Daily roundup of research and analysis from he Globe and Mail’s market strategist Scott Barlow
BMO economist Shelly Kaushik notes that the domestic job market is starting to weaken,
“Canadian job vacancies are coming down from their highs of last spring, with the [not seasonally adjusted] level of vacancies falling for two months. In November, the job vacancy rate (the number of openings as a percentage of total labour demand) stepped down 0.4 ppts to 4.6 per cent. Still, both measures are above pre-pandemic trends, suggesting labour demand remains strong. However, we look for job vacancies to fall further in the coming months as businesses cope with the full impact of the Bank of Canada’s aggressive monetary tightening.”
“Domestic job market starting to roll over (BMO)” – (research excerpt) Twitter
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Scotiabank REIT analyst Mario Saric provided more detail on his bullish stance on apartment REITs,
“CMHC released its (backward-looking) Annual Rental Survey. The report confirms (NFL fans may get this) the ‘CAD Rental Market is who we thought it was’...very strong… Apartment REIT fundamentals are mirroring constructive market trends, which show no signs of letting up. Our Residential SO’s include TCN, IIP and CAR, although as noted last week, we see merit in buying each of the Apartment REITs .… National avg. rent is now 17 per cent above pre-pandemic levels, home prices are 36 per cent while avg. Apartment REIT unit prices are down an avg. 18 per cent; wide disconnect still exists. Consistent with the CMHC data, CAD Apartment REIT Q3/22A rent growth accelerated vs. 2021 on lower vacancy. Relative to other asset classes, SP rent growth is accelerating, a key contributor to our positive thesis. That said, the CAD housing market continues to outperform CAD Apartment REITs by a significant 50 per cent since COVID, in part due to regulatory uncertainty facing the Apartment REITs, in our view. Minto has lagged home prices the most (71 per cent) with BEI the least (4 per cent).”
“More love for apartment REITs from Scotiabank” – (research excerpt) Twitter
“This chart is going to unsettle a lot of REIT investors” – Barlow, Inside the Market
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This is not a usual source of finance news for me, but Gizmodo had an interesting article about lithium demand,
“Read any article about the clean energy revolution, and chances are you’ll run into some staggering numbers about how demand for lithium, cobalt, nickel, and other minerals and metals is projected to rise over the next few decades. But the future isn’t set in stone. The U.S. may need up to 90% less of these materials if it simply prioritizes things like public transit, urban walkability, and smaller cars, according to groundbreaking new research from the Climate and Community Project and University of California, Davis. But there are some big problems with these materials and their production, from environmentally destructive mining practices to child and forced labor in supply chains to geopolitical conflict. A recent analysis found that over half of the world’s supply of these materials is on Indigenous lands, signaling some significant upcoming conflicts with corporations looking to profit from the increased demand… Policies that made cities more walkable and public transit better and more accessible could lower lithium demand between 18% and 66%, while simply limiting the size of EV batteries could cut demand by up to 42%.”
“We May Not Actually Need All That Lithium” – Gizmodo
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Diversion: “This map shows the most popular [music] artist in every country” – A Journal of Musical Things
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