The FED Finds a Good Excuse to Extend and Pretend Through Brexit

 

 

 

 


The FED Finds a Good Excuse to Extend and Pretend Through Brexit



Written by Nathan McDonald (CLICK FOR ORIGINAL)

 

 

 

Brexit has happened. Those who are not happy with this reality are making their voices heard; yet, so too are those who are overjoyed to have their liberty and freedom back in their own hands.

 

This divide is glaringly obvious and has been the highlight of the news reel since last week’s vote. There has been a flood of articles relating to the matter, and for good reason. This is a historic event and a move that slaps the global elites squarely in the face, something that rarely happens throughout our history.

 

Regardless, turbulent times are ahead for the global markets, as this move was considered a “black swan” event, one that was not expected by many, even by those who hoped it would happen. Even Nigel Farage, one of the leaders of the “Leave” campaign, suspected that the vote would be close, but didn’t hold out hope that they would win.

 

Therefore, it is no surprise to find that the FED is also shocked by this turn of events. They, along with many others, did not expect this to happen – but never fear! They will take advantage of the situation and use it as a full-blown excuse as to why they once again cannot act and raise interest rates.

 

Brexit has essentially given Janet Yellen a perfect excuse as to why she cannot raise rates. The FED has been jawboning about a raise in rates once again over the past few months, something that I have highlighted time and time again.

 

This MOPE is a constant theme at just about any press conference the FED attends. They must keep people thinking that they have some sort of power, that they can unravel this mess they have created in the fiat markets. The fact is they cannot, and they know this.

If Brexit didn’t occur, then the FED would have simply found another excuse to not raise rates. That, or they would have just engaged in more extend and pretend, pushing the idea down the road just a little further as they so often do.

 

Either way, near-rock bottom interest rates are here to stay as the U.S. dollar strengthens vs the pound and the Euro. As the elites say, never let a good crisis go to waste. Don’t worry – the FED isn’t.

 

 

 

Please email with any questions about this article or precious metals HERE

 

 

 

 

 

The FED Finds a Good Excuse to Extend and Pretend Through Brexit 



Written by Nathan McDonald (CLICK FOR ORIGINAL)

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Scotland Is About To Have Its Own Currency And Much More: How JPM Sees Brexit Playing Out

Several days ago, we showed a schematic of what Citigroup thought the post-Brexit political timeline would look like. This was released before Brexit was official.

 

 

Now that Brexit is official, JPM’s Malcolm Barr has come out with his base case forecast of “How Brexit Happens.” For those following the constant drama, there is little new here, except for one thing – the thing that caused a mini scandal earlier today during the EU Summit between Juncker and Rajoy – namely the treatment of Scotland. Here JPM said that it now expects Scotland to vote for independence and introduce its own currency before Britain leaves the European Union in 2019.

“Our base case is that Scotland will vote for independence and institute a new currency at that point (2019),” JP Morgan economist Malcolm Barr said in a note to clients on Wednesday. Scottish First Minister Nicola Sturgeon will meet European Commission President Jean-Claude Juncker on Wednesday afternoon, seeking a way for Scotland to remain in the EU. As Reuters reminds us, Scotland voted to stay in the EU in last week’s referendum, putting it at odds with the United Kingdom as a whole, which voted 52-48 percent in favor of Brexit.

If JPM is right, it means a historic split is in store for the United Kingdom which will see Scotland split politically from England and allign itself with the EU, something which would likely inspire a fresh wave of secessionist movements across Europe. Or, as the market would say, “bullish.”

* * *

Full note from JPM’s Malcolm Barr

How Brexit happens – our base case

There are myriad uncertainties in how the UK’s relationship with the EU will evolve in the wake of the referendum. In our minds, however, it is useful to lay out a base case as to how we think things will play out from here. It is highly unlikely events will align exactly to this script. But it useful to go through the exercise to help identify some of the key uncertainties along the way.
 
Phase 1 – Election of a new Conservative Leader and PM (result declared  9th September)

The near 125,000 members of the Conservative Party will choose from 2 candidates selected by MPs. Polling suggests approximately 75% of that group were pro-Brexit at the early stages of the campaign. It is very likely that the new Conservative leader will be elected on a platform of implementing the referendum result and taking the UK out of the EU.

