Housing tops our coverage again today on BNN as prices in the country’s biggest market continue to climb and mortgage lender Home Capital (HCG.TO) postpones facing its shareholders.
Concerns that real estate is inflated have helped drag down the Canadian dollar, which remains stuck below 73 cents U.S., Marc Ostwald, strategist at ADM Investor Services International, told us this morning.
Meanwhile, Toronto home prices continue to rise but a lot more homes came on the market in April, with new listings in the month higher by 34 per cent.
PREDICTIONS ABOUND
At 9 a.m. ET, we hear from a long-time gloomy Gus on the Canadian housing market, David Madani, senior Canada watcher at Capital Economics. He warned BNN viewers last month that “we’re in a full-blown housing bubble.”
Madani doesn’t think the regulatory woes of Home Capital, along with investor jitters, are significant enough to drag down the market as a whole. But “we still fear that a major housing correction and a broader economic slowdown are coming soon,” he tells segment producer Michelle Zadikian.
Mind you, half a decade ago, Madani thought “all the warning signs are there” for a slide in housing - but it hasn’t happened yet.
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Also back in 2012, economists including Robert Shiller and David Rosenberg were trumpeting warnings about the Canadian market.
Like stopped clocks, which are also right twice a day, these seers may be vindicated if home prices collapse. They’ve been wrong so far ... although in fairness, amid all the warnings, the federal government has repeatedly moved to tighten up mortgage insurance rules to rein in real estate borrowing and that may have slowed price appreciation.
HOME CAPITAL PUSHES EARNINGS
Home Capital, meanwhile, has delayed its annual meeting to June, "on a date to be determined. The AGM had been set for Thursday of next week. The company also delayed filing its Q1 earnings.
Standard & Poor’s yesterday cut its rating on Home Capital to B-minus, citing “heightened liquidity risk” after outflows from high-interest savings accounts, although the agency added that “we have not seen signs of weakening loan performance in HCG's underlying mortgage portfolio."
SHOPIFY SOARS
Shares in Shopify (SHOP.TO), which makes it easier for merchants to sell over the Internet, jumped seven per cent to a new high of $113.94 in Toronto yesterday. Revenue in the company’s latest quarter rose 75 per cent to US$127 million.
We’ll be joined by Russ Jones, the company’s CFO, at 10:20 a.m. ET.
BURGERS!
And we’re talking burgers at 10:20 a.m. ET with Paul Hollands, chief executive officer at A&W Food Services of Canada.
Units in A&W Revenue Royalties Income Fund (AW_u.TO), which collects royalties from A&W restaurants, are up 31 per cent in the past year.
Hollands has been moving the chain’s outlets into city cores and trumpeting its use of meat raised without hormones or steroids.
HYDROGEN HELPER
Finally, on Commodities at 11:50 a.m. ET, we hear from University of Cambridge researcher Moritz Kuehnel. He and his colleagues say they have cracked the tricky problem of extracting clean-burning hydrogen, using just sunlight, from tough lignocellulose, dubbed the “armoured concrete” of plants.
Every morning Commodities host Andrew Bell writes a ‘chase note’ to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnn.ca/subscribe.