“Bank stocks limping into 3Q results down 6 per cent month-to-date reflecting concerns tied to higher for longer interest rates. 5yr govt bond yield - proxy for mortgage pricing - at 4.10 per cent or post-GFC highs. Investors are rightly cautious given squeeze to consumer pocketbooks from mortgage re-pricing, especially if no let-up in rates. This is likely to weigh on growth, credit quality and thereby challenge ROE profiles… We expect slowing growth and persistent expense pressures .
“Perceived near-term AI beneficiaries have outperformed the equal-weight S&P 500 by 62 pp [percentage points] year-to-date. Our equity analysts previously highlighted 11 technology stocks directly exposed to the development of AI or with business models that can quickly adopt AI technology and therefore should experience a more immediate boost to earnings. They group the stocks into enablers , hyperscalers , and empowered users .
The list of potential long term winners is too long for this report but notable names most likely to interest Canadian investors include New York Times Co., , IQVIA Holdings, Occidental Petroleum, Illumina Inc., Robert Half Inc., Walmart Inc., Alteryx Inc., Snowflake Inc., Twilio Inc. and Cognizant Technology Solutions Corp.BMO economist Shelly Kaushik detailed more weakness in the housing market but believes a bottom is close,
“New home prices continued their disinflationary march in July, pointing to further cooling in this component of shelter costs for the August CPI report. Momentum slowed quickly as the Bank of Canada started raising rates in 2022, with base effects bringing annual growth into negative territory for the past four months. While past monetary tightening will continue to weigh on the housing market in the coming months, the correction looks to have bottomed out.