A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Investors can look for volatility in the loonie when the Bank of Canada reports its decision on interest rates Wednesday.
A bad string of economic data should have governor Stephen Poloz in a more dovish frame of mind, but market pricing already indicates little fear of future hikes.
Bank of Montreal thinks markets may view the bank’s comments as more hawkish than necessary,
“The BoC will likely sound a bit more cautious than in January as growth has meaningfully disappointed its forecast. However, don’t expect Poloz to be overly negative as growth is expected to rebound in Q2. Given the weaker growth backdrop, with the trade and housing uncertainties unlikely to be resolved, we look for the BoC to be on hold through most of this year”
“@SBarlow_ROB BMO on BoC” – (research excerpt) Twitter
“What to expect from the Bank of Canada today “ – Babad, Report on Business
Bloomberg reports that Canada is “suddenly on recession watch,”
“Gross domestic product grew by just 0.1 percent in the fourth quarter, or 0.4 percent annualized, Statistics Canada said Friday…. there may be no immediate relief to start 2019. Most economists have been expecting the first three months of this year will be even weaker, because of the impact of oil production cuts mandated by Alberta’s government… While the slowdown was expected, the picture is much bleaker than anyone anticipated with weakness extending well beyond the battered energy sector … “Judging by the employment numbers, we’re not close to a recession but we’re in a sluggish growth environment where one more piece of bad news that isn’t currently out there could certainly send us there,” Avery Shenfeld, chief economist at CIBC Capital Markets, said in a telephone interview“
“Startling Near-Halt to Economy Stokes Fear of Canadian Recession” – Bloomberg
The OECD has cut its growth forecasts for the global economy which is not good news for Canada’s trade-sensitive, resource-influenced, open economy
“The global economy is suffering more than expected from trade tensions and political uncertainty which are clouding prospects particularly in Europe, according to a gloomy report from the OECD… “The global expansion continues to lose momentum,’’ the Paris-based Organization for Economic Cooperation and Development said as it downgraded almost every Group of 20 nation’s economy. “Growth outcomes could be weaker still if downside risks materialize or interact.”
“OECD cuts global outlook again and warns worse may be ahead” - BNN Bloomberg
“Global growth weakening as some risks materialise” – OECD.org
Bank of New York Mellow is arguing that China’s credit impulse – the increase in new credit as a percentage of GDP – is the most important chart in the world for investors. The chart presented implies that Chinese credit growth is highly correlated with leading economic indicators for G7 economies (which include Canada).
“The most important chart in the world (BNY Mellon)” – (research excerpt) Twitter
“Premarket: China stimulus plans fail to boost global stocks” – Report on Business
Morgan Stanley economist Ellen Zentner believes that U.S. growth is now troughing, a positive sign that could extent the S&P 500 rally,
“The US is moving through the trough in GDP growth now, with 1Q tracking at just 0.5%. Thereafter, a sizeable rebound to 2.3% in 2Q is then followed by average growth of 2.1% in the back half of the year.”
“@SBarlow_ROB MS getting more bullish on U.S. economy:” – (research excerpt) Twitter
Tweet of the day:
This is the key lesson from the latest round of retail earnings. The companies tied to shopping malls are getting clobbered. The stores that aren't are doing fine. https://t.co/lZvK0NnqGQ— Joe Weisenthal (@TheStalwart) March 5, 2019
Diversion: “Ingenious: David Krakauer - The systems theorist explains what’s wrong with standard models of intelligence” – Nautil.us
Newsletter: “The 10 Rules of Forecasting (anything)” – Globe Investor