Every day ROB Insight delivers exclusive analysis on breaking business news and market-moving events. Streetwise offers news and analysis on Bay Street and the world of finance. Insight the Market delivers up-to-the-minute insights on developing market news.
Here are our editors’ picks of some of the best reads available to Globe Unlimited subscribers this week.
Housing prices are right on the money, study finds
With Canadian housing prices having surged 83 per cent in the past decade, few commentators will tell you the market isn’t overinflated. But Lakehead University economics professor Livio Di Metteo isn’t one of them. Picking through the data on wage and population growth, he found the jump in prices is pretty much justified by the fundamentals. It’s just one yardstick by which to measure the sector, says Scott Barlow in ROB Insight, but it offers some pretty compelling evidence that things aren’t so out of whack as most people think.
A not-so-happy new year for Canadian banks?
Ratings agency Fitch is flashing the warnings lights on the Canadian banking sector, saying consumer debt levels are unsustainable and housing overvalued. Despite Canada’s financial institutions enjoying the highest credit ratings in the world, writes Jacqueline Nelson in Streetwise, the stresses have prompted Fitch to take a negative view of the sector for 2014.
A Buffett-Chanos cage match
The world’s most successful short seller, Jim, Chanos, described Exxon Mobil as a “value trap” when he recently disclosed his big short position. His batting average is pretty high, but then again, so is Warren Buffett’s, who just days before revealed he had a $3.5-billion long position on Exxon. Oddly enough, Scott Barlow notes in Inside the Market, the two big factors that Mr. Chanos cited for going short are the very factors that Mr. Buffett use to guide his investing decisions. Gentlemen, start your engines.
Big deal: Rogers’ NHL rights coup
Rogers’ 12-year, $5.2-billion deal to acquire exclusive rights to NHL properties has deservedly got a lot of attention. No North American media player had ever acquired rights to a major sport’s broadcast and digital assets, but put in the context of bottom lines and and market values in Canada’s telecom, cable and media sector, it’s actually small potatoes, as Brian Milner explains in ROB Insight.
Welcome to the BRIC club, Greece
After being shown the exit door of MSCI’s developed market indexes this past summer, Greek assets are increasingly appearing on investors’ radar screens. Its benchmark index has advanced 27 per cent year to date, but David Berman notes in Inside the Market there are still a range of factors that should curb investor enthusiasm.
The return of the combustible ABCP derivatives
In the messy aftermath of Canada’s ABCP crisis, you’d be forgiven if you thought we’d seen the back of the derivatives behind ABCP for good. But you’d be wrong. Citigroup is marketing the first leveraged super senior (LSS) tranche of a synthetic collaterallized default obligation (CDO) since the blowup, Euromoney reports. Citi has amended their structure, Boyd Erman reports in Streetwise, but with the bitter taste they left last time around it’s hard to imagine much uptake on them.
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