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Briefing highlights

  • Market views from the trenches
  • Stocks climb on Xi comments
  • Markets, loonie at a glance
  • Kinder Morgan: Just sayin’
  • Wireless contracts draw complaints
  • Value of building permits dips
  • Russian markets under pressure

Some views from the trenches

David Rosenberg declares that “the bull market is over.”

Mark Schofield doesn’t see it that way, but cautions that “higher volatility and bigger corrections are likely.”

Finn McLaughlin worries that U.S. stock prices will probably falter along with the U.S. economy, and that the trouble “would almost certainly be “contagious” globally.

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And Bipan Rai says “a tweet here or an unsourced report there” is enough to cause you pain. He’s talking about currency markets, but it could easily apply to stocks, too.

That’s not really what you want to hear this morning after such wild swings in stock prices, but it’s certainly worth sharing these most recent views from analysts in Canada, the U.S. and Europe.

This comes as global markets are surging today.

Here’s a look at the last 10 years:

And here’s a closer look at those views from the trenches:

Mr. Rosenberg, Gluskin Sheff + Associates chief economist

“The bull market is over. This doesn’t mean we won’t be getting tradeable rallies along the way. But it does look increasingly as though we saw the highs on Jan. 26 for the cycle. All three of the major indices are down in three of the past four weeks. The degree of volatility is symptomatic only of a market in transition. I mean – nine of the past 11 sessions have seen the S&P 500 swing up or down 1 per cent or more. So far this year, the number of such intensely volatile days already has tripled what we experienced in 2017. And the fact that the Dow has now posted two individual periods in the same year of 10 per cent-plus declines says the same thing – declines like these back to back are more like hallmarks of bear, not bull, markets.”

Mr. Schofield, Citigroup managing director of global strategy and macro group

“Our Global Equity Quarterly recommends buying equities on the bigger dips. Our market forecasts see returns of about 8 per cent in global equities over the remainder of the year. However risks are rising. The cycle is maturing, which is likely to bring higher interest rates and yields, wider credit spreads and increased volatility. At present only 2.5/18 red flags are up on our Bear Market Checklist, but this could quickly become six or seven as the cycle moves into the next phase. A protracted growth slowdown is the main risk to our view and certainly seems to be on investors’ radar screens at the moment. Our global macro strategy team points out, however, that investor concerns have been fickle this year, flitting between overheating and slowdown. Thus, we still see upside for equity markets, but we caution that higher volatility and bigger corrections are likelyOur latest round of forecasts imply a rise in global equity markets of about 8 per cent to the end of the year, led by Europe with about 13 per cent. U.S. returns are slightly lower at about 6 per cent.”

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Mr. McLaughlin, Capital Economics assistant economist

“The recent weakness of some economic data and business surveys suggests that global growth may have peaked. If that is the case, it could spell trouble for global equities. Admittedly, we do not expect the global economy to slow rapidly. But we do think that the current expansion will begin to fizzle out before long … What’s more, we think that the U.S. will play a key role in the slowdown. We forecast that growth there will falter once tighter [Federal Reserve] policy starts to take a toll on the economy and the effects of fiscal stimulus fade. This could be as soon as later this year. U.S. equities are likely to suffer once the U.S. economy stalls, as investors revise down their expectations for earnings and demand greater compensation for holding risky assets. And a weaker U.S. stock market would almost certainly be contagious, especially if growth in the rest of the world also faltered.”

Mr. Rai, CIBC World Markets North America head of foreign exchange strategy

“We’re also in a world where trade war escalation is a real thing. Markets haven’t had to deal with this sort of risk since the Great Depression. As a result, a tweet here or an unsourced report there is enough to introduce new volatility that creates lots of pain for anyone trying to position for strategic gains. Indeed, broad realized volatility (according to our gauge) is at levels not seen since last spring and there seems to a sense of complacency when it comes to hedging ... Increased realized volatility could feed into itself, making positioning for strategic gains all the more strenuous.”

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Markets at a glance

Those views from the trenches aside, investors are fired up today, driving stocks higher on economic pledges from Chinese President Xi Jinping.

“The statement at the Bo’ao forum points to a more capitalist, more globalist China, and the timing is good as it eases tensions about a possible trade war,” said CMC Markets analyst David Madden.

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Just sayin’

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