A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Citi economist Dana Peterson sees risks in the Canadian housing market for 2020, but she thinks it will skate through the year without major upheaval,
“While household debt remains high, we see risks of a systemically disruptive correction in the housing market as limited in our base case outlook. Regulatory changes have made new debt ‘safer’ and the accumulation of debt has slowed in recent years to more closely in line with the pace of income growth … Housing price and debt risks are likely to remain at bay despite scope for firmer demand and higher valuations.”
There’s more details in the research excerpt for those who click through
“@SBarlow_ROB Citi's 2020 forecast for Canadian housing market, "While household debt remains high, we see [limited] risks of a systemically disruptive correction in the housing market" – (research excerpt) Twitter
@SBarlow_ROB C: Rising housing prices beget higher household debt – (chart) Twitter
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It makes me nervous when pundits start inferring that Warren Buffett is behind the times and doesn’t understand what he’s doing.
This happened in the late 1990s when Mr. Buffett didn’t buy technology stocks and underperformed. Berkshire Hathaway is again trailing the market badly in 2019, and a Nasdaq column called him out for it,
“The conglomerate is badly lagging behind the S&P 500. A stubborn approach to capital allocation is a big part of the problem … Berkshire is sitting on too much cash, has bought back only a modest amount of stock this year despite an attractive valuation on its own shares, has been a subdued buyer of equities, and can’t find suitable acquisition targets because of Buffett’s price sensitivity and unwillingness to participate in corporate auctions.”
Uncle Warren’s magic touch will end one day, or he’ll retire, but that doesn’t mean betting against him is a good strategy.
“What's Wrong With Warren Buffett's Berkshire Hathaway? A Failed Buyout Tells the Story” - Nasdaq
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Canadian investors were warned of a new normal of slower growth for Canadian bank stocks last week, and, over the weekend, Citi strategist Hong Li pointed out that U.S. earnings aren’t going to be great in the fourth quarter either,
“With the Q3’19 reporting season coming to a close, the earnings growth for the Russell 1000 companies is registering a decrease of 4.4%, which is slightly better than the expectation of -5.4%... This is the steepest quarterly downturn in earnings since Q2’16. Looking ahead to next quarter, we note that Q4’19 consensus expectations are calling for a decline of 2.1% (YoY). If Q4’19 earnings growth does finish in negative territory, it would mark the first time that the Russell 1000 companies had four straight quarters of YoY earnings declines since the earnings slump of 2015/16 … For Q4’19, 6 out of 11 sectors are expected to show a decline in earnings growth, led by Energy, Real Estate, and Consumer Discretionary. Since the start of Q4’19, the Industrials, Materials, and Consumer Discretionary sectors have seen the largest declines in earnings growth expectations”
“@SBarlow_ROB C: Q4 Russell 1000 EPS to register the fourth straight decline” – (research excerpt) Twitter
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Diversion: “52 things I learned in 2019” – Fluxx
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Scott Barlow