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Developing Leaders Spotlight: Working for Meaningful Change

A career in the commercial real estate industry requires problem-solving, teamwork and determination – making it a natural fit for Briana Harney, a recipient of NAIOP’s 2020 Developing Leaders Award. She played on the women’s Division I field hockey…

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A career in the commercial real estate industry requires problem-solving, teamwork and determination – making it a natural fit for Briana Harney, a recipient of NAIOP’s 2020 Developing Leaders Award. She played on the women’s Division I field hockey team while pursuing her undergraduate degree at the University of California at Berkeley, and she now competes on the Olympic Club’s Women’s Field Hockey team in San Francisco. Harney earned a Master of Business Administration degree at the University of California at Berkeley’s Haas School of Business.

As vice president with NorthMarq, Harney places both debt and equity for her clients, leveraging her knowledge of the market, a reliable out-to-market strategy, and strong relationships with lenders to bring the best capital markets execution to her clients. During her career at NorthMarq, she has been involved with closing over $2 billion in debt and equity transactions covering the full spectrum of property and transaction types.

She is an active member of the NAIOP San Francisco Bay Area chapter, where she currently serves as co-chair of the Young Professionals Group alumni committee as well as co-chair of the membership committee. NAIOP San Francisco Bay Area honored her as Developing Leader of the Year in 2019; that same year, the chapter also recognized her with the Financing Transaction of the Year for 1 DE Haro. She graduated from the chapter’s Young Professionals Group in 2017. Harney also serves on the board of directors of the Berkeley Real Estate Alumni Association.

NAIOP reached out to this driven dynamo for her thoughts on career development, professional highlights, and opportunities during this time of great change.

NAIOP: What do you think will be the biggest opportunity emerging from the past year?

Harney: The confluence of the pandemic and racial injustice in the U.S. has placed a spotlight on how our communities and social systems have failed to protect the most vulnerable populations and provide equal opportunities for all to thrive. I believe the biggest opportunities emerging from today’s crisis lie in developing new ways to build and use real estate to promote meaningful change.

Personally, I am passionate about addressing the complex issue of creating a more diverse, inclusive and equitable workforce in commercial real estate. I joined NorthMarq’s DE&I (Diversity, Equity and Inclusion) Committee; as co-chair of NAIOP San Francisco Bay Area’s membership committee, I have worked cross-functionally with our chapter’s I.D.E.A. (Inclusion, Diversity, Equality and Accountability) Committee to address diversity initiatives; and through BREAA (Berkeley Real Estate Alumni Association), I have helped develop a series of panel events focused on racial issues and community development. It is my hope that our industry emerges from this crisis with a more diverse workforce so that commercial real estate, and the economic opportunities it represents, is more reflective of and better serves the communities in which we live and work.

NAIOP: What has been a highlight of your career so far?

Harney: Closing $260 million in construction financing on 1900 Broadway in Oakland has been the highlight of my career thus far. This was a highly complex transaction that my team and I had been involved in for over a year. We had a fully negotiated deal and were in the closing process when COVID-19 struck the U.S. The week that closing was scheduled, the Bay Area announced shelter-in-place orders. The entire transaction team buckled down and navigated through the extreme uncertainty of the time and successfully closed that week. The project is now under construction and I can’t wait to see it as a living, breathing asset. The experience taught me the value of having a solid team on all sides of the table that will bring grit and tenacity to a deal they believe in.  

NAIOP: What is one piece of practical advice you would give to Developing Leaders who are just starting out in their careers?

Harney: The piece of advice I always give to other Developing Leaders and young professionals is to work for people that you admire, can learn from, and who will invest in your success. I cannot over-stress the importance of company culture and working in an environment where you feel inspired and supported.

I have been fortunate in my career to work for fantastically smart people who are willing to spend time openly and honestly answering my questions, responding when I seek advice, and encouraging me to reach for the next level. Through these relationships, I have soaked up professional knowledge, best practices, and career guidance from each one of my many mentors and emerged with a vault of collective wisdom that I would otherwise not have been able to acquire.

