BMO: ’Don’t look for a quick turn in the housing market anytime soon’

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

Bank of Montreal detailed signs of a rapidly cooling domestic housing market after existing home sales data was released earlier in the week,

“Canadian existing home sales fell 2.9% in April from the prior month (seasonally adjusted), bringing the 12-month cumulative decline to 13.9% y/y from last spring’s piping hot levels. Sales are also now down a whopping 21.7% in adjusted terms from the record high just this past December, right before the new mortgage rules kicked in. Compounding the slide has been the back-up in borrowing costs, and April’s tally was also likely dampened by particularly miserable weather (e.g. a mid-month ice storm in Central Canada). But we can’t pin the underlying declining trend across much of the country on Mother Nature, with sales now down by 15% in the first four months of 2018 from last year’s super-charged levels. Notably, the sag in April sales was accompanied by an even bigger pullback in new listings (-4.8% m/m, s.a.), in a sign that potential sellers are unimpressed with the prices on offer.”

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BMO went on to warn that “don’t look for a quick turn in the market anytime soon” because of rising interest rates and new regulations.

“@SBarlow_ROB BMO details increasingly cool Canadian housing market” – (research excerpt) Twitter

“Still waiting for the Bank of Canada’s promised real estate rebound: Don Pittis” – CBC


The Financial Times sent a reporter to Toronto’s celebrity-studded Real Estate Wealth Expo, where Sylvester Stallone was among the guest speakers. The tone of the column was withering contempt for the operation, but it also included some interesting information,

“Many people who piled in to the market in recent years are already finding that the sums are not adding up. Of the Toronto condo investors that took possession last year, for example, 44 per cent now collect less rent than the mortgage requires, according to CIBC Economics. Of those, more than a third are down at least C$1,000 a month.”

“ Sylvester Stallone, Pitbull and the Canadian Wealth Expo ‘circus’” – Financial Times (paywall)

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OPEC sees current strength in crude markets as temporary and not driven by supply issues,

“The view of top exporter Saudi Arabia is that any brief, speculator-driven jump in oil prices is not sufficient grounds for producers to boost output, an OPEC source familiar with the kingdom’s thinking said. For such a decision to occur, the rally would need to be driven by data pointing to a supply impact, the source said. “Prices are high just because of the tensions,” one of the OPEC delegates, who declined to be identified, said.”

“OPEC sees oil rally towards $80 as short-term spike, not supply-driven” – Reuters

Counterpoint: “@GregAtkinson_jp …and so the cycle repeats…again: Strong global demand has been outstripping production.” – US crude rises 35 cents, settling at $71.31, boosted by Iran fears and capped by China data “ – Twitter (includes link to CNBC story)

“@chigrl #IEA Report out today…here are the highlights #oott “ – (report excerpt) Twitter

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I am a big believer in cloud computing as an investment theme – it’s the main reason I bought a position in Red Hat Inc. Morgan Stanley analysts recently detailed the strength in cloud-related revenues,

“Public cloud providers continue to report strong revenue growth. Amazon’s AWS business reaccelerated over the last two quarters after posting 48% Y/Y growth in 1Q18. Microsoft Azure grew 93% Y/Y, a slight deceleration from 98% but indicative of persistent demand. Google reported that its Cloud business saw increasing momentum after passing its first $1bn quarter in 2017. Alibaba grew cloud revenues 103% Y/Y. “

“@SBarlow_ROB so, cloud spending seems healthy (MS)” – (research excerpt) Twitter

“The investing case for Red Hat, why TD is steering away from marijuana stocks, and trouble for the TSX” – Inside the Market


Tweet of the day:

Diversion: “Why does gin and tonic taste so good?” – Quartz

This post was originally published here via Google News