Futures are bouncing back and forth, but there is some stability in the bond market, with a slight bid for government bonds. The rise in inflation expectations and long-term borrowing costs is stoking volatility and raising concern that a prolonged rally in equity markets may be in jeopardy. For all the apparent nervousness in the market, it’s a sobering reminder that the S&P 500 is just 3.5% off record highs. Chairman Powell will be making an appearance at a Wall Street Journal webinar later today, Powell is expected to push back on bond-market concerns, saying the central bank will be ultra-patient in withdrawing its support for the economy after the pandemic has ended.
Global markets are trading lower, led by absolute carnage in Asia with Japan down by over 2% and Chines equities lower by over 3%. The Shanghai Shenzhen CSI 300 Index is CSI 300 Index is now in a full correction, down over 10% since February 18th
. This brings it all the way back to level not seen since….. the beginning of the year. After years of underperforming the TSX is doing quite well so far this year up over 5% YTD, which contrasts sharply with the NASDAQ witch is barely positive.
Tech-sector multiples remain vulnerable as the reopening trade drives earnings rebounds and valuation upside for other groups. The valuation premium for tech -- especially the S&P 500's biggest stocks, FAANG -- developed during the "risk-off" period that began with trade turmoil in 2018 and only got bigger with the Covid-19 crisis. The group became a “defensive” go to sector in a way and is now selling of alongside Staples and Utilities.
Euros are weaker, which is driving the DXY index higher for the day, however the Canadian dollar really isn’t losing any ground, maintaining a rather delicate dance below $0.80/USD. Crude markets are stable, and even gold has found a small bid. Elsewhere in the commodity space, the biggest movers are Copper and Nickel, which are down -4% and -7%. While typically closely tied to growth expectations, copper and Nickel prices have attracted investor interest in recent months, amid hopes for a boom in prices driven by the rise of electric vehicles and other moves to electrify the world’s biggest economies. It’s a strange world when copper miners get caught up in the clean-tech play. See also The Metal That Worries Tesla Most Is Getting Much Cheaper
Here’s a link to Evan Siddall’s Twitter thread
basically eating crow for his doomsday predictions last year about a housing crash when the pandemic first hit. To be honest, we were just as concerned as he was, but we’re just real estate observers, not the head of the CMHC that could influence buying behaviour. Given the crazy bidding wars that are going on again in the GTA and Vancouver primarily, first time home buyers who waited on the sidelines are still waiting for that crash. Here’s also the latest Housing Market Insights report from the CMHC
. RBC thinks the housing market is getting a little hot, especially in Toronto. The average selling price for all homes jumped above $1 million for the first time ever
. Supply is certainly not keeping up with demand and making it much more difficult for the new generation to purchase property in Toronto. Interesting blog
put together discussing some unique ways of measuring if we are in a bubble or not. Ultimately, they suggest focusing on risks within your own portfolio rather than getting caught up in all the 'bubble talk'. Diversion
: A doctor had to attend a Court Mandated Zoom Call, the one difference is he was MID SURGERY.