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Latest housing starts data is good for mortgage rates

Typically, good economic data is bad for mortgage rates, especially in this environment. But added supply is a positive.



How is today’s housing starts data, which beat expectations, good for mortgage rates? Typically good economic data is bad for rates, especially in this environment, when a Fed member will come out and say building or buying homes is bad for fighting inflation. The answer is simple: The best way to fight inflation long-term is to add more supply.

Destroying demand is a short-term fix, but longer-term supply is the natural economic way. What we see in this latest starts report is encouraging, as a record number of 5-units are still in construction and anything that gets finished is positive against inflation.

As you can see, the 1974 recession destroyed the 5-unit construction production. Like most recessions, when demand falls, so does production. However, unlike the 1970s, when we had a boom in rents, which account for a whopping 44.4% of CPI inflation data, right now we have supply coming online.

I often talk about how today’s economy doesn’t resemble the 1970s, and the bond market never really believed it either, hence why the 10-year yield is below 3.50% today.

Regarding mortgage rates and bonds, since the banking crisis started with a run on Silicon Valley bank last week, bond yields have been heading lower and are now testing my Gandalf line in the sand of 3.42%.

If the 10-year yield closes below 3.42%, we will get more bond buying in the days after that key level breaks and I will feel more comfortable about mortgage rates falling. However, it’s been a struggle to break under this level. As you can see in the chart below, the lovely slow dance between the bond market and mortgage rates has been going on since 1971.

My 2023 forecast puts the range for the 10-year yield at 3.21% – 4.25%, which means 5.75%-7.25% mortgage rates. If jobless claims increase, meaning more people apply for unemployment benefits, mortgage rates and bond yields will go lower. 

That isn’t happening right now. Jobless claims and housing starts were both good today and the Atlanta Fed showed 3.2% GDP growth for the quarter. 

However, the bond market looks ahead, and the banking crisis here and worldwide is sending money to the bond market for now. We also have to remember Wall Street was heavily short on bonds, meaning that they make money when bond yields and mortgage rates go higher.

However, since the crisis started, they have had to cover their bets and flush more money into buying bonds than normal. This can explain some of the wild actions in the bond market over the last few days. 

Earlier Thursday morning, the 10-year yield was at 3.42%, but as I write this article, it’s 3.52%. We will see how mortgage rates get priced in such a wild marketplace.

Housing starts report

From Census: Housing Completions Privately owned housing completions in February were at a seasonally adjusted annual rate of 1,557,000. This is 12.2 percent (±15.0 percent)* above the revised January estimate of 1,388,000 and is 12.8 percent (±16.2 percent)* above the February 2022 rate of 1,380,000. Single-family housing completions in February were at a rate of 1,037,000; this is 1.0 percent (±15.0 percent)* above the revised January rate of 1,027,000. The February rate for units in buildings with five units or more was 509,000.

As you can see, the housing completion data has been a plodding turtle. The COVID-19 lag in production means we have a backlog of homes to get done, although more for the 5-unit space than single-family. The COVID-19 delays have served as a job program here in America, as labor is still needed to finish up the backlog of homes.

Many single-family housing contracts would not have been started if mortgage rates at the day of signing were at 6%-7%. With rates spiking so much so soon, the builders are working off that backlog today. Traditionally, completions would fall with permits, but this is not the case today due to the COVID-19 delays.

From Census: Building Permits Privately owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,524,000. This is 13.8 percent above the revised January rate of 1,339,000, but is 17.9 percent below the February 2022 rate of 1,857,000. Single-family authorizations in February were at a rate of 777,000; this is 7.6 percent above the revised January figure of 722,000. Authorizations of units in buildings with five units or more were at a rate of 700,000 in February.

The decline in housing permits paused in this report, but the trend is still your friend here, as I don’t expect any kind of meaningful rebound in housing permits until the backlog of homes is sold. As you can see in the chart below, today’s data looks different from the massive run-up in 2005 and the collapse.

From Census: Housing Starts Privately-owned housing starts in February were at a seasonally adjusted annual rate of 1,450,000. This is 9.8 percent (±15.5 percent)* above the revised January estimate of 1,321,000, but is 18.4 percent (±8.9 percent) below the February 2022 rate of 1,777,000. Single-family housing starts in February were at a rate of 830,000; this is 1.1 percent (±13.9 percent)* above the revised January figure of 821,000. The February rate for units in buildings with five units or more was 608,000. 