This is part of a series of profiles of NAIOP’s 2020 Developing Leaders Award recipients, who have distinguished themselves through exceptional commitment and contributions to the industry. This prestigious award was presented at NAIOP’s CRE.Converge Virtual 2020 conference. Watch this two-minute video to learn more about NAIOP’s Developing Leaders program. Applications for the 2021 Developing Leaders Award are now open.

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Spread & Containment

Sandra Thompson talks volatility, affordability challenges, appraisal bias and more

During a Q&A session at HousingWire Annual, Sandra Thompson addressed the volatile housing market, affordability challenges, GSE risk strategies, and…

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FHFA Director Sandra Thompson

The U.S. housing market has faced periods of high interest rates, home price appreciation and lack of inventory before. But these forces all happening at once makes the current landscape especially volatile and challenging, according to Sandra Thompson, the Director of the Federal Housing Finance Agency

“If you put things in perspective, we have dealt with high interest rates, we have dealt with increasing home prices, and we’ve also been dealing with supply issues,” Thompson said Wednesday at HousingWire Annual, held in Scottsdale, Arizona. “These are all things that we have seen before. We just got to see them all at the same time.”  

The main challenge at present is affordability, Thompson told attendees. 

Fannie Mae and Freddie Mac are working to provide more loss mitigation options to borrowers, studying ways to address appraisal bias and encouraging lending for manufactured homes, she said. The housing regulator also wants to encourage lenders to offer special purpose credit programs and to serve communities where English is not the first language. 

Here’s what else Thompson said during her Q&A at the conference.

On the current landscape

“We have seen some very challenging and volatile times. It’s not like we haven’t dealt with high interest rates before. But, if we put it in perspective, the interest rates six months ago were probably about 200 basis points less than they are today. And we certainly are coming off a period of the lowest interest rates in history ­– I certainly took the opportunity to refi. If you put things in perspective, we have dealt with high interest rates, we have dealt with increasing home prices, and we’ve also been dealing with supply issues. There are just not enough single-family properties out there to meet the demand. These are all things that we have seen before. We just got to see them all at the same time.”  

On affordability challenges 

“The main challenge now is affordability. That’s true on the residential side as well as the multifamily rental [side]. Last year this time in Washington D.C., and probably other places, if you put your house on the market, you’d have literally multiple offers over the list price and sometimes cash buyers. Now, home prices are still increasing, but not at the rate we were seeing last year. When we look year over year, it was like an 18.5% increase in prices. This year, it is probably slowing down to about 13.5%. It’s still an increase. So, we are concerned about affordability, especially for first-time homebuyers. We’re also concerned about the increase in rents – we’re seeing some rental payments that are well beyond what people pay for their mortgages.”

Risk facing the GSEs

“We’ve asked Fannie Mae and Freddie Mac to make sure that they have their loss mitigation toolkit in place so that when people get in trouble, they can call their servicer, and they have options. When we look at the Fannie and Freddie books, from a credit risk perspective, you’re getting mortgages with 2%, 2.5%, maybe even 3%. It is really good that people lower their monthly payments. But, when you’re looking at this rising interest rate environment that we have today, people are not able to buy the same house that they could have bought six months or a year ago. And many people – and I will be one of them – don’t want to refi or buy another house, in this interest rate environment. So a lot of people are staying put. That kind of exacerbates the supply issue, and the supply certainly impacts affordability.”  

How to serve diverse communities 

“There are a number of borrowers that English isn’t necessarily their first language. We’ve been working since 2018 to create a mortgage translation database. The predominance is Spanish. We picked the top five languages. We have taken the Word documents and translated them so that people can look at those translated documents and make some decisions. The house is probably the largest asset and the most money most people are going to spend. But we think it’s only fair, given that there are different populations, that servicers be able to respond to their borrowers in an appropriate way, especially when you’re making these huge financial decisions.” 