Phase 2 – Article 50 (2016)

The incoming PM is likely to seek Parliamentary assent for submitting the formal article 50 request to leave the EU. With the EU refusing to begin talks before the article 50 request is submitted, our base case is this happens by the end of the year.  Constitutional experts argue about whether this is strictly needed or whether the new PM could act unilaterally. In practise we think it inevitable that the new PM would seek a Parliamentary assent given that the referendum is not legally binding. In our view, this is the crucial point wherein Brexit could be stopped, if it is to be blocked. Enough Conservative MPs (at this stage, we guess close to 20) would need to defy the leadership to prevent a motion from passing. This would likely generate a confidence vote and possibly a new general election if it occurs. Our base case is that Conservative MPs will fall in behind the leader and implement “the will of the people” as expressed in the referendum.

Phase 3 – Post Article 50 (2017)

Negotiations on the form of the EU exit begin soon after the article 50 request is submitted. On the EU side, the Commission will be acting on the basis of a mandate from the Council, and it appears representative from the Council will be involved on an ongoing basis. On the UK side, parties representing the constituent nations will likely be present. The EU will likely attempt to focus on the issues relating to exit in the first instance, rather than those relating to the future relationship with the UK. The UK side will likely seek to push toward the latter set of issues, and to seek as much access as possible to the single market while restricting free movement of labor.  In our base case, negotiations on exit issues will make progress, but progress on the forward looking issues will be negligible as time passes.

Phase 4 – Decision time (2018-19)

The UK will likely spend the first year of the negotiating process seeking to establish access to the single market on terms very similar to those seen during EU membership without accepting free movement of labour or contributions to the EU budget. We doubt this will be successful. Hence the UK will ultimately be forced to choose between a “Norway” option (accepting free movement of labour, EU regulations and budget contributions in return for full access to the single market) or an arrangement which has significantly less market access. At this point in time, the latter appears more likely. This means that access to the service sector (in particular) in the EU will likely be curtailed, along with some constraints on trade in goods. To the extent that UK economic growth is very weak during the negotiating process, the relative importance of market access versus migration control will shift in favour of the latter. However, our base case is that the hit from EU exit will demonstrate itself as a persistent drag on a positive growth rate, rather than generating  an ongoing contraction. As a result, the extent to which economic under performance will motivate a reassessment of UK priorities is ambiguous.
 
The UK will want to see the exit from the EU completed ahead of the general election in 2020. Submitting the article 50 request in late 2016 means that the standard two year negotiating period will expire in late 2018. However, the UK will likely secure agreement to extend the discussions into 2019, as the focus shifts onto the detail of a set of sectoral arrangements which provide some access to goods sectors beyond WTO terms. Discussion on access to some sectors extending beyond the WTO baseline will likely run beyond the 2020 election, while some sectors will see a reversion to WTO rules for a period while subsequent discussions are promised.
 
During all four phases of the above, we expect there to be clear evidence of multinational operations shifting the location of their activity out of the UK given the regulatory uncertainties. Financial services are among the sectors that will be most exposed to this process. Even if the UK begins to signal that it will compromise on other priorities in order to secure “full” access to the single market in financial services, there is a clear risk that euro-denominated activities relocate to within the EU simply to ensure continuity of relationships. In the event that it becomes clear that a given EU capital is the destination of choice, there is a possibility that this change could occur relatively quickly. The micro-economics of wholesale financial markets points toward sizeable externalities associated with the sharing of information and linkages between markets, hence its tendency to “clump” together within each time zone. 

Scotland

Intersecting the UK’s EU exit process is likely to be pressure to hold a new referendum on Scottish independence, which we expect will ultimately generate a vote shortly before the UK leaves the EU in 2019. Our base case is that Scotland will vote for independence and institute a new currency at that point. We will cover this issue in detail in a subsequent email.

Non-EU trade negotiations

As the UK’s likely exit from the EU becomes more concrete, there are three issues regarding non-EU trade. First is the need to renegotiate the UK’s trade arrangements with over 50 countries which were established while the UK was part of the EU (with the UK having signed them as part of the EU, they no longer apply once we exit). Second, the UK’s membership of the WTO has also been on the basis of its membership of the EU. The head of the WTO has stated that it is likely the UK will have to renegotiate the terms of its WTO membership, as at least some members will not be happy to simply allow UK membership to continue. Third, leave campaigners argued that the UK would be able to strike its own trade deals with countries like the US, China and India upon leaving the EU, so there may be the beginnings of some effort in that direction.
 