Housing starts data itself picked up today, and as always, with housing starts and new home sales data, we have to look back at the revisions, which were negative in this report. However, the recent new home sales data has improved along with builders’ confidence.

Overall, I like the report because it still shows that we will get more apartment supply. The future growth of 5-unit construction will be at risk if a recession happens. However, the key is we have more supply coming, which is the best way to fight inflation.

My rule of thumb for anticipating builder behavior is based on the three-month supply average. This has nothing to do with the existing home sales market; this monthly supply data only applies to the new home sales market, and the current 7.9 months are too high for them to issue new permits.

  • When supply is 4.3 months and below, this is an excellent market for builders.
  • When supply is 4.4 to 6.4 months, this is an OK market for the builders. They will build as long as new home sales are growing.
  • The builders will pull back on construction when the supply is 6.5 months and above.

As you can see below, In the last new home sales report, monthly supply data did fall from 9 months to 7.9 months, so we still have a lot of work to do here to get things back to normal.

On a positive note, the builders are feeling a bit perkier these days. Of course, we are working from a waterfall dive in demand, but it’s still positive that builder’s confidence has picked up.

Home Builder Confidence Index

This week’s housing starts and builders’ confidence report are positive for the future of mortgage rates. We are seeing inflation being fought in the right way with supply and lower mortgage rates, which means future housing production might be better than some thought once the backlogs are done. 

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G7 Vs BRICS – Off To The Races

G7 Vs BRICS – Off To The Races

Authored by Scott Ritter via,

An economist digging below the surface of an IMF report has…



G7 Vs BRICS - Off To The Races

Authored by Scott Ritter via,

An economist digging below the surface of an IMF report has found something that should shock the Western bloc out of any false confidence in its unsurpassed global economic clout...

G7 leaders meeting on June 28, 2022, at Schloss Elmau in Krün, Germany. (White House/Adam Schultz)

Last summer, the Group of 7 (G7), a self-anointed forum of nations that view themselves as the most influential economies in the world, gathered at Schloss Elmau, near Garmisch-Partenkirchen, Germany, to hold their annual meeting. Their focus was punishing Russia through additional sanctions, further arming of Ukraine and the containment of China.

At the same time, China hosted, through video conference, a gathering of the BRICS economic forum. Comprised of Brazil, Russia, India, China and South Africa, this collection of nations relegated to the status of so-called developing economies focused on strengthening economic bonds, international economic development and how to address what they collectively deemed the counter-productive policies of the G7.

In early 2020, Russian Deputy Foreign Minister Sergei Ryabkov had predicted that, based upon purchasing power parity, or PPP, calculations projected by the International Monetary Fund, BRICS would overtake the G7 sometime later that year in terms of percentage of the global total.

(A nation’s gross domestic product at purchasing power parity, or PPP, exchange rates is the sum value of all goods and services produced in the country valued at prices prevailing in the United States and is a more accurate reflection of comparative economic strength than simple GDP calculations.)

Then the pandemic hit and the global economic reset that followed made the IMF projections moot. The world became singularly focused on recovering from the pandemic and, later, managing the fallout from the West’s massive sanctioning of Russia following that nation’s invasion of Ukraine in February 2022.

The G7 failed to heed the economic challenge from BRICS, and instead focused on solidifying its defense of the “rules based international order” that had become the mantra of the administration of U.S. President Joe Biden.


Since the Russian invasion of Ukraine, an ideological divide that has gripped the world, with one side (led by the G7) condemning the invasion and seeking to punish Russia economically, and the other (led by BRICS) taking a more nuanced stance by neither supporting the Russian action nor joining in on the sanctions. This has created a intellectual vacuum when it comes to assessing the true state of play in global economic affairs.

U.S. President Joe Biden in virtual call with G7 leaders and Ukrainian President Volodymyr Zelenskyy, Feb. 24. (White House/Adam Schultz)

It is now widely accepted that the U.S. and its G7 partners miscalculated both the impact sanctions would have on the Russian economy, as well as the blowback that would hit the West.

