Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BMO chief economist Doug Porter publishes an illustrative chart highlighting Canada’s housing shortage,
“The latest Canadian quarterly population stats reveal only the slightest moderation from the recent fiery pace — up 0.6 per cent quarter-over-quarter, and 3.0 per cent year-over-year. That translates into a 250,000 increase in the latest quarter (and 1.21 million in the past year). While a bit below the record rate in the second half of last year, this still marks only the seventh quarter in the past 50 years that Canada’s population has grown by as much as a quarter of a million—and all seven of those quarters were in the past three years. Putting the most recent 250,000 increase in perspective, raw housing starts were 66,000 in the same quarter, suggesting that the housing market just tightened even further. As the chart suggests, up until recently, Canada was building one new dwelling for every two new people—an equilibrium that largely held for more than 30 years, flying in the face of the myth of ‘decades of underbuilding’. But, in the past five years, building has been unable to keep pace with the rapid acceleration in population, with the ratio falling to 1 start for every 3 new people. In the latest quarter, it fell to almost 1 to 4. Not heading in the right direction for improved affordability ... quite the opposite”
“BMO on population growth: Still Fast Times at Occupancy High” – (chart, research excerpt) X
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Wells Fargo analyst Christopher Harvey emphasized U.S. companies with a high percentage of sales to China,
“China’s CSI 300 stock index is +10.8% WTD, mostly following the Politburo’s fiscal stimulus announcement. This was a clear positive catalyst for some US firms: the ten non-Info Tech SPX firms with the highest % sales to China averaged a robust 9.1% WTD return (see chart below left). We separate Info Tech, which also outperformed (see chart below right), as their reported sales to China often are merely manufacturing pass-throughs”
The non-tech stocks are Las Vegas Sands, Wynn Resorts Ltd, Albemarle Corp, Estee Lauder, Tesla Inc, Smith (A.O.) Corp, Borgwarner Inc, Agilent Tech Inc, MGM Resorts International and Aptiv PLC. The tech stocks are Qualcomm Inc, Monolithic Power, KLA Corp, Lam Research, NXP Semiconductor, Corning Inc, Broadcom Inc, Intel Corp, Applied Material and ON Semiconductor.
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BofA investment strategist Michael Hartnett’s weekly Flow Sow report is typically pithy,
“Zeitgeist i: “It’s the bubble dream…Fed slashing, oil crashing, China inflating; only thing that gives me pause is long-end still bid, and if this China stimulus don’t work then geopolitical risks going to soar”…. The Biggest Picture: world stock market cap set to surpass Oct’21 highs …Fed cutting in 50s, central banks cutting fastest pace since Apr’20, China stimulus >3% of GDP…global policymakers, desperate to prevent rise in unemployment, fueling further rise in political populism…”markets stop panicking…” …The Price is Right: Wall St conviction trades are 1. long gold (inflation & populism hedge), 2. long tech (AI), 3. short 30-year Treasuries (debt & deficits), 4. short China (deflation - hence massive squeeze), 5. everything else a “rent”, bullish rotation (EM & EAFE Q4) continue until recession (payrolls 250k) reverses gold/tech leadership”.
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Diversion: “The Saga of a Tech Exec’s Sunken Yacht Just Got a Lot More Interesting” – Gizmodo