All of the above issues are likely to prove intricate and time consuming. The UK starts from a position where it does not have a deep well of resources and experience within the civil service to deal with trade issues. The UK’s negotiating position in these discussions is also likely to be very weak. The simultaneous loss or scaling back of such a large number of trading relationships upon EU exit is likely to be a blow to UK exporters, meaning the need to get a successor deal is more urgent for the UK than for our trading partners. The UK may hope that progress on these issues could be made both before the EU exit is completed and before the full set of follow-on arrangements in our relationship with the EU is clear. However, our non-EU trading partners are likely to want to see the detail of the UK’s relationship with the EU before considering the detail of any bilateral deal with the UK, as there are important interdependencies between those sets of relationships.  Put all of this together, and it is likely that the UK’s access to non-EU markets will become markedly more constrained in the wake of the EU exit for a period of years. And to the extent that the UK is able to secure “quick” deals, it is unlikely they will be on terms which are advantageous to the UK.

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Oil Jumps Above $49 As Crude Production Tumbles, Inventories Drop

Following last night's across the board inventrory drawdown from API, DOE data was more mixed with a surpsingly large build in gasoline stocks but bigger than expected Distillates and total crude inventory drawdowns. Production tumbled 0.63% MoM, the biggest drop in 2 months and back to Sept 2014 lows. Crude prices spiked above $49 for the firest time since Brexit.

API

  • Crude -3.86mm (-2.5mm exp)
  • Cushing -1.207mm (-900k exp)
  • Gasoline -416k
  • Distillates -832k

DOE

  • Crude -4.05mm (-2.5mm exp)
  • Cushing -951k (-900k exp)
  • Gasoline +1.367mm
  • Distillates -1.801mm

6th week of crude inventory draws, Distillates back into drawdown as Gasoline built.

 

Interestingly as Cushing saw a draw, East Coast inventories are soaring…

  • U.S. EAST COAST GASOLINE STOCKS ROSE TO RECORD LEVELS LAST WEEK – EIA

Production dropped the most in 2 months…

 

Which has sent crude prices back above $49…

 

Charts: Bloomberg

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‘Elites’ Called To Arms: “It’s Time To Rise Up Against The Ignorant Masses”

It appears the powers that be just are not going to take it anymore. Having mistakenly allowed the people of Britain to exercise their free will, Foreign Policy's James Traub exclaims, "It's time for the elites to rise up against the ignorant masses."

The Brexit has laid bare the political schism of our time. It’s not about the left vs. the right; it’s about the sane vs. the mindlessly angry

Authored by James Traub, originally posted at ForeignPolicy.com,

I was born in 1954, and until now I would have said that the late 1960s was the greatest period of political convulsion I have lived through. Yet for all that the Vietnam War and the civil rights struggle changed American culture and reshaped political parties, in retrospect those wild storms look like the normal oscillations of a relatively stable political system. The present moment is different. Today’s citizen revolt — in the United States, Britain, and Europe — may upend politics as nothing else has in my lifetime.

In the late 1960s, elites were in disarray, as they are now — but back then they were fleeing from kids rebelling against their parents’ world; now the elites are fleeing from the parents. Extremism has gone mainstream. One of the most brazen features of the Brexit vote was the utter repudiation of the bankers and economists and Western heads of state who warned voters against the dangers of a split with the European Union. British Prime Minister David Cameron thought that voters would defer to the near-universal opinion of experts; that only shows how utterly he misjudged his own people.

Both the Conservative and the Labour parties in Britain are now in crisis. The British have had their day of reckoning; the American one looms. If Donald Trump loses, and loses badly (forgive me my reckless optimism, but I believe he will) the Republican Party may endure a historic split between its know-nothing base and its K Street/Chamber of Commerce leadership class. The Socialist government of France may face a similar fiasco in national elections next spring: Polls indicate that President François Hollande would not even make it to the final round of voting. Right-wing parties all over Europe are clamoring for an exit vote of their own.

Yes, it’s possible that all the political pieces will fly up into the air and settle down more or less where they were before, but the Brexit vote shows that shocking change isn’t very shocking anymore. Where, then, could those pieces end up? Europe is already pointing in one direction. In much of Europe, far-right nativist parties lead in the polls. So far, none has mustered a majority, though last month Norbert Hofer, the leader of Austria’s far-right Freedom Party, which traffics in Nazi symbolism, came within a hair of winning election as president. Mainstream parties of the left and right may increasingly combine forces to keep out the nationalists. This has already happened in Sweden, where a right-of-center party serves as the minority partner to the left-of-center government. If the Socialists in France do in fact lose the first round, they will almost certainly support the conservative Republicans against the far-right National Front.

