Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Canadians are aware of the domestic real estate frenzy, but the data still has the ability to shock,
“Demand still rages in Canadian housing, with 25%-to-30% annualized price growth now the run rate. We continue to emphasize demand, not supply. Consider that: Housing starts surged again in November above 300k annualized, and will have a record year; Housing completions are running at a record high; New resale listings are coming to market a touch more often than pre-COVID norms. On a real per-capita basis, resale transaction values over the past year are now running at around $17k per Canadian person 25 years and over.”
“The ongoing ridiculousness of Canadian housing demand (BMO)” – (research excerpt) Twitter
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Citi global strategist Robert Buckland notes that contrarian investment strategies were mostly successful in 2021 and outlines the contrarian trades for the coming year,
“2021: Contrarian Success — Contrarian equity strategies generally performed strongly this year. Bullish calls on Energy and Financials paid off, as did a bearish call on China. The bearish call on US equities was wrong, as it often is. 2022: Next Year’s Asset Calls — Contrarians will be long gold, short oil. They will be sellers of the US$. They will be long EM, short DM equities 2022: Next Year’s Equity Calls — Contrarians will now be bearish on US equities, especially Tech stocks, and European Luxury Goods. Within EM, they will buying anything China-related. 2022 Outlook — Contrarians are now positioned for global economic slowdown, which would help more defensive equities outperform. They could also profit from significant Fed tightening, which might derate expensive growth stocks. Chinese fiscal or monetary stimulus could also help contrarians in 2022.”
" Citi: Contrarian calls for 2022″ – (research excerpt) Twitter
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BofA Securities sees global oil markets as balanced for 2022,
“With additional supplies due to hit the market from the release of strategic reserves (18 million barrels pending from the first US sale on Dec 17th) and OPEC+ additions in Jan-Mar into the weakest (seasonal) demand part of the year, it seems reasonable that oil prices could face near term headwinds until the net impacts of Omicron and OPEC+ policy become clear … Barring any change in OPEC policy or somehow faster recovery in demand we expect the early year surplus to act as a cap to 1H22 price outlook. How the balance of the year plays out is largely a call on a 2022 mobility recovery but with two final observations worth considering as we ponder 2022: Saudi’s demonstrable intervention that has shown itself prepared to aggressively manage oil markets on condition it is not competing for market share and the COVID impact on a jet fuel recovery which remains the critical link to closing the demand gap and where our airlines analyst has so far retained his expectations of full recovery in available seat miles by summer. So where that leaves us is pretty much where we been now, for several months – an improving oil outlook as a function of declining COVID threat, managed by OPEC intervention and a global supply / demand outlook that when adjusted for the inability of some OPEC countries to hit their numbers is tighter than it looks…while the near term risk is towards a softer oil market in early 2022, the key drivers of a tighter supply demand balance remain in place.”
“BofA: Oil markets will be balanced in 2022″ – (research excerpt) Twitter
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Newsletter: “A lesson in how not to invest” – Globe Investor
Diversion: “Bruce Springsteen sells his entire music catalogue for $500m” – BBC
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Scott Barlow