The US housing numbers came in for Feb and not good, they were down over 7%. This is, of course, only one month, so not a trend.
In this video I discuss how this, coupled with the yield curve, which is worsening, is possibly signaling troubled waters ahead. Here we see how the equity markets (and crypto) can be at risk.
▶️ 3Speak
This is great. Right now BTC is $41,000, nasdaq is up 190 pts and Dow Jones is down slightly. That's is the state of the economy !
You think that is a reflection of the economy?
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I hope not. But with the war in Ukraine and inflation, people are just afraid to buy. They are selling for money, this is like a security !
and in the months prior to February, how the housing numbers were coming is a worrying drop or will it recover later
Yes well housing in the US peaked in June. That does not mean crash but it is a sign of things flattening out. There is a lot of other indicators that tell us things are not so rosy.
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BEER.Just wondering, but how does one fix an inverted yield curve? It just seems like the system is collapsing on itself and it is definitely going to cause a recession. I don't really think QE would be the solution so would it have to be the supply chain issues resolving themselves?
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Summary:
In this Macro Moment video, Task discusses the recent decline in US home sales for February, which were down more than expected. He links this decline to the anticipation and actual implementation of interest rate hikes. Task also delves into the intricacies of the bond market, highlighting concerning inverted yield curves and their potential implications on the economy. He emphasizes the importance of monitoring trends rather than isolated data points to gauge the economic landscape accurately.
Detailed Article:
Task begins by addressing the disappointing US home sales figures for February, indicating a 7.2% decline from January to 6 million homes sold. He attributes this downturn to the widespread discussion surrounding interest rate hikes and the preemptive increase in mortgage rates before the official Fed move. Task highlights the significance of this drop in sales, surpassing market expectations of a 1% decline.
Delving deeper into the economic indicators, Task shifts focus to the mortgage industry, noting layoffs and a downward trend in permits for new home purchases and mortgages. He mentions a decrease in refinancing activities and emphasizes the impact of cash buyers on the housing market dynamics. Despite acknowledging the possible influence of cash transactions, Task underscores that a tightening mortgage industry typically signals challenges ahead for real estate.
Task transitions to a more complex discussion about the bond market, specifically touching on the concerning state of inverted yield curves. He outlines the inversion of the 10-year and 7-year bonds, flagging this occurrence as particularly worrisome. Additionally, Task highlights the inverted relationship between the 3-year and 5-year bonds, further illustrating the destabilized yield curve.
Moreover, Task provides insight into the implications of inverted yield curves, explaining how they signify a lack of confidence in long-term economic growth and inflation. He warns against the misconception that deflation is always beneficial, drawing parallels with historical deflationary crises like the Great Depression. Task emphasizes the importance of an upward-tilting yield curve to indicate positive economic prospects.
In conclusion, Task urges vigilance towards the prolonged flattening of the yield curve over the past three months. He mentions the cessation of quantitative easing by the Fed and hints at turbulent economic times ahead. Task suggests considering risk-off strategies in response to the ominous signals conveyed by the bond market.