A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web
The release of the Bank of Canada's Financial System Review was followed up by some stunning statistics from Bank of Montreal Canadian rates and macro strategist Benjamin Reitzes (my emphasis),
"[new mortgage stress tests] will have some impact, but is unlikely to derail the housing market on its own…we'll need higher rates too for that… Notably, a pie chart on page 8 says that 47% of mortgages are due to reset within 1 year, 31% from 1-to-3 years, and 22% more than 3 years, suggesting that the rise in rates over the past year will hit a significant chunk of household in the near future."
The legions of online housing market Chicken Littles will be declaring the end of the real estate boom on this data, but I'm more concerned about the dampening effects of higher mortgage payments on consumption and the overall economy.
"@SBarlow_ROB BMO: "47% of [Canadian] mortgages are due to reset within 1 year, 31% from 1-to-3 years, " - (research excerpt) Twitter
"@SBarlow_ROB TD: Canada's financial system still vulnerable, but improving via @BrianDePratto" – (TD research excerpt) Twitter
Goldman Sachs calculates that the U.S. asset markets are now more expensive than at any time since 1900, and that investor pain is on the horizon,
"A prolonged bull market across stocks, bonds and credit has left a measure of average valuation at the highest since 1900, a condition that at some point is going to translate into pain for investors, according to Goldman Sachs Group Inc. 'It has seldom been the case that equities, bonds and credit have been similarly expensive at the same time, only in the Roaring '20s and the Golden '50s,' Goldman Sachs International strategists including Christian Mueller-Glissman wrote in a note this week. 'All good things must come to an end'"
"Goldman Warns Highest Valuations Since 1900 Mean Pain Is Coming" – Bloomberg
Andrew Garthwaite, a Credit Suisse strategist frequently ranked No. 1 in the annual Institutional Investor survey, isn't quite as pessimisticas Goldman Sachs for 2018, but it's close,
"While [Mr. Garthwaite predicts] economic growth and steady profits will help add another 6 percent to the MSCI All-Country World Index by mid-2018, stocks are unlikely to push any higher after that. Risks that could make the second half "more difficult" include a flare-up in junk debt markets, China's tightening policy and accelerating wages in the U.S, according to a Nov. 28 note."
"Clock Ticking for Equities' Last 'Hurrah,' Credit Suisse Says" – Bloomberg
Oil markets remain soft ahead of OPEC's announcement on extended production cuts expected Thursday. Tuesday, a report on U.S. inventory levels showed a larger build than expected,
"Oil has dropped this week from a two-year high on uncertainty about the outcome of Thursday's meeting of the Organization of Petroleum Exporting Countries. While the global oversupply relative to the five-year average has more than halved since January, the surplus still stands at 140 million barrels ... U.S. crude inventories rose by 1.82 million barrels last week, the American Petroleum Institute was said to report."
"Oil Pares Losses on Optimism OPEC Will Extend Cuts Through 2018" – Bloomberg
Tweet of the Day: "@ABC MISSION POSSIBLE: Two wingsuit fliers pull off a breathtaking stunt over the Alps when they jump from a mountain and then land inside an airplane in mid-air. abcn.ws/2idZPEu " – Twitter
Diversion: "YouTube's Creepy Kid Problem Was Worse Than We Thought" – Gizmodo