Barlow’s Research Roundup: The end of the Mag Seven and a terrible month for Canadian housing market

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

Ex-Magnificent Seven leading

Scotiabank strategist Simon Fitzgerald-Carrier calls the end of the Magnificent Seven and an opportunity for stock pickers,

“End of Tech/MAG-7 Domination is Good News for Stock Pickers. While the S&P 500 index seems stalled just under the 7k level, beneath the surface, market breadth has improved meaningfully. In fact, the percentage of stocks outperforming the S&P 500 is currently standing at 65 per cent, the highest since 2001 ... Investors’ concerns over AI-stocks (i.e., rising debt on and off B/S, less asset-light business model, and LT profitability uncertainty, among others), have weighed particularly on the index’s largest constituents, opening the door to broader market outperformance. Consistent with this trend, the S&P 500 Equal Weight is set to outperform the S&P 500 market-cap-weighted index for the first time since early 2023 on a year-over-year basis … This environment is increasingly favorable for active managers, as overweighting the top 10 stocks in the index is no longer a prerequisite for benchmark outperformance. As we have emphasized recently, we continue to favor our rotation theme, which calls for greater diversification both within and outside the U.S. equity market.”

Canadians avoiding the U.S.

Canadian travel to the U.S. continues to decline as BMO economist Shelly Kaushik noted,

“Among the many geopolitical- and tariff-related headlines in North America in 2025, Canadians avoiding U.S. travel has remained consistent. As the graph shows, Canadian travel to the U.S. declined steadily in the January-to-April period before stabilizing through December. Since April, the number of Canadian travellers returning from U.S. trips has hovered around 70 per cent of 2024 levels. Where are they going instead? As bookings, prices, and industry anecdotes suggest, plenty of people are choosing to spend their vacations in Canada. But, international travel is still thriving: the number of travellers going to countries outside the U.S. has been rising steadily since September, and was 20 per cent higher than 2024 levels as of December. As USMCA negotiations ramp up through the first half of 2026, some certainty on the trade front is needed to normalize goods trade between the neighbours. But, sentiment and rhetoric are also leaving a mark on travel flows—and here, it will take a sustained improvement in the bilateral relationship to spark a recovery”

“Love thy neighbour, from a distance” – (chart) Bluesky

Bad month for housing

In a separate Scotiabank report, financial sector analyst Mike Rizvanovic details a terrible month for the domestic housing market,

“Total Canada-wide sales volume in January 2026 was notably weak, declining 15 per cent from last year and coming in more than 20 per cent below the prior five-year average for the month of January. It was in fact the second-weakest level of sales for the month of January since 2009 during the Great Financial Crisis (Jan 2023 had lower sales as mortgage rates were rising). Every major city that we track was down on a year-over-year basis with the GVA (down 29 per cent), Calgary (down 28 per cent) and the GTA (down 20 per cent) reporting the most downside. With respect to the dollar volume of transactions, a proxy for mortgage origination, sales were 1 per cent lower on a TTM [trailing 12-month] basis, and remain roughly one-third below peak levels in early 2022. Home prices mixed: Indexed home prices in Canada overall continue to fall, declining by 0.3 per cent from last month, marking the 8th consecutive sequential decline, and were ~5% lower than last year. Among the large cities, results were mixed. Prices in the GTA fell 0.8 per cent month-over-month, bringing its cumulative decline to 27 per cent since peaking in February 2022 (4 years ago), while the GVA (down 1.2 per cent) and Ottawa (down 1.1 per cent) were also weaker. Calgary and Edmonton were roughly flat month-over-month, while Montreal outperformed with a 1.1-per-cent increase.”

Bluesky post of the day

Diversion

“Boozy chimps fail urine test, confirm hotly debtated therory” - Ars Technica