CANADIAN HOUSING MARKET ROLLING OVER

With all the U.S. data yesterday, it was easy to miss the Canadian economic data.  The June housing data probably raised the most eyebrows … home sales fell dramatically, down 8.2% MoM and down 20% from year-ago levels.

Average home prices fell 2.5% on the month; however, are still up 5.0% YoY (quite the dramatic slowing from the double-digit price gains a few months ago).  Even if prices remain flat for the next few months, we estimate that year-over-year trends will be in negative territory by the fall.

The deteriorating inventory situation could suggest that prices may decline instead of remaining stable over the coming months.  In June, months’ supply ticked up to 6.9 months, the highest since March 2009.  Rising inventories are not limited to the existing home market — we estimate that builders have been building inventories of new homes for about eight months or so.

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More in this issue of Breakfast with Dave

• U.S. slowdown: there is no doubt, growth in the U.S. is moderating significantly
• Haven’t we learned? In today’s WSJ, there was an article that completely dumbfounded us
• Income theme intact: according to the latest Investment Company Institute (ICI) data, equity funds saw a net outflow of $4.2bln, while bond funds attracted $6bln
• Bullish sentiment is back, Jack! In addition to the II poll released earlier this week, the AAII survey of investor sentiment also showed bullish sentiment soaring
• Manufacturing sector continues to slow: the NY Empire and the Philadelphia Fed manufacturing indices came in weaker than expected and is suggesting a further decline to the national ISM index
• Manufacturing production in the U.S. sinks: yes, total industrial production rose 0.1% MoM in June, but what caught our eye was the 0.4% decline in manufacturing output
• Initial jobless claims — beware of the noise
• U.S. producer prices — weak to the core

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