Jump-starting special purpose credit programs

“We’ve been focusing on the enterprises providing liquidity in areas that are hard to serve, such as rural areas or manufactured housing. And we also have affordable housing goals that focus on low to moderate-income individuals across the country. There’s a huge equity gap between Black, white, Hispanic populations. We’ve asked the enterprises to take a look at areas that had previously been redlined and identified barriers, but we’ve also asked them to come up with some solutions to address those barriers. Special purpose credit programs have been around for years, and lenders have been reluctant to use them. There’s a movement to try to explain to lenders as best we can that the regulatory environment is supportive of the nature of the special purpose credit programs. For example, one thing that we do know is many people struggle with down payment assistance. So you could have a special purpose credit program that focuses on down payments. We do have a number of pilot programs that the enterprises are working with.”  

Appraisal bias 

“Racial bias is very real. The valuation in certain communities is a lot lower than even the asked price. That’s true, generally speaking. What we’ve done is we’ve tried to automate the appraisal process, and I’ll tell you that the pandemic was really where we got a lot of lessons learned – appraisers didn’t want to go into homes, we had to figure out ways to keep the mortgage pipeline moving, and we introduced desktop appraisals. We made it a permanent part of the enterprise’s policy. We’re also looking at hybrid appraisals and other alternatives so that we can really try to address some of the bias and also make the process more efficient and cheaper.”

Manufacturing houses 

“We have statutory requirements about a desirable program to facilitate liquidity for manufactured housing. And if you look at the enterprises’ duty to serve plans for 2022, you’ll see that they have really made a lot of progress. When I think of manufactured housing, my thoughts versus reality are quite different. In fact, this past June, I went off to the National Mall during National Fair Housing Month. [They are] certainly equivalent to stick building. And so the enterprises have manufactured housing programs where they will purchase manufactured houses based on certain codes. They also are purchasing Manufactured Housing Communities. One of the things that we introduced is the tenant protections for renters, with basic things like 30-day notice to raise the rent.”  

The post Sandra Thompson talks volatility, affordability challenges, appraisal bias and more appeared first on HousingWire.

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Bonds

How The State Of Global Markets Could Be Pushing The Federal Reserve To Adopt Bitcoin

Analyzing the precarious positions of the world’s fiat economies can drive a conclusion that the Federal Reserve will have to adopt bitcoin.

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Analyzing the precarious positions of the world’s fiat economies can drive a conclusion that the Federal Reserve will have to adopt bitcoin.

This is an opinion editorial by Mike Hobart, a communications manager for Great American Mining.

Photo by Daniel Lloyd Blunk-Fernández via Unsplash

In the wee hours of the morning on Friday, September 23, 2022, markets saw yields on the U.S. 10-year bond (ticker: US10Y) spike up over 3.751% (highs not seen since 2010) shocking the market into fears of breaching 4% and the potential for a run in yields as economic and geopolitical uncertainty continued to gain momentum.

Source: TradingView

Yields would slowly grind throughout the weekend and at approximately 7:00 a.m. Central Time on Wednesday, September 28, that feared 4% mark on the US10Y was crossed. What followed, approximately three hours later, around 10:00 a.m. on Wednesday, September 28, was a precipitous cascade in yields, falling from 4.010% to 3.698% by 7:00 p.m. that day.

Source: TradingView

Now, that may not seem like much cause for concern to those unfamiliar with these financial instruments but it is important to understand that when the U.S. bond market is estimated to be about $46 trillion deep as of 2021, (spread across all of the various forms that “bonds” can take) as reported by SIFMA, and taking into consideration the law of large numbers, then to move a market that is as deep as the US10Y that rapidly requires quite a lot of financial “force” — for lack of a better term.

Source: TradingView

It’s also important to note here for readers that yields climbing on the US10Y denotes exiting of positions; selling of 10-year bonds, while yields falling signals purchasing of 10-year bonds. This is where it is also important to have another discussion, because at this point I can hear the gears turning: “But if yields falling represents buying, that’s good!” Sure, it could be determined as a good thing, normally. However, what is happening now is not organic market activity; i.e., yields falling currently is not a representation of market participants purchasing US10Ys because they believe it to be a good investment or in order to hedge positions; they are buying because circumstance is forcing them to buy. This is a strategy that has come to be known as “yield curve control” (YCC).

