A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web
I wrote that "Goldilocks is dead" for Tuesday's Globe Investor newsletter, but I should have spent more time emphasizing that a bear market is not imminent.
The benignly supportive market backdrop may be coming to a close and volatility set to climb, but short-term signs like corporate profits and global growth are intact.
With this in mind, the wild gyrations in equity markets Tuesday are likely part of finding market pricing levels that reflect both solid current conditions and rising risk. Goldman Sachs appears to agree,
"Our economists still see a low probability of recession and while our bear market risk indicator is at elevated levels it has remained range-bound, in part due to anchored inflation. Equity valuations have reset to the lower end of their range and current equity flows and equity-bond rotation are not yet consistent with levels before bear markets."
'@SBarlow_ROB GS: no bear market yet" – (research excerpt) Twitter
From Morgan Stanley: "@SBarlow_ROB MS: 3-6 months of bumpy markets after drawdown, higher after 12M" – (research excerpt) Twitter
"Global markets jittery as U.S. futures signal a lapse back into losses" – Report on Business
Merrill Lynch thinks that everything will be fine unless volatility spreads to corporate and government bond markets:
"@SBarlow_ROB ML: "another wake-up call that equities have been significantly underpricing risk." – (research excerpt) Twitter
Credit Suisse is more confident than most research houses, publishing "Let's Go Shopping," highlighting oversold U.S. stocks with strong fundamentals.
Top picks include Verizon Communications Inc., Autodesk Inc., Netflix Inc. and Noble Energy Inc . Full list here
Domestically, prices for detached homes in Toronto were reported lower in year over year terms for the first time in forever, although other categories continued to see gains,
"The Toronto Real Estate Board said Tuesday the average selling price of a detached home in the 416 area code was $1,283,981 in January, a decline of 3.9 per cent from the same month a year earlier. Prices for other types of housing, however, were higher. Semis changed hands for an average price of $936,623, townhomes sold on average for $712,186 and condominiums went for $543,279 — increases of 3.7, 8.2, and 15.1 per cent, respectively, over the past 12 months."
"Average price for detached homes in downtown Toronto fell 4% in past year" – CBC
"Ontario's crackdown on syndicated mortgages comes far too late" – Maclean's
Goldman Sachs has doubled down on their bullish call on commodities,
"'Historically, when you look at commodities they perform very well during rate-hiking cycles,' Currie told Tom Mackenzie in the interview. 'Oil's what we called backwardated, where spot prices sit above forward prices, so you buy at a discount and roll up the curve. In other words, it pays you to be long." "During the rate-hiking cycle industrial metals are up on average 50 percent per annum: we did 30 percent last year,' said Currie. 'So again, we'd think again that in this type of environment, this is what commodities were intended to perform really well. And what we're seeing so far is spot on.'"
"Goldman's a Raging Bull on Commodities as Turmoil Aids View" – Bloomberg
"Oil steadies, with lower inventories offset by higher U.S. output" – Reuters
Tweet of the Day: "@EdVanDerWalt Bitcoin's in a bull market." – (chart) Twitter
Diversion: "This Is What 'Snowfall of the Century' Looks Like in Moscow" – Gizmodo