Angus King, the Independent senator from Maine, recently observed that he remembers

“when this started a year ago, all the talk was the sanctions are going to cripple Russia. They’re going to be just out of business and riots in the street absolutely hasn’t worked …[w]ere they the wrong sanctions? Were they not applied well? Did we underestimate the Russian capacity to circumvent them? Why have the sanctions regime not played a bigger part in this conflict?”

It should be noted that the IMF calculated that the Russian economy, as a result of these sanctions, would contract by at least 8 percent. The real number was 2 percent and the Russian economy — despite sanctions — is expected to grow in 2023 and beyond.

This kind of miscalculation has permeated Western thinking about the global economy and the respective roles played by the G7 and BRICS. In October 2022, the IMF published its annual World Economic Outlook (WEO), with a focus on traditional GDP calculations. Mainstream economic analysts, accordingly, were comforted that — despite the political challenge put forward by BRICS in the summer of 2022 — the IMF was calculating that the G7 still held strong as the leading global economic bloc.

In January 2023 the IMF published an update to the October 2022 WEO,  reinforcing the strong position of the G7.  According to Pierre-Olivier Gourinchas, the IMF’s chief economist, the “balance of risks to the outlook remains tilted to the downside but is less skewed toward adverse outcomes than in the October WEO.”

This positive hint prevented mainstream Western economic analysts from digging deeper into the data contained in the update. I can personally attest to the reluctance of conservative editors trying to draw current relevance from “old data.”

Fortunately, there are other economic analysts, such as Richard Dias of Acorn Macro Consulting, a self-described “boutique macroeconomic research firm employing a top-down approach to the analysis of the global economy and financial markets.”

Rather than accept the IMF’s rosy outlook as gospel, Dias did what analysts are supposed to do — dig through the data and extract relevant conclusions.

After rooting through the IMF’s World Economic Outlook Data Base, Dias conducted a comparative analysis of the percentage of global GDP adjusted for PPP between the G7 and BRICS, and made a surprising discovery: BRICS had surpassed the G7.

This was not a projection, but rather a statement of accomplished fact:

BRICS was responsible for 31.5 percent of the PPP-adjusted global GDP, while the G7 provided 30.7 percent.

Making matters worse for the G7, the trends projected showed that the gap between the two economic blocs would only widen going forward.

The reasons for this accelerated accumulation of global economic clout on the part of BRICS can be linked to three primary factors:

  • residual fallout from the Covid-19 pandemic,

  • blowback from the sanctioning of Russia by the G7 nations in the aftermath of the Russian invasion of Ukraine and a growing resentment among the developing economies of the world to G7 economic policies and

  • priorities which are perceived as being rooted more in post-colonial arrogance than a genuine desire to assist in helping nations grow their own economic potential. 

Growth Disparities

It is true that BRICS and G7 economic clout is heavily influenced by the economies of China and the U.S., respectively. But one cannot discount the relative economic trajectories of the other member states of these economic forums. While the economic outlook for most of the BRICS countries points to strong growth in the coming years, the G7 nations, in a large part because of the self-inflicted wound that is the current sanctioning of Russia, are seeing slow growth or, in the case of the U.K., negative growth, with little prospect of reversing this trend.

Moreover, while G7 membership remains static, BRICS is growing, with Argentina and Iran having submitted applications, and other major regional economic powers, such as Saudi Arabia, Turkey and Egypt, expressing an interest in joining. Making this potential expansion even more explosive is the recent Chinese diplomatic achievement in normalizing relations between Iran and Saudia Arabia.

Diminishing prospects for the continued global domination by the U.S. dollar, combined with the economic potential of the trans-Eurasian economic union being promoted by Russia and China, put the G7 and BRICS on opposing trajectories. BRICS should overtake the G7 in terms of actual GDP, and not just PPP, in the coming years.

But don’t hold your breath waiting for mainstream economic analysts to reach this conclusion. Thankfully, there are outliers such as Richard Dias and Acorn Macro Consulting who seek to find new meaning from old data. 

Tyler Durden Sat, 03/25/2023 - 07:00

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Many CDC Blunders Exaggerated Severity Of COVID-19: Study

Many CDC Blunders Exaggerated Severity Of COVID-19: Study

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The U.S. Centers…



Many CDC Blunders Exaggerated Severity Of COVID-19: Study

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The U.S. Centers for Disease Control and Prevention (CDC) made at least 25 statistical or numerical errors during the COVID-19 pandemic, and the overwhelming majority exaggerated the severity of the pandemic, according to a new study.

