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

Scotiabank strategist Hugo Ste-Marie summarized the most recent Senior Loan Officer survey of Canadian banks and finds considerable tightening of credit conditions,

“Canadian banks are also restricting lending standards, making it harder for Canadian consumers and businesses to get access to credit. On the consumer side, credit conditions for both mortgage and non-mortgage loans are tightening … It seems that it’s much more difficult to get mortgage credit than other types of credit, suggesting banks have enough housing exposure for now, and they’re potentially only approving consumers with top notch credit scores… the price of credit for all type of consumer loans is going up sharply. Canadian banks are also restricting business lending conditions. Once again, both the price of credit, and access to it, is more difficult… business lending conditions seem to have tightened less in Canada than in the US. Overall, credit in North America is becoming pricier, and harder to get, which is not a good omen for economic growth”

“‘Canadian Banks Are Also Tightening Lending Standards’ (Scotiabank)” – (research excerpt) Twitter


RBC Capital Markets analyst Geoffrey Kwan surveyed the domestic mortgage market in search of leading indicators for the housing market. The end result seems benign,

“For over the past decade, there have often been concerns about an imminent major Canadian housing downturn, including most recently the pandemic-driven surge in home prices followed by substantial increases in mortgage rates. However, the housing market hasn’t crashed yet and despite economic and interest/mortgage rate concerns, home prices are showing early signs of increasing again. Economic data continues to show some signs of weakening and mortgage rates remain elevated, so maybe the illusion does change eventually into something real. For now, factors including continued low unemployment; sufficient cash resources by households thus far to cope with higher interest/mortgage rates; and mortgage lenders/insurers willing to implement measures with certain borrowers to keep them in their homes, thereby minimizing forced sales activity, has kept the housing market operating. In terms of mortgage loan growth, it’s slowed substantially to 5.9 per cent year-over-year as of February 2023 from its recent peak of 10.8 per cent year-over-year as of February 2022 and we expect growth to slow further to the low- to mid[1]single digits over the course of 2023″.


Goldman Sachs’ prominent chief economist Jan Hatzius is more bullish than most on U.S. growth prospects,

“Our U.S. growth forecast for 2023 remains at a well-above-consensus 1.6 per cent (annual average) and our judgmental 12-month recession probability at a well-below-consensus 35 per cent. We would split the latter number roughly evenly into the probability that the current banking turmoil — or another near-term shock such as a debt limit crisis — pushes the economy into recession in the next quarter or two, and the probability that upside inflation surprises force the Fed to deliver more monetary tightening that raises recession risk in late 2023/early 2024. Both outcomes are possible, but neither is likely in our view … Rates market participants have been most concerned about the risk that the banking turmoil will trigger a near-term recession. But two months after the SVB failure, the evidence for a big impact remains surprisingly limited. In terms of economic data, Q2 GDP is tracking at 1.8 per cent, the ISMs edged up in April, and the employment report surprised to the upside”

“Hatzius: SVB/regional bank fallout not visible in eco data” – (research excerpt) Twitter


BofA Securities U.S. oil and gas sector analyst Doug Leggate doesn’t sound very bullish on his coverage,

“[We] view the sector stuck between valuations that have modest upside at our base case (long-term $80 Brent) and a strip [futures curve] price where we see half our coverage with no value. With this backdrop, we continue to advocate selective exposure to the US Oil levered E&Ps and wholesale bullish outlook on US gas weighted names”


Diversion: “Chinese Mars rover sends back images of recent water-shaped crusts” – Ars Technica

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