Bay Street’s big bear - Macleans.ca
 

Bay Street’s big bear

In his report, entitled “Go to Cash—In Plain English,” Mark Steele details the many risks facing markets in Canada and the U.S


 

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Investment analysts aren’t exactly a glass-half-empty crowd. Most rate the stocks they cover a “buy.” Bearish ones might begrudgingly issue a “hold.” But a “sell” from a big Bay Street or Wall Street firm is rare. Which explains why a report last week from Mark Steele, an analyst at BMO Capital Markets, has drawn so much attention. Steele’s advice: sell everything.

In his report, entitled “Go to Cash—In Plain English,” Steele details the many risks facing markets in Canada and the U.S., such as the European sovereign debt crisis, a slowdown in Asia, falling commodity prices and tightening credit markets. “We advocate switching out of equity positions and going to cash,” he states. “We see credit crisis II as just beginning. We are now at the tipping point when the crisis becomes more obvious. Markets will get more dangerous during this phase.”

In no time traders and other Bay Street types were passing the report around. Then it hit the blogosphere, instantly becoming part of bear market lore. One well-known financial blog, Zero Hedge, dubbed it “the most bearish, and easily most comprehensive, report that we have read in a long time.” The real surprise, the blog noted, was the report comes “from Canada, of all places.”

Steele says he’s been surprised by how much attention his report has received online. (He’d actually been warning about a correction for weeks, but his earlier reports were much more technical in nature.) But he’s also concerned bloggers are posting it around as if it is advice to retail investors. The report was prepared for BMO Capital Markets’ institutional clients, he says, who use such research while determining their overall investment strategies. It was never meant for mom-and-pop investors. “I work for an institutional house that’s dealing with professional money managers,” he says. “I write with that specific purpose. I’m not writing a blog that goes out to get mass marketed.”

Maybe, but when a top-ranked analyst cuts through the Street’s usual exuberance, people are going to notice. Now the question is, will Steele’s dismal forecast become reality?


 

Bay Street’s big bear

  1. The question is how confident do you feel, when we have countries getting together to work out a plan to protect countries from failing thus causing a global ripple. If we are doing better, then why are we discussing adjusting pension age or adjusting the pension age to life expectancy, and if the markets were such a great place, why does it rise 100+ one day and drop 100+ the next. To me it appears the market knows where it wants to go, and will get there eventually. Without a stimulas package, ask yourself where would we be? If we take it away ? If another problem arises, where will the money come from? The uncertainty in the market would justify this article. Watch Gold, a rise of $5+ in a day should be telling us something. Anyway, we will get through this, but in the near term, I think caution is warranted. To improve we need consumption, if taxes rise, mtg/lending rates rise, deposit rates drop, and unemployment does not improve (Fulltime) , countries fail, exports drop, consumption falls, —-then what???? I only hope these thoughts are only that, thoughts, we’ll see!! However, I’d rather be in Canada then any other country, at this point in time.