Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
I've been very careful not to point out "run for your lives" stories regarding the domestic housing sector from sources, like Zero Hedge, prone to hyperbole and alarmism.
In the last few days, however, fears of a housing correction have permeated the mainstream, as this column from Canadian Investor, entitled "Vancouver Real Estate Bubble Has Burst and Home Owners Are Panic Selling," highlights,
"Greater Vancouver home sales have fallen 85 per cent in the first half of August to a mere 87, down from 597 homes over the same time last year. Meanwhile, Richmond was down 96 per cent, Vancouver West down 94 per cent and the North Shore's West Vancouver down 90 per cent. Although the Johnny come lately are still listing homes to cash in on the capital gains, the buyers have dried up. "
I'm not about to hazard a guess on where the national housing market will be in six months or a year – there's too many moving parts. If, for instance, the economy recovers strongly in the final two quarters of the year, the housing panic might fade. There are two things I DON'T expect, no matter what. One, a 2008 financial seize-up is very unlikely. There are not enough sketchy derivatives around to cause a bank liquidity crisis.
I'm also ignoring all "the CMHC is going broke" scenarios. It's politically inconceivable that a federal government – particularly a Liberal one – will allow financial pressure to build at the mortgage insurer. The second stress appears, they will offer a line of credit the size of Jupiter.
"Vancouver Real Estate Bubble Has Burst and Home Owners Are Panic Selling" – Canadian Investor
"Toronto, don't let Vancouver's housing crisis become yours" – Report on Business
"Chinese Media Warns Canada's Housing Crash Will Put U.S. To Shame" – Huffington Post
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Markets are fine, but a Reuters reports provides a reminder that global economic growth is still faltering,
'Manufacturing growth in the [European] currency bloc slowed during August. Much of the expansion remained focused in the north, and the survey hinted at a further slowdown this month … Manufacturing growth in the United States also eased last month, data are expected to show later on Thursday … In China … the official PMI ticked up to 50.4 in August, compared with the previous month's 49.9. But the private Caixin PMI, which covers a greater share of smaller firms, showed activity stagnated last month. "While it is encouraging that manufacturing activity appears to be stabilizing, there is a risk that this is a 'calm before the storm' moment for the sector," said Danae Kyriakopoulou at Cebr. '
"Manufacturing falters as global demand weakens" – Reuters
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Fears of a September market correction are seemingly everywhere, but it's not supposed to work this way. The worst corrections happen when no one's looking for them, so in a twisted way the preponderance of doomsayers could be bullish.
"Why September Could Be Huge for Markets All Around the World" – Bloomberg
"There's a High Probability September will be Volatile" – Art Cashin, CNBC(video)
"Canaccord: Investors should be ready for a September TSX pullback" – Dowty, Inside the Market
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Tweet of the Day: "@jake_f In 2002 UBS built the largest trading floor in the world in Stamford CT. It didn't work out. twitter.com/anilvohra69/st… " – (picture) Twitter
Diversion: "Alzheimer's: New drug that halts mental decline is 'best news for dementia in 25 years'" – Telegraph
Scott Barlow