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From homes to stocks (and bitcoin, of course), asset price inflation ‘running rampant’

From homes to stocks (and bitcoin, of course), asset price inflation 'running rampant'

Briefing highlights

  • Asset price inflation ‘rampant’
  • Bitcoin tops $15,000
  • Markets at a glance
  • Lululemon shares on the rise

‘Running rampant’

Central banks may be fretting about low inflation but, as Robert Kavcic points out, that sure doesn't apply to asset prices.

Indeed, the Bank of Montreal senior economist noted, it was almost impossible to run up negative returns this year.

"We often hear about a lack of inflation pressure as traditionally measured by the [consumer price index] for goods and services," Mr. Kavcic said in a research note.

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"All the while, inflation is running rampant across asset prices. In fact, it's been nearly impossible to miss in 2017, with at least solid gains posted in major global equity markets, commodities and real estate (yes, even Toronto and Vancouver)."

Here's Mr. Kavcic's chart to show it:

"You've really had to have been hunkered down in the short end of the yield curve (doubly bad if in US$ as a Canadian investor) to post negative returns this year," Mr. Kavcic said.

"Also, note the heightened risk appetite. Emerging markets have outperformed on the equity front, corporate bond yield spreads have compressed and, of course, the Bitcoin thing … We're still quite a ways away from worrying about the end, but this all has a later-cycle vibe to it."

(Which makes you wonder what else President Donald Trump might take credit for.)

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Markets at a glance

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Lululemon rises

Lululemon Athletica Inc. shares are on the rise after its earnings report late Wednesday.

The Canadian yoga wear retailer came in with better-than-expected numbers, reporting third-quarter profit slipped to $58.9-million (U.S.)., or 43 cents a share, diluted, from $68.3-million or 50 cents a year earlier.

Revenue rose to $619-million from $544.4-million.

Lululemon also forecast fourth-quarter revenue of $870-million to $885-million, and about $2.6-billion for the year. Earnings per share are now projected at $1.18 to $1.21 for the fourth quarter, and $2.20 to $2.23 for the year.

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