A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Domestic Housing starts results were released at 8:15 a.m. ET Thursday, showing an annualized rate of 206,000 new homes were build in October verses the expectation of 198,000. This represents a bit of a rebound as BMO economists note that previously, “Three straight monthly declines have reduced the six-month trend to 207,800 [annualized], the lowest since early 2017”.
CIBC economists were happy enough with the topline results but note some problems beneath the surface,
“the strength all came from the highly volatile multiples component. Single family housing starts in urban areas actually fell almost 11% on the month. The October reading of 47k for urban singles is the slowest pace since the depths of the crisis.”
“@SBarlow_ROB CIBC: Details of Canadian housing starts report are not great” – (research excerpt) Twitter
The S&P/TSX Composite was dragged higher by the S&P 500’s much-stronger rally Wednesday. U.S. equity strength was attributed to investors, after having learned in 2016 that anything is possible in national elections, starting a relief rally when conventional wisdom on midterm elections proved correct.
FT Alphaville notes, however, that things could have been much different if Republicans had maintained the majority in the House of Representatives. When early results had pollsters reconsidering a GOP House majority,
“For a brief stretch between 1 and 2am GMT last evening, yields on US government bonds spiked. At one point, the ten-year fetched a yield of 3.24 per cent. The two-year, 2.95 per cent (a level not breached since the global financial crisis)”
This seems an important reminder of how sensitive the U.S. bond market has been to news flow in 2018, and also a sign that the Republicans are no longer the party of fiscal responsibility.
“Debt markets let us know what they think about Republicans last night [update]” – FT Alphaville (free with registration)
“Investors shun 30-year Treasury auction” – Financial Times (paywall)
Crude prices have been even more volatile than usual lately. A larger than expected build in U.S. inventories announced Wednesday sent prices lower, but subsequent news that China has imported a record amount of oil caused some buying,
“Oil rises after record Chinese imports but threat of oversupply grows” – Reuters
“Oil tumbles nearly 20% from October high – but analysts expect a recovery” – CBC
I sold my Red Hat position on news of the company’s acquisition by IBM. I don’t hold any cloud-related stocks at the moment as a result. but data points, like this one below, make me wish I did (AWS is Amazon Web Services, their cloud and data business),
“@carlquintanilla Look at where Amazon is hiring the most: its web services division. About 3.5x more people at AWS than at any of its other units, says Citi. “Job openings at AWS alone are 1.3x the next largest company in our universe (Alphabet)” – (chart) Twitter
“Amazon and Cisco have a new product for companies that aren't ready to fully embrace the cloud” – CNBC
Tweet of the Day:
Diversion: “WW1 in color for 100th anniversary “ – (photos) The Chive