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Toronto homebuyers ‘used to being slapped around financially now'

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web

There are many signs of stress in global markets, so this Bloomberg report highlighting the increasingly positive outlook for global profit growth is welcome,

"The number of stock analysts raising their profit estimates for firms worldwide has exceeded those lowering them for three straight weeks, according to Citigroup Inc.'s earnings-revisions index. The gauge's four-week moving average has turned positive for the first time since 2011, prompting Jefferies Group LLC to say that equities are entering a "sweet spot."

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"Global Profit Bulls Triumph for First Time Since 2011: Chart" – Bloomberg

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Jeffrey 'Bond King' Gundlach, founder of Los Angeles-based Doubleline Capital, has a two-part outlook for bond markets,

"'There's starting to become a sequential type of Fed pattern,' Gundlach said, … The Fed has historically raised rates 'until something breaks,' according to Gundlach, 57, whose firm oversaw $101 billion in assets as of Dec. 31. DoubleLine doesn't foresee a recession on the near horizon, he added, saying the stock market rally could eventually peter out amid higher rates … Gundlach said his road map for 10-year Treasury rates this year is a short-term drop below 2.25 percent 'and then I think we move up towards 3 percent.'"

"Gundlach Predicts `Old School' Fed Will Do Sequential Hikes" – Bloomberg

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Bloomberg reporter Katia Dmitrieva must have been giggling internally (not at interviewee's expense, because it's a great quote) when she got this comment from a prospective Toronto homebuyer , 'We should have jumped on it — there's no way we can get a house like that for that price now,' Kim Cota said from the couple's 700-square foot (65-square meter) condo in downtown Toronto, which they now share with their 9-month-old child. 'Everyone who wants housing in this city goes through this — we're used to being slapped around financially now.''

The major banks and their economists have gone from sanguine to very concerned about the Toronto housing market in recent months.

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"Desperation Sets in for House Hunters in Toronto's Red-Hot Market" – Bloomberg
"Vancouver's real estate market could crash thanks to China" – Business Insider

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One analyst predicts that revenues from legal marijuana will surpass sales of breakfast cereals by 2020,

"Legal pot is set to outsell the breakfast of champions, Bloomberg reporter Shelly Banjo tweeted on Tuesday. In 2019, US sales of legal pot are predicted to reach $11.6 billion, beating ready-to-eat breakfast cereal sales, which are projected to hit $9.3 billion, according to Kenneth Shea, an analyst for Bloomberg Intelligence."

"Legal pot sales are projected to beat cereal sales in just two years" – Business Insider

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Tweet of the Day: "@TomOrlik China "accounted for roughly one-half of all new credit created globally since 2005" New York Fed libertystreeteconomics.newyorkfed.org/2017/02/chinas… " – (chart) Twitter

Diversion: "It's time for a gender equality budget, because it's 2017" – Macleans

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About the Author
Market Strategist

Scott Barlow is The Globe's in-house market strategist. He is a 20-year veteran of Canadian investment banks, including Merrill Lynch Canada, CIBC Wood Gundy and Macquarie Private Wealth (MPW). He was a highly ranked mutual fund analyst for 10 years and then, most recently, the head of a financial adviser support team at MPW. More

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