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A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web

A helpful report from CIBC economists attempted to assess where the Canadian housing market stands,

“The Bank of Canada also keeps arguing that the worst is now behind us and that housing markets are stabilizing. But, from our vantage point, it’s difficult to agree. The central bank’s own workhorse model says it takes six quarters before the full impact of any rate hike is felt in the economy. So it’s concerning for the outlook then, that only five quarters since the first move of this cycle, let alone subsequent rate increases, we’re already seeing a slowdown in housing-related indicators … Some might argue that while housing starts have fallen, they’re only back to levels that were believed to be healthy in early 2016 (Chart 3, left). But, that misses a key point. The nature of homebuilding has changed. Total building activity is now skewed more heavily toward condos and townhouses as opposed to single-family homes which add up to a greater bump in GDP.”

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“@SBarlow_ROB CM: "Where Are We in the Canadian Housing Slowdown?"” – (research excerpt) Twitter

“ @dbcurren Note the enormous share of Canada's national wealth occupied by #RealEstate in this chart of the components of that wealth from StatsCan: “ – (chart) Twitter

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UBS’ global currency forecasts for 2019 include the belief that the loonie is significantly overvalued,

“CAD still stands out as being one of the more overvalued currencies in the G10 space. Canada's external balance remains negative, and would require FX depreciation to bring it back to a more sustainable level. Furthermore, the lack of improvement in the non-commodity trade balance despite more favourable CAD trends in recent years points to structural competitiveness issues.”

Canada’s current account deficit gets little attention, but it means that domestic, inflation-adjusted rates have to be higher than other countries competing for foreign investment.

“@SBarlow_ROB UBS: CAD overvalued” – (research excerpt) Twitter

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The U.S. high yield corporate bond market has dried up with buyers balking at new issues. This is a much bigger potential problem than many investors realize as there are sectors like U.S. shale oil production that wouldn’t have been viable without cheap financing in bond markets and for many others, continued access to financing is necessary for profitability,

“US credit markets are grinding to a halt with fund managers refusing to bankroll buyouts and investors shunning high-yield bond sales as rising interest rates and market volatility weigh on sentiment. Not a single company has borrowed money through the $1.2tn US high-yield corporate bond market this month. If that drought persists, it would be the first month since November 2008 that not a single high-yield bond priced in the market, according to data providers Informa and Dealogic. … “This is clearly more than year-end jitters,” said Guy LeBas, a strategist at Janney Montgomery Scott. “What we’re seeing now is pretty typical for end-of-credit-cycle behaviour.””

“US credit markets dry up as volatility rattles investors” – Financial Times (paywall)

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The Bank of International Settlements analysts have always been a dour lot but in an investment environment with a lot of confusion as to what’s causing all the pessimism, the BIS’ argument that it’s all about the withdrawal of monetary stimulus ,

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“The “market tensions we saw during this quarter were not an isolated event,” Claudio Borio, head of the monetary and economic department at the BIS said… Among the challenges facing the global economy, Borio listed the possibility of rising inflation, the “dark cloud” of lower-rated U.S. corporate debt in an overstretched market and weakness in the European banking sector.”

“Recent market 'jolt' will be first of many as easy money era ends, says BIS” – Reuters

“Fed entering brave new policy world as rates near normal levels” – Bloomberg

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Tweet of the Day:

Diversion: “The most popular videos of 2018: WATCH: Virtual reality Milky Way opens up the galaxy. Via @ReutersTV” – Reuters

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