Equities
Markets expect the BoC to hike by 100 bps over the next year; we do not. Housing and labor weakness argue for owning Canadian bonds now, while Carney’s reforms and a resource capex wave make the CAD and resource stocks multi-year winners.
Europe has 99 problems, but the paucity of bearish views about the Old Continent is not one of them! And yet, somewhat shockingly, European assets have outperformed US assets over the past two years. Sure, markets make mistakes. But the macro graveyards are littered with investors who thought they were smarter than the markets. In this report, we suggest that Europe is on a cusp of significant structural reforms that will unlock value in its services sector. And that while many of the challenges are real, they’re either well understood or priced in.
We highlight several potential inflections in well-established structural factors, pointing out ways that markets might respond differently this time to economic data and policy actions.
