Commercial real estate is tricky with different areas of uncertainty depending on geographic area and type, like residential versus office. “Both sides look terrible now in Canada” says Phillip Colmar, managing partner and global strategist at MRB Partners. “Unfortunately, the pensions went into that and real estate’s in trouble.”
Phillip Colmar, a global strategist at MRB Partners, also believes returns for the S&P 500 over the long-term will be lackluster given higher valuations. Over the next 10 years, his firm sees US stocks having a compound annual growth rate of around 1%, while non-US stocks will grow at around 4% per year.
Phillip Colmar, managing partner and global macro strategist at MRB Partners, similarly said that equities continue to be driven by the bond market. Stocks remain slightly overbought, he said, adding that the economy remains “reasonably resilient,” making it harder for future rate cuts to be justified.
The market has been too eager to call the end of the bond bear market and the recent sell-off became overdone, said Phillip Colmar, global strategist at MRB Partners in New York. “The durability of the U.S. and global economy warns against betting that bond yields will continue to fall,” he said.
MRB Partners Global Strategist Phillip Colmar spoke with MarketWatch reporter Frances Yue about why a bond yield consolidation is needed for equities, especially tech stocks.
Phillip Colmar, managing partner and global macro strategist at MRB Partners, similarly said that equities continue to be driven by the bond market. Stocks remain slightly overbought, he said, adding that the economy remains “reasonably resilient,” making it harder for future rate cuts to be justified.
Other strategists have warned that there’s still a chance yields run higher. Phillip Colmar, global strategist at MRB Partners, predicted they could indeed breach 5.5% in 2024, and Adam Phillips, managing director of portfolio strategy at EP Wealth Advisors, said a potential government shutdown in November could be an additional factor that pushes yields higher.
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“Every [CPI] print that comes in where it shows more stickiness chips away at the inherent belief we will eventually get to 2% inflation. We’re not going to 2% inflation, but the bond market still wants to believe we will or come close to it,” said Phillip Colmar, managing partner and global strategist at MRB Partners. Equities continue to head south “as the market realizes that yields will move higher,” he said.
Phillip Colmar, global strategist at MRB Partners, predicted the 10-year U.S. Treasury yield could even breach 5.5% in 2024, saying the Fed previously suppressed longer-term yields with overly optimistic inflation views and low estimates for a neutral policy rate.
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Phillip Colmar, Managing Partner at MRB Partners, warned that the Canadian housing bubble will inevitably burst. He cited the fact that the country has one of the biggest bubbles of all time. The surge in Canadian home prices happened as the Bank of Canada (BoC) left interest rates at near zero after the Global Finance Crisis (GFC).
An analyst has expressed concerns that Canada’s housing market, which he describes as one of the largest housing bubbles ever, poses a significant risk to the country’s economy. Phillip Colmar, a partner and Global Strategist at MRB Partners, believes that if the housing bubble bursts, Canada could face a deeper recession than what has been forecasted.
A resilient U.S. economy is the broader trend despite the rise in interest rates, said Phillip Colmar, global macro strategist at MRB Partners in New York.
“We think the underlying trend of U.S. inflation is with a 3% handle, not 2%, and without a recession you have no chance to get to 2%. The market is still coming to grips with that idea.” “If we don’t get interest rates high enough to cause a recession or to sustainably dampen growth, you don’t need rate cuts. So that pushes up yields”.
Phillip Colmar is managing partner and global strategist at MRB Partners.
Canada is facing a massive housing bubble after more than two decades of cheap money and lax lending standards. And with a widespread affordability crisis, the country is now atan escalating risk of a housing bust. Many Canadians maintain hope for a soft landing, but higher mortgage rates and softening employment conditions are a lethal combination.
“Canada is probably sitting on the largest housing bubble of all time,” says Phillip Colmar, partner and global strategist at MRB Partners. “House prices and income ratios are off the charts.”
Phillip Colmar, managing partner and global strategist at MRB Partners has analyzed housing bubbles across the globe and flagged Canada as potentially having the most concerning one.
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An international strategist is warning that Canada could be sitting on the largest housing bubble of all time.
“I’ve analyzed housing bubbles in the developed world and Canada’s really got a unique one to its own,” says Phillip Colmar, Managing Partner and Global Strategist at MRB Partners.
Phillip Colmar, global strategist of MRB Partners, is concerned about the unprecedented levels of debt that could put several Canadian households at risk. The worst part for a housing bubble is when you have a credit bubble underneath it.
“I think it’s a very narrowly focused market,” says Phillip Colmar, global strategist at MRB Partners, adding that just a few names are driving the entire market. “I do think if you’ve got a better growth backdrop and higher bond yields, it lends itself naturally to a broadening of the market. We saw some of that in recent weeks,” he said.
The U.S. economy is less interest rate-sensitive than it was in the past, said Phillip Colmar, global strategist at MRB Partners in New York. “This has been a year in transition where people had expected recession. They’ve been wrong-footed on that call,” he said. “We expected bond yields would break higher and hit new highs, which they have.”
The Canadian housing market is at high risk of unravelling, according to one expert. The level of debt that Canadians have taken on in comparison to their incomes has put many in a precarious position should mortgage rates continue to rise — which is likely says Phillip Colmar, managing partner at MRB Partners.
The unprecedented high levels of debt that Canadians currently hold will place a significant number of households at risk, especially if mortgage rates continue to rise, according to Phillip Colmar, managing partner and global strategist at MRB Partners.
In an interview with BNN Bloomberg, Phillip Colmar, partner at Global Strategist at MRB Partners, notes that “Canada is probably sitting on the largest housing bubble of all time”.