“Under yield curve control (YCC), the Fed would target some longer-term rate and pledge to buy enough long-term bonds to keep the rate from rising above its target. This would be one way for the Fed to stimulate the economy if bringing short-term rates to zero isn’t enough.” 

–Sage Belz and David Wessel, Brookings

This is effectively market manipulation: preventing markets from selling-off as they would organically. The justification for this is that bonds selling off tend to impact entities like larger corporations, insurance funds, pensions, hedge funds, etc. as treasury securities are used in diversification strategies for wealth preservation (which I briefly describe here). And, following the market manipulations of the Great Financial Crisis, which saw the propping up of markets with bailouts, the current state of financial markets is significantly fragile. The wider financial market (encompassing equities, bonds, real estate, etc.) can no longer weather a sell-off in any of these silos, as all are so tightly intertwined with the others; a cascading sell-off would likely follow, otherwise known as “contagion.”

The Brief

What follows is a brief recount (with elaboration and input from myself throughout) of a Twitter Spaces discussion led by Demetri Kofinas, host of the “Hidden Forces Podcast,” which has been one of my favorite sources of information and elaboration on geopolitical machinations of late. This article is meant solely for education and entertainment, none of what is stated here should be taken as financial advice or recommendation.

Host: Demetri Kofinas

Speakers: Evan Lorenz, Jim Bianco, Michael Green, Michael Howell, Michael Kao

What we have been seeing over recent months is that central banks across the world are being forced into resorting to YCC in an attempt to defend their own fiat currencies from obliteration by the U.S. dollar (USD) as a dynamic of the Federal Reserve System of the United States’ aggressive raising of interest rates.

Source

An additional problem to the U.S.’s raising of interest rates is that as the Federal Reserve (the Fed) hikes interest rates, which also causes the interest rates that we owe on our own debt to rise; increasing the interest bill that we owe to ourselves as well as those who own our debt, resulting in a “doom loop” of requiring further debt sales to pay down interest bills as a function of raising the cost of said interest bills. And this is why YCC gets implemented, as an attempt to place a ceiling on yields while raising the cost of debt for everyone else.

Meanwhile this is all occurring, the Fed is also attempting to implement quantitative tightening (QT) by letting mortgage-backed securities (MBS) reach maturity and effectively get cleared off their balance sheets — whether QT is “ackchually” happening is up for debate. What really matters however is that this all leads to the USD producing a financial and economic power vacuum, resulting in the world losing purchasing power in its native currencies to that of the USD.

Now, this is important to understand because each country having its own currency provides the potential for maintaining a virtual check on USD hegemony. This is because if a foreign power is capable of providing significant value to the global market (like providing oil/gas/coal for example), its currency can gain power against the USD and allow them to not be completely beholden to U.S. policy and decisions. By obliterating foreign fiat currencies, the U.S. gains significant power in steering global trade and decision making, by essentially crippling the trade capabilities of foreign bodies; allied or not.

This relationship of vacuuming purchasing power into the USD is also resulting in a global shortage of USD; this is what many of you have likely heard at least once now as “tightening of liquidity,” providing another point of fragility within economic conditions, on top of the fragility discussed in the introduction, Increasing the likelihood of “something breaking.”

The Bank Of England

This brings us to events around the United Kingdom and the Bank of England (BoE). What transpired across the Atlantic was effectively something breaking. According to the speakers in Kofinas’ Spaces discussion (because I have zero experience in these matters), the U.K. pension industry employs what Howell referred to as “duration overlays” which can reportedly involve leverage of up to twenty times, meaning that volatility is a dangerous game for such a strategy — volatility like the bond markets have been experiencing this year, and particularly these past recent months.

When volatility strikes, and markets go against the trades involved in these types of hedging strategies, when margin is involved, then calls will go out to those whose trades are losing money to put down cash or collateral in order to meet margin requirements if the trade is still desired to be held; otherwise known as “margin calls.” When margin calls go out, and if collateral or cash is not posted, then we get what is known as a “forced liquidation”; where the trade has gone so far against the holder of the position that the exchange/brokerage forces an exit of the position in order to protect the exchange (and the position holder) from going into a negative account balance — which can have the potential of going very, very deeply negative.