Perhaps these informal coalitions can survive until the fever breaks. But the imperative of cohabitation could also lead to genuine realignment. That is, chunks of parties from the left and right of center could break away to form a different kind of center, defending pragmatism, meliorism, technical knowledge, and effective governance against the ideological forces gathering on both sides. It’s not hard to imagine the Republican Party in the United States — and perhaps the British Conservatives should Brexit go terribly wrong — losing control of the angry, nationalist rank and file and reconstituting themselves as the kind of Main Street, pro-business parties they were a generation ago, before their ideological zeal led them into a blind alley. That may be their only alternative to irrelevance.

The issue, at bottom, is globalization. Brexit, Trump, the National Front, and so on show that political elites have misjudged the depth of the anger at global forces and thus the demand that someone, somehow, restore the status quo ante. It may seem strange that the reaction has come today rather than immediately after the economic crisis of 2008, but the ebbing of the crisis has led to a new sense of stagnation. With prospects of flat growth in Europe and minimal income growth in the United States, voters are rebelling against their dismal long-term prospects. And globalization means culture as well as economics: Older people whose familiar world is vanishing beneath a welter of foreign tongues and multicultural celebrations are waving their fists at cosmopolitan elites. I was recently in Poland, where a far-right party appealing to nationalism and tradition has gained power despite years of undeniable prosperity under a centrist regime. Supporters use the same words again and again to explain their vote: “values and tradition.” They voted for Polishness against the modernity of Western Europe.

Perhaps politics will realign itself around the axis of globalization, with the fist-shakers on one side and the pragmatists on the other. The nationalists would win the loyalty of working-class and middle-class whites who see themselves as the defenders of sovereignty. The reformed center would include the beneficiaries of globalization and the poor and non-white and marginal citizens who recognize that the celebration of national identity excludes them.

Of course, mainstream parties of both the left and the right are trying to reach the angry nationalists. Sometimes this takes the form of gross truckling, as when Nicolas Sarkozy, who is seeking to regain France’s presidency, denounces the “tyranny of minorities” and invokes the “forever France” of an all-white past. From the left, Hillary Clinton has jettisoned her free-trade past to appeal to union members and others who want to protect national borders against the global market. But left and right disagree so deeply about how best to cushion the effects of globalization, and how to deal with the vast influx of refugees and migrants, that even the threat of extremism may not be enough to bring them to make common cause.

The schism we see opening before us is not just about policies, but about reality. The Brexit forces won because cynical leaders were prepared to cater to voters’ paranoia, lying to them about the dangers of immigration and the costs of membership in the EU. Some of those leaders have already begun to admit that they were lying. Donald Trump has, of course, set a new standard for disingenuousness and catering to voters’ fears, whether over immigration or foreign trade or anything else he can think of. The Republican Party, already rife with science-deniers and economic reality-deniers, has thrown itself into the embrace of a man who fabricates realities that ignorant people like to inhabit.

Did I say “ignorant”? Yes, I did. It is necessary to say that people are deluded and that the task of leadership is to un-delude them.

Is that “elitist”? Maybe it is; maybe we have become so inclined to celebrate the authenticity of all personal conviction that it is now elitist to believe in reason, expertise, and the lessons of history. If so, the party of accepting reality must be prepared to take on the party of denying reality, and its enablers among those who know better. If that is the coming realignment, we should embrace it.

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Stocks Recover Half Brexit Losses… But Bonds Ain’t Buying It

Dow futures are now 500 points off the post-Brexit lows, having retraced half the losses…despite the worst home sales in 6 years. Just one small problem, Treasury yields are plumbing new post-Brexit lows…

Dow bounce…

 

S&P bounce…

 

But bonds ain’t buying it…

 

Trade accordingly.

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Californians Will Decide Whether to Legalize Cannabis This Fall

Yesterday the Control, Regulate, and Tax Adult Use of Marijuana Act (AUMA) officially qualified for this November’s ballot in California. The initiative, whose backers include Lt. Gov. Gavin Newsom and former Facebook president Sean Parker, would belatedly allow recreational use of marijuana in the first state to recognize the plant as a medicine and more than triple the number of Americans who live in jurisdictions that see fit to tolerate cannabis consumption without a doctor’s note.