In an interview with BNN Bloomberg, Phillip Colmar, partner at Global Strategist at MRB Partners, notes that “Canada is probably sitting on the largest housing bubble of all time”.
Colmar asserts that highly inflated home prices are a fallout of the easy money, low-interest rate policy instituted by the Bank of Canada since 2008.
“I don’t think this level of yield will break the economy, so you’ll get a better entry point,” with a higher yield, says Phillip Colmar, global strategist at MRB Partners, an investment strategy firm.
“There is almost no chance that core inflation will fall back near the central bank’s 2% target absent a recession, and the latest economic data indicates the Fed did not provide that knock-out blow.” Phillip Colmar, managing partner and global strategist at MRB Partners.
“The markets had run up a lot,” said Phillip Colmar, managing partner at MRB Partners. “It’s a bit of a wait-and-see, digestion phase.”
A U.S. economy growing more than expected has pushed aside fears of a recession, but rising bond yields pose a risk to equity investors, said Phillip Colmar, Global Strategist at MRB Partners in New York.
“The bond market is coming back into the driver’s seat again,” he said, much as it was in 2022. “If the cost of capital isn’t the thing causing economic damage here, as everybody predicted and our framework suggests it isn’t, then it’s pretty hard to argue for rate cuts.”
“Where the market is mispriced is in expecting significant rate cuts next year. If anything, additional rate hikes will be required,” said Phillip Colmar, Global Strategist at MRB Partners.
“This Fed meeting was about going for maximum flexibility, giving them the ability to do one more quarter-point hike, but not more than that,” Phillip Colmar, Global Strategist at MRB Partners told Investing.com’s Yasin Ebrahim in an interview Wednesday.
The banking crisis has affected the economy less than people appreciate, MRB – The Macro Research Board’s managing partner, global strategy, Phillip Colmar, tells Aerial View.
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Still, “I think there’s some optimism about CPI coming in lower [than expected] this week,” said Phillip Colmar, managing partner and global strategist at MRB Partners.
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However, the more important catalyst for growth stocks will be the direction of Treasury yields, according to Phillip Colmar, managing partner and global strategist at MRB Partners.
“The key to a broader participation in the stock rally will be where monetary policy is headed and its impact on bond yields,” Colmar said. If yields break out of their October highs, investors will start getting nervous about tech and growth stocks, he added.
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“We’ve seen central banks say: ‘Oh, we haven’t done enough.’ They thought at the beginning of the year they had, and everybody thought we were going into recession, and now what we’re seeing is the data sequentially move away from that,” said Phillip Colmar, global strategist at MRB Partners. “If you’re not in a recession, it’s also really hard to get core inflation down because you need to weaken the employment sector in order to do so.”
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As for the data the Federal Reserve is watching, “the latest inflation prints showed a further easing in price pressures, most notably at the headline level,” says Phillip Colmar, partner and global strategist of MRB Partners. This, he adds, “provided some flexibility for the Fed to take a breather at today’s meeting.”
Many economists are overestimating the likelihood of a recession over the next year, Phillip Colmar, managing partner, global strategy at the MRB – The Macro Research Board, tells Aerial View. That’s because their base case assumes the 2010s represent equilibrium, he explains. Colmar says that was an outlier period in history, with the household and banking sectors deleveraging and some other drags after the housing bust. He says economists worry due to that base case that as the cost of capital rises it will hinder the world economy and therefore they’ve been underestimating where interest rate levels need to be.
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“I think there’s a realization among central banks but also investors that the cost of capital wasn’t yet at the tipping point. We’re not sending the world economy into recession,” said Phillip Colmar, partner and global strategist at MRB Partners.
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“You’ve got a situation where people are pricing out a recession and the growth side of the equation is looking a little better, but we’ve had a big unwind of Fed rate-cut expectations for this year,” said Phillip Colmar, global strategist and partner at MRB Partners.
Phillip Colmar, managing partner and global macro strategist at MRB Partners, similarly said that equities continue to be driven by the bond market. Stocks remain slightly overbought, he said, adding that the economy remains “reasonably resilient,” making it harder for future rate cuts to be justified.
The balance between stocks and bonds also depends on where investors think the equilibrium Fed funds rate stands, according to Phillip Colmar, partner and global strategist at MRB Partners. The equilibrium Fed funds rate is the short-term interest rate consistent with full employment and stable inflation in the long run.
Ira Jersey, Chief US Interest Rate Strategist with Bloomberg Intelligence, and Anna Wong, Chief US Economist with Bloomberg Economics, join the show to discuss the debt ceiling. Michael McKee also joins the discussion. Phillip Colmar, Managing Partner and Global Strategist at MRB Partners, joins the program to talk about investments he likes and outlook for the markets.
“Certainly, the debt ceiling’s been weighing on investors,” said Phillip Colmar, partner and global strategist at MRB Partners. “It’s probably an 11th-hour deal, but if it is earlier than that, I think that would be encouraging.”
Investors will be monitoring U.S. banking sector developments very closely over the next several days, since the recent events caused a renewed selloff in bank stocks and more volatility across the markets, says Phillip Colmar, managing partner and global strategist at MRB Partners, an independent investment research firm.
“The wild card or caveat is always that banking systems are built or based on the trust of depositors. If that trust or confidence is questioned (potentially due to negative news headlines or sharp declines in share prices), a panic or frenzy can unfold where people start pulling their deposits at otherwise solid banks,” said Phillip Colmar, global strategist at MRB Partners.
What’s next for the stock market after the Federal Reserve’s recent interest rate hike? According to MRB Partners’ global strategist Phillip Colmar, investors will be closely monitoring the banking sector and inflation data. Read the full article by Money’s Mallika Mitra to learn more about the outlook for the market.
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