Researchers who have been tracking CDC errors compiled 25 instances where the agency offered demonstrably false information. For each instance, they analyzed whether the error exaggerated or downplayed the severity of COVID-19.

Of the 25 instances, 20 exaggerated the severity, the researchers reported in the study, which was published ahead of peer review on March 23.

The CDC has expressed significant concern about COVID-19 misinformation. In order for the CDC to be a credible source of information, they must improve the accuracy of the data they provide,” the authors wrote.

The CDC did not respond to a request for comment.

Most Errors Involved Children

Most of the errors were about COVID-19’s impact on children.

In mid-2021, for instance, the CDC claimed that 4 percent of the deaths attributed to COVID-19 were kids. The actual percentage was 0.04 percent. The CDC eventually corrected the misinformation, months after being alerted to the issue.

CDC Director Dr. Rochelle Walensky falsely told a White House press briefing in October 2021 that there had been 745 COVID-19 deaths in children, but the actual number, based on CDC death certificate analysis, was 558.

Walensky and other CDC officials also falsely said in 2022 that COVID-19 was a top five cause of death for children, citing a study that gathered CDC data instead of looking at the data directly. The officials have not corrected the false claims.

Other errors include the CDC claiming in 2022 that pediatric COVID-19 hospitalizations were “increasing again” when they’d actually peaked two weeks earlier; CDC officials in 2023 including deaths among infants younger than 6 months old when reporting COVID-19 deaths among children; and Walensky on Feb. 9, 2023, exaggerating the pediatric death toll before Congress.

“These errors suggest the CDC consistently exaggerates the impact of COVID-19 on children,” the authors of the study said.

Read more here...

Tyler Durden Fri, 03/24/2023 - 20:20

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NIH awards researchers $7.5 million to create data support center for opioid use disorder and pain management research

WINSTON-SALEM, N.C. – March 24, 2023 – Researchers at Wake Forest University School of Medicine have been awarded a five-year, $7.5 million grant…



WINSTON-SALEM, N.C. – March 24, 2023 – Researchers at Wake Forest University School of Medicine have been awarded a five-year, $7.5 million grant from the National Institutes of Health (NIH) Helping End Addiction Long-term (HEAL) initiative.

Credit: Wake Forest University School of Medicine

WINSTON-SALEM, N.C. – March 24, 2023 – Researchers at Wake Forest University School of Medicine have been awarded a five-year, $7.5 million grant from the National Institutes of Health (NIH) Helping End Addiction Long-term (HEAL) initiative.

The NIH HEAL initiative, which launched in 2018, was created to find scientific solutions to stem the national opioid and pain public health crises. The funding is part of the HEAL Data 2 Action (HD2A) program, designed to use real-time data to guide actions and change processes toward reducing overdoses and improving opioid use disorder treatment and pain management.

With the support of the grant, researchers will create a data infrastructure support center to assist HD2A innovation projects at other institutions across the country. These innovation projects are designed to address gaps in four areas—prevention, harm reduction, treatment of opioid use disorder and recovery support.

“Our center’s goal is to remove barriers so that solutions can be more streamlined and rapidly distributed,” said Meredith C.B. Adams, M.D., associate professor of anesthesiology, biomedical informatics, physiology and pharmacology, and public health sciences at Wake Forest University School of Medicine.

By monitoring opioid overdoses in real time, researchers will be able to identify trends and gaps in resources in local communities where services are most needed.

“We will collect and analyze data that will inform prevention and treatment services,” Adams said. “We’re shifting chronic pain and opioid care in communities to quickly offer solutions.”

The center will also develop data related resources, education and training related to substance use, pain management and the reduction of opioid overdoses.

According to the CDC, there was a 29% increase in drug overdose deaths in the U.S.  in 2020, and nearly 75% of those deaths involved an opioid.

“Given the scope of the opioid crises, which was only exacerbated by the COVID-19 pandemic, it’s imperative that we improve and create new prevention strategies,” Adams said. “The funding will create the infrastructure for rapid intervention.”

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