This is something readers may remember from the Gamestop/Robinhood event during 2020 where a user committed suicide over such a dynamic playing out.

What is rumored to have occurred is that a private entity was involved in one (or more) of these strategies, the market went against them, placing them in a losing position, and margin calls were very likely to be sent out. With the potential of a dangerous cascade of liquidations, the BoE decided to step in and deploy YCC in order to avoid said liquidation cascade.

To further elaborate on the depth of this issue, we look to strategies deployed in the U.S. with pension management. Within the U.S., we have situations where pensions are (criminally) underfunded (which I briefly mentioned here). In order to remedy the delta, pensions are either required to put up cash or collateral to cover the difference, or deploy leverage overlay strategies in order to meet the returns as promised to pension constituents. Seeing how just holding cash on a corporate balance sheet is not a popular strategy (due to inflation resulting in consistent loss of purchasing power) many prefer to deploy the leverage overlay strategy; requiring allocating capital to margin trading on financial assets in the aim of producing returns to cover the delta provided by the underfunded position of the pension. Meaning that the pensions are being forced by circumstance to venture further and further out onto the risk curve in order to meet their obligations.

Source

As Bianco accurately described in the Spaces, the move by the BoE was not a solution to the problem. This was a band-aid, a temporary alleviation strategy. The risk to financial markets is still the threat of a stronger dollar on the back of increasing interest rates coming from the Fed.

Howell brought up an interesting point of discussion around governments, and by extension central banks, in that they do not typically predict (or prepare) for recessions, they normally react to recessions, giving credit to Bianco’s consideration that there is potential for the BoE to have acted too early in this environment.

One very big dynamic, as positioned by Kao, is that while so many countries are resorting to intervention across the globe, everybody seems to be expecting this to apply pressure on the Fed providing that fabled pivot. There’s the likelihood that this environment actually incentivizes individualist strategies for participants to act in their own interests, alluding to the Fed throwing the rest of the world’s purchasing power under the bus in order to preserve USD hegemony.

Oil

Going further, Kao also brought up his position that price inflation in oil is a major elephant in the room. The price per barrel has been falling as expectations for demand continue to slide along with continual sales of the U.S.’s strategic petroleum reserve washing markets with oil, when supply outpaces demand (or, in this case, the forecast of demand). Then basic economics dictate that prices will diminish. It is important to understand here that when the price of a barrel of oil falls, incentives to produce more diminish, leading to slow downs in investment in oil production infrastructure. And what Kao goes on to suggest is that if the Fed were to pivot, this would result in demand returning to markets, and the inevitability for oil to resume its ascent in price will place us right back to where this problem began.

I agree with Kao’s positions here.

Kao continued to elaborate on how these interventions by central banks are ultimately futile because, as the Fed continues to hike interest rates, foreign central banks simply only succeed in burning through reserves while also debasing their local currencies. Kao also briefly touched on a concern with significant levels of corporate debt around the world.

China

Lorenz chimed in with the addition that the U.S. and Denmark are really the only jurisdictions that have access to 30-year fixed rate mortgages, with the rest of the world tending to employ floating-rate mortgages or instruments that institute fixed rates for a brief period, later resetting to a market rate.

Lorenz went on, “…with rising rates we’re actually going to be crimping spending a lot around the world.”

And Lorenz followed up to state that, “The housing market is also a big problem in China right now… but that’s kind of the tip of the iceberg for the problems…”

He went on, referring to a report from Anne Stevenson-Yang of J Capital, where he said that she details that the 65 largest real estate developers in China owe about 6.3 trillion Chinese Yuan (CNY) in debt (about $885.5 billion). However, it gets worse when looking at the local governments; they owe 34.8 trillion CNY (about $4.779 trillion) with a hard right hook coming, amounting to an additional 40 trillion CNY ($5.622 trillion) or more in debt, wrapped up in “local financing vehicles.” This is supposedly leading to local governments getting squeezed by China’s collapse in its real estate markets, while seeing reductions in production rates thanks to President Xi’s “Zero Covid” policy, ultimately suggesting that the Chinese have abandoned trying to support the CNY against USD, contributing to the power vacuum in USD.

