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Christophe Barraud🛢🐳 Profile picture
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Sep 27 • 10 tweets • 4 min read
🇺🇸 (1/10) | As I already warned several times, the #housing #recession has gained traction since July as prices started dropping ⬇

christophe-barraud.com/10-tweets-that…
🇺🇸 (2/10) Today’s figures (Corelogic CS and FHFA) confirmed this assumption. Looking ahead, latest proxies already point to a larger drop in August.

🇺🇸 (3/10) In addition, the recent bounce of #mortgage rates implies that sales’ cancellations will rise, and demand (at least from 1st time buyers) will collapse. As a result, downward pressures are expected to intensify from September.
🇺🇸 (4/10) Focusing on housing sales and inventory, current data are completely lagging the cycle because of two effects:

a- Sales are artificially boosted by households securing a loan before the tightening of credit conditions and the spike of mortgage rates (“rush” effect ⚠)
🇺🇸 (5/10) b- New inventory listings are dropping in a context where homeowners with mortgages have a mortgage rate that is far below current level. If they move, they will lose their current low mortgage payment (“lock-in” effect ⚠)
🇺🇸 (6/10 ) These two effects (well know by housing specialists) are transitory and will normalize or will be offset by other effects (such as negative expectations), leading to a sharper prices’ correction, probably from 1H23.
🇺🇸 (7/10) Meantime, given that analysts now expect the #Fed to maintain its "confirmation bias" ⚠ for a while, they will revise downward their projections concerning housing prices for the next 12 months (Oct.22 – Oct. 23)
🇺🇸 (8/10) A 10% drop seems to be the best-case scenario after prices increased by >35% from March 2020 to June 2022.
🇺🇸 (9/10) Looking at the overall economy, if nothing is done on the monetary and/or the fiscal front, my view is that the question is no longer about #recession but about its size and duration.
🇺🇸 (10/10) I will try to give some estimates after the BEA presents revised statistics for GDP (from 1Q17 to 1Q22). However, using current metrics, difficult to imagine that real GDP growth will be positive from 4Q21 to 4Q23.
bea.gov/news/blog/2022…

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More from @C_Barraud

Christophe Barraud🛢🐳 Profile picture
Aug 25
🇺🇸 #JacksonHole | Since July #Fed meeting, data point to GDP weakness, housing recession, inflation peak but also lower unemployment rate

1/ GDP: Towards downward revisions
*GDP fell for a 2nd straight quarter in 2Q
*Aug. Composite PMI crashed to 45, lowest since May 2020 ⚠
*Atlanta Fed expects 3Q GDP to be close to 1.5% in 3Q
*Taking into account these figures, it seems that 4Q21/4Q22 GDP growth will be close to 0%
*In June, Fed expected 1.7% growth so there could be a significant downward revision in Sep.
2/ Housing: a key downside risk to GDP projections
*Refinancing index hit the lowest since 2001
*Existing and new home sales fell by >20% YoY
*Inventory rebounded (especially for new home sales)
Read 8 tweets
Christophe Barraud🛢🐳 Profile picture
May 29
🇨🇳 #China | #Shanghai Unveils Fresh Policies to Support Economy Hit by Covid - Shanghai municipal government
*50 measures in eight categories aimed at stabilizing the city’s economy.
*Link (Chinese): shanghai.gov.cn/nw12344/202205…
🇨🇳 #CHINA | *#SHANGHAI TO REMOVE 'WHITELIST' REQUIREMENT FOR COS. FROM JUNE - BBG
*SHANGHAI TO ADD 40,000 PASSENGER CAR PLATES THIS YEAR
*SHANGHAI TO CUT PURCHASE TAX FOR SOME PASSENGER CARS
*SHANGHAI SUPPORTS COUPON ISSUANCE TO BOOST CONSUMPTION
🇨🇳 #CHINA | *SHANGHAI TO LAUNCH NEW BATCH OF HOUSING PROJECTS - BBG
*SHANGHAI TO IMPROVE HOUSING MARKET POLICY, SUPPORT HOUSING NEEDS
*SHANGHAI TO PROPERLY INCREASE CONSTRUCTION LANDS FOR 2022
Read 5 tweets
Christophe Barraud🛢🐳 Profile picture
Apr 22
🇺🇸 #Fed (1) | As I expected ⬇, the Fed is on track to tighten its policy quickly and strongly for economic and political reasons.
christophe-barraud.com/why-is-the-fed…
🇺🇸 #Fed (2) | On the economic front, Inflation is well above target and the risk of a wage/price spiral for low-income families has become real.
🇺🇸 #Fed (3) | Given that the labor market also looks tighter than indicated by the U.R., the Fed can easily justify a tightening move.
Read 9 tweets
Christophe Barraud🛢🐳 Profile picture
Mar 14
🇨🇳 Chinese officials will be forced to support growth soon in a context where downward pressures are gaining traction.
*The probability of missing growth target (5.5% in 2022) looks high the year of Xi re-election.
1/ The hospitality sector is under pressure with air traffic and restaurant sales plunging YoY in early March.

2/ More damages from the Zero-Covid policy are expected with restrictions and lockdowns in several areas such as Shenzhen.

Read 6 tweets
Christophe Barraud🛢🐳 Profile picture
Mar 11
🇩🇪 German economy is facing heavy headwinds:

1/ Covid-19 is still circulating a lot which implies that several restrictions will remain in place longer than expected.

2/ Sanctions/counter-sanctions linked to #Russia/#Belarus and the collapse of Ukrainian economy will have a significant impact on trade and supply chain. It's more than just natural gas.

3/ Problems of logistics multiply with airspace and ships bans while freight costs are still rising.
*See Harpex index: bit.ly/3MFkrid
Read 6 tweets
Christophe Barraud🛢🐳 Profile picture
Mar 7
🌎 Global GDP Update (1) | The impact will be larger than the consensus expects. Even the most pessimistic forecast I saw recently (-1% for global GDP) looks optimistic.
*In my opinion, it’s clear that Global 2022 GDP growth will be below 3% (v >4.0%e).
🌎 Global GDP Update (2) | Economists from banks will keep underestimating the shock as they use traditional models.
*🇺🇸 economists are the most exposed to a miss as they don’t perceive the gravity of the situation in a context where the 🇺🇸 economy is less exposed.
🌎 Global GDP Update (3) | The shock has multiple direct and indirect effects (supply and demand). Traditional models are not useful to identify the point of demand destruction in case of multiple price shocks.
Read 6 tweets

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