Like the legalization measures approved by voters in Colorado, Washington, Oregon, and Alaska, the AUMA would let adults 21 or older possess up to an ounce of marijuana at a time. Like all of those states except Washington, it also allows sharing (up to an ounce) and home cultivation (up to six plants per household). Unlike the four states that have legalized marijuana so far, the AUMA explicitly allows deliveries to consumers and on-site consumption at businesses licensed for that purpose. Both of those options would be subject to approval by local governments, which also could ban marijuana businesses entirely and regulate (but not ban) home cultivation.

In 2010, the last time California voters considered a marijuana legalization measure, it lost by seven points. According to the Los Angeles Times, “Advocates say the new measure has a better chance because it adds more regulation at the state level rather than letting locals dictate what happens, and comes after the state has approved a regulatory system for medical marijuana growing, transportation and sales.” The AUMA is indeed highly prescriptive, weighing in at 30,000 words, 10 times as long as California’s 2010 initiative and 50 percent longer than Washington’s 2012 initiative, which was itself quite detailed compared to the initiatives in Colorado and Alaska.

It’s not clear whether size matters to voters, but the AUMA’s supporters are bending over backward to assure the public that they have thought things through. The campaign’s official name is Californians to Control, Regulate and Tax Adult Use of Marijuana While Protecting Children, and its slogan is “Let’s Get It Right, California!” In this case, getting it right means “the toughest regulations of any adult-use marijuana proposal submitted to date,” including a constitutionally questionable ban on many forms of advertising, detailed packaging and labeling requirements, and pretty harsh treatment for possessing more than an ounce, which would be a misdemeanor punishable by a $500 fine and up to six months in jail. Marijuana would be taxed twice: $9.25 per ounce collected from growers plus 15 percent of the retail price. The initiative requires state regulators to begin licensing producers and distributors by January 1, 2018, giving preference to existing medical marijuana businesses.

Organizations supporting the AUMA include the Drug Policy Alliance, the Marijuana Policy Project, the National Organization for the Reform of Marijuana Laws, Law Enforcement Against Prohibition, the California Cannabis Industry Association, the California NAACP, and the California Medical Association. As in 2010, the opposition, known as the Coalition for Responsible Drug Policies, is led by law enforcement groups such as the California Police Chiefs Association and the California State Sheriffs’ Association. It has raised about $125,000 so far, much less than the $3.7 million in the initiative campaign’s war chest.

Another anti-AUMA group, Stop Pot 2016, may be actively undermining the prohibitionist case with its outlandish claims. The group’s president, Roger Morgan, recently told Reason TV “almost all of the mass murders we’ve had in recent years” were caused by marijuana. 

Support for marijuana legalization has grown since 2010 nationwide and in California. Last year the Public Policy Institute of California found that 53 percent of Californians thought pot should be legal, up from 47 percent in September 2010. A February poll by Probolsky Research found that 60 percent of California voters want to “legalize marijuana for recreational use.”

In addition to California, legalization initiatives have either qualified for this year’s ballot or are expected to do so in Nevada, Maine, Massachusetts, and Arizona.

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Savannah Schools: You Shouldn’t Have to Major in Education to Be a Teacher

School districts nationwide are facing a problem: While student enrollment is increasing, fewer teachers are available to address the need. As a result of a negative perception of teaching and relatively low salaries, fewer college students are becoming teachers, and current teachers are leaving the profession for similar reasons.

The Savannah-Chatham County Public School System in Georgia is no exception to this. The state’s 10th largest school district announced in March that it had 450 job openings it needed to fill before the next school year begins, and it is struggling to find applicants with education degrees.

As a result, the district is focusing on publicizing the existence of alternative pathways, including the Georgia Teacher Academy for Preparation and Pedagogy. In order to complete the program, applicants must have at least a bachelor’s degree with a minimum overall GPA of 2.5, passing scores on two separate educator exams, and a satisfactory criminal background check.

It can take up to three years to fully complete the program—but, importantly, it allows one to work as a teacher throughout the process.

