Financial Markets And Real Estate
Welcome to the whacky world of employment in the AI era!
US jobs rose by 172K in May. Local government rose by 55K while finance/insurance jobs fell by -20.2K in May.
The inflation numbers are out for April. Consumer prices rose 3.8% annually, higher than The Fed’s target rate of 2%.
To be fair, The Federal Reserve pumped up the money supply (M2) by 4.6% in March.
According to the BLS, gasoline prices rose 28.4% annually in April while shelter rose 3.3% annually.
MBA Mortgage Purchase Index down -3.7% over the past week after climbing +1.2% in prior week…30y mortgage rate rose to +6.45% up from +6.37% and highest in a month.
With the Federal government playing an outsized role in the housing and mortgage markets, the Federal goverment is like an enormous Mantis Shrimp.
High home prices show signs of cooling, mortgage rates remain fairly constant, while new home sales increase by 47k in March. Despite rising mortgage rates.
The bigger picture? New home sales remain relatively depressed after the Covid outbreak in 2020.
Median price for new single family homes fell to $387,400 in April, dropping 6.2% y/y to its lowest level since July 2021.
Worst March for existing home sales since 2009.
Rents? Lowest since pre-pandemic.
Is Rosa DeLauro actually Moe Howard with purple hair??
It used to be that a debt-to-GDP (Gross Domestic Product) ratio above 1.0 would be disastrous. Yet, the US Debt-to-GDP ratio rises during and after most recessions. Why? The old Keynesian model called for increased government spending and debt to pull the country out of a recession. But the Keynesian model called for debt to be repaind after the recession ended. But after most recessions, the Federal government keeps spending and borrowing. Following the Covid outbreak of 2020, the US debt-to-GDP ratio exceeded 1.0 and has remained fairly constant since.
As of today, the US Federal debt load is $39.204 trillion while GDP is $32.090 trillion resulting in a debt-to-GDP ratio of 1.22.
The leader in the debt-to-GDP race is … Sudan! Followed by Japan and Singapore.
As lowest debt-to-GDP ratio nations are energy-rich Brunei (2.3%) and Kuwait (3%).
The Fed Dots Plot points to rising rates.
The Dots Plot is corroborated by 3-month SOFR options (pink line).
As Federal government debt hits $39+ trillion. And $357,070 per taxpayer.
March housing starts hit their highest level since December 2024 but permits fell sharply to a seven-month low.
Yesterday’s Fed meeting left interest rates unchanged but 2y Treasury yield jumped 10bps to 3.94%.
Here is the Illinois Congressional map that Ill Governor JB Pritzker approved. Almost looks like a psychedelic map of R Crumb.
It almost looks like artist R Crumb drew the Congressional map of Illinois.
More than half of major U.S. metropolitan areas posted year-over-year home price declines in February, with Denver (-2.2%) displacing Tampa (-2.1%) as the weakest market, according to data from the S&P Cotality Case-Shiller Index released Tuesday.
Los Angeles (-0.8%) and Washington, DC (-0.1%) also joined the list of markets with falling home values, signaling weakness that expanding out of the long-suffering Sunbelt region.
kkk
Mortgage employee headcount has fallen to lowest level since the housing bubble and mortgage crisis of 2005-2008.
For all the cheerleaders for housing markets, I hate to be the contrast voice.
Per Redfin, home sellers outnumbered buyers by 43.1% in March…up from 28.0% a year ago but shy of December’s 45.2%, which was largest gap on record.
This imbalance is occuring as credit quality is deteriorating.
Confounded Interest - Anthony B. Sanders 
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