment of its balance sheet. This would result in a total of 4 rate hikes in 2022 (April, June, July, and October) and another 4 in 2023, bringing the policy rate to 1.25% at the end of 2022 and 2.25% at the end of 2023 … We expect USD/CAD to fall to 1.12 [CADUSD US$ 0.892] by the end of 2022. Broad USD weakness in the second half of 2022 and Bank of Canada (BoC) tightening should put downward pressure on USD/CAD.”
MS: “This would result in a total of 4 rate hikes in 2022 (April, June, July, and October) and another 4 in 2023 “” – Twitter
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Diversion: “Helen Fioratti, a New York art dealer, discovered that the surface of her coffee table was a mosaic from one of Caligula’s party ships” – Harper’s
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Scott Barlow