Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Housing affordability is at the forefront of federal election issues, making this BBC report on the problems with rent control in Sweden more topical for Canadians.
“A shortage of accommodation in Stockholm and other cities is causing a major headache for young Swedes - in a country which has been championing rent controls since World War Two. Rents are supposed to be kept low due to nationwide rules, and collective bargaining between state-approved tenant and landlord associations. In theory, anyone can join a city’s state-run queue for what Swedes call a “first-hand” accommodation contract. Once you have one of these highly-prized contracts it’s yours for life. But in Stockholm, the average waiting time for a rent-controlled property is now nine years, says the city’s housing agency Bostadsförmedlingen, up from around five years a decade ago… The traffic-jam has fuelled a thriving sub-letting or “second-hand” market, with “first-hand” renters and owners alike offering apartments to tenants for very high prices, despite regulations designed to stop people being ripped-off. “I really feel like Sweden actually has failed [on housing],” says Mr Stark, who believes he pays double the price his apartment should be leased for.”
To be fair to Sweden’s policies, the story also notes “Only around 8% of Swedes live in households spending more than 40% of disposable income on housing, compared to 15% in the UK and almost 40% in Greece”
“Why rent control isn’t working in Sweden” – BBC
B of A analyst Ben Randol says weakness will persist for the Canadian dollar.
“Prior to the recent move, CAD’s outperformance vs. G10 FX peers in 2021 had been the result of a virtuous cycle of global economic recovery, strong commodity price appreciation, a hawkish central bank, buoyant risk appetite and supportive speculative flows… Against a backdrop of solid but decelerating global growth, sharp gains in Canada’s terms of trade over the last year look unsustainable, in our view. We are penciling in a further moderate slide from lofty June levels, as was the case back in 2003. Softening terms of trade, in turn, puts modestly less pressure on the Bank of Canada to follow through with the upcoming (reasonably well-priced) hiking cycle as the Fed approaches a taper announcement… we have upwardly-revised our USDCAD forecast, with a year-end forecast of 1.30 [CADUSD of $.77]. "
“@SBarlow_ROB CAD: Weakness to persist (BofA)” – (research excerpt) Twitter
Morgan Stanley analyst Brian Nowak published the third in a series of top U.S. stock ideas under the heading Top Non-FANG ‘22 Ideas . Video game developer Activision Blizzard joined the previous picks Compass Inc. (A) and Uber Technologies Inc,
“Is the Blizzard Diablo and Overwatch pipeline intact and still coming in ‘22/’23? Our View: We think it is...as the strength of Blizzard’s development teams and company’s recent [”very significant 18-month period for content releases” commentary from management] leave us confident the pipeline will flow in ‘22. While there have been recent media reports of workplace disruptions … we remain optimistic on the pipeline to come… We see Call of Duty’s (CoD) leading reach, engagement and multiplatform offering leading to better than expected durability even through reopening and competition … We see 45% upside to our $120 ATVI price target: ATVI is currently trading at ~20x NTM [next 12 months] PE on consensus (and ~17x our ‘22 EPS), more than 2 standard deviations below the 2-year average of 24x and at the lowest absolute multiple since August of ‘19.”
“@SBarlow_ROB MS: ATVI joins COMP and UBER as ‘Top Non-FANG ‘22 Ideas’” – (research excerpt) Twitter
Diversion: " This Touchscreen Coffee Table Makes Digital Board Games a Blast” – Gizmodo
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