Skip to main content

Inside the Market Canadian housing market is featured prominently in global research report, for all the wrong reasons

A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web

U.S. earnings reports were mixed Wednesday.

Blackrock Inc. disappointed, Ford Motor Co. guided lower, but both Bank of America and Goldman Sachs exceeded profit forecasts,

Story continues below advertisement

“BofA beats profit estimates on higher interest income, loan growth” – Reuters

“ Ford forecasts weaker-than-expected fourth quarter profit” – CNBC

“BlackRock profit misses as market turmoil hits bottom line” – Reuters

“Goldman Sachs reports higher fourth-quarter trading revenue” – Reuters

***

Canada featured prominently, for all the wrong reasons, in an in-depth Citi research report called, “Flashing Red, Green, or Yellow? – House Price Risks to the Global Economic Outlook”,

“Even when adjusted for trends in household income, economies with the largest price rises since the GFC still appear relatively expensive. These include Canada, Australia, New Zealand, Scandinavia, and Israel. … Rising interest rates would strain debt servicing obligations. The BIS found that the debt service ratio (DSR) and other financial cycles indicators better predicted recessions than did the yield curve… A separate BIS study reveals that elevated DSRs can also signal a financial crisis on the horizon. Our research suggests that the households in high home price and household debt economies of Australia, Canada, Norway, and Sweden are the most at risk from rising DSRs … our economists believe that there is a significant probability of house price declines this year in 11 economies: Australia, Canada, China, Czech Republic, Hong Kong, New Zealand, South Korea, Sweden, Switzerland, Thailand, and the UK.”

Story continues below advertisement

“@SBarlow_ROB C: "Our research suggests that the households in high home price and household debt economies of Australia, Canada, Norway, and Sweden are the most at risk from rising DSRs" – (research excerpt) Twitter

“ @SBarlow_ROB C: Canada debt service ratios” – (chart) Twitter

“ @SBarlow_ROB C: Canada has biggest housing price increase since GFC” – (chart) Twitter

***

The Atlantic’s Derek Thompson is one of my favourite columnists. His most recent “The ‘Age of Tech’ Is Over” has some valuable perspective in my view,

“Print is dead, live TV is dead, and Millennials killed American cheese; but you can still read a print newspaper with the TV on while eating a cheeseburger. Under the latter definition, tech stocks really do look like goners. Publicly traded companies that are classified as “tech” now trade at one of the smallest premiums in history, according to a recent JP Morgan analyst note … if Netflix and Walt Disney both use technology to stream video, why is only Netflix trading at infinity-times earnings? And if Tesla and BMW ‘both use battery technology to power luxury cars,’ Deluard writes, ‘why should the former trade at 42 times forward earnings when the latter fetches 5.6 times trailing earnings?’

Story continues below advertisement

“Some of the largest tech companies have exhausted their main markets. Apple and Samsung may have reached the smartphone plateau, as phone sales seem to have peaked. Facebook and Google have grown to dominate digital advertising. But in the U.S., overall ad spending has historically averaged no more than 3 percent of GDP. How do you grow forever in an sector that isn’t growing? That’s easy: You don’t.”

“The ‘Age of Tech’ Is Over” – Thompson, The Atlantic

***

Tweet of the Day:

Diversion: These visual aids for understanding probability math is a huge public service to investors,

“Seeing Theory: Basic Probability” – Brown University

Story continues below advertisement

Newsletter: The best investment ideas aren’t sellable – Globe Investor

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter