The great white short (2nd time around)
By Christine Hughes, Canada. Chief Investment Strategist, OtterWood Capital:
Canadian banks earnings season is right around the corner, and there’s a lot of negative sentiment surrounding them. Investors betting against Canadian banks are watching for negative effects on banks’ earnings from falling oil prices, employment levels, over-indebted consumers, and a potentially softening housing market.
It’s hard to argue against the fact that the Canadian housing market has been hot. In fact, check out the chart below showing the steep ascent of the average Canadian resale home price. The question that always pops us is how much more debt can Canadian consumers take out?
We will see what next week holds, but as you can see below, some banks are a lot more exposed to the domestic retail banking segment than others.
By Christine Hughes, OtterWood Capital
And in December, the floodgates opened. Read… Money Is Bailing Out of Canada