Bank Reserves

Contributing to this very complex relationship, Lorenz re-entered the conversation by bringing up the issue of bank reserves. Following the events of the 2008 Global Financial Crisis, U.S. banks have been required to maintain higher reserves in the aim of protecting bank solvency, but also preventing those funds from being circulated within the real economy, including investments. One argument could be made that this could be helping to keep inflation muted. According to Bianco, bank deposits have seen reallocations to money market funds to capture a yield with the reverse repurchase agreement (RRP) facility that is 0.55% higher than the yield on treasury bills. This ultimately results in a drain on bank reserves, and suggested to Lorenz that a furthering of the dollar liquidity crisis is likely, meaning that the USD continues to suck up purchasing power — remember that shortages in supply result in increases in price.

Conclusion

All of this basically adds up to the USD gaining rapid and potent strength against nearly all other national currencies (except perhaps the Russian ruble), and resulting in complete destruction of foreign markets, while also disincentivizing investment in nearly any other financial vehicle or asset.

Now, For What I Did Not Hear

I very much suspect that I am wrong here, and that I am misremembering (or misinterpreting) what I have witnessed over the past two years.

But I was personally surprised to hear zero discussion around the game theory that has been occurring between the Fed and the European Central Bank (ECB), in league with the World Economic Forum (WEF), around what I have perceived as language during interviews attempting to suggest that the Fed needs to print more money in order to support the economies of the world. This support would suggest an attempt to maintain the balance of power between the opposing fiat currencies by printing USD in order to offset the other currencies being debased.

Now, we know what has played out since, but the game theory still remains; the ECB’s decisions have resulted in significant weakening of the European Union, leading to the weakness in the euro, as well as weakening relations between the European nations. In my opinion, the ECB and WEF have signaled aggressive support and desire for developments of central bank digital currencies (CBDCs) as well as for more authoritarian policy measures of control for their constituents (what I see as vaccine passports and attempts at seizing lands held by their farmers, for starters). Over these past two years, I believe that Jerome Powell of the Federal Reserve had been providing aggressive resistance to the U.S.’s development of a CBDC, while the White House and Janet Yellen have ramped up pressures on the Fed to work on producing one, with Powell’s aversion to development of a CBDC seeming to wane in recent months against pressures from the Biden administration (I’m including Yellen in this as she has, in my opinion, been a clear extension of the White House).

It makes sense to me that the Fed would be hesitant to develop a CBDC, aside from being hesitant to employ any technology that is not understood, with the reasoning being that the U.S.’s major commercial banks share in ownership of the Federal Reserve System; a CBDC would completely destroy the function that commercial banks serve in providing a buffer between fiscal and monetary policy and the economic activity of average citizens and businesses. Which is precisely why, in my humble opinion, Yellen wants production of a CBDC; in order to gain control over economic activity from top to bottom, as well as to gain the ability to violate every citizens’ rights to privacy from the prying eyes of the government. Obviously, government entities can acquire this information today anyway, however, the bureaucracy we have currently can still serve as points of friction to acquiring said information, providing a veil of protection for the American citizen (although a potentially weak veil).

What this ultimately amounts to is; one, a furthering of the currency war that has been ensuing since the start of the pandemic, largely going underappreciated as the world has been distracted with the hot war occurring within Ukraine, and two, an attempt at further destruction of individual rights and freedoms both within, and outside of, the United States. China seems to be the furthest along in the world with regards to development of a sovereign power’s CBDC, and its implementation is much easier for it; it has had its social credit score system (SCS) active for multiple years now, making integration of such an authoritarian wet dream much easier, as the invasion of privacy and manipulation of the populace via the SCS is providing a foot in the door.

