Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BMO senior economist Robert Kavcic broke down which domestic housing markets are getting hit worst by price corrections,
“Home prices are correcting across the country, but the speed and depth varies. Taken from the February peak in the national benchmark price, the accompanying chart shows how some select markets have performed. It’s abundantly clear where the worst spots are— suburbs and exurbs of Toronto, where prices are now officially off nearly 20% in some areas. These markets were also the first to break (speculative psychology was arguably worst in these areas). The Prairies and Atlantic Canada are holding up much better. Keep in mind that a market like Calgary had already struggled for a number of years before COVID, so prices there never really got stretched. B.C. is struggling, but not quite as severely as Ontario. Montreal and Ottawa are correcting in a moderate and orderly fashion.”
The housing markets getting hit hardest are Oakville, Kitchener-Waterloo, London, Hamilton and Barrie.
“BMO: Regional housing market damage” – (research excerpt, table) Twitter
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BofA Securities chief investment strategist Michael Hartnett remains extremely bearish in his typical, bullet point style,
“US CPI unlikely to drop below 4-5% anytime soon …Fed funds & US yields heading to 4-5% next 4-5 months …US unemployment rate heading to 4-5% next 4-5 quarters; world max bearish but we say new highs in yields=new lows in stocks … Inflation shock ain’t over, financial conditions tightening … S&P 500 in 20th bear market past 140 years; average peak to trough decline 37.3%, average duration 289 days; history no guide to future but history says bear market ends Oct 19th 2022 (35thanniversary Black Monday) with S&P 500 at 3020 (note Nasdaq already down -29%); EPS recession shock (see FedEx) the catalyst for new lows; we say nibble at SPX 3600, bite at 3300, gorge at 3000.”
The S&P 500 is at 3901 pre-market, 23.1 per cent above the 3000 level.
“BofA’s Hartnett ... still bearish” – (research excerpt) Twitter
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Morgan Stanley strategist Victoria Irving and research associate Amelia Danjoux met with three different companies with drastically different solutions to carbon capture,
“A breadth of solutions available in the market to capture carbon. Carbon Capture in a more traditional sense avoids carbon being emitted into the atmosphere by capturing it at the point of release and transporting it to be stored in a natural geological environment. We hosted Storegga, which primarily offers transport and storage solutions. The company stores the CO2 in depleted oil and gas fields offshore. We also heard from two bio-technology companies, Deep Branch and Hexas Biomass. Deep Branch fosters a more sustainable food system by using CO2, alongside hydrogen, as an input into its fermentation process to create a single cell protein for animal feed. Likewise, Hexas uses proprietary technology to a create a sustainable fibre through the growth of its bio-fuel crop, XanoGrass, which sequesters carbon from the atmosphere. The crop can be used to replace wood, corn and other fossil-fuel based raw materials across a number of applications.”
None of the companies mentioned are public but I was surprised by the variety of approaches here.
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Diversion: “Stunning images of space abound in this year’s Astronomy Photographer of the Year competition” – CBC
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