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A daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

BMO senior economist Robert Kavcic provided an update on Canada’s “housing hangover,”

“Canadian home sales fell 5.3% in July (seasonally adjusted), or 29.3% from a year ago. That leaves activity back in the pre-COVID range, or roughly 40% below the peak of the demand-side blowout seen last year. It also leaves seasonally-adjusted activity below the average of the past decade. If there was ever any doubt that the COVID boom was a demand-side phenomenon (certainly no doubt here), this chart illustrates it clearly. Notice that sales at one point surged more than 50% above the 10-year average. The flip side, now that investment activity has fizzled and the pulling-forward of demand has stopped, is that we’re in for a period of benign activity. We’re not seeing any abnormal surge in new listings yet (trends there are still very normal), but soft demand should allow inventory to gradually keep building, and prices to keep falling into 2023.”


Morgan Stanley global economist Diego Anzoategui detailed the ongoing improvement in global supply chain issues,

“The Morgan Stanley Supply Chain Index (MSSCI) keeps dropping. MSSCI continued its downward trajectory in July with a substantial drop, -15% MoM in July (after -20% in June). The factors explaining the improvement are: (i) a sharp drop in the cost of transporting raw materials by sea, measured by the Baltic Exchange Dry Index (-13% MoM), (ii) an important decrease in delivery times in Korea and UK, and better backlogs in Taiwan, and (iii) an incipient drop in containership charter rates. Supply chains are still under stress, and we are still far from normal levels, but July’s print confirmed the break we saw in June and we do not see signs of a slowing pace of improvement”


BofA Securities’ widely followed survey of global portfolio managers found institutional clients a bit less bearish than last month,

“Sentiment remains bearish, but no longer apocalyptically bearish as hopes rise that inflation & rates shocks end in coming quarters ; BofA Bull & Bear Indicator stays at “max bearish” 0 = no immediate reversal of bear rally; but we remain patient bears, would fade SPX >4328 as rates up-profits down our base case … 88% of investors expect lower inflation next 12 months & fear of draconian hikes subsiding (Fed Funds hikes of 100-125bps forecast) … FMS [fund manager survey] on risk: cash drops from 6.1% to still very high 5.7%; #1 “crowded trade” = long US dollar, #1 biggest “tail risk” = inflation stays high … Source of “systemic credit event” = China/global real estate … Contrarian trades: contrarian bull trade (as services inflation falls, new credit bull begins) = short US$, healthcare & long EU, EM, banks, resources”


Diversion: “Canadian food insecurity by the numbers” – Maclean’s

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