The reason I’m surprised that I did not hear this make it into discussion is that this adds a very, very important dynamic to the game theory of the decision making behind the Fed and Powell. If Powell understands the importance of maintaining the separation of central and commercial banks (which I believe he does), and if understands the importance of maintaining USD hegemony with regards to the U.S.’s power over foreign influence (which I believe he does), and he understands the desires for bad actors to have such perverse control over a population’s choices and economic activity via a CBDC (which I believe he might), he would therefore understand how important it is for the Fed to not only resist the implementation of a CBDC but he would also understand that, in order to protect freedom (both domestically and abroad), that this ideology of proliferation of freedom would require both an aversion to CBDC implementation and a subsequent destruction of competition against the USD.

It’s also important to understand that the U.S. is not necessarily concerned with the USD gaining too much power because we largely import the majority of our goods — we export USD. In my opinion, what follows is that the U.S. utilizes the crescendo of this power vacuum in an attempt to gobble up and consolidate the globe’s resources and build out the necessary infrastructure to expand our capabilities, returning the U.S. as a producer of high quality goods.

This Is Where I May Lose You

This therefore opens up a real opportunity for the U.S. to further its power… with the official adoption of bitcoin. Very few discuss this, and even fewer may recall, but the FDIC went around probing for information and comment in its exploration of how banks could hold “crypto” assets on their balance sheets. When these entities say “crypto,” they more often than not mean bitcoin — the problem is that the general populace’s ignorance of Bitcoin’s operations cause them to see bitcoin as “risky” when aligning with the asset, as far as public relations are concerned. What’s even more interesting is that we have not heard a peep out of them since… leading me to believe that my thesis may be more likely to be correct than not.

If my reading of Powell’s situation were correct, and this all were to play out, the U.S. would be placed in a very powerful position. The U.S. is also incentivized to follow this strategy as our gold reserves have been dramatically depleted since World War II, with China and Russia both holding signficant coffers of the precious metal. Then there’s the fact that bitcoin is still very early in its adoption with regards to utilization across the globe and institutional interest only just beginning.

If the U.S. wants to avoid going down in history books as just another Roman Empire, it would behoove it to take these things very, very seriously. But, and this is the most important aspect to consider,I assure you that I have likely misread the environment.

Additional Resources

This is a guest post by Mike Hobart. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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Real Estate

MBA: Mortgage Applications Decrease in Latest Weekly Survey; Purchase Activity Below Pandemic Low

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly SurveyMortgage applications decreased 14.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the we…

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From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey
Mortgage applications decreased 14.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 30, 2022.

... The Refinance Index decreased 18 percent from the previous week and was 86 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 13 percent from one week earlier. The unadjusted Purchase Index decreased 13 percent compared with the previous week and was 37 percent lower than the same week one year ago.

“Mortgage rates continued to climb last week, causing another pullback in overall application activity, which dropped to its slowest pace since 1997. The 30-year fixed rate hit 6.75 percent last week – the highest rate since 2006,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The current rate has more than doubled over the past year and has increased 130 basis points in the past seven weeks alone. The steep increase in rates continued to halt refinance activity and is also impacting purchase applications, which have fallen 37 percent behind last year’s pace. Additionally, the spreads between the conforming rate compared to jumbo loans widened again, and we saw the ARM share rise further to almost 12 percent of applications.”

Added Kan, “There was also an impact from Hurricane Ian’s arrival in Florida last week, which prompted widespread closings and evacuations. Applications in Florida fell 31 percent, compared to 14 percent overall, on a non-seasonally adjusted basis.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.75 percent from 6.52 percent, with points decreasing to 0.95 from 1.15 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added
Click on graph for larger image.


The first graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index has declined sharply this year.

The refinance index is at the lowest level since the year 2000.

The second graph shows the MBA mortgage purchase index

Mortgage Purchase IndexAccording to the MBA, purchase activity is down 37% year-over-year unadjusted.

The purchase index is 5% below the pandemic low and at the lowest level since 2015.

Note: Red is a four-week average (blue is weekly).

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