Happy Monday Morning! Some good news on the inflation front in Canada this past week. Headline inflation ticked in at 5.9% year-over-year, below market expectations of 6.1%. Inflation in services, which is one of the key figures policymakers are watching, eased to 5.3%, from 5.6% in December. The Bank of Canada’s preferred median and trim inflation measures continue to ease, now running at around 3.5% on a 3-month annualized basis. Progress. Meanwhile, mortgage interest costs in Canada surged 21.2% annually in January, the largest increase since the early 1990’s when the data set was first created. According to the always insightful Ben Rabidoux of North Cover Advisors, rising mortgage interest costs alone added 0.6 percentage points to the headline 5.9% print. In other words, in his pursuit of fighting inflation, Tiff Macklem is actually creating inflation too. Rather ironic, I know. Now for the bad news. While inflation is easing in Canada, it is proving to be more sticky in the US. Prices in the US, according to the Federal Reserve’s preferred metrics, rose 5.4% from a year earlier and the core gauge was up 4.7%, both hotter than forecast after slowing for several months. More importantly, Core PCE (Personal Consumption

Happy Monday Morning! National housing figures dropped this past week, and it wasn’t pretty. January home sales fell 37% year-over-year, a sharp decline from the blistering hot bull market of January 2022. When you zoom out further, this January was the slowest since 2009. However, balancing this out was a dearth of supply trickling to market. New listings for the month of January came in at their lowest levels since the year 2000. Yes, we just recorded a 23 year low of new listings coming to market. The nations housing market is currently starved of inventory, which is ultimately the largest driver behind the sudden resurgence of multiple offers popping up across the country. A housing market deprived of sales volume is ultimately a big drag on the economy. When houses don’t transact people don’t need lawyers, mortgage brokers, inspectors, contractors, and new furniture, just to name a few. It’s certainly true that the chronic shortage of new inventory coming to market is providing a floor for house prices, although plenty of damage has already been inflicted. National home prices, as measured by the Home Price Index, fell 12.6% year-over-year in January. Since peaking last year, the index is down

Happy Monday Morning! Those holding their breath for an easing in mortgage rates were delivered some tough news last week. The Canadian labour market added 150,000 jobs in January, more than TEN times economist estimates. Let’s not forget that December jobs numbers were TWENTY times estimates. Just what the hell is going on here? Either our economists are really, really bad at forecasting or the Stats Canada random number generator is in need of repairs. My good friend Ben Rabidoux at North Cove Advisors might have the answer. Immigration. Per Rabidoux and Stats Canada, “On a year-over-year basis, employment for those who were not born in Canada and have never been a landed immigrant was up 13.3% in Jan, compared with growth in total employment of 2.8%.” This makes sense. Job vacancies were sky-high in H2 2022. The Government responded by ramping non-permanent resident growth, which hit record highs over the past 2 quarters. “The increase of NPRs in the third quarter of 2022 was larger than any full-year increase since 1971 (when data on NPRs became available). This increase was driven by work permit holders…” Rabidoux concludes, that what we’re seeing now in the jobs data are work permit holders filling

Happy Monday Morning! Lots of chatter these days about increased activity in the housing market. It’s true open houses are busier, stale inventory that’s been sitting for months is suddenly under contract, and some new listings are fetching multiple offers. Quite a difference four weeks can make. Is this the end of the housing bear market? While sentiment has certainly shifted, the data suggests we’re not out of this just yet. For the month of January, Greater Vancouver home sales ticked in at their lowest levels since January 2009. Yes sales were in the dumps, but housing bulls will scream, “But there’s nothing to buy!” and this is also true. New listings trickled in at their lowest levels since 2004! Very hard to get lower prices when new listings are basically running at 20 year lows. This doesn’t account for the increase in housing stock over the past two decades either. There’s been a narrative building over the past year that a bunch of distressed sellers would flood the market as higher interest rates bite. That has not happened. So we’re stuck with very low inventory levels as we approach the busier spring selling season. Current inventory levels today would