A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
Economists believe that domestic growth has moved from resource-dependent to real estate dependent and this has numerous implications. Interest rate policy and household debt levels take on added economic importance and, more subtly, politicians seeking re-election become more concerned about the housing market. Bloomberg reports,
"On Friday, Statistics Canada released gross domestic product data that showed February was a banner month for sectors linked to housing. The real estate industry, residential construction, financial and legal services generated a combined 0.5 percent increase in output, the biggest one-month gain since 2014. Without those, the overall economy would have contracted slightly in February.
"A day earlier, the Ontario government released a budget that projects land transfer taxes will surpass C$3 billion ($2 billion) in the current fiscal year, from C$1.8 billion three years ago. For the province, it's the difference between a balanced budget and a deficit… RBC's ballpark estimate is that a 10 percent decline in national home prices would knock a full percentage point off growth."
"Life After Oil Makes Real Estate Canada's New Economic Crutch" – Bloomberg
"Future of Home Capital uncertain as bankers explore options" – Report on Business
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I can't stress enough how important this Morgan Housel column is for investors. We've moved from an era when an investor looking for a price-to-earnings ratio had to call their broker to another where data is ubiquitous enough than anyone, through cherry-picking, can prove any market (or social sciences, but that's another story) opinion they want, no matter how outlandish,
"We're lucky to have so much data. But it has a nasty downside. "With big data, researchers have brought cherry-picking to an industrial level," writes Nassim Taleb. There's so much data these days that a skilled analyst can "prove" nearly anything they wish – fooling themselves as much as anyone else. If having information used to be a skill, knowing what to do with it is now the hard part. It requires a combination fitting data to a logical narrative, questioning your own narrative assumptions, and taking conflicting studies as seriously as you take your own."
"Staying Competitive as the World Changes" – Collaborative Fund
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Mohamed El-Erian cites the four biggest factors driving markets this week – U.S. policy, soft data versus hard data , the Federal Reserve meeting, and French elections - while CNBC's Michael Santoli lists the three factors investors are currently over-rating.
"Four Things That Matter for Markets This Week" – BloombergView
"Santoli: These 3 big investor worries seem way overblown" – CNBC
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Crude prices aren't doing much of anything as the likelihood of further OPEC production cuts is offset by continuing signs of a supply glut.
" Oil's Big American Glut Is Resting Elsewhere" – Gadfly
"Big Oil Heads for Back-to-Back Profit Triumphs as Fortunes Turn" – Bloomberg
"Oil slips below $52 as U.S. drilling, China worries weigh" – Reuters
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Tweet of the Day (Re Equitable Group Inc.): "@LJKawa Basically, Canadian banks just stood up and said, "Home Cap's problems are unique/an isolated incident/contained" – Twitter
Diversion: Rarely have I agreed more with an essay,
"In a very perceptive essay, Will Rahn argued that everybody in America thinks they are losing…The internet doesn't coddle you in a comforting information bubble. It imprisons you in an information cell and closes the walls in on you by a few microns every day. It works with your friends and the major media on the outside to make a study of your worst suspicions about the world and the society you live in. Then it finds the living embodiments of these fears and turns them into your cell mates. And good heavens it is efficient."
"I write on the internet. I'm sorry." – The Week
Scott Barlow