This initiative has existed since 2000, but Heather Bilton, the school system’s talent acquisition coordinator, said the district needed to be more proactive in getting these programs advertised. “Our goal is to get the best teachers,” Bilton says. “But with the traditional pipeline declining significantly over recent years, we had to make sure to publicize all pathways.”

The Savannah-Chatham County Public School System consists mainly of Title I institutions. In recent years, its schools have struggled to keep up with changing academic standards and performance expectations from the state Department of Education, leaving little room for any significant reform efforts. Amid these challenges, Bilton says alternative pathway teachers can actually help improve students’ performance.

“They bring real life connections,” Bilton said. “For example, if I am a retired military person, I can use my past experiences in working on planes to bring math to life and better help kids. It makes them more engaged in the classroom.”

Ernie Lee is one of those teachers who came in through an alternative pathway. Before becoming a history teacher at Windsor High School, Lee was a lawyer for more than 20 years, an experience he said is an advantage in his new career.

“I had a lot of life experience that helped me become a better teacher,” Lee says. “I did learn some of this through alternative teaching prep, but a lot of my success is thanks to my lawyer experience communicating with people.”

Lee said several events in 2007 led him to want to make a “lasting contribution on the community,” and he began to reconsider his high school dream of becoming a teacher. “I first started as a substitute in 2008, and realized I could really connect with students,” Lee said. “My rigor is tough, but I also take out time to know my students. By talking to them and making sure they aren’t invisible, it helps them. I have to do everything in my power to help them graduate, including treating them with respect.”

Lee’s time as an educator has been lauded. He was named the 2016 Georgia Teacher of the Year for his dedication not just to history, but also to his students. In fact, three out of the last six Georgia Teachers of the Year have gone through alternative routes to becoming certified.

Not everyone is thrilled about the system allowing those without an education degree to teach. Bilton said there have been concerns over a possible decline of educator preparedness, but notes that the school district is not changing its requirements to fill the positions. Not only do assessments eliminate weaker candidates, but schools also provide mentors to those starting their second career. 

“Rigor is not being lowered,” Bilton said. “What is increasing is the job pool of teacher applicants so schools can pick the best people for the job. Four hundred and fifty vacancies is the normal amount we have, and just as many already certified teachers will apply for [them] as those who are trying to become certified.”

The former lawyer, Lee, understands some of the concerns with alternative teaching programs, but believes the benefits of bringing people into the profession later are worth it. “Traditional teachers may know typical teaching philosophy, but there is something about real world experience that can make better teachers,” he says.

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Listen to the Libertarians: New at Reason

The matchup between Hillary Clinton, one of the most uptight politicians ever, and Donald Trump, a loose-lipped lunatic who revels in saying whatever pops into his head, promises some entertaining presidential debates. But Americans who would like to see a clash of ideas as well as a clash of styles should hope the Libertarian nominee, former New Mexico governor Gary Johnson, gets the poll numbers he needs to appear on the stage with Clinton and Trump.

Johnson, a triathlete and mountain climber who founded a successful construction business before getting into politics and recently left a job as CEO of a cannabis company, is highly disciplined yet easygoing in a way that neither Clinton nor Trump can pull off. More important, as he showed in a CNN town hall last week, he challenges voters to question their assumptions about which political positions go together.

View this article.

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Pening Home Sales Crash Most In 6 Years – ‘Supply’ Blamed

Following April’s exuberant 6 year high bounce (revised lower from +5.1% to +3.9%), May saw pending home sales plunge 3.7% – the biggest drop since May 2010. Sales declined in all 4 regions (with a 4.2% plunge in Midwest to January lows). This is the first annual drop in home sales in 2 years (-0.2%) and realtors are blaming ‘supply’ on the slump… sure (and all that pent up demand).

Remember April…

 

Well May gave it all back…

 

And was revised drastically lower…

 

Lawrence Yun, NAR chief economist, says pending sales slumped in May across most of the country.

“With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity,” he said.

 

“Realtors® are acknowledging with increasing frequency lately that buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in their market.”

Despite mortgage rates hovering around three-year lows for most of the year, Yun says scant supply and swiftly rising home prices – which surpassed their all-time high last month – are creating an availability and affordability crunch that’s preventing what should be a more robust pace of sales.

“Total housing inventory at the end of each month has remarkably decreased year-over-year now for an entire year,” adds Yun.

 

“There are simply not enough homes coming onto the market to catch up with demand and to keep prices more in line with inflation and wage growth.”

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