The Daily Chase: Toronto home sales up

Here are five things you need to know this morning.

January effect: Equities are a little firmer this morning, save for the NASDAQ, which is indicating a lower open. Part of this could be because Mobileye – which makes driverless car technology – has plunged nearly 30 per cent in pre-market over a much weaker than expected sales forecast. But it’s also continuation of a soft 2024. The NASDAQ has started the year down one per cent on both trading days, which has only happened twice in history: 1980 and 2005. It sounds like a cute statistic, but doesn’t offer much in the way of predictability for long-term investors. However, it is a concerning start to the very real “January effect,” which is the seasonal theory related to stock performance in the first month of the year. January is typically the best month for NASDAQ returns. Considering how much the NASDAQ and the “magnificent seven” contributed to U.S. equity gains last year, we will eye what their struggles mean for the broader markets. The TSX saw a very strong January in 2023, but was a disappointing market for much of the year. It has been caught up in the down draft of 2024 and is poised to snap a three-week hot streak. Today we got a read of ADP payrolls in the U.S. that were firmer than expected. Bonds are under pressure. Tomorrow we will get official jobs reports in Canada and the U.S.

Nine lives: Even cats would be envious of how many lives Canada’s real estate market gets. Toronto home sales surged the most in eight months as buyers took advantage of a slight dip in borrowing costs. While rates are holding steady, the rally in bond yields meant that the five-year bond, which mortgages are priced off of, also fell. Home sales rose 21 per cent on a seasonally adjusted. But prices continued to fall for a fifth straight month, dropping 1.3 per cent. The Bank of Canada may be okay with this resurgence, as long as price growth remains constrained and we don’t see signs of excess, like the bidding wars of years past.

A downgrade a day: Apple is subject to another downgrade this morning, its second this week. Today, Piper Sandler downgraded Apple to a hold because of concerns that a weak Chinese market will hurt iPhone sales. This comes after Barclays downgraded it to underweight this week. Apple was the worst performing of the “magnificent seven” stocks in 2023, even as it sits near all-time highs. It’s interesting that the reaction has been a wave of downgrades. In fact, Bloomberg points out that the ratio of buy ratings on Apply has dipped to a three-year low. Yesterday I spoke with long-time Apple watcher Gene Munster who said Apple was poised to outperform in 2024. Part of his thinking was a catch-up play in AI and infusing it with Siri.