Noah Zivitz

Managing Editor, BNN Bloomberg

Archive

There’s going to be a whole lot of housing news to cover today. It starts with another reminder that rate hikes are evidently no match for tight supply. That's the takeaway from Royal LePage's latest assessment of housing market conditions across the country and what CEO  Phil Soper calls a "relentless low supply-high demand imbalance." The real estate firm is now forecasting the aggregate price of a home in this country will rise 15 per cent by the end of this year, up from its previous call for a gain of 10.5 per cent. We’ll speak with Soper at 8:30 a.m. Also this morning, Canada Mortgage and Housing Corporation said housing starts slipped two per cent in March to a seasonally adjusted annualized rate of 246,243 units. And the Canadian Real Estate Association reported national home sales slipped 5.4 per cent in March, with its senior economist saying “it was good to see a moderation.”

MARKET WATCH

The 10-year U.S. treasury yield extended its ascent this morning, and has been as high as 2.907 today amid persistent inflation worries and anticipation for how far, and how fast, the U.S. Federal Reserve will need to raise its target for the federal funds rate. As for what could be moving on the S&P/TSX Composite Index, we’ll note that all of the major energy commodities are trading lower this morning, including natural gas – which had been on a tear and helped propel the energy subgroup yesterday, which was one of the only things that helped push the TSX higher.

LOSING ‘THE GLUE THAT HOLDS ALL THIS TOGETHER’

Without fail, MNP’s quarterly consumer debt index turns into a flashpoint. Whether it’s the methodology (though it should be pointed out the sample size is 2,000 adults and that the survey is conducted by Ipsos) or the extent of the distressed sentiment that it conveys, we always see reaction to the findings (in the latest case, all the way to the finance minister’s director of economic strategy). If you missed it, check out our conversation with MNP President Grant Bazian from late yesterday. He acknowledged the latest survey, which suggests almost have of Canadian adults are perilously close to insolvency, “almost seems unrealistic.” But he also pointed out this is a sentiment gauge, and he cautioned that low interest rates have been “the glue that holds all this together.” He also responded to the aforementioned tweet.

IMF SLASHES GROWTH OUTLOOK

In its new World Economic Outlook, the International Monetary Fund pointed to “seismic waves” from Russia’s attack on Ukraine as a primary reason for significant downward revisions, including a new estimate for the economy to grow 3.6 per cent this year (down eight-tenths of a point from the previous estimate). Russia’s GDP estimate for this year was slashed 11.3 points, with the IMF now calling for a contraction of 8.5 per cent this year. As for Canada, we’ve escaped relatively unscathed as this year’s GDP estimate was trimmed just two-tenths of a point (to 3.9 per cent) – that was the most minimal downward revision of all advanced economies.

OTHER NOTABLE STORIES

• Lululemon was upgraded today by an analyst at Truist Securities who is expecting to see a “robust” five-year financial outlook at the company’s analyst day tomorrow. The analyst (Beth Reed) also hiked her price target to US$495.00 per share from US$390.
• Boralex announced this morning it’s teaming up with Énergir and Hydro-Québec to develop three 400-megawatt wind projects in Quebec. In a release, Boralex said the total investments for the three projects could reach $3 billion.
• PrairieSky Royalty reported a 135 per cent surge in first quarter revenue after yesterday’s closing bell as pricing and royalty production climbed. Funds from operations more than doubled year-over-year — and that’s where being in the royalty business really pays off since the company is shielded from the inflationary pressures hitting companies that pull resources out of the ground. I see an analyst at National Bank of Canada Financial Markets nudged his price target on PrairieSky to $24.00 from $23.00 post-results.
• Cineplex said in a release late yesterday that for the first time since March 2020, all of its 172 theatres and other facilities are now operating at full capacity. CEO Ellis Jacob said last month’s box office revenue reached 70 per cent of pre-pandemic levels (as compared to March 2019).
• Johnson & Johnson cut its full-year adjusted earnings per share forecast this morning and also suspended its outlook for COVID-19 vaccine sales. As for the first quarter, its consumer health unit was the laggard, as total sales slipped 1.5 per cent. In its release, J&J cited “external supply constraints mainly impacting Skin Health / Beauty.”

NOTABLE RELEASES/EVENTS

• Notable data: Canadian housing starts, international securities transactions, and existing home sales, U.S. building permits and housing starts
• Notable earnings: Mullen Group, Netflix, IBM, Johnson & Johnson, Baker Hughes, Halliburton
• 945: U.S. President Joe Biden holds secure video call with allies to discuss invasion of Ukraine
• 1100: Ontario Deputy Premier and Health Minister Christine Elliott makes announcement in Toronto
• 1400: Prime Minister Justin Trudeau makes long-term care announcement in Dalhousie, NB (plus avail)
• 1445: U.S. President Biden delivers remarks in Portsmouth, NH, on infrastructure investments
• 1500: Alberta Premier Jason Kenney announces investments “to support Alberta’s workers on their career paths”
• International Monetary Fund releases World Economic Outlook (900) and Global Financial Stability Report (1030)